Earnings propel FTSE 100 to new high

The FTSE 100 surged to a new record high, buoyed by strong gains in energy and financials and optimism around global technology earnings. Investor sentiment was further supported by expectations that the Bank of England may cut interest rates in December, despite holding them at 4% at its most-recent meeting, and upbeat corporate updates from heavyweights such as HSBC and AstraZeneca. 

The UK third-quarter earnings season has so far painted a picture of resilience amid macro uncertainty, with most blue-chip companies delivering results broadly in line or ahead of expectations. Retail names including J Sainsbury and Marks & Spencer surprised positively, helped by cost controls and steady grocery volumes, though discretionary spending remains under pressure. Financials have held up well thanks to stable credit quality and healthy margins, while utilities like National Grid reaffirmed guidance despite inflationary headwinds. Overall, earnings momentum is solid, but management commentary signals caution on input costs and geopolitical risks, leaving investors focused on whether rate-cut hopes and holiday demand can sustain the rally into year-end. 

The FTSE 100 was down 0.3% over the week by mid-session on Friday, with the more UK-focused FTSE 250 trading 1.4% lower after highs were hit earlier in the week.

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Donald Trump

The US government shutdown is now the longest in American history, with no clear resolution in sight. The impasse, which began on 1 October after Congress failed to pass a budget, stems from a bitter standoff over health-care subsidies and Medicaid funding, with Democrats demanding extensions and Republicans insisting on reopening the government first. The prolonged closure has left 775,000 federal workers furloughed or unpaid, disrupted SNAP food assistance for over 40 million Americans, and triggered plans for a 10% cut in flights at 40 major airports due to air traffic controller shortages. While bipartisan talks have intensified and Senate leaders express cautious optimism about finding an “off-ramp”, 14 attempts to pass a funding bill have failed, and President Trump is pressuring Republicans to scrap the filibuster to break the deadlock. Betting markets now predict the shutdown could last into mid-November, underscoring the deep political divide and mounting economic and social fallout. 

Autumn Budget

Prime Minster Keir Starmer and Chancellor Rachel Reeves made a sharp shift in tone ahead of the 26 November Autumn Budget, refusing to rule out breaking Labour’s manifesto pledge not to raise income tax, VAT or National Insurance as they grapple with a £20bn–50bn fiscal shortfall. Reeves hinted at a possible “two up, two down” move – raising income tax by 2p while cutting National Insurance by the same amount – to protect “working people” while still meeting strict borrowing rules – and stressed that the national interest comes before political expediency. Sir Keir echoed that stance, saying those with the “broadest shoulders” should bear the greatest burden, amid speculation of new property levies and pensioner-focused tax changes. Both leaders framed the Budget as a test of credibility, promising fairness and investment in public services, but their comments have fuelled fears of a political gamble that could trigger backlash within Labour ranks and among voters. 

Reeves refuses to rule out tax rises in the Budget – what might change?

The UK’s Autumn Budget later this month is poised to be one of the most consequential fiscal events for mid-cap investors in years. How will it shape the FTSE 250?

Economics

The Bank of England kept interest rates unchanged at 4% on 6 November in a closely split 5–4 vote, signalling growing divisions within the Monetary Policy Committee as inflation cools and growth slows. Four members pushed for an immediate 25bp cut, citing easing wage growth and mounting economic slack, while Governor Andrew Bailey stressed a “wait and see” approach until disinflation proves durable. The Bank’s latest projections show the consumer price index (CPI measure of inflation falling toward 3% early next year, down from 3.8% in September, and GDP growth trimmed to 0.75% for 2025, reinforcing expectations of a December cut if upcoming data confirm the trend. Markets interpreted the decision as a dovish hold, with sterling steady and traders pricing a roughly 60% chance of easing next month, though policymakers remain cautious ahead of the Autumn Budget and two key inflation releases. 

This week’s purchasing managers index (PMI) data signalled a mixed but improving picture for global activity. In the UK, the Composite PMI jumped to 52.2 in October from 50.1, it’s highest in five months, as services rebounded strongly to 52.3, offsetting a still-contracted manufacturing reading of 49.7. Survey respondents cited better domestic demand, easing cost pressures, and stabilising employment, though uncertainty ahead of the Autumn Budget and tariffs remain headwinds. Across the Atlantic, US data showed divergence: the ISM Manufacturing PMI slipped to 48.7, marking an eighth straight month of contraction, while the ISM Services PMI rose to 52.4, pointing to continued expansion in the dominant services sector. Meanwhile, the S&P Global US Manufacturing PMI held firm at 52.5, its third consecutive month of growth, supported by new orders despite weak exports. Overall, the reports suggest services-led resilience amid manufacturing softness, reinforcing expectations of cautious central bank easing rather than aggressive cuts. 

