Investing.com – London shares advanced on Thursday, with the blue-chip FTSE 100 rising 0.7% as investors welcomed a market-friendly UK budget and benchmark interest rate pauses from both the Federal Reserve and the European Central Bank.
The FTSE 100 climbed 0.7%, breaking out of earlier ranges as relief over the absence of sovereign debt shocks under Chancellor John Healey coincided with broad European equity momentum following the ECB’s policy announcement, with trading desks now positioning for the BoE’s monetary verdict on November 5.
Index heavyweight Shell rallied 3.2% after delivering third-quarter adjusted earnings of $10.81 billion – its strongest quarterly performance since 2022 – beating analyst consensus on the back of historic refining margins and elevated liquefied natural gas (LNG) prices. Reflecting robust cash generation, the energy major raised its quarterly share buyback program to $5 billion.
TotalEnergies mirrored the sector strength, reporting a 127% year-on-year surge in third-quarter adjusted net income to $9.1 billion, underpinned by firm European natural gas tariffs and refining gains.
Defense contractors advanced following Wednesday’s budget confirmation that the government remains committed to lifting UK defense spending to 3% of GDP by 2030, sending BAE Systems up 2.27% and Babcock International up 1.78%.
Among domestic cyclicals, Lloyds Banking Group met consensus as third-quarter pretax profit rose to £2.3 billion from £1.0 billion a year earlier, while advertising giant WPP reiterated full-year targets as third-quarter like-for-like net sales showed sequential improvement, falling 2.1%.
UK Budget secures £15 billion headroom
Market reaction to the UK’s updated fiscal framework remained constructive. Chancellor John Healey affirmed that “fiscal discipline is my first commitment,” balancing targeted tax adjustments on banking balance sheets and gambling operators with strict spending discipline.
The Office for Budget Responsibility (OBR) lifted its 2026 economic growth projection to 1.2% from 1.1%, while trimming 2027 expansion to 1.0% from 1.5% due to the drag of high global energy prices. Headroom against the government’s fiscal mandate narrowed to £15 billion for the 2029/30 fiscal year, down from £23.6 billion in March, but matching primary dealer expectations.
With the UK’s £312 billion gross financing requirement coming in below consensus forecasts and the deficit projected to narrow to 3.4% of GDP by 2027 through fiscal drag, sovereign debt markets stabilized.
Crucially for financial markets, the budget avoids complicating the monetary landscape for the Bank of England, whose Monetary Policy Committee convenes next Thursday to take a call on interest rates.
ECB and Fed pauses
The European Central Bank left its benchmark deposit facility rate unchanged at 2.50% on Thursday, as widely anticipated, following previous hikes in June and September. In its policy statement, the ECB noted that elevated energy prices pose upside risks to inflation and downside risks to growth, but observed that underlying inflation has remained broadly stable while regional financing conditions have tightened.
The decision coincided with the announcement that ECB President Christine Lagarde will step down in February, ahead of her scheduled October 2027 term end.
The ECB hold followed Wednesday’s Federal Reserve decision to keep the federal funds target range steady at 3.75% to 4.00% in a 10-2 vote, with Governors Lisa Cook and Beth Hammack dissenting in favor of an immediate increase. With Fed Chair Kevin Warsh avoiding explicit guidance, interest-rate futures continue to price a 78% implied probability of a Fed hike in December.
Geopolitical risks in the Middle East continued to linger in the background. The UK Maritime Trade Operations (UKMTO) confirmed a commercial vessel was on fire after an attack in the Strait of Hormuz, 17 kilometers north of Khasab, Oman, with Tehran reiterating that the transit corridor remains shut until Washington agrees to a seven-day diplomatic framework.
Original Article
London’s FTSE rises as Shell rally and UK budget discipline absorb ECB pause
Kodiak AI stock gains amid Stoneridge partnership announcement
Analysts slash GBank Financial price targets following third-quarter miss
Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
