The FTSE 100’s early promise faded on Friday amid downbeat economic growth figures and fresh US tech weakness.
The FTSE 100 index closed down 54.1 points, 0.6%, at 9,649.03.
It had earlier traded as high as 9,761.47.
The FTSE 250 ended 24.45 points higher, 0.1%, at 21,876.55, and the AIM All-Share ended up 3.70 points, 0.5%, at 751.36.
For the week, the FTSE 100 fell 0.2%, the FTSE 250 declined 0.9% and the AIM All-Share dropped 0.2%.
The mood was knocked by news that the UK economy shrank in October, according to figures from the Office for National Statistics.
Gross domestic product is estimated to have fallen by 0.1% in October, the same as in September, missing the FXStreet-cited market consensus for a 0.1% rise.
Services output fell by 0.3%, while construction output fell by 0.6%.
Production output, however, climbed 1.1%.
Citi analyst Callum McLaren-Stewart called the data “an unsurprising surprise”.
“A miss in October is perhaps not the most surprising outcome.
“Pre-budget uncertainty, and particularly the degree of speculation ahead of the event, can likely explain the miss relative to forecasts,” he said.
“For households, the prospect of income tax increases (which was still very much live during October) would likely have put the brakes on consumer spending,” the Citi analyst said, while, on the business side, “the associated lack of clarity around which sectors were to be taxed, will have likely delayed/slowed investment decisions”.
Berenberg analyst Andrew Wishart fears some of the slowdown in the UK economy could be due to underlying issues and not just budget uncertainty.
“We suspect that deteriorating fundamentals rather than a budget-related setback in confidence are to blame, so a recovery seems unlikely in the near term,” Mr Wishart said.
The data was seen as cementing a quarter-point interest rate cut at next week’s Bank of England Monetary Policy Committee meeting.
“Not that it was in any doubt at all, but today’s data essentially guarantees that the Bank of England will slash rates again next week.
“The focus will instead be on the guidance for rates in 2026.
“Any dovish undertones that hint at further easing ahead could bode ill for the pound,” Ebury analyst Matthew Ryan said.
Mr McLaren-Stewart agrees the data “clearly supports the consensus case for a cut”.
“However, we anticipate the (BoE) will be obliged to cut lower than currently priced in 2026, necessitating a terminal rate below 3%, supported by weaker GDP outlook,” he added.
Sterling fell back after the figures, after rallying in recent days.
The pound was quoted lower at 1.3356 US dollars at the time of the London equities close on Friday, compared to 1.3416 US dollars on Thursday.
The euro stood at 1.1739 US dollars, down against 1.1746 US dollars.
Against the yen, the dollar was trading higher at 155.69 yen compared to 155.24.
In Europe on Friday, the CAC 40 in Paris closed down 0.1%, while the DAX 40 in Frankfurt ended 0.5% lower.
Stocks in New York were lower at the time of the London equity close.
The Dow Jones Industrial Average was down 0.7%, the S&P 500 index was 1.4% lower, while the Nasdaq Composite was down 2.1%.
Technology stocks were firmly in the red once more as Broadcom slid 11% after results failed to match lofty expectations, while Oracle fell a further 4.6%.
The yield on the US 10-year Treasury was quoted at 4.19%, stretched from 4.12% on Thursday.
The yield on the US 30-year Treasury was at 4.86%, widened from 4.77%.
Supporting the dollar and pushing yields higher, comments from two officials who voted against the Federal Reserve’s decision to lower interest rates this week.
Chicago Fed President Austan Goolsbee had joined Kansas City Fed President Jeffrey Schmid in pushing to keep rates unchanged instead at the central bank’s two-day policy meeting, which ended on Wednesday.
“I believe we should have waited to get more data, especially about inflation, before lowering rates further,” said Mr Goolsbee in a statement Friday.
In a separate statement, Mr Schmid, who also pushed for no rate cut at the Fed’s October meeting, said: “Right now, I see an economy that is showing momentum and inflation that is too hot, suggesting that policy is not overly restrictive.”
In addition, Federal Reserve Bank of Cleveland President Beth Hammack said she would prefer interest rates to be slightly more restrictive to keep putting pressure on inflation, which is still running too high.
Back in London, InterContinental Hotels Group rose 2.3% as Jefferies upgraded to “buy” from “hold”‘, but Whitbread dropped 2.2% as the broker moved the Premier Inn owner the other way, to “hold” from “buy”.
Elsewhere, 1Spatial soared 45% after agreeing in principle to a proposed £87.1 million offer from VertiGIS, a portfolio company of London-based private equity firm Battery Ventures.
The Cambridge, England-based location master data management software company said the cash bid would value each 1Spatial share at 73 pence.
VertiGIS confirmed that it has completed commercial due diligence, has a clear understanding of the 1Spatial business and requires only limited confirmatory diligence to proceed to making a firm offer.
But Card Factory plummeted 27% after cutting its profit guidance as it said weak high-street retail footfall hurt its UK store sales performance.
The Wakefield, England-based greeting cards, gifts and celebration merchandise retailer said it expects adjusted pretax profit of between £55 million and £60 million for financial 2026, which ends on January 31, if current trading trends persist.
This is lower than the company’s previous guidance, which was for mid-to-high single-digit-percentage growth in adjusted pretax profit from £66.0 million in financial 2025, roughly £70 million.
Card Factory attributed weak consumer confidence to the lower high street footfall, which has persisted into its “most important” trading period.
Brent oil was quoted at 61.30 dollars a barrel at the time of the London equities close on Friday, up from 60.91 late on Thursday.
Gold was quoted at 4,291.08 dollars an ounce on Friday, higher against 4,254.97.
The biggest risers on the FTSE 100 were Burberry, up 54.50 pence at 1272.5p, Ashtead Group, up 128.0p at 5,138.0p, BT Group, up 3.7p at 180.5p, Intercontinental Hotels Group, up 185.0p at 10,235.0p and Fresnillo, up 46.0p at 2,904.0p.
The biggest fallers on the FTSE 100 were St James’s Place, down 49.0p at 1,316.5p, British American Tobacco, down 146.0p at 4,238.0p, Anglo American, down 80.0p at 2,817.0p, Weir, down 80.0p at 2,856.0p and Imperial Brands, down 86.0p at 3,179.0p.
Monday’s economic calendar has CPI figures in Canada.
Later in the week, interest rate decisions are due in Europe, Japan and the UK. In addition, US nonfarm payrolls figures will be released, plus UK and US inflation and retail sales data.
Next week’s UK corporate calendar has delayed full-year results from travel retailer WH Smith and half-year numbers from electricals retailer Currys.
Contributed by Alliance News.
