- FTSE 100 up 10 points at 9,452
- UK unemployment rises, pay growth softens
- BP update seen as 'vague and woolly'
- easyJet rises on report of possible bid interest
4.52pm: FTSE 100 closes higher
The FTSE 100 shrugged off geopolitical tensions to finish Tuesday’s session up 9 points at 9,452.
Across the Atlantic, stocks struggled amid heightened trade tensions between the US and China.
“Global stock markets resumed Friday's sell-offs as initial optimism over US-China trade relations faded as both countries imposed new port fees on each other's shipments,” IG chief senior technical analyst Axel Rudolph said.
4.06pm: FTSE climbs out of the water
The FTSE 100 has fought its way back onto dry land after being underwater all day.
Top riser remains easyJet, up over 7% on purported interest from a sizeable investor, though MSC on which the original story was based has now denied being involved.
Next are a group of housebuilders and real estate developers, led by Persimmon and Berkeley.
However, what's moved the index higher are gains for defensive and consumer-focused heavyweights Unilever, BAT, GSK, utilities and financials, led by Barclays (see below).
Over on mainland Europe, Germany's DAX is still down 0.6%, while France's CAC is almost flat and Spain's IBEX is up 0.2%.
Across the pond, US stocks are continuing to wallow, with the S&P 500 down 0.5% and the tech-heavy Nasdaq down almost 1%.
In the background, the International Monetary Fund said the UK is set to be the second-fastest-growing of G7 economies this year, after the US.
The IMF also predicted the UK will face the highest rate of inflation this year and next, driven by rising energy costs, with an average CPI of 3.4% this year dropping to 2.5% in 2026 before ending next year at 2%.
IMF chief economist Pierre-Olivier Gourinchas said the AI investment boom may be followed by a bursting of the bubble, he told Reuters.
However a key point, he said, is that this is not being financed by debt, so if there is a market correction, some shareholders may lose out "but it doesn't necessarily transmit to the broader financial system".
3.41pm: Barclays up on US read-across
Barclays PLC (LSE:BARC) shares have gained from read-across to fellow investment banks in the US, with Goldman Sachs and others reporting strong numbers.
Goldman Sachs reported Q3 earnings that beat the Street's expectations, lifted by strength in investment banking and wealth management.
Investment banking fees surged 42% to $2.66 billion, while earnings per share rose 46% to $12.25, exceeding the $11.02-$11.11 consensus.
Despite the strong results, Goldman shares have dropped almost 3%.
3.22pm: ChatGPT struggles to recruit paying users
European spending on ChatGPT has stalled since May, according to proprietary transaction data from Deustche Bank.
Analysts at the bank say the dbDataInsights data suggests "the poster child for the AI boom may be struggling to recruit new subscribers to pay for it".
"While CEO Sam Altman last week announced that ChatGPT maker OpenAI had over 800 million weekly active users, up from 500 million at the end of March, the number of paid users may not be keeping pace even as spending gradually approaches the likes of Spotify and Netflix.
"The value of OpenAI subscriptions, which surged from a standing start in January 2023, has flatlined in the major European markets over the past four months, the data show.
"While there was a similar slowdown in July and August last year as super-user students went on vacation, growth had been robust in June and picked up strongly in September."
2.49pm: Wall Street sell-ff at the open
US stocks have opened sharply lower for the second time in three sessions.
The S&P 500, Nasdaq and Russell 2000 are all down over 1.6%, while the Dow Jones has dropped just over 1%,
The top 10 largest names on the S&P and the Nasdaq are all in red, with Nvidia, Broadcom and Tesla all down over 3%.
Banks, led by Goldman Sachs and JPMorgan Chase, are also among the bigger fallers despite earnings that beat forecasts.
BlackRock and Wells Fargo are top of the S&P risers, up 3.3% and 2.75%, after their earnings were more warmly received.
2.30pm: Vodafone divides opinions
Vodafone was in the news this week, after a big outage on Monday afternoon that saw mobile coverage and internet services down.
But for the Square Mile, the turnaround story in the background has divided opinions.
Deutsche Bank is doubling down on optimism, while Citi is keeping its hand firmly on the handbrake.
Deutsche’s Robert Grindle lifted his target price to 140p and kept his “buy” rating, pointing to a company that (until yesterday) seemed to be beset by fewer mishaps, especially with its key German operation, which had long been a drag on sentiment but is now showing signs of life.
