(Alliance News) - The FTSE 100 opened higher on Monday, with "more growth" but "fewer rate cuts" potentially in the UK's future following the budget.
Globally, Swissquote's Ipek Ozkardeskaya commented: "The market is now convinced that the Fed will announce another 25bp cut when it meets this week [Thursday]," just after the US presidential election.
"In the short run," she continued, "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."
Meanwhile, Berenberg's Andrew Wishart predicted "more growth, fewer rate cuts". The bank raised its forecast for GDP annual growth in 2025 to 1.7%, expecting average inflation to "drift back up" to 2.6%.
"By front-loading spending while increasing tax revenue more gradually, the government will provide a large boost to growth in 2025," Wishart explained. "The increase in spending announced in the budget caused the [Office for budget Responsibility] to double its forecast of annual growth in real government spending over the next two years."
However: "The Bank of England will have to lean against looser fiscal policy, likely by ending its rate-cutting cycle after just three more cuts at 4.25% in Q2 2025, rather than 4.0% in Q3, as we had previously expected."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: opened 0.2% higher at 8,189.85 points
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Hang Seng: up 0.3% at 20,565.80
Nikkei 225: closed for Culture Day.
S&P/ASX 200: closed up 0.6% at 8,164.60
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DJIA: closed up 288.73 points, 0.7%, at 42,052.19
S&P 500: closed up 23.35 points, 0.4% at 5,728.80
Nasdaq Composite: closed up 144.77 points, 0.8% at 18,239.92
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EUR: higher at USD1.0891 (USD1.0847)
GBP: higher at USD1.2977 (USD1.2949)
USD: lower at JPY152.20 (JPY153.02)
Gold: lower at USD2,736.82 per ounce (USD2,741.43)
(Brent): higher at USD74.35 a barrel (USD73.64)
(changes since previous London equities close)
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ECONOMICS
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Monday's key economic events still to come:
Culture Day in Japan. Financial markets closed.
09:55 CET Germany manufacturing PMI
10:00 CET eurozone manufacturing PMI
11:00 EST US factory orders
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The Border Security Command is set to see its funding doubled as Keir Starmer fixes his sights on ending small boat crossings. The prime minister is expected to use a speech to the Interpol General Assembly in Glasgow on Monday to kick off a week-long blitz on the issue. Monday's speech will see Starmer pledge another GBP75 million for his new border command, taking its total funding to GBP150 million over two years. The money will be used to fund high-tech surveillance equipment and 100 specialist investigators. Elsewhere, reversing plans to charge inheritance tax on farms is "the only sensible course of action", the head of the National Farmers' Union has said as he prepares for crunch talks with the Environment Secretary. NFU President Tom Bradshaw is to meet Steve Reed on Monday amid a growing furore over the chancellor's decision to make farms subject to inheritance tax. Under plans announced at the budget, inheritance tax will be charged at 20% on farms worth more than GBP1 million, although the chancellor has said in some cases the threshold could in practice be around GBP3 million. But writing in the Daily Telegraph, Bradshaw said the prospect of being unable to pass their businesses on to their children would be "the final straw" for many farmers. Tax experts have suggested the changes could affect fewer than 500 farms a year, once the tax thresholds and farmers giving their property to their children before they die are taken into account, but Bradshaw said the Treasury had a "completely skewed view of the structure of farming in the UK" as "Very few viable farms are worth under GBP1 million."
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Bitter rivals Kamala Harris and Donald Trump embark on a final frenzied campaign blitz Monday with both hitting must-win Pennsylvania on the last day of the tightest and most volatile US presidential election in memory. Republican Trump has promised a "landslide" as he seeks a sensational return to the White House, while Democrat Harris said the "momentum" was on the side of her bid to be America's first woman president. But the polls suggest a different story on the eve of election day – total deadlock in surveys nationally and in the seven swing states where the result is expected to be decided. Now a race of dramatic twists, including two bids to kill Trump and Harris's shock late entrance, is coming down to the most viciously fought-over battleground. Harris will spend the whole day campaigning in the rust-belt state of Pennsylvania, culminating in a huge rally in its biggest city Philadelphia. Trump will travel to North Carolina, Pennsylvania and then Michigan. In a sign of how crucial Pennsylvania is to their chances of occupying the Oval Office, Trump and Harris will even hold dueling rallies in the industrial city of Pittsburgh. Pennsylvania is the single biggest swing state prize under the US Electoral College system, which awards influence in line with population.
