The FTSE 100 was lower on Thursday as markets adjusted to new interest rate expectations after last night’s Federal Reserve interest rate decision and press conference. 

Investors also digested the outcome of the US/China trade talks, including several agreements and concessions between the world’s largest economies.

The adage that ‘it’s better to travel than arrive’ could not be truer for the market reaction to developments in Asia overnight, as the FTSE 100 dropped more than 0.6% on Thursday after rallying into the talks yesterday.

“News of the emerging thaw in trade relations between the US and China wasn’t enough to power the FTSE 100 to another record this morning. It has retreated a little at the open, after reaching its best ever close of 9,756.14 on Wednesday,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“Following the conclusion of talks in South Korea, President XI said that a consensus had been reached on major trade issues, while Donald Trump revealed he’d be reducing tariffs after resolving a roadblock on Chinese exports of rare earth minerals. Details, however, were thin on the ground.”

But it was not just the ‘buy the rumour, sell the fact’ fade that dragged stocks lower. Investors also turned up their noses at the Fed Chair’s comments that dented hopes of an interest rate cut in December.

“No-one likes a party pooper, especially when they’re standing in front of the punch bowl. That’s the role taken on by Jay Powell, who poured cold water on the prospect of a December rate cut. That’s put markets on the back foot when it looked like the music was just about to ramp up,” says AJ Bell investment director Russ Mould.

“The Fed did announce an interest rate cut, but short-term Treasury yields jumped up on the back of the hawkish tone, and Jay Powell’s comments might well have elicited a hoot of derision from somewhere in the White House. The Fed chair likened the central bank’s current situation to driving in the fog, because the US government shutdown has prevented the release of key economic data.”

FTSE 100 company earnings didn’t help the equity bulls’ cause either.

WPP shares sank 14% and were languishing near the lowest levels since the turn of the century, following the release of dismal Q3 results that confirmed that the advertising giant was in big trouble.

“A 5.9% drop in third-quarter net revenue exposes how far the world’s biggest advertising group has drifted from the bravado of its Madison Avenue heyday,” said Mark Crouch, market analyst for eToro.

“WPP’s new CEO Cindy Rose inherits a brief no less daunting than a rebrand of the word “decline”. The sharp slowdown at WPP Media, once the jewel in the crown, underlines how the company’s traditional engine is sputtering in a market running on algorithms and automation.”

Shell offered some positivity with strong Q3 results that beat analyst estimates.

“The results were underpinned by record production in Brazil and 20-year highs in the Gulf of America, alongside standout contributions from its Marketing division, which logged its second-highest quarterly earnings in over a decade,” explained Garry White, Chief Investment Commentator at Charles Stanley.

Shell shares were flat on Thursday, as results gave investors no reason to sell after a recent rally that pushed the stock to its highest level since 2023. But they weren’t strong enough to spur further buying either.

Lloyds shares have stormed to the upside and now trade close to the highest levels since the financial crisis.

With the Lloyds share price at 89p, investors will be eyeing the 100p as the next major target, especially if we see a break of 90p in the short term.

Whether Lloyds can hit this key psychological level hangs in the balance. There are valid bull and bear cases for the stock, both of which we will touch on here.

The main thing on the bull’s side is momentum. Lloyds is an oil tanker of a share. Once it’s set its course, it’s very difficult to change its trajectory.

Whether that was the range-bound, sideways trade around 50p over the three-year period after the pandemic, or the steady rally since the beginning of 2024, the Lloyds share price tends to settle into long-term trends. 

And the market has set Lloyds shares on a course for further gains.

From a technical perspective, the trend points strongly to a test of 100p as the stock makes a series of higher highs, underscoring the market’s willingness to push the stock further along the rising trend line. 

The uptrend is further underpinned by Lloyds’ share price reaction to the 50-day moving average, which has proved to be a buy signal each time it was touched this year.

Honing in on recent results, there’s a lot to like. Looking past the motor finance scandal, underlying net income rose 7% driven by strong demand and higher net interest margins.

Strong Q3 results were met with a string of broker upgrades, including RBC’s 110p price target.

What could knock Lloyds shares off course?

The UK economy is an obvious contender. Although Lloyds has so far shrugged off concerns about the underlying economic conditions, investors must have one eye on the UK jobs and property markets. 

Zoopla’s recent house price report showed falling prices and rising housing stock. Should this continue, demand for Lloyds mortgage products will soften. That said, encouraging UK mortgage approvals data was released this week, showing that approvals reached their highest levels since December 2024 in September.

The UK jobs market is also an area to watch. It is already showing signs of softening, and if Rachel Reeves has her way, it could be about to get a whole lot worse. 

The Bank of England’s natural response to both of these areas of softness will be to lower rates. And while this should be a positive for the economy and Lloyds’ customers, it will dent key net interest margins for the banks. 

A new era for the banks

Despite obvious risks for the economy, the UK banking sector has seemed to have turned a corner.

The recent motor finance scandal shows that the market is prepared to focus on underlying earnings and the value held in banking balance sheets. This is demonstrated by long-running discounts to book values turning to premiums. Lloyds now trades at 1.2x its book value after spending years trading at a 50% discount.

The dramatic shift in market pricing puts the banks back where they should be in terms of valuation, and there is no sense yet that valuations are looking frothy.

