UK’s FTSE 100 inched higher on Monday, set to rise for the month as some investor nerves were soothed over reports that Prime Minister Rishi Sunak could extend a freeze on British foreign aid, helping offset a fall in oil stocks.
The blue-chip FTSE 100 edged up 0.1% by 0938 GMT, while the domestically oriented FTSE 250 remained flat.
Energy stocks fell 0.4%, as oil prices declined on weaker-than-expected China factory activity data.
The FTSE 100 tracked gains of 2.2% in October, while midcaps eyed a monthly rise of 4.4%.
Sunak might extend the foreign aid spending cut by another two years to 2026-2027 as the government draws up spending cuts and cancels tax cuts to ease the squeeze on household budgets caused by higher costs of living, according to a Telegraph report.
The government had cut its foreign aid spending two years ago to deal with the hit public finances took during the pandemic.
Investors will now look towards the Bank of England and the US Federal Reserve for any signs of easing their aggressive monetary policy tightening cycles, with each expected to hike rates by 75 basis points during the week.
“It all adds up to an increasingly difficult tightrope for monetary policy makers on both sides of the Atlantic to walk, as they look to bring inflation under control without doing too much economic damage in the process”, said Russ Mould, investment director at AJ Bell investment.
The banking sector gained 1.2%, after a Sunday Times report said that more windfall taxes in the UK was unlikely.
Commodity stocks, Natwest drag FTSE 100 lower
Easyjet rose 5.9% after a Times report stated that International Consolidated is to renew its EU consolidation plans, which includes a merger of the two companies as per analysts.
Centrica Plc topped the UK FTSE after brokerage Jefferies upgraded the stock to “buy” and raised its price target as well, citing strong fundamentals.
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