The FTSE 100 is expected to open around 35 points, or 0.3%, higher at 10,463 on Friday, recovering only a fraction of Thursday’s sharp decline.
London’s blue-chip index plunged 177.73 points, or 1.7%, to 10,428.27 on Thursday, its worst session since May and leaving it down around 2.5% for the week.
Some pressure eased overnight as US government bonds attracted buyers following their recent heavy sell-off.
The benchmark US 10-year Treasury yield eased to around 5.25% early Friday from 5.30% late Thursday, while the 30-year yield remained around 5.63%.
Wall Street also stabilised overnight, with the Dow Jones Industrial Average ending marginally higher, the S&P 500 gaining 0.2% and the Nasdaq Composite edging up.
Asian markets were mixed. Japan’s Nikkei 225 fell 1.0% after Thursday’s 3.3% rally, while Hong Kong’s Hang Seng dropped 2.7% as trading resumed after a holiday. Australia’s S&P/ASX 200 rose 0.7%, while mainland Chinese markets remained closed.
European sovereign-debt concerns remain another source of volatility, particularly in France. The French government has presented a 2027 budget containing €43 billion of new savings measures, with total fiscal consolidation rising to €54 billion when existing measures are included. The government is targeting a reduction in the deficit to 5% of GDP from 5.4%, although the package faces a divided parliament.
The euro recovered slightly to around US$1.125 after falling to its weakest level since May 2025 on Thursday, while sterling traded around US$1.321.
The main market event on Friday is the US nonfarm payrolls report.
Economists expect the US economy to have added approximately 90,000 jobs in September, down from 162,000 in August, with unemployment forecast to remain at 4.1%.
That figure will be closely watched after Treasury yields reached multi-decade highs this week. A stronger-than-expected employment report could revive expectations of further Federal Reserve tightening and push yields higher again, while softer data could reinforce the recent easing in rate expectations.
Several Federal Reserve officials have recently urged patience over further changes in interest rates, although views within the central bank remain divided over whether additional tightening will ultimately be required.
Commodity markets remained firm ahead of the data. Brent crude rose to around US$102.08 a barrel, while gold climbed to approximately US$4,187 an ounce.
For London investors, Friday’s expected rise looks more like a technical rebound after Thursday’s heavy losses than a decisive change in market direction. The more important question is whether US payrolls allow Treasury and gilt yields to continue retreating from this week’s extreme levels.
If bond yields stabilise, rate-sensitive sectors such as banks, housebuilders and property stocks could recover some of Thursday’s losses. A renewed rise in yields following strong US employment data would risk quickly reversing the tentative improvement in sentiment.
Investor takeaway: The FTSE 100 is expected to recover a small part of Thursday’s 1.7% sell-off, helped by an easing in US Treasury yields. The rebound remains tentative, however, with London still down 2.5% this week and the US jobs report likely to determine the next major move in global bond markets.
