London's blue-chip index finished Friday 0.32% higher at 10,461.95 after a soft U.S. payrolls report pulled Treasury yields lower and gave miners and oil majors room to rebound from a brutal week for UK government bonds.

The gain did not erase a 2.2% weekly decline for the FTSE 100, its steepest since April, and the mid-cap FTSE 250 still ended the week marginally lower at 24,194.24. Investors arrived on Monday morning weighing whether Friday's relief rally can hold once traders reopen books focused on Chancellor John Healey's 28 October Budget and the Bank of England's November rate decision.

Payrolls changed the tone on rates

The U.S. Bureau of Labor Statistics said the economy added 29,000 jobs in September, far below the 84,000 consensus, while unemployment ticked up to 4.2%. Prior months were revised down, and average hourly earnings rose just 0.1% on the month. For London desks, the print reduced the odds of another near-term Federal Reserve hike, easing pressure on global risk assets after Thursday's slump when the 30-year gilt yield briefly touched 6%.

IG technical analyst Axel Rudolph said slower job creation and muted wage growth made employment look less inflationary, which helped equities even as questions lingered about U.S. growth. That dynamic favoured commodity-heavy UK listings that had sold off with bond volatility earlier in the week.

Sector moves under the surface

Shell, BP, Anglo American and Glencore featured among Friday's gainers as energy and mining stocks tracked firmer commodity cues. Banks remained under pressure: the UK lenders subindex posted its worst weekly performance since April as higher discount rates fed through to net-interest-income debates. Centrica also drew attention after JPMorgan added the British Gas owner to its focus list, helping utilities outperform defensive staples.

Intertek's shares had fallen sharply earlier in the week after the testing group rejected a takeover approach, a reminder that idiosyncratic stories still matter when macro trading dominates flows. More broadly, the FTSE's composition left it sensitive to both bond yields and dollar earnings, a combination that produced sharp intraday swings as gilt and currency markets moved in tandem.

What London traders watch this week

UK inflation data on 21 October and the Budget on 28 October are the next domestic catalysts, while the U.S. jobs report has already shifted Fed expectations for the month. Strategists at Proactive Investors noted that markets were pricing roughly an 80% chance of a Bank of England hike on 5 November before the payrolls surprise, a probability that may now be debated again in morning meetings.

For pension funds and insurers, the priority is whether long gilt yields stabilise below last week's peaks. Until they do, equity risk premiums on UK domestic stocks may stay elevated even when individual earnings stories, like Friday's commodity bounce, look constructive on paper.

Currency and earnings translation

Many FTSE 100 constituents report in dollars or earn the bulk of revenue overseas, so sterling moves can exaggerate index swings that look domestic on paper. When gilts sell off and the pound weakens, dollar earners often get a mechanical lift in sterling terms, partially offsetting the discount-rate hit from higher yields. That cross-current explained why miners rallied on Friday even as domestic banks struggled.

Asset allocators running balanced mandates said they were trimming UK gilt duration rather than exiting equities entirely, betting that payrolls weakness would cap how far global yields could rise in October. If that bet fails, the same commodity stocks that helped on Friday could reverse quickly because their valuations embed long-run commodity assumptions that bond markets are now questioning.