FTSE 100 closes higher despite hot US inflation

The FTSE 100 ended higher on Wednesday, despite strong US inflation data, as the Bank of England’s chief economist played down fears of multiple interest rate rises in the UK.

In London, the FTSE 100 Index ended up 74.53 points, 0.7%, at 10,724.86.

The FTSE 250 climbed 21.58 points, 0.1%, to 24,360.77, but the AIM all-share fell 3.25 points, 0.4%, to 767.91.

Bank of England chief economist Huw Pill, who has consistently supported more monetary tightening this year, expressed scepticism on Wednesday about market expectations for four interest rate increases totalling 100 basis points, Bloomberg reported.

“Is it obvious that we will need to follow market pricing to four 25 basis point hikes and so forth? There I would be a little bit more sceptical,” Mr Pill said at the event in Bangkok.

“To get 100 basis points [of rate rises], we need a concrete manifestation of these risks [to wages and prices],” he said.

“We will get more evidence in the next six to nine months on second-round effects.”

Meanwhile, The Financial Times reported that Chancellor John Healey is expected to fund new spending commitments and tax giveaways in this month’s Budget through higher taxes or spending cuts rather than additional borrowing.

Citing people briefed on Budget preparations, the FT said the October 28 fiscal package would be “scorecard positive” in 2029-30, the final year of the Parliament, meaning any additional discretionary spending would be fully funded.

The reports saw bond yields initially retreat before picking up pace once more after hot US inflation numbers.

Figures released by the Bureau of Labour Statistics showed the US consumer price index rose 3.7% year-on-year in September, accelerating from 3.4% in August, topping the 3.6% FXStreet-cited consensus.

On an annual basis, energy prices rose 20%, with gasoline prices surging 34%.

Core inflation, which excludes volatile food and energy prices, accelerated to 2.6% year-on-year in September from 2.4% in August, exceeding FXStreet consensus expectations of 2.5%.

Barclays analyst Pooja Sriram said the data is unlikely to provide much comfort to policymakers.

“Risks we have flagged for some time, including energy pass​-​through into core prices, resilient consumer spending, and AI​-​related price pressures, increasingly appear to be showing up in the inflation data,” she noted.

Admir Kolaj, economist at TD Economics, said the Federal Reserve will likely not be able to remain on the sidelines for much longer.

“Markets have responded, with market implied odds for an October hike increasing sharply following the release. We maintain the view that the Fed is due for another hike by the end of this year, even if the upside inflation surprise makes the timing more uncertain.”

The inflation report sparked gains for the dollar and saw bond yields advance.

The yield on the US 10-year Treasury was quoted at 5.26% on Wednesday, stretched from 5.22% at the same time on Tuesday.

The yield on the US 30-year Treasury was quoted at 5.57%, up from 5.56%.

The pound was quoted at 1.3152 dollars, down from 1.3249 dollars.

Against the euro, sterling ebbed to 1.1826 euros from 1.1834 euros.

The euro declined to 1.1121 dollars from 1.1194 dollars.

Against the yen, the dollar was trading at 158.86 yen, up from 158.42 yen.

In European equity markets on Wednesday, the CAC 40 in Paris ended up 0.6%, while the DAX 40 in Frankfurt added 0.2%.

Europe’s most valuable listed company, ASML, rose 1.2% after well-received third-quarter results.

The Dutch chipmaker booked net income of 4.96 billion euros for the quarter, up 70% from 2.92 billion euros the previous quarter, and more than doubled from 2.12 billion euros the previous year.

Its gross margin stood at about 57%, compared with 52% a year earlier.

Net sales rose 25% to 11.66 billion euros from 9.33 billion euros in the second quarter, and up 55% from 7.52 billion euros in the third quarter of 2025.

JPMorgan analyst Sandeep Deshpande said results were ahead of market expectations, driven by better-than-guided gross margin.

He noted that ASML’s full-year operating profit guidance was around 5.5% ahead of consensus estimates.

In New York, markets were lower.

The Dow Jones Industrial Average was down 0.1% at the time of the closing bell in London on Tuesday.

The S&P 500 fell 0.8%, and the Nasdaq Composite faltered 1.2%.

Bank of America slumped 7.7% after the US Treasury Department said that it was imposing penalties of more than 1.2 billion dollars on the bank, citing “violations of anti-money laundering and sanctions laws”.

The second biggest US bank failed to properly report more than five billion dollars in “suspicious transactions”, the department said.

The charge dented third-quarter earnings, which came in below market expectations.

The bank also saw a drop in sales & trading revenue and investment banking fees.

Back in London, hopes of fewer rate hikes in the UK lifted housebuilders, with Barratt Redrow up 4.0% and Persimmon up 2.8%.

But the stronger dollar put gold prices under pressure, sending miners Fresnillo and Endeavour Mining down 4.6% and 3.4% respectively.

Gold was quoted at 4,089.77 dollars an ounce, down from 4,163.06 dollars.

On the FTSE 250, Big Yellow shares shot up 5.4%.

Ancora Holdings Group called on the self-storage provider to launch a comprehensive strategic review, including a sale process.

In a statement, Cleveland, Ohio-based wealth management and advisory firm Ancora said it believes that a sale of Big Yellow represents the best risk-adjusted outcome for shareholders.

Elsewhere, Robert Walters shares were also in the green, up 3.9%.

The recruitment firm said net fees increased 1% at constant currency in the third quarter of the year, improving from a 3% decline in the first half.

Brent oil was quoted at 105.67 dollars a barrel, down from 105.83 dollars.

The biggest risers on the FTSE 100 were Barratt Redrow, up 11.8p at 304.1p, GSK, up 63p at 1,816p, Burberry Group, up 36.5p at 1,074p, AstraZeneca, up 404p at 12,300p and Babcock International Group, up 26.2p at 913.4p.

The biggest fallers on the FTSE 100 were Fresnillo, down 126p at 2,590p, Computacenter, down 230p at 5,465p, Endeavour Mining, down 141p at 3,991p, Airtel Africa, down 8.6p at 278.6p and Standard Chartered, down 56p at 2,109p.

Thursday’s local corporate calendar has trading statements from miner Antofagasta, home furnishings and furniture retailer Dunelm and building materials company Travis Perkins.

Thursday’s global economic calendar has jobs data in Australia overnight, inflation figures in France, an economic growth report in the UK and wholesale inflation numbers in the US.

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