3i Powers the Rally as UK Deal Fever Meets Gilt-Market Doubt
London extended Wednesday’s gains on Thursday, helped by a global rebound in technology sentiment, strong corporate updates and renewed takeover activity across UK-listed companies. The FTSE 100 moved higher, with 69 of its 100 constituents trading in positive territory, though losses in energy and some defensives limited the advance. The broader benchmark remains in strong shape, having rallied more than 20% over the past year, but Thursday’s session again showed the split inside the UK market: equities found support from corporate catalysts and cheap valuations, while the gilt market continued to push back against the political and fiscal backdrop.
The clearest FTSE 100 winner was 3i Group, which jumped around 10% after a strong trading update. Its discount retail brand Action reported a 3.3% rise in like-for-like sales for the 25 weeks to June 21, reinforcing confidence in the group’s growth engine. The move lifted the broader financials sector, which rose about 3.4% and led the market higher. Other major gainers included Abrdn and Barratt Redrow, both up more than 4%. The Barratt move fitted the recent theme of selective buying in rate-sensitive domestic sectors, especially as investors reassess the political transition and the possibility that an Andy Burnham-led government may try to preserve fiscal credibility while supporting housing and infrastructure. But the rally was not universal. BAE Systems, Metlen Energy & Metals and United Utilities were among the weakest blue-chip names, each losing more than 2%. Energy majors also weighed, with oil-linked weakness limiting the FTSE’s overall upside. That matters because the index’s energy exposure has often acted as ballast during periods of geopolitical risk. With oil softening and peace headlines still shifting, that support has become less reliable.
The gilt market remained the main warning signal. Unlike much of Europe, where yields softened, UK 10-year gilt yields hardened to around 4.6975%, from 4.6857% the previous day. The move was not dramatic, with yields trading between 4.6872% and 4.7105%, but directionally it matters. UK equities can rally on corporate news, but rate-sensitive sectors still need bond-market stability to sustain a broader recovery. The domestic data did not help. The CBI retail sales balance fell to -54 in June from -46 in May, worse than expectations for -41. That points to renewed pressure on consumer demand and suggests the rebound in some retail and leisure names is being driven more by stock-specific updates and valuation support than by a clearly improving macro environment.
Still, individual corporate stories were strong. In the midcap and broader UK market, Moonpig jumped 10.3% after reporting upbeat annual pre-tax profits, helped by customers trading up to higher-priced gifts. Halfords surged 16.1% after forecasting fiscal 2027 profit toward the top end of analyst expectations. Those updates helped offset the weak CBI survey and showed that some consumer businesses can still deliver if pricing, mix and execution are strong enough. Deal activity was another major theme. EasyJet rose 6.2% after rejecting a fourth, sweetened £4.93 billion takeover proposal from U.S.-based Castlelake, while still granting limited access to commercial information in hopes of drawing out a higher offer. That is a classic “not at this price” signal and keeps bid speculation alive. ITV gained 2.3% after Comcast (CMCSA)-owned Sky agreed terms to buy ITV’s broadcast and streaming unit. Advanced Medical Solutions jumped 16% after receiving a £715 million buyout proposal, including debt, from U.S.-based H.B. Fuller (FUL). Alongside Wednesday’s Segro-Prologis (PLD) story, the message is becoming hard to ignore: overseas and strategic buyers see value in UK assets that public markets continue to discount.
Politics remains central. Finance Minister Rachel Reeves announced support for Andy Burnham, who is now widely expected to become the UK’s seventh prime minister in a decade within two weeks. That may reduce near-term leadership uncertainty, but it does not remove fiscal uncertainty. Markets still need clarity on the next cabinet, the next chancellor, the Autumn Budget and whether infrastructure ambitions can be delivered without forcing a larger gilt supply premium. For now, investors appear willing to separate political process risk from corporate value. Equities are not panicking over Burnham’s likely arrival, partly because he has signalled commitment to the current fiscal framework. But the gilt market is more sceptical. As discussed earlier this week, staying inside the rules does not necessarily mean low borrowing or low issuance if the government leans on accounting flexibility to fund investment. The global rates backdrop also remains uncomfortable. A key U.S. inflation report due later in the day could shape expectations for the Fed path, and LSEG-compiled data show traders still expect the Bank of England to deliver a 25bp rate hike by year-end. That is a notable contrast with the weaker UK activity data and Taylor’s recent suggestion that cuts could resume if slack deepens. The market is pricing a difficult policy mix: weak growth, sticky inflation risk, and political pressure for more investment.
Finish Line: The FTSE 100 pushed higher as global tech sentiment improved and corporate news carried the tape. 3i surged on Action’s update, financials led, and takeover activity in easyJet, ITV and Advanced Medical Solutions reinforced the view that UK assets are cheap. But the rally still has limits: energy weakness capped the index, the CBI retail survey was poor, and gilt yields hardened even as European yields eased. UK equities can keep squeezing higher on valuation and M&A — but for a durable domestic rally, the bond market still needs convincing.
TECHNICAL & TRADE VIEW – FTSE100
Daily VWAP Bullish
Weekly VWAP Bearish>Bullish
Above 10350 Target 11000
Below 10100 Target 9469
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