16th Oct 2026 17:02
(Alliance News) - The FTSE 100 made further strong gains on Friday as Bank of England Governor Andrew Bailey played down inflation fears, although banks missed out amid fears of a tax hit.
In London, the FTSE 100 index ended up 41.55 points, 0.4%, at 10,881.90. The FTSE 250 climbed 109.13 points, 0.5%, to 24,533.90, and the AIM all-share rose 8.03 points, 1.1%, to 773.12.
For the week, the FTSE 100 rose 3.1%, the FTSE 250 was up 1.3%, and the AIM all-share was down 0.4%.
The Cboe UK 100 ended up 0.4% at 1,080.05, the Cboe UK 250 closed 0.8% higher at 21,587.30, and the Cboe small companies rose 0.5% to 18,908.93.
Speaking at the International Monetary Fund's annual meeting in Bangkok, Bank of England Governor Andrew Bailey said that evidence of second-round inflation effects was limited.
"To the extent we have seen evidence, it's quite subdued", Bailey said, adding: "It's too early".
Bailey also said that BoE policy was already restrictive and that ahead of the Middle East conflict, "the market was pricing a couple of cuts, and I thought that was probably pretty reasonable". He added that the UK economy was "more resilient than we expected it to be".
Bailey's comments followed remarks by BoE Chief Economist Huw Pill earlier this week, who said that the four interest rate hikes priced into money markets look overdone.
Also speaking at the IMF meeting, Federal Reserve Chair Kevin Warsh was less forthcoming on his views ahead of the Federal Reserve meeting at the end of the month.
"I don't prejudge meetings," Warsh said during a fireside chat with IMF Managing Director Kristalina Georgieva. "I don't believe in saying now what I might do at the meetings that we have in the balance of the year."
UBS notes Warsh has been "loath" to offer explicit forward guidance, even refraining from offering his own forecasts for the summary of economic projections.
In European equity markets on Friday, the CAC 40 in Paris ended up 0.3%, while the DAX 40 in Frankfurt added 1.0%.
In New York, markets were mixed. The Dow Jones Industrial Average was up 0.2% at the time of the closing bell in London on Tuesday. The S&P 500 was 0.4% lower, and the Nasdaq Composite fell 1.2%.
Barclays strategist Emmanuel Cau suggested the "best of the AI trade may be over, yet we wouldn't throw the baby out with the bathwater. BigTech earnings will be key."
With regard to AI, Cau said that "the maturing phase of the cycle means it is no longer a one-way trade, which comes with lower valuation and more dispersion."
Meta Platforms and Tesla kick off the technology reporting season next week, with IBM and Texas Instruments also on the calendar.
Tesla fell 1.0% after Thursday's launch of its new Roadster sports car at an event at a SpaceX test facility in Texas.
The long-awaited second-generation Roadster combines conventional automotive engineering with rocket propulsion technology. Production is targeted for 2028, compared with the original 2020 delivery target announced when the vehicle was first unveiled in 2017.
In economic data, figures released by the Federal Reserve Friday showed US industrial production growth outperformed in September.
On a monthly basis, industrial production climbed 0.7% in September, up sharply from just 0.1% in August, which was revised up from a flat figure. The September reading beat the FXStreet-cited forecast of a 0.4% rise.
On an annual basis, total production was 2.2% higher in September.
The pound was quoted at USD1.3339, up from USD1.3254. Against the euro, sterling firmed to EUR1.1860 from EUR1.1828.
The euro climbed to USD1.1248 from USD1.1204. Against the yen, the dollar was trading at JPY157.88, down from JPY158.16.
The yield on the US 10-year Treasury was quoted at 5.08% on Friday, narrowed from 5.10% at the same time on Thursday. The yield on the US 30-year Treasury was quoted at 5.42%, unchanged from Thursday.
On the FTSE 100, defence manufacturer Babcock International, advertising firm WPP and engineer Weir were prominent risers, up 3.6%, 3.1% and 2.6% respectively.
But banks bucked the stronger trend, with NatWest down 1.2% and Lloyds down 0.9% on reports that the sector will be hit in the upcoming budget.
The Guardian reported late Thursday that UK Chancellor John Healey is poised to tax the banks more heavily in his October 28 budget, to help offset the damage inflicted on the public finances by war in the Middle East.
To keep the Treasury's deficit reduction plans on track in the face of rising UK government borrowing costs, the Guardian said it understands Healey has decided to tap the financial sector for additional revenue.
One option understood to be under discussion – reversing cuts to the bank surcharge made by former chancellor Jeremy Hunt – would raise upwards of GBP2 billion a year, the newspaper said.
The UK's biggest banks and building societies currently pay a surcharge of 3% on top of the baseline 25% rate of corporation tax, plus a levy on the assets held on their balance sheets. The 3% surcharge was reduced from 8% under the former chancellor, at the same time as he raised corporation tax from 19% to 25%.
On the FTSE 250, THG rose a further 9.1% after Thursday's positive trading statement.
Man Group added 1.1%, after it said assets under management increased in the third quarter, supported by net inflows of around USD10 billion.
Assets under management amounted to USD270.9 billion at the September 30 quarter end, a rise of 6.8% from USD253.6 billion in June.
Net inflows totalled USD10.1 billion, Man Group said, with the bulk coming in the long-only equity category.
A positive investment performance lifted the assets under management by USD5.9 billion.
Net inflows picked up in the third quarter, with the USD10.1 billion topping the USD7.1 billion Man reported for the whole of the first half of 2026.
Iofina shares shed 9.1%.
The iodine producer said it made "significant" strategic progress in the third quarter, but reduced its second-half production guidance after the quarter's output was weaker than expected.
Gold was quoted at USD4,176.55 an ounce, up from USD4,152.39.
Brent oil was quoted at USD106.06 a barrel, down from USD106.33.
The biggest risers on the FTSE 100 were Babcock International Group, up 33.40p at 961.80p, WPP, up 12.30p at 412.70p, Kingfisher, up 9.70p at 348.80p, Weir, up 68.00p at 2,682.00p, and BAE Systems, up 50.00p at 1,983.50p.
The biggest fallers on the FTSE 100 were Scottish Mortgage Investment Trust, down 50.00p at 1,545.00p, AstraZeneca, down 252.00p at 12,446.00p, Polar Capital Technology Trust, down 11.50p at 635.00p, NatWest Group, down 8.00p at 666.00p and British Land, down 5.00p at 417.40p.
Monday's local corporate calendar has full-year results from ITM Power and Tristel.
Monday's global economic calendar has a slew of data from China overnight, including GDP and retail sales, followed later in the day by inflation figures in Canada.
By Jeremy Cutler, Alliance News reporter
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