FTSE 100 snaps nine-day winning streak as banks and energy drag

​​​FTSE 100 rally finally runs out of steam

​The FTSE 100 fell 0.2% on Friday, snapping a nine-day winning streak that had pushed the index to record highs. Banks, miners and energy stocks led the retreat as softer risk appetite across global markets prompted investors to lock in profits after the recent rally.

​Sterling held just above $1.31, down 0.1% on the day, while gilt yields remained little changed. The subdued currency and bond moves reflected market uncertainty about the Bank of England's (BoE) next steps, with rate cut expectations building but not yet fully priced in.

​Despite Friday's slip, the FTSE 100 has significantly outperformed European peers in recent weeks. The index's defensive characteristics and exposure to overseas earnings have provided insulation from domestic growth concerns that continue to weigh on sentiment.

​The pullback was modest but marked the end of London's most sustained winning run in months, as traders reassessed valuations following the recent climb through October on dovish central bank signals and resilient corporate earnings.

​Bank of England rate cut speculation intensifies

​Barclays economists joined Goldman Sachs in forecasting a 25 basis point rate cut at next week's Monetary Policy Committee meeting, describing a 5-4 vote in favour of easing as "compelling" given weakening growth and cooling inflation. The call adds weight to expectations that the BoE will resume cutting after pausing in September.

​Market pricing remains cautious, with traders assigning roughly a 24% probability to a November cut, equivalent to just six basis points of easing. This suggests significant upside for the pound if the BoE disappoints dovish expectations, but also room for a sharp move lower if policymakers signal more aggressive easing ahead.

​The case for cutting has strengthened as recent data showed growth stalling and inflation falling faster than anticipated. Services inflation, the BoE's key concern, has moderated more quickly than forecast, giving policymakers room to act without reigniting price pressures.

​However, the labour market remains tight and wage growth elevated, factors that could give hawks on the committee ammunition to argue for holding steady. Next week's decision is genuinely uncertain, making it one of the more consequential BoE meetings in recent memory.

​House prices and corporate activity defy gloom

​Nationwide data showed house prices rose 0.3% month-on-month (MoM) in October, defying forecasts for no change and taking annual growth to 2.4%. Mortgage approvals remain near pre-pandemic levels despite elevated borrowing costs, as solid household balance sheets and rising real incomes offset expensive financing.

​The resilience surprised analysts who had expected the property market to weaken, suggesting UK housing has found a floor even if conditions for a sustained rally remain absent. For the BoE, stronger house prices complicate the rate-cutting calculus, though current levels are unlikely to derail gradual easing plans.

​Canned food supplier Princes Group priced its London listing at 475 pence per share, valuing the company at £1.16 billion, with trading beginning today under ticker PRN. The deal marks another data point in a modest revival for the city's initial public offering (IPO) market, suggesting investors remain willing to back defensive businesses.

​Precious metals miner Fresnillo announced plans to acquire Canada's Probe Gold for C$780 million, extending its project pipeline beyond Mexico. The strategic shift diversifies away from political risk while providing exposure to Canadian gold assets at a time when gold trading activity has picked up on safe-haven demand.

​Oil extends decline on brutal oversupply outlook

​Oil prices continued their retreat, with Brent crude oil falling below $73.00 per barrel as mounting evidence of structural oversupply weighed on sentiment. The International Energy Agency's latest forecasts show global oil supply is projected to increase by roughly 2.5 million barrels per day in 2025, while demand growth crawls ahead at just 0.7 mb/d.

​The mismatch is set to worsen through the end of the decade, with the IEA predicting demand growth will slow to "just a trickle" by 2030 as renewable energy consumption surges 60% by decade's end. Supply capacity, meanwhile, continues to expand as US producers ramp up output and OPEC+ members prepare to return barrels to the market.

​The oversupply dynamic has caught many commodity trading investors off guard, particularly those betting on sustained strength in energy prices. The structural shift toward oversupply represents a fundamental change from the tight markets that prevailed through much of 2022 and 2023.

​A firmer US dollar has compounded pressure on oil trading, making dollar-denominated commodities more expensive for holders of other currencies. Unless demand surprises to the upside or supply faces unexpected disruptions, the path of least resistance for crude appears lower from current levels.

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