FTSE 100 Slips While DAX Struggles Amid Mixed Earnings Reports

The FTSE 100 dipped marginally on Tuesday, but recovered the majority of its early losses as the International Monetary Fund raised its forecast for UK economic growth. London’s blue-chip index fell by 0.14%, losing 11.7 points to finish at 8,306.54.

The FTSE dipped in early trade but recovered later in the day as the IMF upgraded its outlook for the UK, stating that lower inflation and interest rates will help drive expenditure.

IMF upgrades UK growth forecast in boost to Reeves ahead of Autumn Budgethttps://t.co/qdEIYRqaqd

— Investment Week (@InvestmentWeek) October 22, 2024

IMF Declares Victory Over Inflation, While UK Faces Rising Borrowing Challenges

The International Monetary Fund (IMF) believes the worldwide struggle against inflation has been mostly won.

It maintained its prediction of 3.2% global growth this year, however growth in 2025 has been lowered down from 3.3% to 3.2%. The projection came after the UK borrowed £16.6 billion last month to bridge the gap between public sector spending and earnings. The number was £2.1 billion higher than in September 2023, and the third biggest September borrowing since monthly records started in January 1993.

It was also £1.5 billion more than the £15.1 billion borrowing anticipated by the Office for Budget Responsibility (OBR) for September, putting chancellor Rachel Reeves in a tight financial situation ahead of the autumn budget.

So far this fiscal year, the UK has borrowed £79.6 billion, £1.2 billion more than at the same stage in the previous fiscal year. Meanwhile, the public borrowing amount for August was reduced from £13.7bn to £13 billion.

Public sector net debt excluding public sector banks amounted to around 98.5% of the UK’s yearly GDP.

IMF raises UK's 2024 GDP growth forecast as Reeves readies budget https://t.co/E2radxY1dx pic.twitter.com/8UnO0og1hv

— Reuters UK (@ReutersUK) October 22, 2024

The organisation’s top economist also warned that the UK and other countries must take a “narrow path” in their efforts to cut debt ahead of next week’s Budget, amid speculation that the Chancellor may tweak UK fiscal laws.

FTSE 100 Futures Slide as Miners Gain Amid Rising Gold and Silver Prices

On Wednesday morning, futures showed the FTSE 100 sliding by 12 points to 8,335 points, putting London’s blue chips on track for a third day of decline.

Fresnillo PLC (LSE:FRES) and miners have gained ground this week despite the index’s overall decline, as gold and silver prices have risen as attention turns to next month’s presidential election in the United States.
Gold resumed its record-breaking streak on Wednesday, reaching US$2,750 per ounce for the first time, while silver rose 1.5% to US$34.74.

Gold reached a record high, with safe haven demand continuing to support prices as traders monitored escalating tensions in the Middle East and an increasingly tight US election race https://t.co/efcmfmTK41

— Bloomberg (@business) October 20, 2024

Back in London, the focus on Wednesday will be on trading updates from Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) and Lloyds Banking Group PLC (LSE:LLOY).

DAX Closes lower as SAP Gains on Strong Earnings

On Tuesday, European shares ended flat, with the DAX 40 in Frankfurt down 0.1%. SAP rose 2.1%, boosting the DAX, after reporting excellent third-quarter results and raising forecast.

SAP, a software company based in Walldorf, Baden-Wurttemberg, Germany, boosted its cloud and software revenue, operational profit, and free cash flow forecasts late Monday. Deutsche Bank described it as a ‘exceptional’ and ‘almost perfect’ third quarter.

Munich Re https://t.co/nlpJQNcG85

Jefferies downgrade to hold from buy and lower the price target to €485 from €495#DAX #EuroStoxx50

— Stocksandbonds (@Stocksandbonds3) October 21, 2024

On Wednesday, investors continued to respond to Jefferies’ downgrade of Munich Re Group, which fell 2.75%, and Hannover Re, which dropped 1.50%.

Rising government bond yields hit tech equities, including Infineon Technologies, which dropped 1.00%.  As of writing on Wednesday the DAX is traded at 19,435.93 with a 0.072% increase.