FTSE 100 climbs as traders look ahead to UK budget this week

·3 min read
European stocks mixed as traders look ahead to UK Budget and ECB meeting
The FTSE 100 closed 0.3% higher on the day. Photo: Thomas Krych/SOPA Images/LightRocket via Getty

European stocks got off to a mixed start on Monday, with the FTSE 100 (^FTSE) pushing higher ahead of a crucial week for markets.

London's benchmark index rose 0.3% on the day, with miners and energy stocks leading the charge once again, while the CAC (^FCHI) tumbled 0.2% and the DAX (^GDAXI) was more than 0.4% higher.

Last week, Europe lagged behind US bourses, finishing the week lower, despite an attempt to recoup their losses from an early week sell-off.

Traders have now turned their attention to the UK’s upcoming budget and spending review this week, as well as the European Central Bank (ECB) meeting, and a string of major corporate results.

“The FTSE 100 started a new week in robust fashion on Monday despite a lukewarm reaction to better-than-expected results from index heavyweight HSBC,” AJ Bell investment director Russ Mould said. “The mining sector is doing the heavy lifting, as it did at the end of last week. 

Read more: Budget 2021: Sunak to give £6bn to NHS

He added: "The coming days look busy as more of the UK’s big companies report on third quarter trading and chancellor Rishi Sunak delivers his latest Budget.

“As we head into winter, COVID is starting to move back into the market’s consciousness amid concern about a rising number of infections in the UK — threatening the return of restrictions which could hit the travel and hospitality sectors in particular.”

Across the pond, the S&P 500 (^GSPC) rose 0.3% and the tech-heavy Nasdaq (^IXIC) increased 0.5% by the time of the European close. The Dow Jones (^DJI) was 0.1% higher.

The S&P 500 increased 1.64% last week, but ended its 7-day winning streak after retreating 0.11% on Friday. Meanwhile, the dollar had a tough week amid improved market sentiment and expectations that interest rates will rise globally to combat inflation.

Victoria Scholar, head of investment at Interactive Investor, said: "Short-term downside pressure remains on the US dollar, which is at a one-month low owing to relative dovishness from the Fed versus other central banks around the world ahead of the ECB’s policy meeting this week and a potential rate hike from the Bank of England at the start of November."

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Asian markets were mixed overnight after last week's gains. A fresh COVID-19 outbreak in China kept gains at bay, with investors worrying over whether it will affect the already stuttering economy.

“There are rising concerns around new and increasing COVID outbreaks all around the world,” Michael Hewson of CMC Markets said.

“In China, which is already battling a slowing economy, an increase in infections is prompting some cities to shutdown transportation services, while Singapore has already implemented another lockdown. In the UK the volume is also being turned up a notch on tightening restrictions to protect the NHS from being overwhelmed again.”

Elsewhere, shares in Chinese property development company Evergrande (3333.HK) rose on Monday as the firm said it was looking to grow its electric vehicles unit.

Last week, the company managed to avoid a costly default as it came up with money to pay a bond interest payment at the last minute. China’s second-biggest property developer has debts of about $305bn (£221bn).

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