The FTSE 100 advanced on Thursday as investors assessed the UK government’s latest Budget, the Federal Reserve’s decision to maintain interest rates and a series of corporate earnings announcements. Energy and defence stocks were among the gainers, while developments in the Middle East remained in focus.
At 08:28 GMT, London’s benchmark index was up 0.56%, alongside gains across major European markets. Germany’s DAX increased 0.46%, while France’s CAC 40 rose 0.84%.
Sterling declined 0.10% against the US dollar to $1.3316.
Shell Leads FTSE 100 Gains Following Third-Quarter Results
Shell (LSE:SHEL) rose 3.25%, leading gains on the FTSE 100 after reporting third-quarter adjusted earnings of $10.81 billion, its highest level since 2022.
The energy group also increased its quarterly share buyback programme to $5 billion, following higher refining margins and liquefied natural gas prices.
Defence companies also recorded gains following the government’s reaffirmation of its commitment to NATO defence spending equivalent to 3% by 2030.
BAE Systems (LSE:BA.) advanced 2.27%, while Babcock International (LSE:BAB) increased 1.78%.
UK Budget Includes Tax Changes and Revised Economic Forecasts
Chancellor John Healey outlined the government’s fiscal plans, including higher taxes on banks and betting companies.
“Fiscal discipline is my first commitment”, Healey said.
The Office for Budget Responsibility revised its UK economic growth forecasts, raising its projection for 2026 to 1.2% from 1.1%, while reducing its 2027 estimate to 1% from 1.5%.
The fiscal watchdog also forecast inflation of 3.1% in 2026 and 3.4% in 2027, with consumer price growth expected to return to the Bank of England’s 2% target in 2028, approximately one year later than projected in March.
Fiscal headroom against the government’s current budget rule was estimated at approximately £15 billion for 2029-30, compared with £23.6 billion in March.
ING said the Budget maintained a projected decline in the fiscal deficit to 3.4% of GDP in 2027, although it noted that defence funding questions remained unresolved.
The bank also said the fiscal measures had not complicated its expectations for a Bank of England interest rate increase next week.
ING Highlights Tax Thresholds and Government Financing Requirements
According to ING, the projected reduction in the fiscal deficit depends primarily on frozen income tax thresholds rather than changes to the bank levy.
The bank estimated that fiscal drag would account for the entire narrowing of the deficit next year.
ING also noted that the government’s gross financing requirement of £312 billion was below most market expectations.
The Budget included temporary energy support measures, comprising a reduction in VAT on electricity and a £100 rebate for certain households.
ING estimated that these measures would provide fiscal stimulus equivalent to approximately 0.2% of GDP this year and 0.1% in 2027.
The bank expects the measures to reduce near-term inflation by between 0.1 and 0.2 percentage points.
Federal Reserve Holds Interest Rates at 3.75%-4%
The US Federal Reserve maintained its benchmark interest rate range at 3.75% to 4% following Wednesday’s policy meeting.
The decision passed by a 10-2 vote, with Lisa Cook and Beth Hammack supporting an increase in rates.
ING said it continued to expect a rate increase in December, although it noted that Federal Reserve Chair Kevin Warsh had provided no specific guidance on the timing of future policy changes.
The bank also described Cook’s dissenting vote as unexpected.
Attention in Europe subsequently turned to the European Central Bank’s monetary policy announcement, scheduled for 13:15 GMT.
Middle East Developments Remain in Focus
Geopolitical developments continued to feature in financial markets following reports of another maritime incident in the Strait of Hormuz.
The United Kingdom Maritime Trade Operations organisation reported that a vessel was on fire following an apparent attack approximately 17 kilometres north of Khasab, Oman.
Iran has stated that the Strait of Hormuz will remain closed until Washington accepts its proposed seven-day plan.
US President Donald Trump said he had approved Vice President JD Vance’s outreach to Iran, explaining that “they need help with medical supplies and various things”.
Trump also denied reports that he had instructed officials to restart peace negotiations.
Iranian Foreign Minister Abbas Araghchi separately said Tehran was “in close and ongoing contact” with mediators.
The developments followed reports that Washington had advised Gulf allies to prepare for possible military strikes against Iran after Tuesday’s US midterm elections.
Oil and Gold Prices Decline
Oil prices moved lower during Thursday’s trading session.
Brent crude futures declined 1.1% to $110.40 per barrel, while US West Texas Intermediate futures fell 1.4% to $101.31 per barrel.
Precious metals also recorded declines.
Gold futures decreased 0.19% to $4,044.30 per ounce, while spot gold fell 0.86% to $4,032.02 per ounce.
The price movements occurred as investors monitored monetary policy developments and diplomatic activity involving the United States and Iran.
UK Corporate Roundup: TotalEnergies, WPP and Lloyds Banking Group
TotalEnergies (LSE:TTE) reported third-quarter adjusted net income of $9.1 billion, an increase of 127% compared with the corresponding period last year.
The result exceeded market expectations, with the energy company reporting higher refining margins and gas prices during the quarter.
Advertising group WPP (LSE:WPP) reported a 2.1% decline in third-quarter like-for-like revenue less pass-through costs.
The decrease was smaller than in the preceding quarter, while the company said its turnaround programme remained on schedule. WPP also maintained its full-year financial guidance.
Lloyds Banking Group (LSE:LLOY) reported third-quarter pretax profit of £2.3 billion, compared with £1 billion in the previous year.
The result was in line with market forecasts, and the banking group said it remained on course to achieve its annual financial targets.
More About the FTSE 100
The FTSE 100 is the principal benchmark index of the London Stock Exchange, comprising 100 of the largest qualifying companies by market capitalisation. Its performance reflects share-price movements across sectors including financial services, energy, healthcare, consumer goods and industrial businesses.
The index is monitored alongside UK economic indicators, corporate financial results, international monetary policy decisions and developments affecting global financial markets.
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