Citi, by contrast, is not convinced the worst is behind the group. It has kept a 'neutral' rating and raised its price target only slightly, from 75p to 85p, while adding a “90-day negative catalyst watch”. The concern is that too many things remain outside Vodafone’s control.
2.01pm: Budget situation is 'desperate'
Back in the UK, next month's autumn budget is in focus, as the Treasury committee in Westminster hears from various experts.
Dan Neidle, founder of Tax Policy Associates, said a "wise" way for Rachel Reeves to increase taxes would be raising "one of the main taxes, possibly by expanding the base of VAT, which may or may not break a manifesto pledge”.
He warned that the "less wise way to do it is by picking from a Scrabble bag of lots of little tax rises", which chimes in with an Institute for Fiscal Studies report yesterday.
Neidle also called for reform to the tax system to make it more pro-growth, warning the situation had become “quite desperate”, as he gave evidence to the Commons Treasury committee.
The Times led with a story that the IFS report had "urged" the Chancellor to impose a one-off wealth tax.
But IFS director Helen Millar has flagged that the thinktank "definitely did not recommend a one-off wealth tax" nor has it recommended any other tax rises.
Speaking to the Treasury committee earlier, she said that Rachel Reeves could raise lots of additional tax revenues without breaking manifesto promises.
"Whatever Rachel Reeves decides to do, there’s a huge opportunity to reform taxes to improve ecoonomic growth."
She also told MPs on the committee that Reeves "could raise £20-30 billion without touching [the big three taxes of income tax, NICs and VAT]. The question is not could you, but should you?”
But she added that there was a "huge opportunity" for Reeves to reform taxes to ensure they are doing "less damage to economic growth".
Yesterday, the IFS advised the chancellor to avoid cobbling together various unrelated tax-raising measures using existing taxes, some of which may have a detrimental effect on incentives to work, economic productivity and growth.
The report said significant funds could be raised by reforms to taxes on savings and investment income, such as rental income, dividend income, interest income, self-employment profits or capital gains.
1.22pm: BP vague and woolly
BP PLC's (LSE:BP.) short update earlier was not entirely clear but debt continues to be a "large concern", said analyst Ashley Kelty at Panmure Liberum, and suggests share buybacks may need to be cut back.
With net debt set to be unchanged at $26 billion, the analyst says, "this is a large concern given BP is targeting reducing this to $18 billion by 2027.
"This remains a fanciful goal given falling output, softer commodity prices and ongoing need to sell off more valuable assets – of which there are less in the portfolio after the push into low margin renewables.
"If this is to be achieved, the scale of buybacks may need to be trimmed further."
Kelty says investors "will not be much clearer on what to expect as the statement is vague and woolly", though being vague "does help BP if its going to miss expectations (again)".
1.12pm: Losses pared slightly
European stocks and US stock futures have seen losses trimmed.
The FTSE 100's leading fallers are Metlen Energy & Metals, Anglo American, Imperial Brands, Rolls-Royce, Rentokil Initial, Antofagast, BP and IAG.
The S&P 500 is now seen opening 0.8% lower as more Q3 earnings emerge.
However, Goldman Sachs Group Inc (NYSE:GS, ETR:GOS) shares are down 2% in premarket trading, despite what looks a strong earnings beat.
US analyst John Canavan at Oxford Economics notes that US Treasury yields are lower this morning "as trade concerns sustain a broader risk-off trade that has pushed US equity index futures down sharply overnight and boosted the dollar index".
A limited data calendar will "keep the focus on Fed Chair Jerome Powell's speech on the economic outlook and monetary policy early this afternoon" as well as Fed vice chair Bowman this morning, Fed Governor Waller and Fed President Collins.
12.36pm: US tensions
Into the afternoon, as well as trade tensions and US earnings, investors will have an eye on the IMF and World Bank meetings in Washington, where global growth, debt, and inflation remain key talking points.
The IMF is expected to release its latest world economic outlook report too, while Federal Reserve Chair Jerome Powell will be speaking later this afternoon.
"The economic calendar may look rather threadbare as far as the US is concerned due to the ongoing government shutdown," says market analyst David Morrison at Trade Nation.
The US stock futures sell-off is down to news this morning that China had imposed sanctions on five US-linked subsidiaries of South Korean shipbuilder Hanwha Ocean.
"This added to existing trade issues as both the US and China will start charging port fees on each other’s shipping firms from today," says Morrison.