Taking this all into consideration, Lloyds shares touching 100p before the end of the year is a real possibility. But investors must be mindful of the evolving economic landscape and potential changes in sentiment.

Meta shares sank on the release of Q3 earnings, despite the tech giant beating estimates, as investors fretted about rising AI-related costs.

Revenue for the period was $51.24 billion, an increase of 26% year-over-year and higher than the $49.41bn analysts had predicted.

Meta shares were down 8% in the US premarket.

However, the decline in shares was not a fair reflection of the group’s underlying progress on key metrics. Core measures, such as average price per ad and the number of users, all showed strength.

Unfortunately, higher revenues and better performance were masked by a one-off tax charge of $15bn, which led to an 83% drop in net income for the period.

There were also concerns around higher spending and costs. Costs and expenses rose 32% to an eyewatering $30bn as the firm ramped up spending on AI.

“Meta’s quarter highlighted a familiar tension: strong user engagement versus rising costs. The company’s platforms continue to see impressive activity, helped by AI-driven improvements, but investors focused on two negatives – lower growth for the next quarter and a sharp increase in spending plans,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“Zuckerberg is betting heavily on AI infrastructure, which means profits will likely come under pressure in the near term. He argues this is essential to secure a bigger long-term opportunity, but the trade-off is clear: higher costs now for uncertain future gains. For some, that’s a reasonable risk; for others, it’s a concern given how much control rests with one person.”

Shawbrook Group has priced its initial public offering at 370p per share, the middle of the 350p – 390p range set out earlier in October.

The price gives the specialist lender a market capitalisation of approximately £1.92 billion.

The IPO comprises 13.5 million new shares raising £50 million in gross proceeds, alongside 80.5 million existing shares being sold by the bank’s sole shareholder, Marlin Bidco Limited.

The total offer size amounts to £348 million, representing 18.1 per cent of the company’s issued share capital.

Approximately £25 million of the offer was allocated to retail investors, who will receive 6.8 million shares through participating investment platforms and wealth managers.

Conditional dealings in Shawbrook shares commenced on the London Stock Exchange today under the ticker SHAW.

“The strong support we have received from investors across the UK, Europe and the US, reflects the strength of Shawbrook’s proposition and the business we have built. We are proud to be listing in London – our home market – a milestone that positions us well for the opportunities ahead,” said Marcelino Castrillo, Chief Executive Officer.

“We have built scale across diverse, attractive markets and, following significant investment under private ownership, are well placed to keep growing as we support UK businesses and households.

“As a listed company, we will continue to invest in our platform and people, deepen our presence in chosen markets and expand selectively where we see attractive demand. Our priorities are clear: keep supporting our customers and deliver sustainable, profitable growth and long-term value for all stakeholders.”

The FTSE 100 soared to a fresh intraday record high on Wednesday as hopes of a US/China trade deal boosted sentiment.

London’s leading index was trading 0.5% to the good at the time of writing, touching highs above 9,750.

“A positive mood on Wall Street extended into European markets on Wednesday on increased hopes for a US-China trade deal,” said AJ Bell investment director Russ Mould.

“US indices closed at record levels, with sentiment also supported by reports Nvidia will announce new AI chip supply contracts with major South Korean operators like Samsung and Hyundai.

Last week, we published an article exploring whether Nvidia could hit $200 before it reports earnings in November. We explained that Nvidia’s achievement of this milestone depended on US/China trade talks and the outcome for Nvidia’s exports to China.

Trump’s overnight comments that he would discuss Nvidia’s ‘super-duper’ Blackwell chips with China at the upcoming talks were all the equity bulls needed to send Nvidia through $200 in the US pre-market on Wednesday and towards a $5 trillion valuation.

The FTSE 100 has missed out on several US tech-inspired rallies recently, but not so on Wednesday, with cyclical sectors enjoying the improved sentiment.

“The FTSE 100 built on its own all-time highs this morning, with miners doing a lot of the heavy lifting and positive corporate updates from Next and GSK also contributing,” Russ Mould said.

Next was the FTSE 100’s top riser, surging over 7%, after the retailer yet again defied the negative feeling around the UK to produce sales growth that beat expectations and drove an upgrade of full-year earnings.

“Next seems to have missed the memo on Britain’s slowdown,” said Mark Crouch, market analyst for eToro.

“The British retail giant has nudged up profit guidance for the fourth time in eight months, after third-quarter full-price sales rose an impressive 10.5%. While rivals have spent the year tripping over rising costs and cautious consumers, Next has managed to glide serenely through it all.

“Even more striking is the message behind the numbers. This is a retailer whose shares are up over 40% this year and whose leadership still finds room for a special dividend come January 2026.”

Glencore shares rose 6% after releasing Q3 production figures, which showed a 36% jump in copper production.

Fresnillo and Endeavour Mining were back among the gainers as gold prices rose above $4,000.

Housebuilders were at the bottom of the FTSE 100 leaderboard for the second day running.

The global equity rally will face several hurdles later today, when big tech reports in the US and the Fed releases its interest rate decision.

“A key test of investors’ optimism looks set to come later with the US Federal Reserve’s decision on interest rates and earnings reports from Alphabet, Meta and Microsoft.”