London close: FTSE gains as bond markets stabilise, after Waller remarks

(Sharecast News) - London stocks rose on Thursday as bond markets stabilised, and as investors welcomed remarks from Federal Reserve Governor Christopher Waller, who said he could support keeping rates on hold this month.

The FTSE 100 closed up 0.7% at 10,831.52, while Brent crude was up 0.1% at $95.75 a barrel and West Texas Intermediate was 0.5% higher at $91.50.

In bond markets, the yield on the 10-year gilt was down nine basis points at 5.15% and the yield on the 30-year gilt was seven basis points lower at 5.80%.

Waller said that while inflation is "meaningfully above" the Fed's 2% target, recent trends "suggest we are finally seeing some signs of disinflation".

"If this continues in the data due over the next two weeks, I would be inclined to support holding the target for the federal funds rate at its current setting," he said.

Chris Beauchamp, chief market analyst at IG, said: "Today it was the turn of Fed governor Waller to keep equities supported, as he struck a relatively dovish note, the second to contrast with Warsh's more dovish tone.

"If the idea is to keep investors guessing, then the Fed is succeeding, but so far the data appears to lean towards the dovish argument. But as was the case 24 hours ago, everything rides on tomorrow's payrolls and then next Friday's inflation readings. Equities aren't out of the woods yet."

On home shores, a survey showed the services sector grew in August at the fastest pace since April, but cost pressures ramped up. The S&P Global services PMI business activity index rose to 52.5 from 52.1 in July. A reading above 50 indicates expansion, while a reading below signals contraction.

The survey also showed that employment numbers fell at the slowest pace since October 2025, helped by improved order books and more optimism towards the business outlook. However, a number of firms reported ongoing hiring freezes due to strong cost pressures and excess business capacity, with some also commenting on efforts to boost productivity through automation.

S&P Global said service sector workforce levels have now fallen for 23 months in a row, which is the longest continuous period recorded since the survey began in July 1996.

Tim Moore, economics director at S&P Global Market Intelligence, said: "August data highlighted improving operating conditions across the UK service economy. Business and consumer spending saw further gains after declining during the second quarter of 2026, which led to the fastest expansion of output levels since April.

"Service providers are increasingly optimistic about the year ahead business outlook, with confidence levels now close to those seen just prior to the Middle East conflict. However, business activity growth projections were still subdued in comparison to long-run trends amid lingering worries about inflationary pressures and geopolitical tensions.

"Higher fuel prices and transportation bills reignited overall input cost inflation in August. Moreover, the rate of output charge inflation in the service sector also accelerated for the first time in four months as businesses sought to protect their margins from suppliers' price hikes.

"Many firms have responded to intense cost inflation by tightening their staff recruitment policies. This trend continued in August, but signs of a turnaround in sales pipelines and broader market conditions led to the slowest pace of job losses since October 2025."

In equity markets, Hilton Foods surged after it lifted its full-year profit guidance as it hailed a good interim performance from core meat and fresh prepared food, but weakness in the Foppen business. It now expects full-year adjusted profit before tax from continuing operations of between £66m and £71m, up from previous guidance of £60m to £65m and reflecting the removal of Dalco losses and favourable FX.

Dunelm rallied as Deutsche Bank upgraded the homeware retailer to 'buy' from 'hold' ahead of its strategy update. It believes management will outline a revamped digital offer and increased store investment to drive accelerating earnings growth as Dunelm progresses towards 10% market share. DB also hiked the price target to 1,050p from 850p.

On the downside, Crest Nicholson tumbled after it warned it now expects a full-year loss and downgraded its completions guidance as it said market conditions have been more subdued than expected over the summer. The housebuilder expects full-year completions of between 1,350 and 1,400, down from previous guidance 1,400 to 1,500, and an EBIT loss of around £10m, versus previous guidance for a profit of £5m to £10m.

Admiral, Vesuvius and Ithaca Energy all fell as they traded without entitlement to the dividend.

Market Movers

FTSE 100 (UKX) 10,831.52 0.70%

FTSE 250 (MCX) 24,496.13 0.71%

techMARK (TASX) 6,076.16 0.22%

FTSE 100 - Risers

Metlen Energy & Metals (MTLN) 48.44p 3.90%

Informa (INF) 912.80p 3.89%

London Stock Exchange Group (LSEG) 8,898.00p 3.85%

Prudential (PRU) 1,038.50p 3.38%

Relx plc (REL) 2,675.00p 3.32%

Fresnillo (FRES) 3,162.00p 3.00%

Scottish Mortgage Inv Trust (SMT) 1,500.00p 2.39%

M&G (MNG) 351.20p 2.36%

Autotrader Group (AUTO) 512.20p 2.28%

Antofagasta (ANTO) 3,935.00p 2.23%

FTSE 100 - Fallers

Reckitt Benckiser Group (RKT) 5,080.00p -2.79%

Convatec Group (CTEC) 227.40p -2.65%

Admiral Group (ADM) 3,836.00p -2.49%

Haleon (HLN) 357.60p -2.30%

Diageo (DGE) 1,666.50p -1.57%

Centrica (CNA) 148.30p -1.56%

Bunzl (BNZL) 2,672.00p -1.47%

Pearson (PSON) 1,183.00p -1.33%

Rentokil Initial (RTO) 351.10p -1.18%

InterContinental Hotels Group (IHG) 159.00p -1.12%

FTSE 250 - Risers

Ceres Power Holdings (CWR) 404.80p 12.44%

Hilton Food Group (HFG) 708.00p 12.38%

Trustpilot Group (TRST) 286.20p 5.84%

WPP (WPP) 381.50p 5.59%

Ocado Group (OCDO) 216.40p 5.46%

CMC Markets (CMCX) 763.00p 4.95%

GB Group (GBG) 160.40p 3.89%

Dunelm Group (DNLM) 865.50p 3.65%

Hochschild Mining (HOC) 670.50p 3.63%

Rosebank Industries NPV (ROSE) 354.00p 3.51%

FTSE 250 - Fallers

Ithaca Energy (ITH) 269.00p -5.94%

AEP Plantations (AEP) 192.00p -4.95%

Baltic Classifieds Group (BCG) 2.46p -4.65%

Watches of Switzerland Group (WOSG) 663.50p -3.14%

Safestore Holdings (SAFE) 557.50p -3.04%

Hays (HAS) 68.70p -3.03%

Foresight Environmental Infrastructure Limited (FGEN) 86.70p -2.91%

B&M European Value Retail (BME) 222.80p -2.62%

Johnson Service Group (JSG) 142.20p -2.60%

Dr. Martens (DOCS) 71.20p -2.60%