FTSE 100 down as interest rate call set to be closer than previously thought

Stock prices in London closed mostly lower on Friday, after positive news for European trade with China and hawkish comments by a US Federal Reserve officer.

In the UK, softer inflation data means the Bank of England’s interest rate call on Thursday next week is more finely balanced than previously thought.

A hold is broadly expected but the vote is expected to be close, and a quarter-point cut is far from ruled out.

With “dovish” Monetary Policy Committee members Swati Dhingra and Alan Taylor expected to vote for a cut, the outcome will likely depend on the decisions of governor Andrew Bailey, deputy governor Sarah Breedon and Dave Ramsden.

The Bank’s dilemma follows a downside surprise in September inflation data, cooling pay growth, a weakening labour market and lacklustre economic growth.

In addition, reports suggest Chancellor Rachel Reeves may opt to remove VAT on electricity bills in November’s budget, adding to downward pressure on inflation.

The FTSE 100 index closed down 42.81 points, 0.4%, at 9,717.25. The FTSE 250 ended down 105.31 points, 0.5%, at 22,170.97, and the AIM All-Share closed up 2.58 points, 0.3%, at 772.38.

On the FTSE 250, Raspberry Pi ended up 0.4% after announcing that chief financial officer Richard Boult will step down from his role in the second half of 2026 to “explore new challenges”, with a formal search for his successor now under way.

The maker of personal-use computers and modules said Mr Boult will assist in the recruitment process to ensure an orderly succession.

Among smaller caps, Coral Products climbed 14% after posting a swing to an annual profit.

The maker of bespoke plastic products said it swung to a pre-tax profit of £216,000 in the financial year ended April 30, from a loss of £1.2 million a year prior. Revenue fell 3.7% to £29.8 million from £31.0 million.

Chairman Joe Grimmond said after a “disappointing” first half the company “took decisive action by appointing a largely new executive team with a clear focus on strengthening our operational fundamentals”.

Crimson Tide gained 12%, with the software developer saying it continues to see evidence of the impact of its new strategy, which is designed to result in sustainable growth.

At the annual general meeting, chairman Chris Fielding said Crimson Tide’s performance “remains in line with the board’s expectations of re-establishing the foundations for growth in future years”.

Cash on October 29 amounted to £1.3 million, which the firm expects to largely maintain for the rest of the financial year.

Versarien lost 28% after the materials group said it has signed a non-binding heads of terms with an unnamed UK PLC regarding the disposal of its remaining assets.

The consideration for the assets would be £100,000 in cash and around £100,000 in shares in the potential acquirer.

Versarien said both parties have entered into a period of exclusivity until the end of November.

In European equities on Friday, the CAC 40 in Paris closed down 0.5% while the DAX 40 in Frankfurt ended down 0.8%.

The EU commissioner for trade has said China’s one-year suspension on its restrictions on rare earth materials would apply to the bloc as well as the US.

“My understanding is that the agreement, which was found between the US and China in this matter, is ‘erga omnes’, so we should apply it to all and, of course, including the EU,” Maros Sefcovic told reporters in Rome.

Following discussions with the US, China on Thursday said it would suspend certain export restrictions for one year, including on rare earth materials, that had been announced in October.

The pound was quoted at 1.3135 US dollars at the time of the London equities close on Friday, lower compared to 1.3149 dollars on Thursday. The euro stood at 1.1536 dollars, down against 1.1565 dollars. Against the Japanese yen, the dollar was trading lower at 154.06 yen, compared to 154.11 yen.

Stocks in New York were higher at around the time of the London close. The Dow Jones Industrial Average was up 20.15 points, the S&P 500 index up 0.3% and the Nasdaq Composite up 0.7%.

Kansas City Fed president Jeff Schmid was one of two people who dissented at the US Fed’s vote on Wednesday, at which the US central bank backed a quarter percentage-point cut to bring interest rates to between 3.75% and 4.00%. The other dissenter was governor Stephen Miran, who wanted a larger cut.

Mr Schmid said in a statement: “The labour market is largely in balance, the economy shows continued momentum and inflation remains too high.

“I view the stance of policy as only modestly restrictive. In this context, I judged it appropriate to maintain the policy rate at this week’s meeting.”

In other US news, G7 countries will have to use “non-market” tactics to curb China’s dominance in rare earth production, US Energy Secretary Chris Wright said, calling the effort a “strategic necessity”.

“China, frankly, just used non-market practices to squish the rest of the world out of manufacturing those products, so it got strategic leverage. Everybody sees that now,” he told reporters.

“We need to establish our own ability to mine, process, refine and create the products that come out of rare earth elements. We’re going to have to intervene and use some non-market forces.”

The yield on the US 10-year Treasury was quoted unchanged at 4.09%. The yield on the US 30-year Treasury was quoted at 4.66%, widening from 4.64%.

Brent oil was quoted lower at 64.45 dollars a barrel at the time of the London equities close on Friday, from 64.92 dollars late on Thursday.

Gold was quoted lower at 3,982.25 dollars an ounce against 3,998.00 dollars.

The biggest risers on the FTSE 100 were Smith & Nephew, up 38.0p at 1,405.0p, Metlen Energy & Metals, up 0.9p at 44.1p, BT, up 2.3p at 185.7p, Babcock International, up 13.0p at 1,213.0p, and Haleon, up 3.3p at 354.1p.

The biggest fallers on the FTSE 100 were WPP, down 15.0p at 287.5p, Auto Trader, down 28.4p at 780.4p, Burberry, down 42.5p at 1,237.5p, Beazley, down 22.1p at 924.8p, and Intercontinental Hotels, down 216.0p at 9,192.0p.

On Monday’s economic calendar, there are manufacturing purchasing managers’ index reports from the eurozone, the US, the UK and others.

On Monday’s UK corporate calendar, Ryanair releases its half-year results.

– Contributed by Alliance News