The FTSE 100 closed higher at the end of the week as flash data showed that the UK private services sector improved in August; meanwhile Wall Street stocks opened higher as US business activity performed better than anticipated in August.
The FTSE 100 index closed up 68.40 points, 0.6%, at 10,816.56. The FTSE 250 ended up 210.16 points, 0.9%, at 24,718.82, and the AIM All-Share closed up 7.87 points, 1.0%, at 811.96.
For the week, the FTSE 100 was up 0.6%, the FTSE 250 was down 0.6%, and the AIM All-Share was up 1.1%.
The Cboe UK 100 was up 0.5% at 1,074.93, the Cboe UK 250 was up 0.6% at 21,483.17, and the Cboe Small Companies gained 0.6% at 19,056.96.
In the UK, figures showed the private sector grew at a slightly faster pace in August, as the services economy shone.
The S&P Global flash composite purchasing managers’ index rose to 52.5 points in August, a four-month high, from July’s final tally of 52.2, beating FXStreet cited consensus of 51.6 points.
The composite PMI is calculated using the service and manufacturing sector data.
The services PMI rose to 52.8 according to the August flash, a six-month high, from 52.1 in July. The manufacturing PMI, however, eased to a five-month low of 51.5 from 51.9.
JPMorgan analyst Allan Monks said the report “sends another positive message on growth” and “points to modest upside risks to our [third quarter] growth forecast.”
However, other data was not quite as positive, with retail sales weaker than expected last month, and public sector borrowing higher than forecast.
The Office for National Statistics said UK retail sales volumes increased 1.6% on-year in July, slowing from a 3.8% improvement in June. The latest reading was shy of the FXStreet cited consensus, which had forecast a 2.2% increase.
On-month, retail sales fell 0.5% in July, in line with expectations, after a 0.7% rise in June from May. June’s reading was downwardly revised from a 1.0% rise.
Separate ONS figures showed government borrowing rose in July, “as spending growth outpaced receipts despite strong self-assessed income tax revenue”.
Public sector net borrowing totalled £1.80 billion last month, rising from £1.07 billion a year prior. It faded from £12.78 billion in June. Borrowing in July is typically lower than other months due to the timing of additional receipts from self-assessed income tax.
Nonetheless, the latest reading was above the FXStreet cited forecast which had predicted an on-year fall in borrowing to around £300 million.
The pound traded at USD1.3625 on Friday afternoon, down from USD1.3634 at the equities close on Thursday. Against the euro, sterling eased to EUR1.1672 from EUR1.1676.
On Wall Street, stocks opened higher after a report showed US business activity performed better than anticipated in August, boosted by the service sector.
The headline S&P Global flash US composite purchasing managers’ output index improved to 56.0 points in August, a 52-month-high, from 54.5 points in July.
S&P Global noted: “Jobs were added at the fastest rate since the start of last year as increasingly confident companies took on more staff to meet higher demand. Business growth expectations struck a nine-month high. Price pressures meanwhile moderated.”
The Dow Jones Industrial Average was up 0.7%, the S&P 500 index was 0.4% higher, while the Nasdaq Composite rose 0.3%.
In Europe equities on Friday, the CAC 40 in Paris closed up 0.4%, while the DAX 40 in Frankfurt advanced 0.6%.
Private sector activity also picked up in the eurozone in August. The flash S&P Global eurozone PMI composite output index registered 52.1 points in August, edging up from 52.0 points in July with the services and manufacturing PMI readings ahead of consensus.
The euro stood lower at USD1.1673 against USD1.1678. Against the yen, the dollar was higher at JPY159.03, compared to JPY158.87.
Elsewhere, bond yields remained elevated as enthusiasm for the US Treasury’s intervention faded.
The yield on the US 10-year Treasury widened to 4.74% on Friday from 4.70% at the time of the London equity close on Thursday. The yield on the US 30-year Treasury stretched to 5.27% from 5.26%.
Dan Coatsworth, head of markets at AJ Bell, said the relief offered by the intervention earlier in the week has proved “short-lived”.
“Underlying factors, like the sheer scale of US government borrowings, having crossed the USD40 trillion threshold, the size of deficits across the West, and the ongoing push higher in oil prices, mean yields have ticked up once more,” he added.
On the FTSE 100, rising metal prices boosted miners with Antofagasta, Endeavour Mining and Anglo American, up 5.4%, 4.1% and 2.6% respectively.
Gold traded at USD4,605.34 an ounce on Friday, up from USD4,518.45 on Thursday. The price of silver rose 2.1% and copper climbed 1.6%.
Goldman Sachs analyst Lina Thomas said renewed elevated call option demand raises volatility and upside price risk.
Thomas explained that gold call option demand has risen sharply amid renewed demand for global macro-policy hedges, creating a mechanical price amplifier to both the upside and downside.
“As gold prices approach key strike levels, dealers that have sold these calls may be forced to buy gold to hedge their exposure, accelerating the rally. Conversely, any pullback in the gold price can prompt dealers to unwind those hedges, adding selling pressure and amplifying the price downside,” Thomas added.
“We therefore continue to see significant upside risk to our USD4,900/oz end-2026 gold forecast, but also greater two-sided volatility to the gold rally,” the Goldman analyst added.
Brent oil for October delivery traded at USD94.08 a barrel on Friday, up from USD93.53 late Thursday.
Back on the FTSE 100, JD Sports Fashion rebounded 5.6% after Thursday’s slump when the sports retailer cut profit guidance.
Analysts at Berenberg said they remain “constructive on JD’s recovery prospects should consumer and product cycles turn back in the company’s favour.” The broker also noted JD’s continuing low valuation.
On the FTSE 250, Gamma Communications rose 12% after it named Waterland Private Equity Investments and Giacom Group as potential suitors.
Waterland is a Bussum, Netherlands-based private equity firm and is acting in concert with London-based telecommunications service provider Giacom, which Gamma had previously disclosed as interested in buying parts of the company.
Domino’s Pizza climbed 5.2% as Shore Capital upgraded to ‘buy’ from ‘hold’.
“We now see a more attractive risk-reward, supported by a cleaner strategy, early evidence of operational delivery and a cash profile that should support investment and deleveraging,” said analyst Katie Cousins.
But Hunting plunged 14% as it reported a decline in half-year revenue and cut its 2026 guidance, as the Middle East conflict “caused some delays to tendering”.
As a result of the delay, the London-based supplier of equipment to the oil and gas industry cut its 2026 Ebitda guidance to USD138.0 million to USD141.0 million from USD145.0 million to USD155.0 million.
The biggest risers on the FTSE 100 were JD Sports Fashion, up 4.46p at 84.54p, Antofagasta, up 199.00p at 3,905.00p, Endeavour Mining, up 184.00p at 4,680.00p, Autotrader, up 19.40p at 546.80p and 3i, up 98.00p at 2,891.00p.
The biggest fallers on the FTSE 100 were National Grid, down 15.50p at 1,171.00p, Melrose Industries, down 6.00p at 470.30p, Babcock International, down 13.50p at 1,104.50p, BAE Systems, down 19.00p at 2,126.00p and Shell, down 30.50p at 3,409.50p.
Monday’s global economic calendar has the Chicago Fed national activity index. Later in the week, US personal consumption expenditures inflation data will be released while Federal Reserve Chair Kevin Warsh is scheduled to speak at the Jackson Hole symposium on Friday.
There are no significant events scheduled in Monday’s UK corporate calendar. Later in the week Asia-focused insurer Prudential reports half-year results.
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