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The US Federal Reserve is poised to lower its benchmark policy rate by a quarter-point next week, the Financial Times reported on Sunday, sticking to its course despite Friday's disappointing jobs report and uncertainty over economic policy beyond Tuesday's US presidential election. The Federal Open Market Committee will announce its next decision on interest rates two days after polls close, with the results potentially not yet known. Officials are likely to press ahead with a quarter-point reduction, resuming a more traditional pace of easing after September's larger-than-usual half-point cut. The move would lower the federal funds rate to a new target range of 4.5% to 4.75%.
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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. Beijing has in recent months heeded calls to step up support for the economy after years of inaction, announcing a raft of measures including rate cuts and the easing of some home buying restrictions. But they have refrained from unveiling a figure for the long-awaited stimulus, disappointing investors after a market rally fizzled when officials repeatedly failed to commit to a top line. Analysts now hope this number could emerge from this week's meeting of the Standing Committee of National People's Congress, the top body of China's rubber stamp parliament and headed by number three official Zhao Leji. The standing committee reviews and approves all legislation, including allocating funds out of China's budget. The session kicked off on Monday with discussion of a draft revision to China's Arbitration Law, state news agency Xinhua said. "We are expecting more details on the proposals to be passed," said Heron Lim of Moody's Analytics, including "how this extra funding would be allocated to address the near-term economic issues". Nomura economists expect lawmakers this week to approve around CNY1 trillion, or USD140 billion, in extra budget – mostly for indebted local governments. Analysts also expect Beijing to approve a one-off CNY1 trillion for banks, aimed at writing off non-performing loans over the past four years.
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BROKER RATING CHANGES
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Goldman cuts Standard Chartered to 'neutral' - price target 937 pence
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RBC cuts 3i Group to 'sector perform' (outperform) - price target 3,425 pence
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Berenberg starts Morgan Sindall with 'buy' - price target 4,500 pence
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COMPANIES - FTSE 100
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Anglo American has agreed to sell its 33.3% minority interest in Jellinbah Group Pty Ltd, a joint venture which owns a 70% interest in the Jellinbah East and Lake Vermont steel-making coal mines in Australia, to Zashvin Pty Ltd for cash proceeds of AUD1.6 billion, approximately USD1.1 billion. Zashvin is an existing 33.3% shareholder in Jellinbah alongside Anglo American and Marubeni. Anglo American noted that it does not operate the Jellinbah mines, or market any of the production volumes. It expects the sale to complete in the second quarter of 2025.
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COMPANIES - FTSE 250
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Wizz Air reported that passengers in October rose 4.1% to 5.6 million from 5.4 million the same month last year. Capacity increased 3.7% to 6.1 million seats from 5.8 million "despite the Pratt & Whitney GTF engine-related groundings". This pushed the load factor up to 92.9% from 92.5%. The airline operator noted its announcements in late October that it will open a temporary base in Chisinau, Moldova, and is collaborating with Airbus in a sustainable aviation fuel trial on its Barcelona to Budapest and Brussels Charleroi to Budapest routes. It also opened a new EUR38 million training centre in Rome Fiumicino, which is expected to provide recurrent training for over 4,800 pilots per year.
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OTHER COMPANIES
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Ryanair reported mixed half-year results, with revenue rising 1% to EUR8.69 billion compared with EUR8.58 billion in 2023. Pretax profit however dropped 16% to EUR2.07 billion, with Ryanair blaming an 8% rise in operating expenses with staff costs jumping 21%. It declared a 22.3 euro cents per share interim dividend, up from 17.5 cents. It also said October passengers rose 7% to 18.3 million. Rolling 12-month passengers rose 8% to 194.8 million. Ryanair said it still targets between 198 million and 200 million passengers in 2025, up 8% annually, but expects third-quarter fares to be lower and has "almost zero Q4 visibility". It added that it cannot give full-year profit guidance, saying this depends on delivery delays from Boeing among other issues.
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By Emma Curzon, Alliance News reporter
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