Quick Read
- FTSE 100 hit a record high on Friday, then pulled back slightly as the week began.
- Progress in US-China trade talks has fueled optimism across global markets.
- Sterling rose, gold prices dropped 1.7%, and oil held last week’s gains.
- UK job vacancies fell to their lowest level this year as employers await the next budget.
- Central banks worldwide are set for key meetings, likely increasing market volatility.
FTSE 100 Retreats After Record High: What’s Driving the Shift?
London’s FTSE 100 index, the flagship for UK large-cap stocks, has been riding a wave of optimism in recent weeks. Last Friday, the index closed at a historic high of 9,645.62, a testament to renewed investor confidence driven largely by progress in US-China trade negotiations. But as the new week dawned, that momentum slowed. Futures indicated a modest pullback, with the index set to open 19.1 points lower at 9,664.72, according to IG data (Alliance News).
The mood across global markets has been buoyant. The possibility of a breakthrough in trade talks between Presidents Donald Trump and Xi Jinping has provided a powerful tailwind. Both sides have reportedly reached a preliminary consensus, with top officials agreeing on several major points. This sets the stage for a potentially market-moving leaders’ summit later in the week.
Currency Moves and Commodities: Sterling Rises, Gold Drops
Amid the shifting equities landscape, currency markets have responded with notable moves. Sterling, for example, strengthened slightly to USD1.3328, up from USD1.3301 at Friday’s close. The euro, meanwhile, held steady against the dollar but hit an all-time high against the Japanese yen. The dollar itself firmed against the yen, climbing to JPY152.96 (MarketPulse).
These currency dynamics have rippled into the commodities space. Gold, traditionally a safe-haven asset, dropped 1.7% early Monday to USD4,079.10 an ounce. The retreat reflects two key forces: a stronger dollar (making gold more expensive for foreign buyers) and reduced global anxiety as trade tensions appear to ease. Spot gold was down 0.8%, as investors shifted focus to upcoming central bank meetings for clues about future policy direction.
Oil prices, on the other hand, saw a modest uptick. Brent crude traded at USD65.40 a barrel, slightly down from USD66.56 but holding onto last week’s significant gains. The rally was fueled by new US and EU sanctions on Russia and a more upbeat outlook on global growth thanks to the US-China trade progress.
UK Job Market: Vacancies Drop as Budget Anticipation Builds
Beneath the headlines of record highs and currency moves, the UK job market is showing signs of strain. According to Adzuna, advertised vacancies fell by 2.4% in September compared to August, reaching the lowest level this year at 826,205. That’s 4.1% lower than a year ago. The ratio of jobseekers to vacancies has climbed to its highest since early 2024, signaling a cooling in recruitment as employers await clarity from next month’s government budget (Alliance News).
Warehouse workers remained the most sought-after role, followed by healthcare assistants and cleaners. This shift reflects a cautious approach from employers, who are pausing hiring plans after a strong start to the year. The upcoming Budget has become a focal point for UK businesses, as they look for signals on taxation and economic policy that could shape hiring and investment decisions.
Political and Economic Outlook: Leadership, Budgets, and Global Meetings
The economic calendar is packed. Investors are watching for US durable goods order data, which will offer insight into the health of the American economy. Later this week, central banks in the US, Canada, Japan, and Europe will hold meetings that could set the tone for global markets heading into the final quarter of the year.
Meanwhile, UK Chancellor Rachel Reeves is leading a delegation to Saudi Arabia, hoping to secure trade and investment deals with the Gulf Cooperation Council (GCC). Reeves’ trip, the first by a UK chancellor to the Gulf in six years, underscores the government’s push for growth amid domestic uncertainty. Supermarket bosses have also weighed in, urging the chancellor to exempt shops from a new business rates surtax to help tackle food inflation. Reeves has declined to rule out raising income tax in the upcoming budget, keeping speculation alive about the government’s next moves.
On the international stage, President Trump is set to meet President Xi Jinping in South Korea, marking their first encounter since Trump’s return to office. The talks, led by US Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng, have reportedly set a positive framework to avoid further tariffs—critical for maintaining the recent market rally.
Technical Outlook: FTSE 100 Levels to Watch
From a technical analysis perspective, the FTSE 100’s recent retreat comes after a surge to fresh all-time highs. Immediate support levels sit at 9,610, with further cushions at 9,575 and 9,550. On the upside, resistance is marked at 9,675, 9,700, and the ambitious 9,725 zone (MarketPulse). Traders and investors are watching these levels closely, as volatility could spike with new economic data and policy announcements.
Elsewhere in the world, the Nikkei 225 in Japan closed above 50,000 for the first time ever, powered by expectations of major economic spending from Prime Minister Sanae Takaichi and strong performance from AI-linked stocks like SoftBank Group and Advantest. European shares also hit record highs, with mining and technology stocks leading the charge.
What Lies Ahead: Risks and Opportunities
While the FTSE 100’s pullback might seem like a momentary pause, it is a reminder of the delicate balance between optimism and caution in today’s markets. The potential US-China trade breakthrough has injected new energy, but underlying risks—from UK domestic policy uncertainty to global currency and commodity swings—remain in play. Investors are navigating a landscape where good news can quickly be tempered by policy shifts or unexpected data releases.
As central banks prepare for pivotal meetings, and political leaders gear up for high-stakes summits, the FTSE 100 stands as a barometer for broader market sentiment. The next few days will likely bring fresh volatility, but also opportunities for those able to read the signals and act decisively.
The FTSE 100’s recent performance highlights the interconnectedness of global events, market psychology, and domestic policy. While optimism over a US-China trade deal has fueled record highs, the underlying caution in hiring and investment decisions underscores that markets are still searching for sustained direction. Investors would do well to watch not just the headlines, but the deeper currents shaping risk and opportunity in the weeks ahead.