London's refuge week: the FTSE 100's highest close since August

The FTSE 100 closed on Thursday at 10,840.35, up 115.49 points or 1.08% on the day and its highest close since 26 August. It reached that mark in a week when Japan's Nikkei 225 shed 4.9% in a single session, South Korea's Kospi fell 6.12% and tripped a rare program-trading halt, and Wall Street's chipmakers were sold for the best part of five consecutive sessions. London did not so much escape that turmoil as sit outside it.

That was the week's defining feature. Our Monday note opened on a cheerful, entirely different premise — oil easing towards $103 a barrel on hopes of a Russia–Ukraine energy-infrastructure ceasefire, the FTSE 100 adding 0.4–0.5% in early trade near 10,730, and a thin UK corporate diary with only Hays due to report. By Tuesday the subject had changed completely, and it never changed back. What carried London through was not optimism but composition: a blue-chip index weighted towards pharmaceuticals, tobacco and consumer staples has very little to lose when the AI trade is being repriced.

The sentiment we logged across the five sessions tells the story in five words: risk-on, cautious, cautious, risk-off, mixed. The most instructive entry is Thursday's. We marked that morning risk-off — and Thursday turned out to be the best session of the week.

How the week unfolded

Two scheduled catalysts framed everything, and we flagged both days in advance.

The first was US September inflation, which our Tuesday note named as "the next major data point" and the reading that would "shape Federal Reserve expectations and, by extension, risk appetite into the rest of the week." It landed on Wednesday, and it landed hot. Headline CPI rose 3.7% year-on-year against the 3.6% economists expected, and 0.6% on the month, with petrol up 9.1% and accounting for roughly half the headline gain. Core CPI came in at 2.6% annually, up from 2.4% in August and above the 2.5% forecast. The read-across was immediate: the Nasdaq Composite fell 1.88% to 26,692.87 on Wednesday, and Asia amplified it overnight into Thursday, with the Nikkei down about 5% and the Kospi down as much as 7%.

The second was the Office for National Statistics' August GDP estimate, which our Monday note put in the diary for Thursday at 7am as "the next update on the economy's growth trend." It beat, and by more than the headline suggests. Monthly GDP grew 0.1% in August against a Reuters consensus looking for a 0.1% contraction, while the annual rate came in at 2.1% versus 1.7% expected — the strongest year-on-year reading since August 2022. Three-month growth to August was 0.7%. The detail was less flattering than the headline, with consumer-facing services falling and construction output down 1.0% on a three-month basis, but the number was enough.

Thursday is where those two forces met, and where our 08:30 note was overtaken by its own session. Writing into the Asian rout, we recorded the FTSE 100 down 0.1% at 10,710.77 in early trade, with the FTSE 250 off a sharper 0.6% at 24,184.96 and miners being dumped. By the close, better-than-expected GDP and softer gilt yields had turned a 0.1% loss into a 1.08% gain and the highest close in seven weeks. The FTSE 250 recovered too, ending the session around 24,425. It is a useful reminder of what a day-ahead note is and is not: we had the direction of the global risk event right and the direction of the London session wrong, because the domestic data we had flagged four days earlier arrived to overrule it.

Friday closed the week quietly and slightly lower, with Middle East tension keeping oil above $105 a barrel and no significant UK trading updates in the diary. Even after giving a little back, London was heading for a weekly advance of roughly 2.7%. One thing our notes did not have to resolve: there was no Bank of England decision this week. The Monetary Policy Committee held Bank Rate at 3.75% on 17 September in a split 6–3 vote, with three members pushing for 4%, and does not meet again until 5 November.

The names that moved it

The miners took the week's pain and did most of the index's work in both directions. We named Rio Tinto on consecutive days, and the sequence is instructive. On Wednesday its third-quarter production update was the single biggest scheduled event in London's diary, and it was solid: consolidated copper output of 205,000 tonnes, flat year-on-year and down 4% on the second quarter, taking nine-month production to 646,000 tonnes, with full-year guidance of 800,000–870,000 tonnes held. Oyu Tolgoi in Mongolia lifted copper output 29% year-to-date. Pilbara iron ore shipments rose 2% to 85.7 million tonnes. Lithium climbed 33% year-to-date to 40,300 tonnes of lithium carbonate equivalent.

None of that stopped the shares falling 4.2% the next morning. Rio was sold on Thursday alongside Antofagasta, down 6.5%, and Anglo American, down 4%, on the straightforward worry that higher-for-longer US rates slow global growth and with it demand for copper and iron ore. The numbers were fine; the macro was not, and the macro won.

The week's clearest corporate winner was Whitbread, whose half-year results on Tuesday took the shares to a seven-month high and kept them near it all week. Revenue rose 2% to £1.57 billion and adjusted pre-tax profit of £287 million, though down 9% year-on-year, came in ahead of the roughly £276 million analysts had pencilled in. The statutory figure was uglier — pre-tax profit down 62% to £109 million, on around £178 million of adjusting items tied mainly to impairments and the Accelerating Growth Plan — and the interim dividend was held at 36.4p. Shareholders also had an activist board proposal to vote on the same day.

Beyond that, the domestic reporters we flagged gave a mixed read on the UK consumer and corporate mood rather than a clean one. Bellway and YouGov both delivered full-year results on Tuesday, Bellway having already pointed to completions up around 10.8% to 9,695 homes and year-end net cash of £157.7 million funding a £150 million buyback, while flagging softer demand since April on mortgage rates. Softcat's full-year figures and Vertu Motors' half-year numbers followed on Wednesday, with Imperial Brands, Ashmore, Brooks Macdonald and Robert Walters reporting alongside. Thursday added Antofagasta's trading statement plus Dunelm, Jupiter Fund Management and Kenmare Resources. For oil-exposed blue chips, Shell and BP, the swing factor stayed where it has been for weeks: a Strait of Hormuz still running around 30% below pre-war tanker traffic, and stalled talks between Washington and Tehran.

What to watch next week

ITM Power publishes full-year results on Monday 19 October, the first scheduled UK corporate update after an unusually quiet Friday diary. UK labour market and inflation data are both due during the week, and after an August GDP print that beat on both the monthly and annual measures, they are the next test of whether the domestic picture is genuinely firming or merely less bad than feared.

Further out, the Bank of England's Monetary Policy Committee meets on 5 November, its first decision since September's 6–3 hold at 3.75%. The ONS publishes its next monthly GDP estimate on 12 November. Full company reporting dates are on our screener.