FTSE 100 at new high as gold rush boosts miners

The FTSE 100 hit new heights on Wednesday, boosted by gains in miners as the price of gold surpassed 4,000 dollars an ounce for the first time.

The FTSE 100 index closed up 65.29 points, or 0.7%, at 9,548.87, a new closing peak. It had earlier set a new intra-day best level of 9,577.08.

The FTSE 250 ended up 39.03 points, 0.2%, at 22,041.83, but the AIM All-Share closed down just 0.30 of a point at 796.07.

Gold traded at 4,044.28 dollars an ounce on Wednesday, up against 3,985.98 dollars on Tuesday, taking year-to-date gains to 54%.

It passed the 3,000 dollars milestone in March, just ahead of US President Donald Trump’s liberation day tariffs that sparked uncertainty and volatility on financial markets.

Gold has previously passed 2,000 dollars during the Covid-19 pandemic and 1,000 dollars during the global financial crisis back in March 2008.

Deutsche Bank’s Henry Allen pointed out that, as it stands, gold remains well on track for its strong annual increase since 1979, when the oil shock that year led to a huge surge in inflation.

Gold is traditionally seen as a safe port in a financial market storm.

But Russ Mould, investment director at AJ Bell noted gold’s strong performance this time around has, unusually, come at a time of strong market performance.

“Traditionally, investors would load up on the shiny stuff when markets look gloomy, not when they’re motoring ahead. It shows that investors are hedging their bets,” he said.

On the FTSE 100, gold miners Endeavour Mining and Fresnillo rose 2.7% and 3.0% respectively.

Another miner in the green was Anglo American which climbed 3.2% as Berenberg upgraded to ‘buy’ from ‘hold’, believing its deal with Teck Resources “will result in Anglo American shares continuing to outperform”.

Lloyds Banking Group climbed 3.7%, after the Financial Conduct Authority said the cost from car finance mis-selling would be at the lower end of its prior expectations.

The UK’s finance regulator said car finance mis-selling will cost providers around GBP8.2 billion, with an additional GBP2.8 billion of administrative costs, taking the total to GBP11 billion.

The UK’s financial regulator had previously estimated that the total cost of compensation could range from £9 billion to £18 billion.

Davy Research said the FCA review should be “well received as it further narrows the potential outcomes to the lower end of its initial range”, although it stressed “uncertainty remains”.

Other car finance providers were mixed. Close Brothers rose 5.4% and S&U PLC firmed 2.4% but Vanquis Banking fell 2.0%.

On the FTSE 250, Unite Group fell 10% after reporting beds sold for the 2025 to 2026 academic year fell to 95.2% from 97.5% the year prior, below its expectations.

Rental growth from the sales to date amounted to 4.0%, down from 8.2% a year ago.

Nonetheless, the company reiterated financial 2025 guidance for adjusted earnings per share of 47.5 pence to 48.25p, compared with 46.6p in 2024.

“We have sold 95% of beds and delivered rental growth of 4.0%. While this is slightly below our target, we saw a strong clearing period which has contributed to our outperformance of the wider (purpose-built student accommodation) sector,” said Joe Lister, Unite Students chief executive officer.

Tim Leckie, analyst at Panmure Liberum, said: “Citing outperformance versus the wider PBSA sector feels like a story we’ve heard before and investors may worry about buying the best house on the worst street.”

In economic news, the Office for National Statistics revised down UK government borrowing figures for the current fiscal year by £2 billion following an error in the tax receipts used to calculate the data.

The ONS said that HM Revenue & Customs had alerted it to inaccuracies in value-added tax receipts, the statistics agency relied on for its estimates for government borrowing published on September 19.

As a result of the errors, which cover the period from January to August this year, the ONS cut its estimate for government borrowing for the current fiscal year, which began in April, by £2 billion. It also reduced the borrowing figure for the previous fiscal year by £1 billion.

Correcting for the errors, the ONS said borrowing for the fiscal year to August was £81.8 billion, down from the £83.8 billion initially reported in its September 19 release.

The total is still above the £72.4 billion forecast for the period by the Office for Budget Responsibility, the UK’s official fiscal watchdog.

The pound was quoted lower at 1.3406 dollars at the time of the London equity market close on Wednesday, compared with 1.3440 dollars on Tuesday. The euro stood at 1.1615 dollars compared with 1.1672 dollars. Against the yen, the dollar was trading at 152.68 yen, higher compared with 151.02 yen.

In European equities on Wednesday, the CAC 40 in Paris leapt 1.2% and the DAX 40 in Frankfurt ended up 1.0%.

Stocks in New York were higher at the time of the London close. The Dow Jones Industrial Average was up 0.3%, the S&P 500 index was 0.5% higher and the Nasdaq Composite advanced 0.7%.

The yield on the US 10-year Treasury was quoted at 4.12%, narrowed from 4.13% on Tuesday. The yield on the US 30-year Treasury stood at 4.71%, trimmed from 4.73%.

Technology stocks climbed once on Wall Street shrugging off fears about AI profitability and concerns of a market bubble.

The Bank of England’s Financial Policy Committee thinks the risk of a “sharp correction” in the financial markets has increased.

The minutes of the FPC’s latest meeting read: “On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on artificial intelligence.”

But Peter Oppenheimer at Goldman Sachs said while there are elements of investor behaviour and market pricing currently that rhyme with previous bubbles, there are key differences this time around.

“First, the appreciation of the technology sector has, so far, been driven by fundamental growth rather irrational speculation about future growth.

“Second, the leading companies that have seen the strongest returns have unusually strong balance sheets.

“Third, the AI space has, so far, been dominated by a few incumbents; most bubbles form in a period of huge competition as both investors and new entrants flock into the space.”

Brent oil traded at 66.40 dollars a barrel on Wednesday, up from 65.28 dollars late on Tuesday.

The biggest risers on the FTSE 100 were Antofagasta, up 113.0 pence at 2,793.0p, Lloyds Banking Group, up 3.08p at 86.38p, Anglo American, up 91.0p at 2,900.0p, Haleon, up 10.5p at 340.8p and Fresnillo, up 68.0p at 2,368.0p.

The biggest fallers on the FTSE 100 were ICG, down 96.0p at 2,176.0p, Segro, down 20.6p at 647.2p, Spirax, down 160.0p at 6,960.0p, Croda, down 49.0p at 2,823.0p and LondonMetric, down 2.5p at 180.6p.

Thursday’s global economic calendar sees German trade data and the Bundesbank’s monthly report.

Thursday’s UK corporate calendar has half year results from specialist finance provider S&U and a trading statement from Upper Crust owner SSP.

Contributed by Alliance News