Early market roundup: Stocks mostly higher but UK data hits sterling

Stocks in Europe were mostly higher on Friday morning as a week stacked with major central bank decisions draws to a close, while the pound was under pressure after UK public finances data that made for grim reading once again.

The FTSE 100 index rose just 4.52 points at 9,232.63. The FTSE 250 fell 43.63 points, 0.2%, at 21,682.32, and the AIM All-Share was down just 0.23 of a point at 772.11.

The Cboe UK 100 was flat at 924.54, the Cboe UK 250 was 0.2% lower at 18,992.83, but the Cboe Small Companies was 0.1% higher at 17,321.70.

In Paris, the CAC 40 was up 0.3%. In Frankfurt, the DAX 40 edged 0.1% higher.

The pound fell to $1.3505 on Friday morning, from $1.3556 at the time of the London equities close on Thursday. The euro bought $1.1776, down from $1.1786. Against the yen, the dollar fell to JP¥147.78 from JP¥147.94.

‘Jobless claims dropped back sharply yesterday, a rare positive development for the US jobs market and the dollar. But we still think the greenback is due to give up its post-Fed gains in the near term. Meanwhile, the Bank of Japan surprised with a hawkish vote split as it held rates unchanged today, raising the chances of an October hike and JPY outperformance,’ analysts at ING commented.

In the week ending September 13, new claims for unemployment insurance fell to 231,000, from 264,000 a week prior. The prior figure was upwardly revised from 263,000. The latest figure was below the FXStreet cited consensus of 240,000.

The Bank of Japan said Friday it would keep its main interest rate unchanged at 0.50%, as expected, with economists forecasting officials to announce a hike in the coming months.

However, the BoJ also said it would sell financial assets it had previously acquired to keep rates lower – including exchange-traded funds – marking a new phase of its monetary tightening policy.

‘Japan’s economic growth is likely to moderate, as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline in domestic corporate profits,’ the BoJ said in a statement following the decision.

The announcement comes hours after government data showed inflation in the fourth-largest economy slowed to 2.7% in August partly because of government energy subsidies, with rice prices increasing 69% year-on-year.

The Nikkei 225 ended down 0.6% on Friday. In China, the Shanghai Composite fell 0.3%, while the Hang Seng Index in Hong Kong was down 0.3%. In Sydney, the S&P/ASX 200 rose 0.3%.

In New York on Thursday, the Dow Jones Industrial Average closed up 0.3%, the S&P 500 added 0.5% and the Nasdaq Composite climbed 0.9%.

The yield on the 10-year US Treasury advanced to 4.13% early Friday, from 4.11% at the time of the London equities close Thursday. The yield on the 30-year widened to 4.75% from 4.73%.

Eyes also remain on the UK bond market, XTB analyst Kathleen Brooks said, in the wake of public finances data that made for difficult reading for the government.

The Office for National Statistics said UK government net borrowing rose to £17.96 billion, from £2.82 billion in July. It was up on-year from £14.24 billion and is the loftiest August borrowing figure for five years.

The latest figure was ahead of FXStreet’s cited consensus, which expected a net borrowing figure of £12.5 billion.

‘Borrowing in the financial year to August 2025 was £83.8 billion; this was £16.2 billion more than in the same five-month period of 2024 and the second-highest April to August borrowing since monthly records began in 1993, after that of 2020,’ the ONS added.

‘The current budget – borrowing to fund day-to-day public sector activities – was £13.6 billion in August 2025; this brings the total current budget deficit in the financial year to August 2025 to £62.0 billion, which is £13.8 billion more than in the same five-month period of 2024.’

The ONS added that public sector net debt, excluding public sector banks, was provisionally estimated at 96.4% of gross domestic product at the end of August 2025. This was 0.5 percentage points more than at the end of August 2024 and ‘remains at levels last seen in the early 1960s’, the ONS added.

XTB’s Brooks commented: ‘This is going to lead to calls about the sustainability of public finances, and the need for tax rises at the upcoming budget. However, many of the hard-working people that Kier Starmer and Rachel Reeves are pledging to protect will wonder why public spending can’t be cut, and they always have to pay more in an ever widening net of taxation. It could also lead to questions being asked about the size of the UK state, as well as the cost of public services vs private.

