Stock prices in London opened higher on Monday morning, ahead of the US presidential election on Tuesday and the Bank of England’s interest rate decision on Thursday.
‘Markets are seemingly scaling back some Trump trades,’ commented ING analysts, ‘and we suspect the next two days can see some abnormal swings in USD crosses due to tighter volatility conditions ahead of a closely contested and highly binary US election. There are also many central bank meetings this week.
‘Regardless of the election result, we see 25bp cuts from the Fed and BoE.’
The FTSE 100 index opened up 38.96 points, 0.5%, at 8,216.11, despite being called earlier to open in the red. The FTSE 250 was up 54.00 points, 0.3%, at 20,533.74, and the AIM All-Share was up 0.69 points, 0.1%, at 739.69.
The Cboe UK 100 was up 0.4% at 823.79, the Cboe UK 250 was up 0.3% at 18,134.50, and the Cboe Small Companies was flat at 16,356.60.
‘Many will be braced for the BoE to copy the [Office for Budgetary Responsibility] by deeming that fiscal loosening announced by the government will warrant a slower pace of bank rate cuts than previously planned. But...the [BoE’s Monetary Policy Committee] would have to have a very hawkish interpretation of the Budget impact from the baseline of its assumed path for rates...for it to warrant a re-pricing beyond where the market has already got to.
‘To support that point, the other factor to note is that the BoE is working with more spare capacity in the economy to start with (1.25% of GDP in 2026) than the OBR had (~0.3% of GDP) before it factored in the government policy changes in the Budget.’
Among large-cap companies, Anglo American gained 1.4%.
The FTSE 100 mining giant has agreed to sell its 33.3% minority interest in Jellinbah Group, a joint venture with a 70% interest in the Jellinbah East and Lake Vermont steel-making coal mines in Australia, to fellow shareholder Zashvin.
In European equities on Monday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was down less than 0.1%.
Market participants will be waiting for manufacturing purchasing managers’ index data from France, Germany and the wider eurozone.
The pound was quoted at $1.2965 early on Monday in London, compared to $1.2949 at the equities close on Friday. The euro stood at $1.0891, against $1.0847. Against the yen, the dollar was trading at JP¥152.03 compared to JP¥153.02.
In China, the Shanghai Composite was up 1.2%, while the Hang Seng index in Hong Kong was up 0.9%. The S&P/ASX 200 in Sydney closed down 0.5%.
China’s top lawmakers gathered Monday to hash out a major stimulus package that analysts say could grow even bigger if former US president Donald Trump wins the White House this week, AFP reports.
Nomura economists expect lawmakers this week to approve around ¥1 trillion, or $140 billion, in extra budget – mostly for indebted local governments. Analysts also expect Beijing to approve a one-off ¥1 trillion for banks, aimed at writing off non-performing loans over the past four years.
Markets in Japan were closed for Culture Day.
In the US on Friday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.7%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.8%.
Bitter rivals Kamala Harris and Donald Trump will embark on a final frenzied campaign blitz on Monday with both hitting must-win Pennsylvania on the last day of the tightest and most volatile US presidential election in memory, AFP reports.
Polls suggest a total deadlock in surveys nationally and in the seven swing states where the result is expected to be decided.
‘The worst possible outcome for the market would be a too-close race and a contested outcome, commented Swissquote’s Ipek Ozkardeskaya.
‘In the short run, a Harris victory could bring relief to treasury and international markets, while a Trump victory could resonate louder – and not necessarily in a good way – for the euro and the European markets, due to the tariff threat. The Stoxx 600 index rebounded on Friday, but the index could bear the brunt of a potential Trump victory later this week.’
Lloyds added: ‘In terms of market reactions, it isn’t just the presidential race that counts, House and Senate results matter too as a red or blue wave would ease the passage of respective sides’ policy programmes.’
Brent oil was quoted at $74.76 a barrel from $73.64 late Friday.
Gold was quoted at $2,735.56 an ounce against $2,741.43.
Still to come on Monday’s economic calendar, most eyes will be on the manufacturing PMI readings from the eurozone, France and Germany. From the US, there are factory orders and vehicle sales.
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