FTSE 100 Rises on Earnings and Rate Cut Hopes, DAX Sees Mild Recovery

On Thursday, London’s blue-chip stock index moved higher, boosted by strong corporate profits and economic data that backed expectations on further rate cuts from the Bank of England.

The benchmark FTSE 100 (FTSE) closed 0.13% higher, while the locally focused FTSE 250 (FTMC) fell 0.2%. The FTSE 100 has tried to rally for weeks with little success. Just as the US election hangs over Wall Street, UK investors have decided to sit it out till Rachel Reeves finishes speaking next week.

Unilever (ULVR.L) climbed 2.9% after topping third-quarter underlying sales projections, while Barclays (BARC.L) surged 4.1% after reporting an 18% increase in third-quarter earnings that exceeded expectations.

Anglo American (AAL.L) rose 2.9%, lifting the industrial metal miners’ sector (.FTNMX551020), as the global miner retained its copper and diamond production projections.

Next week the UK budget will be handed down.

The government has already said they’ve run out of money and need to find some more. But they have limited options.

All eyes are on the way they tax entrepreneurs and businesses. Arguably the engine of growth in the UK.

Already…

— Daniel Priestley (@DanielPriestley) October 24, 2024

Optimism among British firms fell in October, according to two surveys released on Thursday, just six days before finance minister Rachel Reeves attempts to strike a balance between raising taxes and stimulating growth in the new government’s first budget.

Traders are widely anticipating a 25 basis point rate drop by the BoE at its November and December sessions.

Bank of England rate-setter Catherine Mann warns that the UK may have prematurely cut interest rates if there have been lasting shifts in wage and price setting https://t.co/WlsJXhItal

— Bloomberg (@business) October 24, 2024

Catherine Mann, the BoE’s interest rate-setter, welcomed a recent drop in inflation but said that the central bank still had “a long way to go” to meet its 2% inflation objective in the medium run.

FTSE 100 Futures Dip as Autumn Budget Uncertainty Looms

On Friday morning, futures showed the FTSE 100 giving up virtually all of its gains from Thursday, falling 8 points to 8,303.

However, uncertainty surrounding next week’s Autumn Budget was believed to be holding down gains, with chancellor Rachel Reeves confirming intentions to raise taxes and change UK debt regulations to free up funds for additional borrowing.

Rachel Reeves plans to change the UK fiscal rules to help fund a £20bn infrastructure investment.

Reeves plans to use a measure called public sector net financial liabilities as the UK' s measure of debt, which will include financial assets such as student loans.

This would… pic.twitter.com/HYQCjlyqLt

— Gio Politics (@gio_politics) October 24, 2024

On Friday, the focus was expected to be on NatWest Group PLC’s (LSE:NWG) latest trading update, as well as GfK consumer confidence numbers.

DAX Rebounds 0.34% as Auto Sector Shines, but Weekly Outlook Remains Bearish

On Thursday, October 24, the DAX rose 0.34%, recovering from a 0.23% drop in the previous session, to close at 19,443. The DAX snapped a three-day losing run.
On Thursday, the car sector grabbed center stage. Renault reported Q3 earnings that surpassed expectations, fuelling demand for German auto stocks.

Renault beats Q3 forecasts as new launches lift sales https://t.co/fWYbR4JMz1 pic.twitter.com/lHDEIw3P7D

— Reuters (@Reuters) October 24, 2024

The top performers on the DAX for the session included Dr. Ing. hc F Porsche AG Preferred (ETR:P911_p), which saw a rise of 3.07%, or 2.06 points, closing at 69.16. Beiersdorf AG O.N. (ETR:BEIG) followed closely, gaining 2.79% or 3.55 points to finish at 130.60. Rheinmetall AG (ETR:RHMG) also had a strong showing, up 2.30% or 11.30 points, closing at 503.40.

Conversely, the worst performers included Symrise AG Inh. O.N. (ETR:SY1G), which dropped 2.99% or 3.45 points, ending the session at 112.10. Deutsche Bank AG NA O.N . (ETR:DBKGn)saw a decline of 2.40% or 0.39 points, closing at 15.79, while Merck KGaA (ETR:MRCG) fell 2.02% or 3.20 points to finish at 155.50.

The DAX is set to have a bad week on Friday. Broker IG computed the leading German index two hours before the Xetra opened 0.4 percent down at 19,365 points. This would bring its weekly loss to approximately 1.5 percent.