UK output grew 0.7% in the three months to August as technology shares fell worldwide

UK output grew 0.7% in the three months to August and 0.1% in the month itself, and the FTSE 100 closed 1.07% higher on Thursday, while US consumer price inflation picked up to 3.7% in September and Japanese shares fell about 6.7% over the week. For advisers the week turns on rate expectations rather than company news: stronger UK growth alongside 3.1% inflation makes a November cut harder to argue for, while falling gilt and Treasury yields gave bond funds their better week of the autumn.

Last week in numbers

Market	Level (Thu close)	Note
FTSE 100	10,839.90	Up 1.07% on Thursday, after the growth figures
FTSE 250	24,441.74	Up 0.33% on Thursday, behind the large caps
S&P 500	7,686.95	Down about 1.0% on the week
Stoxx Europe 600	636.56	Up about 1.8% on the week
Nikkei 225	64,425.95	Down about 6.7%, the week's largest fall
UK 10-year gilt yield	5.33%	Down about 0.15 percentage points
US 10-year Treasury yield	5.09%	Down about 0.14 percentage points
Bank Rate / Fed funds	3.75% / 3.75% to 4.00%	Next Bank Rate decision 5 November
GBP/USD	1.3253	Up about 0.2% on the week
Brent crude	105.44 US dollars	Up about 1.1% on the week
Gold	4,168.90 US dollars	Up about 0.3% on the week

Levels and weekly moves are as at Thursday 15 October close, against the previous Thursday close.

What happened

UK growth came in better than the recent run of figures suggested. The Office for National Statistics said on Thursday that output rose 0.1% in August and 0.7% in the three months to August, after 0.5% in the three months to July. Services did the work, up 0.9%, while production fell 0.2% and construction fell 1.0%. The read-across for portfolios is to rate expectations: growth at that pace alongside CPI inflation of 3.1% gives the Monetary Policy Committee less reason to cut on 5 November.

_Client impact: a Bank Rate that stays at 3.75% for longer keeps cash and fixed term savings rates where they are, and stops new mortgage quotes falling much further._

US inflation picked up again, and technology shares fell. The Bureau of Labor Statistics reported on Wednesday that American consumer prices rose 3.7% in the year to September, up from 3.4% in August, with the core rate at 2.6%. The Federal Reserve raised its target range to 3.75% to 4.00% on 17 September, so this print lands in a tightening cycle. Equity markets split: the Nikkei 225 fell about 6.7% on the week and the S&P 500 about 1.0%, while the Stoxx Europe 600 rose about 1.8%.

_Client impact: a client in a global fund may see a quiet week overall while the Japan or technology part of their portfolio moves several percent._

Government bond yields fell on both sides of the Atlantic. The UK 10-year gilt yield ended Thursday at 5.33%, down about 0.15 percentage points on the week, and the US 10-year Treasury yield at 5.09%, down about 0.14 percentage points. Falling yields mean rising prices, so this was a better week for bond funds after a difficult autumn. Gilt yields are still high by the standards of the past 15 years, the backdrop to the Budget on 28 October.

_Client impact: bond and multi asset valuations improve when yields fall, and annuity rates quoted today still reflect yields well above where they sat two years ago._

The week ahead

Day	Event	Why it matters
Tue 20 Oct	UK labour market statistics	Average earnings excluding bonuses was last 3.5%, and pay growth is the number the MPC watches most closely
Wed 21 Oct	UK CPI inflation for September	The consensus looks for an annual rate of 3.4% against 3.1% last time
Wed 21 Oct	Speech by the Governor of the Bank of England	Hours after the inflation release
Fri 23 Oct	UK retail sales and flash PMIs for October	The first read on activity this month

Two to watch. Wednesday is the day that matters: a September CPI rate near the 3.4% consensus would put inflation further above the 2% target and make a November cut harder to argue for, and the Governor speaks that afternoon. Tuesday's pay figures are the other, where earnings growth holding near 3.5% would suggest domestic inflation is cooling slowly rather than quickly.

Adviser corner: motor finance redress has a court date

The FCA said on 13 October that the Upper Tribunal will hear legal challenges to its motor finance redress scheme from 16 to 26 February 2027, with judgment expected in the months after. Three lenders and a consumer group are bringing the case, and the FCA said it will defend the scheme. The scheme is partly suspended, so lenders need not calculate or pay redress until the process ends. A step for your own process: flag at file review which clients have had motor finance, record that they can complain to the lender at no cost rather than paying a claims management company, and diarise February 2027 rather than promising a timescale now. Whether any of this applies depends on individual circumstances.

_This article is for information only and reflects market conditions at the time of writing. It is not investment, tax or financial advice and should not be relied on as such. The value of investments and the income from them can fall as well as rise, and investors may get back less than they put in. Past performance is not a reliable indicator of future results. Advisers should consider the suitability of any action for individual clients. Issued by Wealth Analytica._

Sources

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