The outlook for lower US interest rates is in the spotlight after yesterday’s big upgrade to GDP figures.
UK gilts are also in focus after the 10-year yield posted the biggest increase in the G7 yesterday.
Water company Pennon is among those reporting during a quiet session for corporate updates.
Market update: IHG upgrade boosts shares, miners retreat
10:00 , Graeme EvansA double upgrade for InterContinental Hotels today put its shares top of the FTSE 100 index as European markets experienced a decent finish to the week.
The Crowne Plaza and Holiday Inn business rose 3% or 244p to 9018p after JPMorgan switched its recommendation from Underweight to Overweight with a new target price of 10,400p up from 8500p.
IHG’s progress placed it ahead of Rentokil Initial, which lifted 9.2p to 369.2p, and B&Q owner Kingfisher after an improvement of 7.3p to 300.1p.
The FTSE 100 index ended a lacklustre week with a rise of 0.4% or 36.54 points to 9250.52.
The gains came despite a third successive decline for leading Wall Street benchmarks, having posted record highs earlier in the week.
Asia markets were also lower after President Trump announced more tariffs, including on pharmaceuticals and kitchen cabinets.
The US investment plans of London-listed GSK and AstraZeneca meant their shares were unmoved by the planned 100% import tax on branded or patented medicines.
On London’s fallers board, Rio Tinto retreated 72.5p to 4843.5p and Anglo American by 18p to 2661p at the end of a strong week for their shares.
The pound held firm after recent weakness against the US dollar, while the 10-year gilt yield followed yesterday’s sharp rise with a calmer session at 4.74%.
Pennon earnings improve despite weather impact
08:40 , Graeme EvansSouth West Water owner Pennon has reported a “strong return to profitability” despite higher costs in the face of hot summer weather.
The FTSE 250 water firm said it maintained “resilient” supplies of water despite high levels of demand due to the weather conditions.
Pennon told investors that it is making “good progress” with its £3.2 billion investment plan, which it agreed with regulator Ofwat last year.
Shares dipped 3p to 450.6p.
FTSE 100 edges higher, AstraZeneca and GSK lower
08:26 , Graeme EvansThis week’s poor run for US markets has set the tone for a lacklustre session in London, with the FTSE 100 index up by 0.1% or 14.74 to 9228.72.
Richard Hunter, head of markets at Interactive Investor, said: “US investors have run into a brick wall over recent days, with the validity of the drives to fresh record highs having been brought into question.
He said UK banks were in favour as expectations of higher-for-longer interest rates helped NatWest to rise 2p to 507.2p and Lloyds Banking Group by 0.3p to 82.1p.
Hotels group IHG posted the biggest rise, up 3% or 248p to 9022p.
AstraZeneca fell 92p to 10,864p and GSK by 8.5p to 1462p, even though their US investment plans mean they should avoid Donald Trump’s planned 100% import tax on branded or patented medicines.
Meanwhile, the 10-year bond yield has edged up by another 0.4% to 4.767% while the pound has steadied at $1.335.
PCE inflation measure keeps US rate cuts in spotlight
07:47 , Graeme EvansToday’s release of US personal consumption expenditure (PCE) figures for August is set to mean fresh scrutiny on the outlook for interest rate cuts.
The annual rate of core PCE, which is the Federal Reserve’s preferred inflation measure, is seen at an unchanged 2.9%.
Derren Nathan, Hargreaves Lansdown head of equity research, said: “If today’s number turns out close to or below that, it provides evidence that the robust economic data seen of late has been boosted by improved productivity rather than prices alone, which should raise investors' spirits.
“The roll-out of artificial intelligence promises to help in that area, but whether its effects are showing up in national data just yet is hard to call.”
Yesterday’s upwards revision of second quarter GDP growth to the highest level in almost two years at 3.8% was driven by strong consumer spending.
The figures prompted Wall Street to scale back its rate cut expectations to between one and two more cuts this year.
FTSE 100 set for stronger session, pound steadies
07:01 , Graeme EvansWall Street markets ended lower last night after big upward revisions to second quarter GDP figures led traders to revise their bets on US interest rate cuts.
The Dow Jones Industrial Average fell 0.4% and the S&P 500 and Nasdaq Composite lost 0.5% as US markets retreated for a third successive session.
Asia stocks followed the US lead, with the Nikkei 225 down by 0.7% and the Hang Seng index 0.4% lower.
The FTSE 100 index closed down by 36.45 points or 0.4% at 9213.98 but is forecast to start today’s session 0.2% higher.
The pound is at $1.3354, having steadied at the end of a poor week against the US dollar. The gold price is at $3744 an ounce.
