FTSE 100 extends gains as markets await Powell's Jackson Hole speech

​​​FTSE 100 outperforms European markets again

​The FTSE 100 extended its winning streak for a fourth consecutive day, rising 0.1% at the open and continuing to outperform its continental European counterparts. The index's resilience reflects its unique sector composition, which has proven advantageous in the current market environment.

​Defence stocks provided significant support, with Rolls-Royce and BAE Systems rebounding strongly. These companies have benefited from increased geopolitical tensions and rising global defence spending, making them attractive to investors seeking exposure to structural growth themes.

​Energy majors BP and Shell also contributed to the index's gains as crude oil prices continued their upward trajectory. The FTSE 100's heavy weighting in commodity-linked stocks has served it well during periods of resource price strength.

​The index's outperformance versus European peers stems from its defensive sector composition and limited exposure to struggling technology and media shares that have weighed heavily on other regional markets. This structural advantage has become increasingly valuable as investors rotate towards more defensive positioning.

​The FTSE 250 faced greater challenges, declining 0.2% as individual company stories overshadowed broader market sentiment. The mid-cap index's underperformance highlighted the importance of stock selection in current market conditions, where company-specific factors often outweigh macro trends.

​Powell's Jackson Hole speech takes centre stage

​Markets are holding their breath ahead of Federal Reserve (Fed) Chair Jerome Powell's much-anticipated speech at the Jackson Hole Economic Symposium on Friday. The event has historically served as a platform for major policy announcements and guidance on future monetary policy direction.

​Investors are pricing in an 80% probability of a September interest rate cut following mixed inflation data and softer-than-expected payrolls released earlier this month. This dovish sentiment has been building as economic indicators suggest the Fed's aggressive tightening cycle may be nearing its end.

​The mixed signals from recent economic data have left traders uncertain about the central bank's next moves. While inflation remains above the Fed's 2% target, the pace of price increases has shown signs of moderating in recent months.

​Powell's remarks will be closely scrutinised for any hints about the timing and magnitude of potential rate cuts. The speech could provide crucial insight into whether the Fed will adopt a more accommodative stance in the coming months.

​Mixed fortunes for individual UK stocks

​The FTSE 250 faced headwinds, declining 0.2% as individual stock stories dominated headlines. WH Smith suffered its worst day on record, plummeting 33% after the retailer slashed profit guidance for its North America division from £55 million to just £25 million.

​The dramatic revision was attributed to accelerated recognition of supplier income and overestimating incentives and discounts. WH Smith's board has instructed Deloitte to undertake an independent comprehensive review, highlighting the severity of the operational challenges facing the company.

​Recruitment firm Hays also disappointed investors, cutting its final dividend and announcing further cost-cutting measures worth £45 million annually by 2029. The company's shares fell 8.2% despite an initial uptick at the open, making it the second-biggest loser on the FTSE 250.

​Hays faced additional pressure beyond the dividend cut, with full-year net fees falling 11% year-on-year (YoY) and profit before tax dropping 90%. Chief Executive Dirk Hahn attributed the poor performance to challenging market conditions, with economic and political uncertainty weighing on confidence and reducing placement volumes.

​In contrast, Renishaw provided a bright spot, surging 8.9% after indicating full-year profits would come in at the high end of guidance. The strong performance suggests the company has successfully navigated US tariff pressures while implementing cost savings ahead of schedule.

​Tech stocks struggle

​Technology stocks faced another challenging session as investors continued rotating away from high-growth sectors into more value-oriented plays. The Nasdaq Composite declined 0.7%, while the broader S&P 500 fell 0.2% as selling pressure intensified across major tech names.

​Chipmaker giants Nvidia and Advanced Micro Devices (AMD) extended their recent losses amid growing concerns that artificial intelligence (AI) spending may not sustain the extraordinary gains witnessed over the past year. These semiconductor leaders have been particularly vulnerable to profit-taking after their meteoric rise.

​The sector rotation reflects growing investor appetite for cheaper, more defensive sectors that could benefit from a potential economic slowdown. Financial services and utilities have attracted renewed interest as traders seek shelter from volatility.

​The selloff in technology shares highlights the market's evolving narrative around AI investments. While the long-term potential remains intact, investors are becoming more cautious about valuations and the pace of returns on AI-related capital expenditure.

​Asian markets show mixed performance

​Asian markets delivered a mixed session as regional indices struggled to find clear direction ahead of Powell's Jackson Hole appearance. Japan's Nikkei 225 eased 0.6% from recent record highs, weighed down by weakness in Tokyo Electron, though Advantest provided some support with a 3% gain.

​Australia's ASX 200 reached an all-time high, supported by strength in mining and financial stocks. The benchmark's resilience reflects the country's commodity-rich economy and relatively stable interest rate environment compared to other developed markets.

​Trump intensifies pressure on Federal Reserve

​Political tensions surrounding Fed independence have escalated as President Trump demanded the resignation of Governor Lisa Cook amid mortgage-related allegations. The unprecedented public pressure on a sitting Fed governor has raised concerns about potential political interference in monetary policy decisions.

​Trump has simultaneously pushed for the nomination of Stephen Miran to a key Fed position, signalling his intent to reshape the central bank's leadership. The move has sparked debate about the appropriate balance between political oversight and Fed autonomy.

​Oil extends gains on inventory draws

​Energy markets continued their recent upward momentum, with Brent crude oil rising 0.5% to $67.19 per barrel and West Texas Intermediate (WTI) crude oil advancing 0.6% to $63.10. The gains were supported by larger-than-expected drawdowns in US crude oil inventories, signalling robust underlying demand.

​Weekly inventory data showed a significant decline in stockpiles, reinforcing expectations that global oil demand remains resilient despite broader economic uncertainties. The inventory draws suggest that supply and demand fundamentals are tightening in the energy complex.

​OPEC+ production restraint continues to provide a floor for prices, with the producer group maintaining its disciplined approach to output management. This coordinated effort has helped stabilise the market after earlier volatility.

​Traders focusing on commodity trading opportunities should note that oil's technical picture has improved markedly. The break above key resistance levels suggests further upside potential if demand trends continue to strengthen.

​UK bonds and safe-haven assets mixed

​Gold edged slightly lower to $3342.00 per ounce as investors remained divided on the precious metal's near-term direction. The modest decline came despite ongoing uncertainty about Fed policy, as some traders took profits following recent gains.

​UK gilt yields remained broadly unchanged following the better-than-expected public borrowing data, suggesting bond markets had already priced in reasonable fiscal performance. The stability in government bond yields provides a supportive backdrop for UK equity markets.

​Bitcoin showed resilience, recovering toward $114,700.00 after earlier weakness. The cryptocurrency's ability to bounce back demonstrates growing institutional interest in digital assets as traditional correlations between asset classes continue to evolve.

​US 10-year Treasury yields held steady at 4.30% as bond traders awaited fresh guidance from Powell's Jackson Hole speech. The British pound's weakness against the US dollar, trading closer to $1.34, reflects ongoing concerns about UK economic growth prospects despite improved public finances.