Closing summary
The FTSE 100 index is on track to hit a new closing high. It is currently up 0.57%, or 53 points, at 9,536, and if it holds on to its gains, would surpass its peak of 9,491.25 last Friday.
The Bank of England has warned there is a growing risk of a “sudden correction” in global markets as it raised concerns about soaring valuations of leading AI tech companies.
Policymakers said there were also threats of a “sharp repricing of US dollar assets” if the Federal Reserve lost credibility in the eyes of global investors. It comes as Donald Trump’s continues to attack the US central bank and threaten its independence.
Continued hype and optimism about the potential for AI technology has led to a rise in valuations in recent months, with companies such as OpenAI now worth $500bn (£372bn), compared with $157bn last October. Another firm, Anthropic, has almost trebled its valuation, going from $60bn in March to $170bn last month.
However, the Bank of England’s financial policy committee (FPC) warned on Wednesday: “The risk of a sharp market correction has increased.
“On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on artificial intelligence. This … leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic.”
It said investors had not fully accounted for these potential risks, warning that “a sudden correction could occur” should any of them crystallise, resulting in finance drying up for households and businesses. The FPC added: “As an open economy with a global financial centre, the risk of spillovers to the UK financial system from such global shocks is material.”
Faith in the AI boom has recently been rattled by research from the Massachusetts Institute of Technology, which showed that 95% of organisations are getting zero return from their investments in generative AI.
The price of gold has risen above $4,000 (£2,980) per ounce for the first time as investors continue to seek a safe place to put their money at a time of global political and economic uncertainty.
Ministers are preparing to raise the amount the NHS pays pharmaceutical firms for medicines by up to 25% after weeks of intensive talks with the Donald Trump administration and drugmakers.
The government has drawn up fresh proposals to end a standoff with the industry over drug pricing, including changing the cost-effectiveness thresholds under which new medications are assessed for use on the NHS, according to industry sources.
Our other main stories today:
Thank you for reading. We’ll be back tomorrow. Take care! – JK
Updated
Wall Street rises ahead of Fed minutes
Wall Street has risen at the open.
The Dow Jones climbed by 125 points or 0.3% to 46,728 while the S&P 500 index rose over 12 points, or 0.2%, to 6,727 and the Nasdaq added 65 points, or 0.3%, to 22,853.
The minutes of the US Federal Reserve’s rate-setting committee’s last meeting are in focus, due at 7pm BST. As the federal government shutdown has extended into its eighth day, there have been no releases of official economic figures, leaving investors scrambling for clues from other sources on the rate outlook.
France’s political crisis and the change in Japan’s government have also weighed on markets, and driven investors into safe-haven investments such as gold, which has surged through $4,000 an ounce for the first time. Spot gold is currently up 1.4% at $4,040 an ounce.
Daniela Hathorn, senior market analyst at Capital.com, said:
Gold is at it again. The momentum is well supported, driven primarily by expectations of further easing around the globe. The leadership change in Japan, which has seen deficit-dove Sanae Takaichi take the reins of the ruling Liberal Democratic Party, has served as a new boost this week.
A softer dollar, persistent central bank buying and elevated geopolitical risk continue to underpin the move. With fiscal policy remaining expansionary in many economies despite above-target inflation, dips are still finding willing buyers—though the technical picture argues for rising volatility after a historic breakout.
Beyond near-term momentum, the medium-term case for bullion still leans positive: tolerance for above-target inflation, swelling public deficits, ongoing de-risking in foreign exchange reserves, and a dense geopolitical calendar suggest pullbacks may remain shallow unless policy surprises jolt real yields sharply higher.