"After a summer where tariff concerns had melted away as far as investors were concerned, the US-China trade dispute is now definitely back in the headlines.
"While the issues hadn’t gone away, the fact that the Trump administration had postponed the deadline for tariffs on China for three months until 1st November gave, from the market’s point of view, stacks of time for both sides to reach an agreement."
After Friday saw the biggest sell off in US equities since reciprocal tariffs were unveiled in April, risk assets bounced back yesterday after some consiliatory language from President Trump and Treasury Secretary Scott Bessent.
"This morning has seen some significant selling across the tech sector. Stocks in the ‘Magnificent Seven’ are all down, while semiconductor companies have been particularly badly hit.
"This all comes against a backdrop of the ongoing government shutdown, which enters its third week tomorrow.
"But the feeling is that the worse it gets, the greater the chances that the Federal Reserve cuts rates further."
12.04pm: Stocks firmly in red, but floor found?
London stocks are back on the down-slope as markets moved towards the end of the morning part of the session, but seem to have found a floor.
While the FTSE 100 and 250 were down 0.6% and 0.7% just before midday, and the German DAX and French CAC were 1.6% and 1.4% lower, they have seen losses pared slightly in the past few minutes.
A similar picture is seen with US futures, though futures for the tech-heavy Nasdaq 100 are down 1.4% and the S&P 500 is down 1.1%, with the Dow Jones off 0.6%.
Some big US earnings releases could be moving sentiment. JPMorgan has reported a bumper third quarter, while Johnson & Johnson also mostly beat expectations. We also hear from Goldman Sachs, Wells Fargo, BlackRock, Citigroup and several others.
11.29am: easyJet rumours denied, but shares remain elevated
EasyJet is "no stranger" to takeover rumours, says market analyst Dan Coatsworth at AJ Bell, after the report in Italy this morning that shipping giant MSC is interested in buying a large or even a majority stake.
"The longer its shares trade on a cheap valuation, the louder the bid speculation could get."
Following the report, MSC has played things down, but Coatsworth says "markets rarely move on and focus on something else when there is bid talk".
The report is likely to get investors thinking about who might want to own easyJet, he says, explaining why the shares are still trading higher despite MSC denying any involvement.
He says there is "some logic" to MSC owning easyJet, even if it looks like an odd match at first glance, as its involvement in air cargo gives it a foot in the aviation industry.
MSC also has a cruise business and "might take the view that easyJet is a cheap way to expand into other parts of the consumer leisure market".
He feels a rival airline bidding for easyJet is more realistic, potentially an American player looking to expand geographically or BA owner International Consolidated Airlines Group SA (LSE:IAG).
EasyJet’s shares trade on 6.3 times forward earnings, and the stock has been stuck in a 400p to 600p range since 2023.
10.43am: M&S chairman staying on
Marks and Spencer Group PLC (LSE:MKS) shares are up 1% after the board decided to extend chairman Archie Norman's tenure for what it says is "the next phase of the 'reshaping of M&S' growth strategy".
Senior independent director Fiona Dawson, who carried out "extensive consultation" with shareholders, executives and advisers says Norman, the former Asda and Kingfisher boss who joined M&S in 2017, "has been an exceptional chair, steering an effective, engaged board and putting in place a highly capable leadership team under Stuart Machin which is transforming M&S and building a stronger, better business".
A three-year extension has been agreed, subject to an annual review by a committee of independent directors and no major change of circumstances, with his appointment also requiring approval at the annual shareholder meeting, as normal.
Analyst Clive Black at house broker Shore Capital said it was "good news" that was "very warmly" welcomed, though "those of a rather prescriptive process bent may splutter".
10.25am: Mid-cap buybacks bonanza
Some more mid- and small-cap movers, where buybacks seem to be the flavour of the morning.
Bellway shares rose 5% after the UK housebuilder reported a strong rise in annual profit and unveiled plans for a £150 million share buyback.
Mitie shares are up 8% in early trading after the facilities management group upgraded its full-year profit guidance and restarted share buybacks, following a strong first-half performance.
Gear4music has turned the amp up 11%, with its profit outlook hiked again, following a strong first half marked by surging sales and higher margins.
9.36am: Bytes taken out
The biggest faller on the FTSE 250 is Bytes Technology Group PLC (LSE:BYIT), down 10.4% after the IT services group blamed the impact of Microsoft’s partner incentive changes and adjustments to its corporate sales structure on why first-half operating profits fell.
