The FTSE 100 managed to eke out minor gains on Thursday, ending four straight days of losses, while Chancellor Rachel Reeves confirmed fiscal changes are to come in next week’s budget.
The FTSE 100 index closed up 10.74 points, or 0.1%, at 8,269.382. The FTSE 250 ended down 39.38 points, or 0.2%, at 20,790.55, and the AIM All-Share lost 3.44 points, 0.5%, at 725.69.
The Cboe UK 100 closed up 0.2% at 828.23 on Thursday, the Cboe UK 250 ended down 0.1% at 18,377.34, while the Cboe Small Companies rose 0.5% at 16,847.92.
Chancellor Rachel Reeves confirmed she will change the UK’s fiscal rules in her budget next week as she seeks to fund about £20 billion a year of extra investment with increased borrowing.
Writing in the Financial Times, Reeves said her ‘investment rule’ would ensure Britain avoided ‘the falls in public sector investment that were planned under the last government’.
‘I won’t cut capital budgets to make up for shortfalls in the day-to-day running costs of departments,’ Reeves wrote.
The FT said in her effort to fund the investment drive, the chancellor is planning to include government assets in the UK’s measure of debt as she seeks to have debt falling as a proportion of GDP in five years’ time.
Reeves is set to adopt a gauge called ‘public sector net financial liabilities’, according to people briefed on budget discussions.
The change would give Reeves space to borrow an additional £50 billion a year by the end of the decade and still have debt falling, under the Treasury’s March forecasts, the report said.
Barclays estimated the figure could be even higher.
‘Taken together, a shift to PSNFL could mean that the chancellor has fiscal headroom against the primary fiscal rule, before any policy changes, of around £65 billion (c.2% of GDP).’
In European equities on Thursday, the CAC 40 in Paris closed up 0.1% while Frankfurt’s DAX 40 ended up 0.4%.
In New York at the time of the London close, the Dow Jones Industrial Average was down 0.4%, the S&P 500 was 0.1% higher and the Nasdaq Composite rose 0.5%.
Tesla gave US markets a boost, powering 19% higher, after it delivered a profit beat and an optimistic view of 2025.
Chief Executive Elon Musk predicted strong vehicle sales growth, the roll-out of the driverless ride-hailing service and the launch of new low-cost vehicles - all in 2025.
Speaking after strong third quarter results, the Tesla chief executive predicted the firm ‘will become the most valuable in the world, and by a long-shot’.
UPS, often considered an economic bellwether in the US, rose 4.9% after returning to profit and sales growth for the first time in 18 months. But Boeing fell 1.7% after workers rejected the latest offer aimed at ending a strike.
Data showed the US economy continues to rattle along.
The S&P Global flash composite purchasing managers’ index rose to a two-month high of 54.3 points in October, accelerating from 54.0 in September.
The flash services PMI improved to 55.3 from 55.2, coming in above FXStreet-cited market consensus of 55.0.
Manufacturing, meanwhile, remained in contraction with a reading of 47.8, but picked up a touch from 47.3. Consensus had been expecting 47.5.
The pound was quoted at $1.2955 late Thursday afternoon in London, up compared to $1.2938 at the equities close on Wednesday. The euro stood at $1.0799, higher against $1.0780. Against the yen, the dollar was trading at JP¥151.84, down compared to JP¥152.83.
In the UK, figures showed UK private sector growth slowed to a near one-year low in October, due to ‘heightened economic uncertainty’.
The flash UK composite purchasing managers’ index from S&P Global fell to 51.7 points in October, from 52.6 in September, an 11-month low.
S&P Global noted ‘anecdotal evidence’ of some pre-budget uncertainty.
Earning plaudits in London, Anglo American rose 2.9%. It said it is making progress in its ‘portfolio simplification’ as the diversified miner characterised its production performance for the first nine months of 2024 as ‘stable’.
London Stock Exchange Group added 2.6% as it reported broad-based growth in the third quarter as it expressed confidence for 2025.
Chief Executive David Schwimmer said: ‘We delivered a particularly strong quarter, with healthy growth in our subscriptions business and very strong performance in our high-quality volume-based businesses.’
Unilever also impressed, rising 2.9%, as the consumer foods firm reported third-quarter sales and volume growth.
Barclays added 4.2% after the lender raised its annual outlook and reported a rise in third-quarter earnings.
It now expects 2024 net interest income, excluding the investment bank and head office, above £11.0 billion. It had previously expected the figure to land at £11.0 billion. Barclays UK net interest income was raised to £6.5 billion from £6.3 billion.
The stock hit a roughly nine-year high.
Dowlais climbed 1.8% as Citi upgraded to ’neutral’ from ’sell’, albeit with a reduced share price target.
‘Whilst we expect [earnings before interest and taxes] margins to remain under pressure in [the second half], we expect margin to stabilise in financial 2025 as management cuts costs, reduces the impact of BEV programme delays on ePowertrain losses, continues to improve commercial recovery and as Dowlais cuts out Hydrogen losses through its disposal.’
Elsewhere, Softcat jumped 11% as it posted annual profit growth and lifted its payout.
The provider of IT infrastructure products and services said pretax profit in the year to July 31% climbed 12% to £159.4 million from £141.9 million.
It raised its final dividend by 6.5% to 18.1 pence per share from 17.0p. Its total ordinary payout for the year was 6.4% higher at 26.6p from 25.0p. Special dividends for the year totalled 20.9p, an increase of 66% from 12.6p.
Brent oil was quoted at $74.48 a barrel on Thursday, down from $75.06 late Wednesday. Gold was quoted at $2,729.94 an ounce, up against $2,718.02.
Friday’s economic calendar has a UK consumer confidence reading and US durable goods order figures.
The local corporate calendar sees third quarter results from high street lender NatWest and Africa-focused telecommunications firm, Airtel Africa.
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