The FTSE 100 was stronger ahead of the US election this week, with firmer oil prices helping lift the oil majors and hopes of further stimulus by China supporting interest in mining companies.
Banks were again higher as investors adjusted to the revised trajectory for UK interest rates after the budget. London’s leading index was 0.6% higher at 8,228 at the time of writing.
NatWest was the top riser with a gain of 3% with BT and Frasers Group not far behind.
“After a difficult few days, the FTSE 100 got off to a steady start on Monday as resources and China-linked stocks made progress,” says AJ Bell investment director Russ Mould.
“Lawmakers in Beijing are sitting down this week to thrash out a big stimulus package to accelerate an economy which has been spluttering since the pandemic. Top of the agenda is addressing the issue of local government debt but also providing support to households who, unlike those in the West, received precious little support during Covid.
“This fiscal package is essentially what the market has been waiting for, ever since China fired the starting gun on stimulus in September. As ever, the devil is likely to be in the detail.
“News that oil producers’ cartel OPEC+ would delay hikes in output through December helped give oil prices a lift and, in turn, provided a tailwind to heavyweight oil stocks Shell and BP.”
US Election
If anyone wasn’t aware, this week’s big risk event is the US election. A Trump victory is likely to be considered inflationary and damaging to international trade, ultimately culminating in a bearish tone for equities. A Harris victory and the avoidance of the risk presented by Donald Trump will almost certainly be seen as a positive and spark a relief rally.
However, while a consensus is building around the market playbook after the election, who actually wins is still anyone’s guess.
The Harris camp benefited from a favourable poll in a critical state over the weekend, but it is still too close to call.
“As Republicans and Democrats embark on a last-minute surge of campaigning, some of the big Trump ‘plays’ on the markets have lost ground. Investors are reassessing Donald Trump’s chances of re-entering the White House, given polls which emerged over the weekend, indicating Kamala Harris may have gained ground in key battle ground states,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“The dollar has fallen back slightly, as the chances of Trump setting off a fresh tariff frenzy, pushing up inflation and interest rates, seem to have retreated a little. Bitcoin, which had also made strides of progress as markets priced in a Trump win, given his pro-crypto stance, has also continued to dip back. But this election is still far too close to call, so considerable swings in prices are likely as the results ebb in.”