Revenue was up 2.5%, supported by a 9% increase in gross invoiced income, but operating profit slipped 7%.
Chief executive Sam Mudd said Bytes had shown resilience through a “challenging economic climate” and was benefiting from strong demand for cloud, cyber security and AI services.
Services gross profit rose more than 40%, offsetting a decline in software margins linked to Microsoft’s changes.
Panmure Liberum said the results were broadly in line with guidance, noting that the first half was more affected by Microsoft’s public sector rebate overhaul and the reshuffling of roughly 750 corporate accounts.
9.11am: FTSE weighed by miners, easyJet rises on rumour
The FTSE 100 is down just over 30 points or 0.3% at 9,411.
Miners are continuing to be the main weight around the index's neck.
Topping the leaderboard is easyJet PLC (LSE:EZJ), on the back of reports from an Italian newspaper that shipping giant MSC is interested in buying a stake.
Elsewhere in European markets, the falls are bigger. Germany's DAX is down 1.1% as the likes of Siemens, Continental and Rheinmetall drag, while France's CAC has lost 0.85%.
8.43am: November rate cut unlikely, December maybe, February most likely
Some more thoughts on the ONS jobs market data.
Thomas Pugh, economist at RSM UK, says pay growth "remains too strong to prompt the MPC into a rate cut next month".
He says the labour market "appears to still be weakening with the unemployment rate ticking up and vacancies falling. However, the pace of deterioration is slowing, and the revised payrolls picture looks much healthier now."
Rob Wood at Pantheon Macroeconomics says a rate cut is possible by the end of the year.
The slower wage growth combined with an unemployment rate rise "gives today’s labour market release a dovish tint" and markets will "rightly price a greater chance of an MPC rate cut by year-end after these data as rate setters have placed a lot of focus on wage growth and inflation to justify another cut".
He felt the underlying story, though, "is that the labour market is beginning to stabilise".
Payrolled jobs were unchanged between June and September, having fallen 43K in the three months to June. September’s initial payroll print matched consensus but is likely be revised up, he says.
Statisticians have more than halved their estimate of payrolled job falls over recent months, so he says this data should be handled with caution.
But the Labour Force Survey data is "likely" to be more reliable as the sample size remains steadier now, Wood says, shows a picture of a gradually easing labour market.
While the unemployment rate surprisingly ticked up to 4.8% in August, he suspects "some volatility as the single-month unemployment rate—remember the headline is a three-month average—rocketed to 5.3% suggesting an erratic part of the ONS sample".
The slower pay growth "pushes us closer to forecasting a rate cut next February or as early as December if this continues," though Wood sees a "decent chance" of an upward revision to average wages in future.
8.31am: China reaction hits copper and shifts currency markets
A fall in copper is weighing on the FTSE, with US-China trade tensions likely to be a factor.
Falls in Asian markets and US futures are likely to be linked to China threatening further retaliatory measures against US curbs on its shipping sector, while US Treasury Scott Bessent has been speaking to the FT.
Bessent, who made some conciliatory comments on China yesterday that contributed to markets rising, said Beijing's move to impose extra export controls on rare earths last week "is a sign of how weak their economy is, and they want to pull everybody else down with them".
"Maybe there is some Leninist business model where hurting your customers is a good idea, but they are the largest supplier to the world.
"If they want to slow down the global economy, they will be hurt the most."
Analysts at ING note that after the weekend de-escalation in tariff worries, "market concerns have risen again overnight" after China's retaliation included placing limits on five US entities of a Korean shipbuilding company.
This was in response to the US investigation into China’s trade practices, with the Ministry of Commerce reviving its rallying vow to "fight to the end" in the trade war.
ING analyst Francesco Pesole says "the FX market is reacting to the re-escalation" with safe haven demand benefitting the Japanese yen, Swiss franc and euro more than the dollar, while the "highly China-sensitive" Aussie and Kiwi dollars are "taking a beating".
On the pound, Pesole says this morning’s UK jobs report was "mildly dovish", though public sector pay is a "slight fly in the ointment".
"But this reflects the current expansive fiscal stance, and the upcoming budget should make clear that this won’t be repeated next year."
He says November BoE cut "looks unlikely" but December "is more in play than markets are pricing", with pricing for a December cut increasing from 7bps to 9bps, and 2-year GBP swap rates down 4bp after this morning’s ONS release.
