24th Sep 2026 06:53
(Alliance News) - Stocks in London are set to open marginally lower on Thursday as investors weighed a sell-off in US government bonds, firmer oil prices and reports the UK Treasury could opt for a smaller fiscal buffer at next month's Budget.
IG says futures indicate the FTSE 100 to open 3.07 points lower, marginally down, at 10,702.19 on Thursday. The index of London large-caps closed marginally lower at 10,705.26 on Wednesday.
In the UK, Chancellor John Healey could accept a smaller fiscal buffer in next month's budget in an effort to limit the scale of tax rises and spending cuts, the Financial Times reported.
Citing people familiar with the discussions, the FT said the Treasury and Number 10 are actively considering setting a lower level of headroom than the GBP23.6 billion forecast by the government's fiscal watchdog in March.
Investors have indicated that a buffer of around GBP14 billion could be accepted without unsettling the gilt market, according to the report.
The discussions come as the government grapples with a fiscal shortfall caused in part by the economic impact of the Middle East war.
Prime Minister Andy Burnham said this week he was "conscious" that Labour had already raised taxes twice in recent years. The Budget is due on October 28.
Brent oil was trading at USD103.08 a barrel early Thursday, higher than USD102.74 late Wednesday.
Meanwhile, a sell-off in US government bonds deepened on Wednesday, pushing yields across much of the Treasury market to their highest levels in almost two decades.
Stronger-than-expected US manufacturing and services activity added to the selling pressure, while a weak debt auction pushed the five-year Treasury yield above 5% for the first time since 2007. The 10-year yield recorded its sharpest increase since so-called Liberation Day in April 2025.
Sterling was quoted at USD1.3243 early Thursday, lower than USD1.3254 at the London equities close on Wednesday. Against the euro, sterling fell to EUR1.1628 from EUR1.1636 a day prior.
The euro traded at USD1.1384 early Thursday, lower than USD1.1391 late Wednesday. Against the yen, the dollar was quoted at JPY158.08 versus JPY158.39.
In the US on Wednesday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.7%, the S&P 500 down 0.9% and the Nasdaq Composite down 1.1%.
US Treasury Secretary Scott Bessent said Washington and Beijing had agreed to extend their trade truce by two months, pushing its expiry from November 10 to January 10.
The agreement followed talks between Bessent and Chinese Vice Premier He Lifeng in New York on Sunday and Washington on Wednesday, and came as Chinese President Xi Jinping arrived in the US for a summit with President Donald Trump.
"We have agreed today that we will extend what we call the Busan Agreement, the economic detente between the two countries that was scheduled to end on November 10th," Bessent told Fox News.
"That is going to be extended until January 10th to give us more time to see what we can do on the economic front," he added.
In Asia on Thursday, the Nikkei 225 index in Tokyo rose 1.3%. In China, the Shanghai Composite fell 0.8%, while the Hang Seng index in Hong Kong lost 0.4%.
The S&P/ASX 200 in Sydney fell 0.7%, as data showed Australia's unemployment rate unexpectedly increased in August.
According to the Australian Bureau of Statistics, the seasonally adjusted unemployment rate rose to 4.6% from 4.5% in July, above the FXStreet-cited consensus forecast of 4.5%.
Gold was quoted at USD4,283.00 an ounce early Thursday, marginally lower than USD4,283.94 on Wednesday.
Meanwhile, UK consumer sentiment deteriorated in September as the government's October budget drew closer, according to the British Retail Consortium-Opinium consumer sentiment monitor.
Expectations for the UK economy over the next three months fell to minus 34 points in September from minus 28 in August, while expectations for personal finances worsened to minus 15 from minus 9.
"With the budget looming large, consumers want to see government prioritise bringing down the cost of living," said BRC Chief Executive Helen Dickinson.
In Thursday's corporate calendar, Halma, Mitchells & Butlers and On The Beach Group issue trading statements, while Raspberry Pi Holdings and Vistry Group report half-year results.
In the economic calendar on Thursday, Switzerland announces its latest interest rate decision.
In the US, weekly jobless claims and new home sales figures are due.
By Eva Castanedo, Alliance News senior economics reporter
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