Must read: FTSE 100, UK GDP, Rolls-Royce

GLOBAL MARKETS

The FTSE 100 is lagging continental European this morning with corporate earnings in focus – the blue-chip index is being dragged down by 3i Group Ord (LSE:III) which has sunk over 10% after a cautious outlook in its latest results. However, Burberry Group (LSE:BRBY) shares are trading higher after reporting a narrower first-half loss and returning to growth in China. Elsewhere in the UK, Wizz Air Holdings (LSE:WIZZ) shares have surged over 13% thanks to first half profit which beat expectations.

• Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

European markets more broadly are trading mostly in positive territory with the STOXX600 and the CAC 40 in the green while the DAX is hovering above the flatline. The ending of the US government shutdown has sparked risk-on sentiment, with US futures pointing to a higher open. It comes after a mixed session on Wall Street with the Nasdaq ending lower while the Dow Jones closed higher, as fears of an AI bubble sparked investors to rotate out of tech into other sectors.

Another sign of cautiousness in the markets is the continued ascent for precious metals, with gold up by 0.6% trading at a three-week high while silver is up 1.5%.

UK GDP

UK GDP fell to 0.1% in the three months to September, missing analysts’ expectations, slumping to the lowest growth in almost two years. The monthly figure declined by 0.1% in September, also below forecasts.

The UK economy took a hit from Jaguar Land Rover’s cyber-attack - the disruption hurt car production which fell to a 7-year low. The services sector performed well; however the struggling manufacturing sector weighed on GDP with a decline of 0.5%.

• Share Sleuth: how this trio of trades came to pass
• Stockwatch: a FTSE 100 recovery buy or falling growth star?

The UK economy has been decelerating from the previous two quarters, piling yet more pressure on the Chancellor Rachel Reeves as she prepares to outline the extent of her tax increases in the Autumn Budget at the end of the month.

For the Bank of England, today’s bleak growth figures provide further support for a rate cut next month. Next week's inflation data will be very closely watched and will help the Monetary Policy Committee decide ultimately whether or not to reduce borrowing costs in December.

ROLLS-ROYCE

Rolls-Royce Holdings (LSE:RR.) confirmed its full-year underlying profit guidance for between £3.1 billion and £3.2 billion. The engine maker said it delivered a strong performance across the group, in line with its own expectations. Free cash flow is seen coming in between £3 billion and £3.1 billion.

In Civil Aerospace, Rolls-Royce enjoyed strong demand with major large engine orders. Defence has also performed well partly due to the heightened global geopolitical instability. Last month, Turkey and the UK signed a £8 billion Typhoon fighter jet deal last month, powered by Rolls-Royce’s EJ200 engines.

• Outlook for 2026: why more records could be broken
• Bond Boss: are money market funds still a good deal?
• Sign up to our free newsletter for investment ideas, latest news and award-winning analysis

The sector is dealing with continued supply chain issues and Trump tariff uncertainty while airlines are facing engine shortages. Shares in Rolls-Royce are trading slightly lower today, with investors slightly underwhelmed by today’s guidance confirmation.

However, the broader picture is one of strength for the engine maker, with shares surging since January 2023 when CEO Tufan Erginbilgic took to the helm, spearheading a miraculous recovery for the previously so-called ‘burning platform.