This week’s US jobs report underscored a fragile labour market, with October nonfarm payrolls rising just 22,000, well below historical norms and consensus expectations, while the unemployment rate held at 4.3%. The muted job growth follows downward revisions totalling 911,000 jobs over the past year, reinforcing concerns that hiring momentum is stalling despite recent Federal Reserve rate cuts. Wage growth remained steady at around 3.7% year-on-year, suggesting inflationary pressures persist even as employment cools. Markets interpreted the data as broadly dovish, boosting bets on another 25bp rate cut in December, though analysts warn that persistent weakness could signal deeper structural issues heading into 2026. The report, delayed by the ongoing government shutdown, has heightened volatility in Treasuries and the dollar, as investors weigh whether the US central bank can engineer a soft landing without tipping the economy into recession. 

Companies

After years of pandemic-fuelled growth, the luxury-goods sector faces a reckoning. Economic headwinds, cultural shifts, and price fatigue mean recovery won’t come from the old playbook. Beyond the boom: why the luxury-goods industry must evolve to survive.

Amazon struck a seven-year, $38bn deal with OpenAI, giving the ChatGPT maker access to hundreds of thousands of Nvidia Graphics Processing Units (GPUs) through Amazon Web Services to power its next-generation AI models. The agreement marks OpenAI’s biggest move away from Microsoft’s Azure exclusivity and underscores the industry’s insatiable demand for computing power as AI ambitions scale. OpenAI will begin using AWS immediately, with full capacity expected by 2026 and room for expansion beyond 2027, while Amazon plans to build out dedicated data clusters for the partnership. The deal sent Amazon shares to an all-time high, signalling investor confidence in AWS’s ability to compete in the AI infrastructure race, even as analysts warn of ballooning costs and a potential AI bubble. Is AI a financial bubble?

OpenAI has completed a long-awaited restructuring, handing its largest shareholder Microsoft a $135bn stake and propelling the software giant to a $4tn market capitalisation. The deal values OpenAI at $500bn and gives the tech giant a 27% stake worth $135bn, alongside a commitment from OpenAI to spend $250bn on Azure cloud services. The agreement restructures OpenAI into a public benefit corporation under nonprofit oversight, removing fundraising constraints and paving the way for a potential IPO. Microsoft retains long-term access to OpenAI’s advanced models – including any that achieve artificial general intelligence – through 2032, while relinquishing its previous exclusivity on cloud workloads, allowing OpenAI to pursue a multi-cloud strategy. The pact, which delivers Microsoft a near tenfold return on its $13.8bn investment since 2019, underscores its ambition to dominate AI infrastructure and services even as competition from Amazon and Google intensifies. How to invest in AI.

Tesla shareholders approved a record-breaking compensation plan for chief executive Elon Musk that could be worth up to $1 trillion over the next decade, making it the largest executive pay package in corporate history. Backed by more than 75% of investors, the deal grants Mr Musk 12 tranches of stock options tied to ambitious milestones, including boosting the US-listed group’s market capitalisation from about $1.5 trillion to $8.5 trillion, delivering 20 million vehicles, and deploying 1 million robotaxis and humanoid robots. Mr Musk will receive no salary or cash bonus; his payout depends entirely on Tesla hitting these targets, which would also raise his stake to roughly 25% and cement his control over the company. Critics, including Norway’s sovereign wealth fund and proxy advisors, warned of dilution and governance risks, but Tesla’s board argued the package is essential to keep Mr Musk focused as the automaker pivots toward AI and robotics. If successful, the plan could make Mr Musk the world’s first trillionaire and redefine the scale of chief executive compensation. 

BP beat expectations in the third quarter, posting underlying replacement cost profit of $2.22bn – above consensus despite weaker oil prices – thanks to higher crude and gas output and stronger refining margins. Revenue rose to $49.3bn from $48.3bn a year earlier, while operating cash flow surged to $7.8bn. The company announced a $750m share buyback and maintained its quarterly dividend at 8.32 cents per share, signalling confidence even as hydrocarbon price realisations fell and trading results softened. 

