FTSE 100 rebounds as political turmoil drives gold to record highs

​​​FTSE 100 stages modest recovery after recent weakness

​The FTSE 100 opened 0.1% higher on Tuesday, providing some respite after recent declines. The modest rebound comes as investors digest a complex mix of geopolitical uncertainty and corporate news.

​The recovery, whilst welcome, remains fragile given the multiple headwinds facing UK equities. The index has struggled to maintain momentum in recent sessions, with concerns about slowing economic growth weighing on sentiment.

​Global factors continue to dominate price action, with the stronger US dollar creating additional pressure for UK exporters. This dynamic has made it harder for the FTSE 100 to sustain rallies, even as individual stocks post strong gains.

​Traders should note that the index remains vulnerable to further volatility, particularly given the ongoing political uncertainty in France. Any escalation could trigger renewed safe-haven flows and further weakness in risk assets.

​Pound slips as French political crisis deepens

​Sterling fell 0.4% to around $1.34 as political turmoil in France sent ripples across European currency markets. The pound's weakness reflects broader concerns about continental Europe's economic and political stability.

​French Prime Minister Sebastien Lecornu's resignation has deepened the crisis, with President Macron giving him just 48 hours to negotiate a solution. This dramatic development has increased uncertainty across the eurozone.

​The spillover effect has been evident in currency markets, with the euro remaining under pressure and the pound suffering collateral damage. French bond yields rose sharply, highlighting investor concerns about fiscal stability.

​Gold hits record high near $4,000 on safe-haven demand

Gold climbed to a record high near $3,980.00 per ounce, supported by multiple tailwinds. The French political crisis and the ongoing US government shutdown have driven investors towards the traditional safe-haven asset.

​Goldman Sachs responded to gold's strength by raising its 2026 forecast to $4,900.00 per ounce. This bullish outlook reflects expectations of continued geopolitical uncertainty and potential central bank easing.

​The precious metal's rally has been remarkably sustained, with the price showing little sign of a meaningful pullback. This suggests strong underlying demand from both institutional and retail investors.

​Traders should monitor key resistance levels carefully. Whilst the momentum remains positive, any resolution to the French crisis or progress on the US government shutdown could trigger profit-taking at these elevated levels.

​Shell and Imperial Brands lead UK stock gainers

Shell shares rose nearly 2% following a bullish third-quarter (Q3) trading update. The energy giant benefited from stronger gas performance, offsetting concerns about weaker oil prices.

Imperial Brands jumped 3.7% after announcing a £1.45 billion share buyback programme. The tobacco company's total planned shareholder returns now exceed £2.7 billion, demonstrating management's confidence in cash generation.

​Funding Circle surged 10% after a loan settlement, whilst Rentokil gained 4% on a broker upgrade. Quilter added 2% on renewed takeover speculation, highlighting the diverse sources of gains across the market.

​These positive moves were partially offset by B&M's dramatic plunge. The discount retailer fell as much as 22%, its biggest single-day fall on record, after admitting to "weak" operational execution and announcing price cuts. 

Housing market shows signs of cooling pressure

​Halifax reported UK house prices fell 0.3% in September, with annual growth slowing to 1.3%. This marks the weakest year-on-year increase since April 2024, suggesting mounting pressure on the property market.

​Regional variations remain significant, with London prices rising just 0.6% year-on-year (YoY). Northern Ireland and Scotland led regional gains, highlighting the uneven nature of the housing market recovery.

​The cooling property market has broader implications for the UK economy. Housing-related spending typically drives consumption patterns, and weakness here could signal softer consumer confidence ahead.

​However, there is a silver lining for the government. Higher inflation is expected to give Chancellor Rachel Reeves a £5 billion fiscal boost through increased nominal tax receipts, providing some room for manoeuvre in future budgets.