London — The FTSE 100 advanced on Friday, supported by easing inflation data and a sharp drop in UK government borrowing costs, even as geopolitical tensions between the United States and China continue to cloud the global market outlook.
The yield on the UK’s 10-year gilt temporarily slipped to its lowest level this year before stabilising around 4.4%, still well above the 2.57% benchmark in the euro area. Investors are cautiously optimistic that the Bank of England could soon begin cutting interest rates more decisively as inflation moderates.
Meanwhile, commodity-linked stocks led gains across London markets. Oil and gas majors climbed as Brent crude rose to a two-week high of $65.50 per barrel, driven by fresh U.S. sanctions on Russian producers. Precious metals also recovered from earlier declines, lifting Fresnillo shares by more than $5 on the day.
Trade and Technology Tensions
Across the Atlantic, investors remain on edge as the U.S.–China trade relationship faces renewed strain ahead of next week’s Trump–Xi meeting. Market jitters eased slightly after news that U.S. Trade Representative Scott Bessant met his Chinese counterpart to seek common ground, though uncertainty persists.
Washington is reportedly considering sweeping export restrictions on products incorporating U.S. software — a move that could affect sectors ranging from laptop manufacturing to aerospace. The proposal marks a significant escalation in the ongoing technology standoff, reinforcing concerns about supply chain disruptions and corporate exposure.
With 100% tariffs on Chinese imports set to take effect on 1 November, both sides appear to be hardening their negotiating positions. Analysts view the rhetoric as part of a pre-summit strategy, with each party signalling leverage ahead of possible concessions.
“There’s significant positioning taking place,” said Joshua Mahony, Chief Market Analyst at Scope Markets. “Both sides are testing boundaries, but the rewards could be considerable if a breakthrough occurs.”
While a limited agreement — such as the resumption of Chinese soybean and rare earth purchases — could improve sentiment, Mahony cautioned that any deal is unlikely to deliver a substantial lift to the U.S. economy.
Energy Markets in Focus
Oil prices surged as geopolitical tensions deepened on another front. President Donald Trump reportedly hardened his stance on Russia, following the collapse of backchannel talks over Ukraine’s Donbas region.
The latest U.S. sanctions target major Russian oil producers, while Europe has moved to ban Russian LNG imports. Hopes are rising that the tightening measures could push Moscow back to the negotiating table.
Meanwhile, India — one of Russia’s largest remaining energy customers — is reportedly preparing to slash Russian crude imports to zero, seeking reduced U.S. tariff rates in exchange. The timeline for the shift, however, remains uncertain given the scale of India’s energy dependence.
Overall, markets are attempting to balance improving inflation and yield trends against a volatile geopolitical backdrop. As traders await the outcome of the Trump–Xi meeting, the next week may prove decisive in determining whether markets consolidate on optimism — or retreat on renewed trade confrontation.
