FTSE 100 hits new high despite worries over potential US government shutdown

The FTSE 100 ended the quarter with a flourish, hitting an all-time high on Tuesday, as hopes grew of a peace settlement in the Middle East and as Sir Keir Starmer reiterated a commitment to fiscal responsibility.

The FTSE 100 index closed up 50.59 points, 0.5%, at 9,350.43, beating its previous record close of 9,321.40 in August.

The blue chip index had earlier set a new best level of 9,363.57. It has risen 6.7% in the last three months.

The FTSE 250 ended 149.08 points higher, 0.7%, at 22,015.56, and the AIM All-Share ended up 2.99 points, 0.4%, at 783.17.

Prime Minister Sir Keir said at the Labour Party conference that “fixing our public finances, investing in new infrastructure, helping our public services off their knees … will be better for growth”.

He thanked “every business in our country” for taking the brunt of last year’s tax raises when the government increased employer national insurance costs.

“We asked a lot at the last budget,” he noted.

Calling for fiscal discipline, Sir Keir said: “It does not matter if it is unfunded tax cuts or unfunded spending… You lose the economy and working people pay the price.”

Sir Keir spoke after figures showed the UK gross domestic product grew as expected during the second quarter of 2025.

According to the Office for National Statistics, real GDP is estimated to have increased by 0.3% between April and June, in line with the ONS’s first estimate.

The rate of growth slowed from a 0.7% rise in the prior quarter.

The pound was quoted higher at 1.3443 dollars at the time of the London equity market close on Tuesday, compared to 1.3432 dollars on Monday. The euro stood at 1.1727 dollars, lower against 1.1731 dollars. Against the yen, the dollar was trading at 147.98 yen, lower compared to 148.57 yen.

The yield on the US 10-year Treasury was quoted at 4.12% trimmed from 4.14% on Monday. The yield on the US 30-year Treasury stood at 4.69%, narrowed from 4.71%.

In European equities on Tuesday, the CAC 40 in Paris closed up 0.1%, while the DAX 40 in Frankfurt ended up 0.6%.

Stocks in New York were lower at the time of the London close. The Dow Jones Industrial Average was down 0.4%, the S&P 500 index was 0.2% lower, while the Nasdaq Composite declined 0.2%.

US markets fell back after weak consumer confidence data and as a federal government shutdown looms.

President Donald Trump met key congressional Republicans and Democrats at the White House on Monday, hoping to revive stalled spending negotiations on the eve of a looming US government shutdown.

Without Congress passing a bill to fund federal operations before midnight Tuesday night, the government will partially close up shop – and plunge Washington into a new round of political crisis.

AJ Bell’s investment director, Russ Mould, said relations between the Democrats and Republicans are “frostier than an Alaska morning”, so markets are not confident about the prospects of agreeing on a deal before midnight tonight.

“One of the biggest short-term concerns for markets is the impact this would have on the release of government data – particularly the jobs numbers due on Friday – without which the Federal Reserve might not feel as confident about cutting interest rates,” he added.

Ahead of a possible shutdown, a report showed US consumer confidence slumped to its lowest level since Mr Trump’s tariffs came into effect in April, with respondents expressing growing concern about inflation.

The Conference Board’s consumer confidence index slipped 3.6 points to 94.2 in September, down from a revised 97.8 a month earlier.

There was better news on jobs, where a Bureau of Labour Statistics report showed job openings picked up slightly in August from July.

On the FTSE 100, Rolls-Royce firmed 2.3% as the Financial Times reported Boeing has had exploratory discussions with the UK aerospace firm about potentially providing an engine for a new single-aisle aircraft that would replace the US group’s best-selling 737 Max jet.

Tufan Erginbilgic, Rolls-Royce chief executive, hosted his Boeing counterpart Kelly Ortberg at the UK company’s Derby site in February, where they discussed new engine technology, according to FT sources.

But bookmaker Entain fell 3.5% after Chancellor Rachel Reeves hinted gambling taxes could be raised in the budget.

While the weak oil price weighed on BP and Shell, down 2% and 1.8% respectively, on hopes for a peace deal in the Middle East after Israel backed a US-backed Gaza peace plan.

Brent oil fell to 65.99 dollars a barrel on Tuesday from 67.81 dollars late on Monday.

On the FTSE 250, PayPoint surged 11% as it said it will pay a 50p per share special dividend after securing an investment into its Collect+ business.

Paypoint said Royal Mail owner International Distribution Services will make a £43.9 million investment in Collect+, and take 49% ownership, valuing the Collect+ business at £90 million.

Collect+ is a UK parcel service that uses a network of local shops and convenience stores for customers to pick up and drop off packages.

But Asos slid 3.9% as the online fashion retailer warned on annual sales amid a “soft consumer backdrop”, though it expects to report an improvement in profit margin.

The London-based company expects to report revenue “slightly below consensus estimates” for the financial year, which concluded around the start of this month.

The weaker-than-expected revenue is due to the firm prioritising “higher quality sales against a soft consumer backdrop”.

Gold traded at 3,836.50 dollars an ounce on Tuesday, up against 3,828.66 dollars on Monday.

The biggest risers on the FTSE 100 were Airtel Africa, up 12.4p at 244p; Reckitt Benckiser, up 212p at 5,718p; GSK, up 56.5p at 1,584.5p; Melrose Industries, up 16.2p at 608.8p; and Rentokil Initial, up 9.2p at 375.8p.

The biggest fallers on the FTSE 100 were Entain, down 32p at 873.8p; Pershing Square, down 112p at 4,614p; BP, down 8.8p at 425.7p; Antofagasta, down 56p at 2,751p; and Shell, down 49.5p at 2,646.5p.

Wednesday’s global economic calendar has a slew of manufacturing PMI readings and the ADP jobs report in the US.

Wednesday’s UK corporate calendar sees a trading statement from bakery chain Greggs and retailer Topps Tiles.

Contributed by Alliance News.