29th Oct 2026 07:00
(Alliance News) - Stocks in London were set to open higher on Thursday as investors digest the UK government's autumn budget and the US Federal Reserve's decision to hold interest rates, while a busy day of corporate earnings and the European Central Bank's latest policy announcement lay ahead.
IG says futures indicate the FTSE 100 to open 23.8 points higher, 0.2%, at 10,718.30 on Thursday. The index of London large-caps closed up 0.1% at 10,694.50 on Wednesday.
Sterling was quoted at USD1.3313 early Thursday, marginally higher than USD1.3310 at the London equities close on Wednesday. Against the euro, sterling rose to EUR1.1952 from EUR1.1941 a day prior.
The euro traded at USD1.1140 early Thursday, lower than USD1.1148 late Wednesday. Against the yen, the dollar was quoted at JPY157.81 versus JPY158.23.
On Wednesday, Chancellor John Healey delivered his first budget, which he said was "for the working people of Britain" and built on "fiscal discipline", as the government sought to reassure financial markets while providing support for households facing rising living costs.
Healey said the Labour government's plans would give "breathing space" to households and bring "innovation and growth in every postcode".
The budget included tax increases on profits earned by banks and betting companies to help fund support for households facing soaring energy bills.
"Fiscal discipline is my first commitment," Healey said, as he sought to reassure investors about the government's commitment to keeping the public finances under control.
Tom Stevenson, investment director at Fidelity International, said: "For investors, the message was one of stability, with few major surprises to unsettle financial markets."
However, updated forecasts from the Office for budget Responsibility highlighted the challenging economic backdrop facing the government.
The OBR upgraded its UK economic growth forecast for 2026 to 1.2% from 1.1%, but cut its projection for 2027 to 1.0% from 1.5%.
Inflation is expected to reach 3.1% in 2026 and 3.4% in 2027, before returning to the Bank of England's 2% target in 2028, around a year later than forecast in March.
Meanwhile, fiscal headroom against the government's current budget rule is projected at around GBP15 billion in 2029-30, down from GBP23.6 billion in the March forecast, before recovering to GBP22 billion in 2030-31.
In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.2%, the S&P 500 up 0.3% and the Nasdaq Composite up 0.3%.
The US Federal Reserve left interest rates unchanged on Wednesday, as analysts continued to anticipate a further increase in December, although expectations for the policy outlook in 2027 remained more divided.
The Federal Open Market Committee maintained the federal funds rate target range at 3.75% to 4.00%, less than a week before the US midterm elections on November 3.
The decision followed a unanimous 25-basis-point increase in September, the Fed's first rate hike since July 2023 after a prolonged period of monetary easing.
Wednesday's decision was supported by 10 of the 12 FOMC policymakers, with Lisa Cook and Beth Hammack dissenting in favour of a further quarter-point increase.
Fed Chair Kevin Warsh did not provide explicit forward guidance on the path of interest rates during his press conference following the announcement.
In Asia on Thursday, the Nikkei 225 index in Tokyo was up 1.0%. In China, the Shanghai Composite fell 0.9%, while the Hang Seng index in Hong Kong was down 0.2%.
The S&P/ASX 200 in Sydney closed up 0.5%, as data showed Australian export prices increased in the third quarter, driven by gas exports, while import prices declined.
According to the Australian Bureau of Statistics, the export price index rose 1.4% quarter-on-quarter in the third quarter of 2026, following a 1.1% increase in the second quarter.
Meanwhile, the import price index fell 1.1% in the third quarter, reversing a 5.5% increase in the previous three months and coming in well below the FXStreet-cited consensus forecast for a 1.8% rise.
Gold was quoted at USD4,029.30 an ounce early Thursday, lower than USD4,039.18 on Wednesday.
Brent oil was trading at USD110.28 a barrel early Thursday, lower than USD116.37 late Wednesday.
Meanwhile, US Vice President JD Vance has contacted Iran's security chief in an effort to revive peace negotiations and avert a renewed American military offensive, the Wall Street Journal reported.
Vance sent a letter to Mohsen Rezaei, head of Iran's Supreme National Security Council, in a move directed by President Donald Trump, according to one of the newspaper's sources.
The letter and subsequent discussions between US and Iranian officials focused on establishing a possible framework for negotiations rather than the details of a peace agreement, the Journal reported.
The conflict, which began with US and Israeli strikes on Iran in late February, has severely disrupted energy shipments from Gulf countries, contributing to higher global energy prices and wider economic uncertainty.
In Thursday's busy corporate calendar, Lloyds Banking and Shell report third-quarter results, while Glencore, Haleon, IMI, PPHE Hotel Group, St James's Place and WPP issue trading statements.
In the economic calendar on Thursday, UK mortgage approvals are due early in the session, alongside Irish gross domestic product figures.
Later, the European Central Bank announces its latest interest rate decision, with markets expecting rates to remain unchanged, while the US releases personal consumption expenditures inflation data and weekly jobless claims figures.
By Eva Castanedo, Alliance News senior economics reporter
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