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London’s FTSE 100 outperformed European counterparts on Friday afternoon, but was hurt by banking shares, which slumped on windfall tax fears. Investors across the globe are anxiously awaiting a key US inflation reading, and whether the Federal Reserve will still be odds-on to cut next month in the aftermath. The FTSE 100 index was down 21.39 points, 0.2%, at 9,195.43. The FTSE 250 was 65.52 points lower, 0.3% at 21,678.88, and the AIM All-Share advanced 2.42 points, 0.3%, at 763.63. The Cboe UK 100 was 0.3% lower at 922.30, the Cboe UK 250 was down 0.4% at 19,000.90, and the Cboe Small Companies fell 0.4% at 17,231.80. In European equities on Friday, the CAC 40 in Paris was 0.4% lower, while the DAX 40 in Frankfurt was down 0.5%. ‘The UK stock market ended the week on a sour note amid suggestions that the government could help to fill its fiscal hole with a new tax on the banking sector,’ AJ Bell analyst Russ Mould commented. ‘Some of the biggest names in the FTSE 100 are lenders so if they’re out of favour on the stock market, it acts as a drag on the whole UK blue-chip index.’ UK lenders NatWest, Lloyds and Barclays slumped 5.1%, 4.8% and 3.7% respectively at midday on Friday. They were the worst FTSE 100 performers. Among mid-caps, Metro Bank was down 3.5%, while OSB fell 2.8%. On Friday, a report by the Institute for Public Policy Research argued the Treasury should impose a new levy to recoup ‘windfalls’ made by lenders as a legacy of the Bank of England’s quantitative easing programme, undertaken in the wake of the financial crisis. The think-tank said the UK taxpayer is spending £22 billion a year compensating the BoE for losses on the programme. The scheme entailed the BoE purchasing hundreds of billions of pounds of government bonds, buoying commercial bank reserves at the central bank. These are now being remunerated at the BoE’s official rate, which stands at 4.00%. The IPPR recommended that the Treasury introduce a QE reserves income levy on commercial banks to save £7 billion to £8 billion a year over this parliament. In addition, it suggests the BoE slows down quantitative tightening, by ending its fire sale of government bonds to save more than £12 billion a year. The Financial Times on Friday said fears are mounting that the autumn budget will target banks to help fill £20 billion fiscal hole. ‘Politically it is an easy target,’ a senior banker told the FT. ‘No one likes banks, they are seen as a whipping boy for the government.’ AJ Bell’s Mould said: ‘The timing of the tax debate, fuelled by a report from think-tank IPPR, is unfortunate given it coincides with a new poll from Lloyds suggesting a rise in business confidence, despite cost pressures. This positive sentiment could be threatened if businesses take the view that a new tax on banks might force lenders to tighten their lending criteria.’ The main event on Friday afternoon is the US personal consumption expenditures data, which is due at 1330 BST. The core reading is the Federal Reserve’s preferred inflation gauge. Traders are watching the impact of tariffs, as a further acceleration in the rate of inflation could complicate matters further for the Fed in its deliberations on interest rates. Stocks in New York were called lower. The Dow Jones Industrial Average and S&P 500 index were called down 0.3% while the Nasdaq Composite was called to open 0.5% lower. The yield on the 10-year US Treasury was unchanged at 4.22%. The yield on the 30-year slimmed to 4.90% from 4.91%. The pound was lower at $1.3461 at midday on Friday, from $1.3513 at the London equities close on Thursday. The euro traded at $1.1669, flat from $1.1668 late Thursday. Against the yen, the dollar was higher at JP¥147.16 versus JP¥147.02. Elsewhere in London, Frasers shares were down 1.2%. The company, founded by high street billionaire Mike Ashley, said Jon Thompson will succeed David Daly as chair on Monday, as the owner of the House of Fraser, Sports Direct and Flannels brands rejigged its board. It said Daly will step down from the board after eight years at the company’s annual general meeting on September 24. Thompson joined the board of Frasers back in June of last year as a non-executive director, with the company stating that his appointment marks an ‘important step’ in its long-term strategy as it seeks to ‘strengthen its position as a global business.’ Thompson was formerly the head of the UK Financial Reporting Council, which oversees corporate governance matters. JTC shares jumped 10%. Permira Advisers announced it has approached JTC over a ‘possible cash offer’. ‘There can be no certainty that any firm offer will be made, nor as to the terms on which any firm offer might be made,’ Permira added. On the AIM market, Avacta shares were up 14%. The life sciences company raised £3.3 million from placing of 6.5 million new shares at 50p each with ‘high net worth investors introduced by Zeus Capital’. It said the net proceeds of £3.1 million will be used to settle the October quarterly repayment of its unsecured convertible bond. It also struck an agreement to delay payments due in January and April 2026 until October 2027. The adjustments to the convertible bond are subject to it raising £13.0 million by January 15, 2026. The raise could be via equity, strategic investment or a pharmaceutical product partnership. ‘I am very pleased Avacta has been able to raise the necessary funds to pay off the October instalment of the convertible bond ahead of schedule and also reach an agreement with the bondholder to amend the terms of the convertible bond,’ says Chief Executive Officer Christina Coughlin. t42 IoT Tracking Solutions shares were down 14%. The provider of real-time tracking solutions for the freight market said it made a pretax loss of £891,000 for the six months to June 30, narrowed from £1.4 million a year prior. Revenue rose 12% to £2.3 million from £2.0 million a year prior. ‘The first half of 2025 has marked a genuine step-change for the company, with commercial, operational, and financial achievements that strengthen our position as a leading provider of supply chain monitoring and security solutions worldwide,’ the firm said. ‘We close the first half of 2025 with strong momentum - supported by major contracts, improved liquidity, an expanded product range approaching commercial launch, and a growing global demand for our solutions.’ Gold was quoted at $3,407.30 an ounce midday Friday, largely flat from $3,407.04 on Thursday. Brent oil was trading higher at $67.66 a barrel from $67.51. As well as US personal consumption expenditures data, still to come on Friday is a German inflation reading at 1300 BST. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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