Gilts and oil ran London's week: the FTSE 100 added 64 points

The FTSE 100 closed the week at 10,723, up 63.9 points, or 0.6%, on the previous Friday's 10,659.13. Almost none of that came from what London's own companies reported. The index made its entire weekly gain on Monday, handed most of it back across three consecutive lower closes, and only recovered it on Friday as mining shares rallied. The round trip left the blue-chip index roughly where it started, while the two things actually setting its price — the gilt market and the crude oil price — moved hard in both directions.

Those two forces were the week. Public sector borrowing hit £18.3bn in August, the highest for that month outside the pandemic and £3.5bn above the Office for Budget Responsibility's forecast, and 30-year gilt yields spent the week parked close to their highest levels since 1998 as investors reassessed how much room Chancellor John Healey will have at the 28 October Budget. Brent crude fell from around $104.82 to near $98 on hopes of a US-Iran de-escalation, then climbed back above $105 after Saudi Arabia intercepted fresh Houthi missile attacks near Mecca.

Our own day-ahead notes tracked the shift as it happened. The sentiment we logged across the five sessions ran Cautious, Risk-on, Mixed, Cautious, Cautious — and the single Risk-on reading, on Tuesday, was imported almost entirely from Wall Street's record close the night before. It did not survive contact with the UK's public finances.

How the week unfolded

Monday opened with London trying to recover a 1.4% Friday slide that banks had led, and it managed it. The FTSE 100 added 80 points to close at 10,739.01, its high for the week, helped by an Asian rally on hopes for the coming Trump-Xi summit and by easing oil. We flagged that morning that London's own diary was thin and that Wednesday's flash PMIs were the next real macro test.

That framing held, but the first test arrived earlier than the PMIs. Tuesday's borrowing figures landed before the open and capped the rally on the spot: the index slipped 30.68 points, or 0.29%, to 10,708.33, even as the FTSE 250 edged 0.14% higher. Our Tuesday note put the number at £18.3bn and called out what it did to the Budget arithmetic. That pressure never lifted.

Wednesday brought the catalyst we had pointed to on Monday, and it missed. The flash UK composite PMI came in at 51.7, down from 52.5 in August and below the 52.0 economists had expected, with manufacturing the better half at 52.0. Still above the 50 line, so still expansion — but a slower one than our note's framing of a fragile recovery holding up had allowed for, and slower than the 0.4% third-quarter growth Bank of England staff have pencilled in. The index finished all but unchanged at 10,705.26.

Thursday was London's low point and the week's biggest headline elsewhere. The FTSE 100 slipped 0.24% to 10,679.99 as the 10-year US Treasury yield pushed above 5% for the first time since 2007 and 30-year gilt yields sat near 5.89%, within touching distance of the multi-decade highs set earlier in September. In Washington, Donald Trump hosted Xi Jinping for China's first US state visit in eleven years — the summit we had been flagging since Monday — and the two extended their tariff truce by two months, to 10 January 2027. Wall Street fell anyway, the S&P 500 losing 0.76% to 7,706.03. The trade thaw we had treated as a potential risk-on trigger was simply overrun by the bond market.

Friday reversed the oil trade a second time. Crude held above $105 after the attacks near Mecca, and London closed 0.4% higher at 10,723 with miners leading: Glencore up 1.9%, Anglo American up 1.6%, precious metals miners up 2.5% as a group. The FTSE 250 recovered 0.4% to 24,251.19 after a 0.9% Thursday fall, leaving mid-caps the weaker half of the market over the five sessions. One genuine domestic bright spot had landed on Thursday, when GfK consumer confidence improved to -13 in September, its best reading since August 2024 and ahead of the -16 forecast. Sterling, which our Monday note had at around $1.34, drifted to about $1.32 by Friday as Treasury yields outpaced gilts.

The names that moved it

Smiths Group was the week's clearest winner. Full-year results on Tuesday sent the shares up as much as 6%, on organic revenue growth of 1.2% to £1,937m and headline operating profit up 1.9% to £399m at a 20.6% margin, with headline earnings per share 12% higher at 135.7p. The board lifted the full-year dividend 5.4% to 48.5p and confirmed a further £1.5bn of buybacks tied to the Smiths Detection disposal still to execute, on top of the £500m and £1bn programmes already completed.

Shell and BP were the week's two-way trade, and they were on both sides of it. UK energy shares fell 1.4% as a group on Tuesday, with Shell off 0.8% and BP off 2.2%, and both opened lower again on Wednesday as Brent slid towards $98. By Thursday and Friday, with crude back above $100 and then $105, the same two names were cushioning the index against rising gilt yields. If you want the single stock that explains how London's week felt from day to day, it is Shell.

JD Sports delivered the results we had flagged on Monday, and the outcome was more nuanced than the share price suggested. Adjusted pre-tax profit of £282m was down 19.7% year on year but edged past the £279m consensus, and organic sales fell only 0.7% to £5,899m. Operating profit dropped 20.5% to £294m as promotional conditions and a weak footwear launch cycle bit, with North America the principal drag and Asia Pacific the only strong offset. Crucially, the retailer held the £700-800m full-year profit guidance it had already cut by £50m in August. The shares still lagged on Wednesday — a reminder that in a week driven by yields, a modest beat on lowered expectations buys very little. The JD Sports page carries the detail.

Two more of the names we flagged resolved quietly. TUI, which we had noted on Monday was due to update on Tuesday, narrowed its FY26 underlying EBIT guidance to €1.2-1.3bn from a €1.1-1.4bn range, with summer booked revenue 5% behind last year, the UK market 7% behind, and early winter 2026/27 bookings down 7% across the group and 9% in the UK. Rentokil Initial agreed to sell its US SOLitude Lake Management and Vertex Aquatic Solutions arms to Bain Capital for $230m, a business that turned over $112m last year. And Craneware, the story that opened our Monday note, reported FY26 revenue roughly flat at $206m with statutory pre-tax profit up 7% to $25.8m, while trimming its FY27 outlook to match existing annual recurring revenue of about $185m after a post-year-end cyber incident.

What to watch next week

London's domestic diary is thin in the coming week, as our Friday note observed — the dated items that matter to the story above sit further out. The fixed point is the 28 October Budget, Chancellor Healey's first, which is where the borrowing figures and the gilt curve converge. The extended US-China tariff truce now runs to 10 January 2027, removing a near-term cliff edge rather than resolving anything.

Beyond that, the week's pattern suggests where to look rather than what to expect: US data and Treasury auctions moved London's rate-sensitive stocks more than any UK release did, and the oil price reacted to Gulf headlines within hours. Our daily notes resume at 08:30 on Monday, and the screener carries the full FTSE 350 picture in the meantime.