Rachel Reeves was handed a pre-Budget boost today as the rate of inflation unexpectedly remained unchanged at 3.8% in September.
The consumer prices surprise opens the door to a potential cut in interest rates next month from the Bank of England.
Meanwhile, Barclays has made a big increase in the amount of money it is setting aside in relation to motor finance compensation.
Market update: Barclays leads stronger FTSE 100, Halfords up 7%
10:27 , Graeme EvansBarclays and a clutch of interest rate-sensitive stocks today fuelled a stronger-than-expected performance by the FTSE 100 index.
Relief that UK inflation may have peaked at 3.8% meant London’s top flight rose by 0.7% or 67.18 points to 9494.17.
The FTSE 100 performance was much better than expectations prior to September’s inflation print, given that economists were braced for a figure of 4%.
As the release kept alive hopes for a November interest rate cut, the shares of housebuilders Berkeley, Barratt Redrow and Persimmon all rose by more than 2%.
Real estate company Land Securities also advanced 7.5p to 635p and urban logistics business Segro rallied 11.8p to 703.6p.
Barclays shares led the top flight, up by 4% or 15.2p to 379.45p after it reported a return on tangible equity of 10.6% for the third quarter and lifted its 2025 guidance on the key industry measure to more than 11%.
A stronger outlook and earlier than planned delivery of efficiency savings led to the upgrade, despite an additional charge for motor finance redress.
The provision rose from £90 million to £325 million, with the additional charge of £235 million recognised in today’s third quarter results.
AJ Bell investment director Russ Mould said:“If investors were looking for some reassurance after a tricky little spell for the banking sector then Barclays has provided it.”
Other risers in the FTSE 100 included British Airways owner IAG, which improved 8.9p to 402.7p after Goldman Sachs lifted its price target to 470p.
Miner Fresnillo also steadied after yesterday’s 12% reverse, which was fuelled by a sharp decline for the prices of gold and silver. It rose 52p to 2166p as a robust third quarter update helped offset a further fall in gold price to $4068 an ounce.
The FTSE 250 index rose 0.6% or 130.56 points to 22,038.86, with Wickes, Vistry and building materials supplier Ibstock among those up by 2% or more.
ITV fell 8% or 6.3p to 68.25p after Liberty Global raised £135 million by cutting its stake in the broadcaster from 10% to about 5%.
In the FTSE All-Share, Halfords rose 7% or 9.2p to 146.4p after the retailer and motoring services business reported 4.1% like-for-like sales growth for the six months to 26 September.
Princes Group sets IPO price range
09:24 , Graeme EvansPrinces Group is set for a valuation between £1.16 billion and £1.24 billion after the tinned tuna and Napolina firm set the price range for its IPO.
It is expected that conditional trading will commence by the end of October and that full dealings will get under way at 8am on 5 November.
The almost 150-year-old firm, which is owned by Italian food business Newlat, expects the offer to raise up to £400 million towards further acquisitions.
The group – which has headquarters in Liverpool’s landmark Liver Building – also owns Crisp N Dry and licenses brands such as Branston.
Shawbrook yesterday said it is set for a valuation of between £1.8 billion and £2 billion after the specialist lender announced details of its early November IPO.
JLR cyber attack impact seen at £1.9 billion
08:54 , Graeme EvansThe cyber attack on Jaguar Land Rover (JLR) is estimated to have cost the country around £1.9 billion, making it the most economically damaging hack in UK history.
Today’s research by the Cyber Monitoring Centre (CMC) said that around 5,000 businesses across the country have been hit by the fallout of the attack.
Ciaran Martin, chair of the CMC’s technical committee, said: “With a cost of nearly £2 billion, this incident looks to have been by some distance, the single most financially damaging cyber event ever to hit the UK.”
FTSE 100 higher, Barclays shares rally after upgrade
08:09 , Graeme EvansThe FTSE 100 index is 0.5% or 44.74 points higher at 9471.73, boosted by today’s weaker-than-expected inflation print.
The performance of London's top flight is much better than the flat start anticipated prior to the release of inflation figures.
Housebuilding stocks rallied on hopes of lower mortgage rates as Barratt Redrow advanced 2% or 8.2p to 394.6p and Persimmon lifted 22.5p to 1201.5p.