Saudi Aramco defied weak oil prices to post a stronger-than-expected third-quarter performance, with adjusted net income rising 1% year-on-year to $27.9bn, beating analyst forecasts despite Brent crude hovering near $65 a barrel. Reported net profit slipped slightly to $26.9bn from $27.5bn a year earlier as lower crude and product prices weighed on revenue, which fell to $111bn from $123bn. The world’s largest oil exporter offset price pressure with higher production and tight cost control. 

Marks & Spencer reported second-quarter figures that underlined resilience amid lingering fallout from April’s cyberattack, with group adjusted profit before tax down to £184.1m from £413m a year earlier despite £100m in insurance proceeds. Food continued to outperform, delivering 7.8% sales growth and margin gains, while Fashion, Home & Beauty slumped 16.4% as online disruption and stock flow issues weighed on performance. International sales fell 11.6%, and Ocado Retail posted a small operating loss, though joint-venture sales rose nearly 15%. Chief executive Stuart Machin said M&S is “regaining momentum” and reaffirmed full-year profit guidance, citing strong Christmas plans and accelerated transformation initiatives, including store renewals and supply chain modernisation. 

Associated British Foods posted a mixed third-quarter performance, with Primark delivering modest 1% sales growth driven by new store openings in the US and Europe, while like-for-like sales fell 2.3% amid subdued consumer demand on the continent. Group revenue slipped 1% year-on-year to £19.5bn, as resilience in retail and grocery was offset by a sharp downturn in sugar, which swung to an operating loss following weak European pricing and restructuring costs. Adjusted operating profit dropped 12% to £1.73 billion, prompting management to announce a £250m share buyback and maintain its dividend at 63p per share. Against this backdrop, AB Foods confirmed it is conducting a strategic review that could lead to a separation of Primark from its food businesses – a move that could unlock value but adds uncertainty as the group navigates volatile markets and cost pressures. 

AstraZeneca posted a strong third-quarter performance, with revenue up 12% year-on-year to $15.19bn, beating forecasts, and core earnings per share rising 14% to $2.38. Growth was driven by robust growth in oncology (+18%) and respiratory and immunology (+14%), alongside gains in rare diseases (+11%). Sales grew across all regions, led by a 25% rise in emerging markets excluding China. Chief executive Pascal Soriot highlighted “unprecedented” pipeline progress, including 16 positive Phase III readouts this year, and reaffirmed full-year guidance for high single-digit revenue growth and low double-digit core EPS growth. The company also pointed to strategic US expansion, including a $4.5bn manufacturing facility in Virginia, as it targets $80bn in revenue by 2030. 

Ryanair delivered a sharp earnings surprise in its fiscal third quarter, posting net profit of €149m – ten times higher than a year ago – on the back of a 9% rise in traffic to 45 million passengers and slightly firmer fares. Revenue climbed 10% to €2.96bn, beating estimates, while ancillary sales also grew. However, the upbeat numbers were tempered by a downgrade to full-year traffic guidance, cut to 206 million passengers from 210 million, as Boeing delivery delays continue to bite. Management reiterated its profit forecast of €1.55bn-€1.61bn and highlighted strong Christmas bookings. With European short-haul capacity still tight, Ryanair’s cost advantage and fuel hedging offer resilience, yet investors remain watchful as supply chain issues cloud its growth ambitions.

International Airlines Group (IAG), the owner of British Airways, Iberia and Aer Lingus, posted a third-quarter operating profit of €2.05bn, up 2% year-on-year and broadly in line with forecasts, as strong summer travel demand offset signs of cooling on transatlantic routes. Total revenue was €9.33bn, virtually flat on last year, while non-fuel unit costs rose just 0.2%, underscoring tight cost control. The group reported an operating margin of 22% and said adjusted earnings per share for the nine months to September jumped 27%, supported by disciplined investment and efficiency gains. IAG has nearly completed a €1bn share buyback and declared an interim dividend of €0.048 per share, reaffirming its outlook for full-year revenue and profit growth despite geopolitical and macroeconomic headwinds. 

