The FTSE 100 closed 0.3% higher on Thursday as investors welcomed a UK budget and rate pauses from the Federal Reserve and the European Central Bank. Shell rallied 3.2% on its earnings, and the Bank of England's rate decision on November 5 is next.
London shares closed slightly higher on Thursday, with the blue-chip FTSE 100 rising 0.3%. Investors welcomed a market-friendly UK budget and benchmark interest rate pauses from both the Fed and the ECB.
The index remains in a range despite earlier threatening to break higher. Trading desks are now positioning for the Bank of England's monetary verdict on November 5.
Shell and TotalEnergies report strong quarters
Index heavyweight Shell rallied 3.2% after third-quarter adjusted earnings of $10.81 billion, its strongest quarterly performance since 2022. The result beat analyst consensus on the back of historic refining margins and elevated liquefied natural gas (LNG) prices.
The energy major also raised its quarterly share buyback program to $5 billion. Meanwhile, TotalEnergies reported a 127% year-on-year surge in third-quarter adjusted net income to $9.1 billion.
Defense contractors also advanced after the budget confirmed the government's commitment to lifting UK defense spending to 3% of GDP by 2030. BAE Systems rose 2.27% and Babcock International gained 1.78%.
Budget leaves £15 billion of headroom
Chancellor John Healey balanced targeted tax adjustments on banking balance sheets and gambling operators with strict spending discipline. He affirmed that "fiscal discipline is my first commitment".
The Office for Budget Responsibility lifted its 2026 growth projection to 1.2% from 1.1% and trimmed 2027 expansion to 1.0% from 1.5% because of high global energy prices. Headroom against the fiscal mandate narrowed to £15 billion for 2029/30 from £23.6 billion in March, matching primary dealer expectations.
ECB and Fed hold rates
The ECB left its deposit facility rate unchanged at 2.50% after hikes in June and September. It noted that elevated energy prices pose upside risks to inflation and downside risks to growth. The ECB also announced that President Christine Lagarde will step down in February.
On Wednesday, the Fed kept the federal funds rate target range at 3.75% to 4.00% in a 10-2 vote. Governors Lisa Cook and Beth Hammack dissented in favor of an immediate increase. Interest-rate futures continue to price a 78% implied probability of a Fed hike in December.
Source: Investing.com
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