Among other rate-sensitive stocks, Land Securities added 11p to 638.5p and Segro improved 11.6p to 703.4p.
Barclays shares rose 3% or 11.25p to 375.5p after it bolstered 2025 guidance.
The improvement came despite an increased provision for motor finance compensation.
Hargreaves Lansdown analyst Matt Britzman said: “Barclays’ latest results show a bank quietly outperforming despite headline noise.
“The extra charge tied to motor finance grabbed attention, but investors had largely priced that in already with shares underperforming in recent weeks.
“Strip out that provision and profits were 13% ahead of expectations, helped by revenue growth that beat forecasts by 2%, driven mainly by strong US card spending.”
The FTSE 250 index is 0.5% or 105.45 points higher at 22,013.75. ITV fell 8% or 5.95p to 68.6p after Liberty Global raised £135 million by cutting its stake in the broadcaster from 10% to about 5%.
Inflation surprise boosts rate cut outlook
07:36 , Graeme EvansThe weaker than expected inflation print opens the door to a potential November interest rate cut by the Bank of England.
The FTSE 100 is now seen opening about 45 points higher, rather than the flat performance seen before the inflation release.
The interest rate outlook meant the pound fell 0.3% to $1.33.
Capital Economics points out that CPI inflation is set to fall to 3.5% or below in October, not least due to year-on-year declines in utility and fuel prices.
It said CPI may surprise by falling to 2% by the end of next year, aided by a fall back in food price inflation and the impact of a weaker jobs market on wage growth.
However, the consultancy doubts today’s release will prompt the Bank of England to cut rates from 4% next month.
“But it increases the chances of the next cut happening by February in line with our forecast and it supports our view that interest rates will be reduced to 3% next year.”
Deutsche Bank added: “With two additional CPI prints to watch, and two further labour market reports to come before the December meeting, we think there will be enough ammunition for the MPC to ease rates further.
“And with Chancellor Reeves laying the groundwork for lowering the cost of living in the upcoming Budget, we continue to think that a December rate cut is very much in play.”
Barclays lifts car finance provision to £325m
07:14 , Graeme EvansBarclays today announced a big increase in the amount of money it is setting aside to settle compensation claims for motor finance mis-selling.
The provision has risen from £90 million to £325 million, with the additional charge of £235 million recognised in today’s third quarter results.
The charge reflects the increased likelihood of a higher number of motor finance cases falling within the scope of the compensation scheme contemplated in this month’s FCA consultation paper.
Barclays delivered a return on tangible equity of 10.6% for the third quarter and has upgraded its guidance ont he key industry measure to more than 11%. It also reiterated a 2026 target of greater than 12%.
Chief executive C. S. Venkatakrishnan said: “This is driven by a stronger outlook for stable income and an earlier than planned delivery of efficiency savings. Moreover, it comes despite an additional charge for motor finance redress.”
Inflation rate unchanged at 3.8%
07:06 , Graeme EvansThe UK’s inflation rate for September today came in below expectations at an unchanged 3.8%.
The figure compared with City forecasts for a figure of 4%, which would have been the highest rate in 21 months.
ONS chief economist Grant Fitzner said: “A variety of price movements meant inflation was unchanged overall in September.
“The largest upward drivers came from petrol prices and airfares, where the fall in prices eased in comparison to last year.
“These were offset by lower prices for a range of recreational and cultural purchases including live events. The cost of food and non-alcoholic drinks also fell for the first time since May last year.
“Meanwhile, the annual rise in the cost of goods leaving factories continued to increase, driven by higher food prices.”
FTSE 100 firm after mixed US session, gold price steadies
06:59 , Graeme EvansThe gold price has steadied near to $4142 an ounce, having fallen 5% in the precious metal’s worst daily performance in more than five years.
Yesterday’s reverse and silver’s 7% slide left FTSE 100-listed Endeavour Mining down by 10% and Fresnillo 12% lower.
The FTSE 100 index still closed 0.3% higher at 9426.99 in yesterday’s session and is forecast to trade broadly flat at today’s opening bell.
The Dow Jones Industrial Average yesterday rose 0.5% while the S&P 500 index finished flat and the Nasdaq Composite ended 0.2% lower.
Netflix fell 6% in dealings after the releases of third quarter figures, which were impacted by an unexpected tax liability in Brazil.
