London close: FTSE jumps as US PCE meets expectations

(Sharecast News) - London stocks ended firmly in the black on Friday, having extended gains in the afternoon after the US Federal Reserve's preferred measure of inflation came in as expected. The FTSE 100 closed up 0.8% at 9,284.83.

Felipe Barragán, expert research strategist at Pepperstone, said the latest PCE figures reinforce the view that while inflation remains above target, it is not accelerating fast enough to derail the easing narrative.

"Headline PCE rose 0.3% in August, while core prices advanced 0.2%, exactly in line with forecasts," he said.

"On a year-over-year basis, headline inflation came in at 2.7% and core at 2.9%, steady rather than alarming. The figures were enough to keep the dollar under pressure, as investors judged there was no reason for the Fed to abandon its gradual path toward rate cuts.

"The reaction underscores a subtle shift in sentiment. Earlier in the week, a stronger-than-expected GDP revision and firm labour data had propped up the dollar on the idea that the Fed might stay cautious. But with PCE matching expectations and showing no renewed flare-up in price pressures, traders are leaning back toward the dovish side. Futures markets continue to price in at least two additional cuts by year-end, and today's data offered little resistance to that view."

Investors largely shrugged off a fresh tariff announcement from President Donald, who said the US will impose 100% tariffs on imported branded drugs, 25% tariffs on imports of heavy-duty trucks and 50% tariffs on kitchen cabinets.

GSK rallied while AstraZeneca eked out small gains as Trump's new pharma tariffs will not apply companies building new sites in the US.

Kathleen Brooks, research director at XTB, said AstraZeneca could be better placed than some of its European rivals, due to promised extra investment in the US that has already been announced, and the President's promise to treat the UK differently when it comes to pharma tariffs.

"Thus, the FTSE 100 could be a relative 'safe haven' in the middle of this latest tariff storm," she said.

Elsewhere, InterContinental Hotels shot to the top of the FTSE 100 after JPMorgan double upgraded the stock to 'overweight' and hiked the price target to 10,400 from 8,500p.

Bakery chain Greggs surged ahead of a third-quarter trading update next Wednesday.

Pennon Group was flat broadly after saying it remained on track to return to profitability, despite the hot summer weather ramping up costs.

Market Movers

FTSE 100 (UKX) 9,284.83 0.77% FTSE 250 (MCX) 21,681.48 0.43% techMARK (TASX) 5,384.76 -0.17%

FTSE 100 - Risers

InterContinental Hotels Group (IHG) 9,124.00p 3.99% Hikma Pharmaceuticals (HIK) 1,641.00p 3.27% Babcock International Group (BAB) 1,273.00p 3.16% Weir Group (WEIR) 2,718.00p 3.03% NATWEST GROUP (NWG) 520.40p 3.01% Kingfisher (KGF) 301.00p 2.80% Rentokil Initial (RTO) 369.50p 2.64% Antofagasta (ANTO) 2,666.00p 2.62% Burberry Group (BRBY) 1,148.50p 2.41% Fresnillo (FRES) 2,320.00p 2.11%

FTSE 100 - Fallers

Metlen Energy & Metals (MTLN) 46.90p -2.09% Smurfit Westrock (DI) (SWR) 3,135.00p -1.91% Rio Tinto (RIO) 4,831.50p -1.72% Coca-Cola Europacific Partners (DI) (CCEP) 6,620.00p -1.19% Spirax Group (SPX) 6,795.00p -1.16% Bunzl (BNZL) 2,336.00p -1.02% Scottish Mortgage Inv Trust (SMT) 1,122.50p -0.97% Diageo (DGE) 1,749.00p -0.96% The Sage Group (SGE) 1,070.00p -0.88% Diploma (DPLM) 5,270.00p -0.85%

FTSE 250 - Risers

Greggs (GRG) 1,596.00p 5.42% THG (THG) 37.00p 4.52% Johnson Service Group (JSG) 148.40p 3.49% Close Brothers Group (CBG) 507.00p 3.47% Dr. Martens (DOCS) 94.60p 3.39% Mitchells & Butlers (MAB) 249.00p 3.32% Hochschild Mining (HOC) 351.80p 3.23% Kier Group (KIE) 214.00p 2.88% AO World (AO.) 99.80p 2.67% Anglo-Eastern Plantations (AEP) 1,385.00p 2.59%

FTSE 250 - Fallers

Oxford Biomedica (OXB) 547.00p -4.54% Pinewood Technologies Group (PINE) 420.50p -3.22% Ashoka India Equity Investment Trust (AIE) 257.00p -2.84% Future (FUTR) 649.00p -2.04% Bridgepoint Group (Reg S) (BPT) 301.40p -1.82% Renishaw (RSW) 3,510.00p -1.82% Tate & Lyle (TATE) 449.60p -1.71% Oxford Instruments (OXIG) 1,864.00p -1.58% Diversified Energy Company (DEC) 1,071.00p -1.38% Templeton Emerging Markets Inv Trust (TEM) 215.50p -1.38%