FTSE 100 reaches record high as pharma stocks surge

​​​The FTSE 100 climbed 0.6% to reach a new record high, outperforming its European peers as pharmaceutical stocks rallied strongly. AstraZeneca overtook HSBC to become the largest UK-listed company by market capitalisation, marking a significant shift in the index's composition.

​The British pound strengthened for a fourth consecutive session, providing additional support to UK equities. This positive momentum comes despite broader concerns about the global economic outlook and central bank policy trajectories.

​Investors responded positively to corporate developments and economic data releases. The rally demonstrated the continued appeal of defensive sectors during periods of uncertainty, with healthcare stocks leading the advance.

​The broader market rally suggests improving sentiment towards UK equities. However, traders remain cautious about sustainability given ongoing macroeconomic headwinds and policy uncertainties facing the British economy.

Pharmaceutical stocks drive FTSE 100 to new peak

​AstraZeneca and GlaxoSmithKline (GSK) both posted strong gains following Pfizer's announcement to cut drug prices to avoid potential US tariffs. This development eased concerns about protectionist policies affecting the pharmaceutical sector's profitability and sparked a broader rally across healthcare stocks.

​AstraZeneca's ascent to become the UK's largest listed company represents a notable milestone. The pharmaceutical giant's market value now exceeds that of banking heavyweight HSBC, reflecting shifting investor preferences towards defensive, healthcare-focused businesses.

​The pharmaceutical sector's outperformance highlights its defensive characteristics during uncertain economic periods. Healthcare stocks typically maintain steady demand regardless of economic cycles, making them attractive to investors seeking stability and consistent growth.

​This rally in pharma stocks contributed significantly to the FTSE 100's record-breaking performance. The sector's weighting in the index means movements in major pharmaceutical companies can substantially influence overall index direction and performance.

​Greggs shares jump on strong sales performance

​Greggs shares surged as much as 13%, marking the bakery chain's biggest single-day gain since 2021. The rally came after the company reported stronger-than-expected sales during the late summer period, demonstrating resilient consumer spending on affordable food options.

​Despite the positive sales performance, Greggs trimmed its store-opening targets for the year. This adjustment reflects a more cautious approach to expansion amid ongoing uncertainty about the economic outlook and consumer spending patterns.

​The bakery chain's performance contrasts with struggles faced by other retailers. Greggs' focus on value-oriented products appears to resonate with cost-conscious consumers navigating elevated living costs and economic pressures.

​Investors welcomed the company's ability to maintain sales momentum despite challenging conditions. The strong performance suggests Greggs' business model remains robust and well-positioned to navigate the current economic environment.

​Mixed fortunes for UK retailers and consumer stocks

​Tate & Lyle slumped 11% after issuing weak earnings guidance, highlighting challenges facing food ingredient suppliers. The sweetener and starch manufacturer's disappointing outlook underscored pressure on margins and demand in the processed foods sector.

​Flutter Entertainment and Entain both declined on concerns about potential tax increases affecting the gambling sector. Regulatory scrutiny and taxation remain persistent headwinds for betting companies operating in the UK market.

Topps Tiles bucked the negative trend, rising 8% after reporting record revenue. The tile retailer's performance suggests pockets of strength remain in the housing-related retail sector despite broader economic uncertainties.

​These divergent performances across consumer-facing sectors illustrate the selective nature of the current market. Investors are increasingly discerning, rewarding companies demonstrating pricing power and operational resilience while punishing those facing structural or cyclical headwinds.

​Housing market shows resilience amid rate concerns

Nationwide reported house prices rose 0.5% in September, exceeding market expectations. The data suggests the UK housing market maintains a degree of resilience despite elevated interest rates and affordability challenges.

​Regional and property-type variations persist across the housing market. Some areas continue experiencing stronger demand and price growth, while others face more subdued conditions reflecting local economic factors.

​Bank of England (BoE) officials warned of risks from keeping interest rates elevated for extended periods. These comments signal growing awareness of potential economic damage from maintaining restrictive monetary policy too long.

​The housing data provided a positive backdrop for property-related stocks and the broader market. Continued stability in house prices supports consumer confidence and wealth effects, though affordability remains stretched for many potential buyers.

Global markets context and outlook

​Wall Street posted gains across major indices, with the S&P 500 rising 0.41% and the Nasdaq 100 adding 0.31%. The US stock market completed a strong third quarter (Q3), with the S&P 500 gaining 7.8% and the Nasdaq surging 11.2%.

​September proved the best month for the S&P 500 since 2010, gaining 3.5%. This positive seasonal performance defied historical patterns showing September as typically weak for equities.

​However, investors now face uncertainty from the US government shutdown. The closure could delay key economic data releases, including the crucial jobs report, complicating the Federal Reserve's (Fed) policy decisions.

Gold reached fresh record highs as the shutdown began, reflecting safe-haven demand. Asian markets opened weaker, with Japan's Nikkei 225 falling 1%, suggesting some caution heading into the new quarter.