‘The UK’s bond market is extremely fragile, 10-year and 30-year yields rose sharply on Thursday, although global long end yields were higher, the UK was the weakest performer across Europe and the US. UK bond yields could rise further on this news, especially as the Bank of England is maintaining its ’careful and gradual’ approach to loosening monetary policy. Although the BoE has reduced the amount of bonds that it is offloading from its balance sheet, especially long end bonds, they are still shrinking their balance sheet albeit at a slower pace. Thus, the BoE cannot be relied on to relieve pressure on the long end of the UK Gilt curve.’

The Bank of England on Thursday voted to hold UK interest rates at 4.00% as expected, amid stubbornly lofty inflation.

Seven members of the nine strong Monetary Policy Committee, including BoE Governor Andrew Bailey, voted to hold interest rates. Bailey was joined by Sarah Breeden, Megan Greene, Clare Lombardelli, Catherine Mann, Huw Pill and Dave Ramsden.

Two MPC members, Swati Dhingra and Alan Taylor, backed a 25 basis point cut.

The committee voted by a majority of 7-2 to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £70 billion over the next 12 months, to a total of £488 billion.

Andrew Bailey, Sarah Breeden, Swati Dhingra, Megan Greene, Clare Lombardelli, Dave Ramsden and Alan Taylor voted in favour of the £70 billion reduction.

Catherine Mann preferred a reduction of £62 billion, and Huw Pill voted to maintain the pace of quantitative tightening at £100 billion.

In London, gold miners were back on the up, after successive daily declines. Endeavour Mining added 3.1% and Fresnillo rose 2.8%.

Brent rose to $67.36 a barrel early Friday, from $67.09 late Thursday. Gold was a touch lower at $3,652.22 an ounce against $3,654.51.

XS.com analyst Linh Tran commented: ‘Gold has just gone through a period of high volatility, reaching a new all-time high around $3,707/oz before retreating to the current level of around $3,650/oz. This rally reflected a combination of monetary easing expectations and increased safe-haven demand, but it also revealed short-term profit-taking pressure as prices quickly pulled back to a significantly lower level. This marks a phase where the gold market enters consolidation after a sharp rally, awaiting clearer macroeconomic signals to determine the next direction.’

Back in London, Spire Healthcare shot up 8.9%. It said it is reviewing options for the business, including a possible sale.

The London-based private healthcare provider said it is working with lead financial adviser Rothschild & Co.

‘This process is highly preliminary and no decision has been made regarding whether any such option will be pursued at this stage,’ Spire added.

The process has a ‘range of potential options’, and these include a possible sale of the company.

The firm said it believes that its freehold property and ‘a well invested asset base’, among others, are not yet reflected by the market in full. Therefore, it actively gauges appropriate action that could drive long-term shareholder value.

Spire said: ‘There can be no certainty either that any offer will be made for the company nor as to the terms of any offer, if made. The company is not in receipt of any approaches and is not in discussions with any parties in respect of a potential sale of the company at the time of this announcement.’

Futura Medical slumped 39%. It warned annual revenue will be ‘materially below expectations’, with a US patent milestone payment now set to fall in 2026.

The sexual health products provider added that it is mulling a way to extend its cash runway and plans a ‘significant restructuring’. Cash and cash equivalents stood at £2.7 million at the end of August 2025, and this is expected to provide it with working capital until January.

Futura added: ‘In view of the reduced operating cash flow outlined above, the ongoing review of the business has been broadened to consider a range of potential options to create shareholder value including but not limited to alternative partnering/licensing and distribution arrangements for Eroxon alongside Eroxon Intense and WSD4000. This may include the sale of one or more assets of the business. The board continue to believe that there is value in the group’s assets and therefore development plans for both Eroxon Intense and WSD4000 continue to progress.’

Futura expects 2025 revenue between £1.3 million and £1.4 million, ‘materially below expectations’. It puts market expectations at £5 million.

Sales of erectile dysfunction treatment Eroxon have been slower than originally anticipated.

‘Alongside this sales trend, under the terms of the company’s agreement with Haleon, a payment of $2.5 million is due upon the granting of a US patent for Eroxon that meets the contractual definition of a valid patent claim. All filings have been made and it had been anticipated that this milestone would be achieved in FY 2025, with the payment forming a portion of overall revenue in FY 2025 however it is now expected to crystalise in H1 2026,’ Futura added.

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