US-listed Arm Holdings delivered its strongest second quarter on record, with revenue surging 34% year-on-year to $1.14bn, comfortably ahead of forecasts, as demand for AI-driven compute designs powered growth across data centre, smartphone, and automotive markets. Royalty income hit a record $620m, up 21%, while licensing revenue jumped 56% to $515m, reflecting robust uptake of Arm’s next-generation architectures. Chief executive Rene Haas hailed Arm as “the only compute platform delivering AI everywhere,” citing a strategic partnership with Meta and accelerating adoption of Neoverse chips in hyperscale data centres. 

Barratt Redrow delivered a steady third-quarter performance despite a tough housing backdrop, reporting a net private reservation rate of 0.57 per outlet per week – slightly below last year’s 0.59 – as affordability pressures and uncertainty ahead of the November Budget weighed on demand. Completions rose 7.9% to 3,665 homes, while the forward order book held firm at 10,669 units valued at £3.28bn. The group reiterated full-year guidance for 17,200–17,800 completions and confirmed £80m of cost synergies from its Redrow integration, with a £100m target on track. 

CRH delivered another record third quarter, with net income up 9% year-on-year to $1.5bn, driven by strong pricing, resilient demand, and contributions from recent acquisitions. Revenue climbed 5% to $11.1bn. The building materials giant completed nine acquisitions worth $2.5bn during the quarter and returned $1.1bn to shareholders via buybacks, alongside a 6% dividend increase to $0.37 per share. Chief executive Jim Mintern highlighted “favourable underlying demand and positive pricing momentum” as CRH positions for another record year. 

Danish-listed Novo Nordisk delivered a mixed third quarter, reporting revenue of DKK 74.98bn, up 5% year-on-year, but missing analyst forecasts, while net profit fell 27% to DKK 20bn amid rising costs and restructuring charges. Adjusted earnings per share came in at $1.02, beating expectations. Sales of obesity drug Wegovy rose 18% and diabetes blockbuster Ozempic climbed 9%, but growth slowed due to US pricing pressure and fierce competition from Eli Lilly. The Danish drugmaker cut its full-year guidance to 8%-11% sales growth and 4%-7% operating profit growth, down from earlier forecasts, and announced plans to slash 9,000 jobs globally as part of a transformation program.

Weir Group reported a solid third-quarter performance, with total orders up 2% year-on-year, supported by acquisitions of Micromine and Townley, while underlying original equipment orders surged 15% excluding last year’s large contracts. Aftermarket orders grew 10%, reflecting installed base expansion and software-driven demand. The Glasgow-based engineering company reaffirmed its full-year guidance for constant currency revenue and operating profit growth, targeting an operating margin of around 20% and free cash conversion of 90%–100%. 

Diageo delivered a muted first-quarter update, with organic net sales flat year-on-year and reported sales down 2.2% to $4.9bn, as volume growth of 2.9% was offset by a negative price/mix impact of 2.8%. Solid gains in Europe, Latin America and Africa were overshadowed by sharp declines in Asia Pacific, where Chinese white spirits slumped, and by a softer US spirits market, which fell 4.1% amid weak consumer confidence and heightened tequila competition. North America, Diageo’s largest region, saw organic sales drop 2.7%, while Asia Pacific fell 7.5%. Interim chief executive Nik Jhangiani said the group was “not satisfied” with its performance and cut full-year guidance, now expecting organic net sales to be flat to slightly down and operating profit growth in the low to mid-single digits. 

Hiscox reported a solid third-quarter performance, with group insurance contract written premiums up 5.9% year-on-year to $4.05bn, driven by strong momentum in its Retail division. The insurer delivered an investment return of $350.8m, or 4.2% year-to-date, and continued its $275m share buyback, repurchasing 10.5 million shares so far. Chief executive Aki Hussain highlighted disciplined cycle management and multi-year margin expansion in Retail, supported by benign weather. 

ITV delivered a better-than-expected third-quarter performance, with group revenue up 2% in the year-to-date to £2.8bn, driven by an 11% rise at ITV Studios and 15% growth in digital advertising as streaming platform ITVX continued to gain traction. Total advertising revenue was flat in the third quarter – ahead of guidance – but remains down 5% year-to-date against tough comparatives from last year’s Men’s Euros. Looking ahead, ITV warned that economic uncertainty and cautious spending ahead of the UK Budget will hit the fourth quarter, with advertising revenue forecast to fall about 9%. To offset this, the broadcaster has identified £35m in temporary savings in its Media & Entertainment division.