"EUR/GBP has rallied above 0.870, although further gains are set to face the drag of more French political noise."
8.15am: FTSE opens lower
The FTSE 100 fell 30 points to 9,412.54 in opening trades, led by declines for miners.
Anglo American PLC (LSE:AAL) and Antofagasta PLC (LSE:ANTO) are at the bottom of the pile, down 3% and 2.6%, while Glencore, and precious metals pair Fresnillo and Endeavour Mining are all down over 1.5%.
Copper prices are down over 4%, while gold, after soaring to $4180/oz yesterday, fell sharply and is now at $4111.
7.58am: BP guides to mixed quarter
BP PLC (LSE:BP.) has put out a short trading update before its full quarterly results next month, saying it expects stronger upstream and refining performance in the third quarter of 2025, though oil trading results are likely to be weak.
Brent crude oil average prices were higher in the period, at $69.13 per barrel compared with $67.88 in the second quarter.
Production is expected to rise from the second quarter, led by higher gas output at its bpx energy business and improved performance in its gas and low-carbon energy division.
The quarterly results are scheduled for 4 November.
7.46am: Close Bros ups redress provisions
Some company news now. Close Brothers Group PLC (LSE:CBG) has added £135 million to its previous £165 million provisions for motor finance compensation.
This follows Lloyd's update yesterday and the launch of the FCA consultation last Monday, with details on which commission models would be covered, how unfairness would be assessed and how compensation would be calculated.
The lender said the new guidance places potential costs at the upper end of its earlier forecasts and, like Lloyds, said it "does not believe the redress methodology proposed by the FCA appropriately reflects actual customer loss or achieves a proportionate outcome".
7.33am: Pound falls
The pound has fallen against the dollar and the euro, after the jobs data, down 0.4% for each currency pair, reflecting a slight increase in interest rate cut hopes.
But market analyst Michael Brown at Pepperstone reckons "there are limited implications from this morning's data for the Bank of England's monetary policy committee".
This is partly as incoming inflation data should be a more important deciding factor, but also as quality and accuracy concerns continue to plague the ONS employment statistics.
As well as the changes in pay growth, he notes that the more timely PAYE metric of payrolled employees from September pointed to a decline of 10k, the eighth monthly decline in a row, "indicating that while the pace of job shedding has slowed markedly from earlier in the year, hiring has yet to materially pick up".
7.25am: Unemployment up, pay growth down
UK unemployment has surprisingly risen to 4.8%, according to freshly published data by the Office for National Statistics, up from 4.7%.
Average wage growth including bonuses was up 5.0% in the three months to August, from 4.7%, where it was expected to remain.
Excluding bonuses, pay growth fell to 4.7% from 4.8%, with the market expecting it also to have remained at 4.8%. These figures were boosted by the annual NHS staff pay award.
Excluding public sector wages, pay growth excluding bonuses fell to 4.4% from 4.7%, with the economists expecting 4.5%.
"After a long period of weak hiring activity, there are signs that the falls we have seen in both payroll numbers and vacancies are now levelling off," says ONS director of economic statistics Liz McKeown.
"We see different patterns across the age ranges with record numbers of over-65s in work, while the increase in unemployment was driven mostly by younger people.
"Wage growth slowed in the private sector to its lowest rate in nearly four years, but public sector pay growth increased, reflecting some public sector pay rises being awarded earlier than they were last year."
Viraj Patel at Vanda Research says the 5% pay growth is "mechanical" due to the difference in timing for public sector pay rises, whereas the fall in private sector pay is the "real sign of labour market loosening", the lowest since 2021.
He says this means the Bank of England is "on track" to cut.
7.15am: FTSE 100 set to slide
A sharp fall is expected for the FTSE 100 and other European stock markets on Tuesday as the previous day's confidence appears to be a mirage.
London's blue-chip index has been called 37 points lower, after closing up 15.4 points at 9,442.87.
Germany's DAX has been called over 100 points lower, while Wall Street futures are in the red too.
Asian markets are seeing heavy selling this morning, with Japan's Nikkei tumbling 2.8% and the Hang Seng down 1.2% in Hong Kong.
That followed strong gains for US stocks overnight, led by the tech-powered Nasdaq, which rebounded 2.2% after Friday's sell-off, while the S&P 500 climbed 1.6% and the Dow Jones added 1.3%.