FTSE 250 jumps 1.4% as oil slips and a tech rally lifts markets

A tech rally in New York and a pullback in oil prices gave stock markets a lift on Monday, easing some of the anxiety that dominated trading last week. Investors in London, Paris and Frankfurt all finished the day in positive territory, while Wall Street was higher around the time European markets closed.

The FTSE 100 closed up 31.55 points, or 0.3%, at 10,761.33. The more domestically focused FTSE 250 did much better, gaining 342.49 points, or 1.4%, to end at 24,795.85. The AIM all-share added 0.6% to finish at 757.92. In Europe, the CAC 40 in Paris rose 1.0% and Frankfurt’s DAX 40 gained 0.6%. In New York, the Dow Jones Industrial Average was up 1.0%, the S&P 500 up 0.6% and the Nasdaq Composite up 0.7%.

Why the tech rally matters after last week’s falls

The bounce in technology shares followed heavy losses the week before, when investors began to doubt whether the huge sums going into AI infrastructure will ever pay off. Tom Stevenson, investment director at Fidelity International, summed up the mood. Investors, he said, no longer doubt that growth is coming, but they are starting to wonder whether they have paid too much for it.

He also pointed to the cost of money. The AI boom, he argued, is running into higher borrowing costs, and even the large cash flows of the big US cloud companies are being drained. That leaves the industry leaning more on equity and bond markets, and with yields at or above 5% “the case is harder to make”. On Monday, longer-dated US government borrowing costs eased slightly. The 10-year Treasury yield was quoted at 4.89%, down from 4.94% on Friday, and the 30-year yield fell to 5.25% from 5.31%.

Anthropic gave the sector some support. The AI company said its third-quarter revenue reached $17 billion, up from $1.4 billion a year earlier, an increase of more than 1,100%. It is preparing to list on Wall Street later this month. The figures are the company’s own, but they offered a counterweight to worries about whether AI spending can generate returns.

Oil falls on hopes of US-Iran progress

The other main driver was energy. Oil prices fell on hopes of progress in peace talks between the US and Iran. The sources give no price levels, but cheaper crude eased pressure on the cost-sensitive parts of the market and helped the broader rally.

Manufacturing data points to resilience

Economic data was mostly encouraging. The S&P Global US manufacturing PMI came in at 54.9 for October. That is well above the 50 mark separating growth from contraction, though down from September’s 52-month high of 55.9 and below the 56.0 analysts had forecast. The Institute for Supply Management’s gauge was stronger, rising to 55.5 from 54.5 and beating forecasts of 54.6. It was the tenth consecutive month of expansion. TD Economics’ Vikram Rai welcomed a fall in the prices index, which suggests input-cost pressures are easing after a sharp rise in September.

In the UK, the manufacturing PMI rose to a five-month high of 52.8, from 51.9 in September. S&P Global Market Intelligence’s Rob Dobson said manufacturers showed resilience in the run-up to the autumn budget.

What could move markets next

The week is crowded with events. Apple reports after the US market close on Monday, with chipmaker AMD following on Tuesday. Those results will test whether the tech rally has staying power. Friday brings the US nonfarm payrolls report. The US midterm elections also loom, and Goldman Sachs says polling points to a swing of about 10 to 11 percentage points towards the Democrats. Prediction markets imply high odds of a Democratic House majority of around 236 seats, while the Senate is less certain. Ebury analyst Diego Barnuevo said a Democratic sweep could be neutral to mildly positive for the fiscal outlook, as Congress could restrain President Donald Trump’s expansionary agenda and the deficit.

Closer to home, the Bank of England announces its rate decision on Thursday. It is widely expected to raise rates by 25 basis points to 4.00%. Bank of America analysts expect the hike but think the central bank will “gently push back” against the pace and number of future increases priced in by markets.

On currencies, sterling was quoted at $1.3417, up from $1.3396 on Friday, and eased slightly against the euro to 1.1980 euros. The euro rose to $1.1200, and the dollar edged up to 157.82 yen.