National Grid reported a strong set of interim results, with pretax profit up 21% to £826m despite an 11% drop in revenue to £7.07bn, as cost controls and regulated investment drove performance. Underlying operating profit rose 12% to £2.29bn, while underlying EPS increased 6% to 29.8p, in line with its 6%-8% growth target. The utility company invested a record £5.05bn, up 10%, as it accelerated UK transmission upgrades and US infrastructure projects, and reaffirmed plans to deploy over £11bn this year under its £60bn five-year program. An interim dividend of 16.35p per share was declared, up 3% year-on-year. 

J Sainsbury posted stronger-than-expected interim results, with group revenue up 2.8% to £17.6bn and retail sales excluding fuel rising 4.8%, driven by grocery growth of 5.3% and modest gains at Argos and clothing. Management upgraded its full-year profit guidance to more than £1bn and announced shareholder returns expected to exceed £800m, including buybacks and dividends. Management credited its Aldi Price Match, personalised Nectar pricing, and premium own-label innovation for sustaining market share gains and improving value perception, while warning of continued competitive intensity heading into Christmas. 

Smith & Nephew delivered third-quarter revenue of $1.50bn, up 6.3% on a reported basis and 5.0% underlying, but slightly below analyst expectations as strong growth in US hip implants and advanced wound bioactives was offset by continued weakness in knee implants and a slower recovery in Sports Medicine. Management reaffirmed full-year guidance for underlying revenue growth of around 5% and a trading profit margin of 19%-20%, while raising its free cash flow forecast to $750m, citing improved working capital discipline. 

Vistry Group reaffirmed its full-year guidance in a trading update, citing strengthening demand for affordable housing and progress under its partnerships model. The housebuilder reported an 11% rise in weekly sales rates to 0.81, driven by registered providers and local authorities, while open market sales showed only a modest uptick amid economic uncertainty. Although its order book slipped to £4.3bn from £4.8bn, Vistry expects to close several partner-funded deals in the fourth quarter, underpinning confidence in year-on-year profit growth. 

US-listed Uber posted another strong quarter, with revenue up 20% year-on-year to $13.47bn and gross bookings climbing 21% to $49.7bn, driven by a 22% surge in trips and robust growth in delivery, which jumped 29%. Net income soared to $6.6bn, boosted by a $4.9bn tax benefit. Chief executive Dara Khosrowshahi hailed the results as “one of the largest trip-volume increases in the company’s history”, crediting innovation and affordability for the momentum. However, shares fell as investors focused on softer fourth quarter profit guidance and a $479m legal charge tied to regulatory matters, which dented operating income. 

JD Wetherspoon posted a resilient start to its financial year, with like-for-like sales up 3.7% in the 14 weeks to 2 November, driven by a 5.7% rise in bar sales and an 8.9% boost from gaming machines. Food sales edged up just 0.9% and hotel revenue fell 6.3%. Total sales grew 4.2%, marking the pub chain’s 37th consecutive month of outperforming the wider hospitality sector, which saw growth of only 0.2% in September. Expansion continued with four new pubs and three franchised sites opened year-to-date, as the group targets 15 of each for the full year. Despite the upbeat trading, chairman Tim Martin struck a cautious tone ahead of the UK Budget, warning of inflationary pressures from rising energy costs and highlighting structural disadvantages pubs face versus supermarkets on VAT and labour costs. 

Auto Trader posted solid interim results, with revenue up 5% to £317.7m and operating profit rising 6% to £200.1m, while basic EPS jumped 11% to 17.26p. Retailer revenue grew 6%, driven by a 1% increase in forecourts and a 5% uplift in average revenue per retailer, supported by April’s pricing and product event. The FTSE 100 group highlighted strong demand for used cars and record engagement across its platform.

US-listed McDonald’s posted mixed third-quarter results, with revenue rising 3% year-on-year to $7.08bn but falling slightly short of Wall Street forecasts, while adjusted earnings per share came in at $3.22 versus expectations of $3.33. Net income was $2.28bn, up 1% from last year. Global comparable sales grew 3.6%, driven by gains of 2.4% in the US and more than 4% in international markets, helped by value promotions and the return of Snack Wraps. However, management flagged ongoing pressure from lower-income consumers and inflation, which weighed on margins and contributed to the earnings miss. Despite the shortfall, the shares rose as investors focused on steady sales growth and loyalty program momentum, with systemwide sales topping $36bn for the quarter.