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The FTSE 100 hit another record peak on Friday following weaker-than-expected US inflation data, an optimistic UK economic report and strong results from NatWest.
The FTSE 100 index closed 67.05 points, 0.7%, higher at 9,645.62, a new record.
The FTSE 250 rose 167.61 points, 0.8%, to 22,529.02 and Objective The All-Share gained 1.77 points, 0.2%, to 777.06.
For the week, the FTSE 100 rose 3.1%, the FTSE 250 rose 3.4% and the AIM All-Share rose 0.7%.
In Europe The CAC 40 in Paris closed flat on Friday, while the DAX 40 in Frankfurt closed up 0.1%.
Stocks were sharply higher in New York at that time London to close. The Dow Jones Industrial Average was up 1.2%, the S&P 500 was 1.0% higher, and the Nasdaq Composite advanced 1.3%.
The yield on the US 10-year Treasury was reported at 4.00%, unchanged from Thursday. The yield on the US 30-year Treasury was 4.58%, also steady from Thursday.
Blue chips advanced in London after US consumer price inflation rose slower than expected in September, after a sluggish start.
Delayed data from the Bureau of Labor Statistics showed the annual consumer price inflation rate was 3.0% in September, rising from 2.9% in August.
But the reading was 3.1% below the FXStreet-cited consensus.
Core CPI, which excludes more volatile food and energy costs, rose 0.2% month-on-month and 3.0% year-on-year. It was expected to remain steady at August’s 3.1% level.
The data were seen as giving the US Federal Reserve the green light to lower rates at next week’s Federal Open Market Committee (FOMC) meeting. A reduction of one quarter point is expected.
Wells Fargo analysts said: “Today’s softer-than-expected CPI data should lock in FOMC The rate will be cut by 25 (basis points) in next week’s meeting. He said, today’s data was not so soft that the committee could give everything clear on inflation.
Economists believe US inflation could remain “sticky” in 2026 due to the ongoing impact of tariffs and this could have an impact on future interest rate decisions.
Felix Schmidt at Berenberg believes increased inflation will make it difficult for the Fed to lower the key interest rate again before its October meeting.
In the UK, retail sales data came as a welcome surprise, showing a 0.5% rise in September, defying forecasts for a 0.2% decline.
Danny Hewson, head of financial analysis at AJ Bell, said the data should bring “cautious optimism” ahead of the sector’s most important shopping periods with Black Friday and Christmas approaching.
Adding to the positive trend, flash PMI data showed that business activity in the UK grew at a sharp pace in October, led by a pick-up in the manufacturing sector. The S&P Global Flash Composite Output index climbed to 51.1 points, surpassing both the 50 no-change threshold and expectations of 50.6.
The September reading had slipped to 50.1 points. The latest data showed the slowest pace of job cuts since May and the weakest input price inflation since November 2024.
Additionally, consumer confidence rose marginally in October as shoppers remained focused on Black Friday despite jitters over the upcoming Budget, the data showed.
GfK’s long-running consumer confidence index rose two points, although it is still down at minus 17.
The rise was largely driven by a four-point increase in the index’s key purchase marker, an indicator of confidence in buying big-ticket items, a nine-point improvement on the previous October, from minus 12.
At the close of the London equities market on Friday, the pound fell to $1.3301, down from $1.3323 on Thursday.
The euro was up $1.1631 from $1.1609.
On the FTSE 100, there was a tug-of-war between NatWest and London Stock Exchange Group for top billing, with the two swapping places as the trading day progressed.
Lender NatWest ultimately prevailed, rising 4.9%, and hitting a 15-year high as the bank lifted its annual guidance and said its third-quarter profit rose by almost a third.
The Edinburgh-based lender reported a pretax profit of £2.18 billion in the third quarter, up 30% from £1.67 billion a year earlier. Total income improved 16% to £4.33 billion from £3.74 billion.
London Stock Exchange Group took the silver medal, rising 4.8%, after Thursday’s well-received trading update.
Elsewhere, retail sales surprised and upgrades helped do-it-yourself retailers kingfisherWhich increased by 1.9%.
RBC Capital Markets raised the B&Q owner to “outperform” from “sector perform” on expectations that growth opportunities for Kingfisher in the UK and Poland will outperform long-term sales forecasts.
On the FTSE 250, WH Smith rose 4.2% after Peel Hunt was upgraded to “buy” from “hold” after Barclays downgraded it on Thursday.
Next month, the Swindon-based company is expected to reveal the findings of an investigation into its US business after it underreported profits.
But Peel Hunt thinks even in such a scenario that US is worth “virtually nothing”, with “shares still worth owning” for its other divisions.
Brent oil traded late Thursday night at $ 66.56 per barrel, up from $ 65.75. On Friday, gold was trading at $4,125.47 an ounce, up from $4,146.49 an ounce on Thursday.
The biggest risers on the FTSE 100 were NatWest Group, up 26.8p at 572.4p, London Stock Exchange Group, up 450.0p at 9,799.0p, Tesco, up 9.8p at 455.4p, Next, up 280.0p at 13,435.0p and Polar Capital Technology Trust, Up 8.5p. 450.0p.
The biggest decliners on the FTSE 100 included GSK, down 26.5p at 1,620.0p, Airtel Africa, down 2.4p at 228.0p, Hikma Pharmaceuticals, down 17.0p at 1,753.0p, Diageo, down 15.0p at 1,811.0p and LondonMetric Property. With a decline of 1.6p 1.6p at 196.9p.
Contributed by Alliance News