The FTSE 100 is expected to open around 36 points, or 0.3%, higher at 10,715.99 on Friday, after closing 0.2% lower at 10,679.99 on Thursday.
The rebound comes despite a deepening global bond sell-off. The US 10-year Treasury yield reached 5.22% on Thursday, its highest level since 2007, while the 30-year yield climbed as high as 5.5%, increasing pressure on equity valuations and corporate financing costs.
The sell-off accelerated after strong US business activity and renewed inflation pressures strengthened expectations that the Federal Reserve could continue raising interest rates.
Oil provided some relief early Friday, with Brent crude falling to around $104.93 a barrel from $107.25 at Thursday’s London close. However, geopolitical risk remains elevated following renewed Houthi attacks targeting Saudi Arabia, including attempted strikes on Taif and the strategically important oil hub of Yanbu. Reuters has reported that Saudi-led forces have intercepted attacks against both locations, while France has indicated it is prepared to contribute to the protection of Saudi energy infrastructure.
Yanbu is particularly important because it connects to Saudi Arabia’s East-West pipeline, allowing crude to reach the Red Sea without passing through the Strait of Hormuz. The pipeline recently resumed operations after earlier disruption, although restoring full capacity is expected to take time.
Separately, Iran has proposed reopening the Strait of Hormuz within seven days if conditions including reduced US military pressure are met, potentially providing another route towards easing pressure on global oil supplies.
Asian markets were mixed, with Japan’s Nikkei 225 up 1.3%, while Hong Kong fell 1.4% and Australia declined 0.4%. Gold recovered to around $4,273 an ounce.
UK consumer confidence also improved slightly, with the GfK index rising one point to minus 13 in September, marking a third consecutive monthly improvement, although sentiment remains firmly negative.
The broader market implication is that Friday’s expected FTSE rebound looks more like relief after Thursday’s selling than a decisive change in trend. Unless oil falls materially further or bond yields retreat, equities remain vulnerable to a higher-for-longer rates environment, leaving energy producers relatively supported while property, consumer, technology and highly leveraged companies remain exposed to continued valuation pressure.
Investor takeaway: London is heading for a modest rebound, but the underlying macro backdrop remains difficult. Brent has eased from Thursday’s spike above $107, providing some relief, yet US Treasury yields above 5% and renewed threats to Saudi energy infrastructure mean inflation and interest-rate risk remain firmly in control of market sentiment.
