FTSE 100 FINISH LINE 9/1/26
London's stock market saw a modest uptick on Friday, bouncing back after two days of losses, as Glencore sparked investor interest with early discussions of a potential merger with Rio Tinto. If realised, this merger could create the world's largest mining powerhouse. Glencore's shares surged 10%, reaching their highest level since July 2024, while Rio Tinto's stock dipped by 2.2%. The FTSE 100, representing the UK's top blue-chip companies, rose by 0.4%, setting the stage for a second consecutive weekly gain. Meanwhile, the mid-cap index, focused on domestic companies, climbed 0.2%, hovering near a four-year high and heading for its fourth straight week of gains.
Energy stocks provided additional momentum as oil prices climbed for the second day in a row, gaining over 1%. Industry giants like BP and Shell both saw their shares rise by approximately 2.2%. Elsewhere, Anglo American's shares jumped 2.7% following news that the European Commission is moving toward granting antitrust clearance for the miner's deal with Canada's Teck Resources. Meanwhile, Sainsbury's, the UK’s second-largest supermarket chain, reported increased underlying sales during the crucial Christmas period. However, its shares declined by 5.3%, as weakness in general merchandise sales offset the gains in other areas.
The year 2025 began tumultuously for British government bonds (gilts), marked by a significant sell-off. However, UBS's recent analysis signals a brighter outlook. They argue gilts are undervalued due to reduced supply, easing inflation, a soft labour market, subdued volatility, weak sterling, a steep yield curve, and a stable political environment. UBS forecasts a 4.4% yield for 30-year gilts, a 75-basis-point drop from the current 5.15%, and expects more Bank of England rate cuts than anticipated. Currently, 10-year gilt yields stand at 4.41%, with the potential to dip below October’s 4.37%. Domestic investors, including funds and insurers, are driving demand, but policymakers hope for increased foreign interest. UBS notes parallels to Italy’s 2025 bond success, suggesting international confidence could boost gilts similarly. For investors, gilts present a promising opportunity amid Britain’s shifting economic narrative.
In other news, British lawmakers proposed granting the Bank of England authority to gather private credit data if its current stress testing fails to uncover risks in the rapidly growing credit market. The results of these tests are expected in 2027.
Coming up next week in the UK, all eyes will be on the November GDP data (Thursday), which could lead to a downward revision of Q4 growth expectations—currently projected at 0.2% quarter-on-quarter in the Bloomberg survey median—especially after October's contraction (see chart). Also on Thursday, the Bank of England's credit conditions survey is set for release. Meanwhile, speeches from MPC members Taylor and Ramsden on Wednesday are likely to draw attention.
TECHNICAL & TRADE VIEW - FTSE100
Daily VWAP Bullish
Weekly VWAP Bullish
Above 10050 Target 10250
Below 9930 Target 9800
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!