22nd Aug 2025 17:01
(Alliance News) - The FTSE 100 posted another record closing peak on Friday as Jerome Powell said shifting economic risks may justify an interest rate cut in the US.
The FTSE 100 index closed up 12.20 points, 0.1%, at 9,321.40. It earlier traded as high as 9,357.51.
The FTSE 250 ended up 259.39 points, 1.2%, at 22,077.23 and the AIM All-Share finished 6.17 points higher, 0.8%, at 765.03.
For the week, the FTSE 100 rose 2.0%, the FTSE 250 advanced 1.5% and the AIM All-Share climbed 0.6%.
The Cboe UK 100 ended up 0.3% at 935.22, the Cboe UK 250 was 1.3% higher at 19,399.30 and the Cboe Small Companies firmed 0.7% to 17,269.01.
In a keenly awaited speech, Federal Reserve Chair Jerome Powell left the door open to an interest rate cut at its September meeting noting a "shifting" balance of economic risks may warrant such a move.
Addressing the Jackson Hole economic symposium Powell said: "The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance."
But he added "the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance".
Padhraic Garvey at ING commented: "Chair Powell could have been super balanced, or even hawkish. But he effectively chose to endorse the market discount for a rate-cutting phase ahead. It's had quite the reaction. Risk assets are up, the dollar down."
In New York, the Dow Jones Industrial Average soared 2.0%, as did the Nasdaq Composite, while the S&P 500 jumped 1.6%.
On the labor market, the Fed Chair said while it "appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers. This unusual situation suggests that downside risks to employment are rising."
On tariffs, Powell said a "reasonable base case" is that they create a "one time" shift up in the price level, although he added those effects will take time to fully work their way into the economy.
"In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside - a challenging situation," Powell said.
"With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance," he added.
While stocks rose, the dollar fell, while US bond yields declined. The pound jumped to USD1.3539 late on Friday afternoon in London, compared to USD1.3426 at the equities close on Thursday. The euro firmed to USD1.1726, higher against USD1.1619. Against the yen, the dollar was trading lower at JPY146.61 compared to JPY148.21.
In Europe, the CAC 40 in Paris ended up 0.5%, while the DAX 40 in Frankfurt closed up 0.3%.
The yield on the US 10-year Treasury was at 4.26%, narrowed from 4.34%. The yield on the US 30-year Treasury was 4.87%, trimmed from 4.94%.
Back in London, trading recovered from a sluggish start supported by news UK consumer confidence improved in August boosted by the latest interest rate cut, although uncertainty over the possibility of future tax hikes and inflationary pressures weighed on expectations going forward.
The GfK consumer confidence index rose to minus 17 in August from minus 19 in July, above the FXStreet-cited consensus forecast of minus 20.
Consumer expectations for their personal financial situation over the next 12 months rose to plus 5 in August from plus 2 in July, while expectations for the general economic situation over the next 12 months declined to minus 30 from minus 29.
Neil Bellamy, consumer insights director at GfK, said: "The biggest changes in August are in confidence in personal finances, with the scores looking back and ahead a year each up by three points. This is likely due to the Bank of England’s August 7th cut in interest rates, delivering the lowest cost of borrowing for more than two years."
AJ Bell investment analyst Dan Coatsworth said the slight uptick is "good news" for retailers, hospitality and travel businesses but "no-one will be getting carried away given this is just a case of people feeling a bit less bad rather than genuinely optimistic about the economic outlook."
On the FTSE 100, gains were broad-based with Asian-focused bank Standard Chartered leading the way, up 4.2%, while housebuilders Persimmon and Berkeley climbed 2.3% and 2.2% respectively, and British Airways owner, IAG, added 2.3%.
On the FTSE 250, WH Smith rallied 11% recouping a small slice of Thursday's dramatic 42% fall in the wake of lowered guidance after an accounting error.
Morgan Advanced Minerals rose 3.6% after Vesuvius agreed to buy its Molten Metal Systems business for a total enterprise value of GBP92.7 million.
In addition, the England-based manufacturer of carbon and ceramic materials, said it has instructed Investec Bank to launch the third tranche of its ongoing share buyback immediately upon completion of the second tranche. Each tranche to date has been for up to GBP10 million, under a total buyback programme for up to GBP40 million.
Revolution Beauty leapt 20% as it announced the return of its co-founders to the business after terminating its formal sales process.
The news came as the firm pledged to slash costs amid declining sales and profitability, and raised GBP15 million via a placing and subscription.
This includes cornerstone investment from the make-up brands co-founders, Tom Allsworth and Adam Minto, and from its largest shareholder, boohoo, now trading as Debenhams.
Between them the cornerstone investors hold just under 58% of Revolution Beauty stock, with boohoo having a 27% stake.
Allsworth will step in as chief executive over the "coming days", the firm said, with Colin Henry stepping down as interim CEO at that point, while Minto, will also return to the business in a consulting capacity.
A barrel of Brent traded at USD67.59 late Friday afternoon, up from USD67.13 on Thursday. Gold pushed up to USD3,375.22 an ounce against USD3,343.46.
The biggest risers on the FTSE 100 were Standard Chartered, up 57.00 pence at 1,417.00p, Persimmon, up 25.50p at 1,128.50p, International Consolidated Airlines, up 8.80p at 394.50p, Scottish Mortgage Trust, up 24.00p at 1,095.00p and Berkeley Group, up 80.00p at 3,792.00p.
The biggest fallers on the FTSE 100 were British American Tobacco, down 78.00p at 4,315.00p, Coca-Cola Europacific down 120.00 pence at 6,710.00p, Coca-Cola HBC, down 52.00p at 3,892.00p, Tesco, down 5.20p at 426.30p and National Grid, down 10.50p at 1,049.00p.
Financial markets in London are closed on Monday for the August bank holiday.
Later in the week results are due from insurer Prudential and sports retailer JD Sports Fashion.
The global economic calendar on Monday has the German ifo business climate report and US new home sales figures.
By Jeremy Cutler, Alliance News reporter
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