"The FTSE 100 soared 1% to fresh all-time highs on Tuesday morning, almost touching 9,900 as global equity markets enjoy a relief rally on hopes the protracted US government shutdown would end soon, whilst a bounce in AI stocks lifted sentiment across the board. The blue chip index had rallied yesterday to hit 9,800 for the first time, as a broad risk-on tone took hold over following the Senate vote on Sunday, while there are some FTSE-specific factors at work too."
"Some soft UK employment data pushed sterling lower to give the blue chips another leg of support. Unemployment rose by more than expected to 5%, while payrolls continue to shrink and wage growth cooled. It's a sign that employers are suffering some pre-Budget worries about both employment costs and output demand. The Budget - particularly the delay to its announcement and the rampant speculation about what it will contain - is already having a chilling effect on the economy."
"The employment data confirms me in my view that the Bank of England should have cut already and, given the Budget about to be, we should see it go much deeper than the market has priced - 3% by next summer is the top of my expectations...2.5% could be a reality if the economy is tipped into a serious recession by the Budget."
FTSE 100 rose about 1% to record highs near 9,900 as global markets rallied on hopes the US government shutdown would end and AI stocks recovered. Vodafone led gains after interims promising a return to a progressive dividend and service revenue growth in Germany. Housebuilders rose on rate-cut bets and utilities benefited from falling gilt yields after soft UK labour data. UK unemployment unexpectedly rose to 5%, payrolls shrank and wage growth cooled, weakening sterling and supporting large-cap exporters. Budget delays and speculation are weighing on demand. Expectations for Bank of England rate cuts have risen, potentially sharply.
Read at London Business News | Londonlovesbusiness.com
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