FTSE 100 Climbs as UK Courts Global Investors; DAX Rises Amid ECB Rate Cut Bets

London’s FTSE 100 rose on Monday as the Government rallied global investors to increase efforts to secure additional investment for the UK.

The blue-chip index rose 39.01 points, or 0.47%, to settle at 8,292.66, with utilities among the day’s top gainers. The domestically focused FTSE 250 increased 0.25% to 20,817.19, led by 19.32% TI Fluid Systems (TIFS) gains.

Addressing an international investment summit in London, the Prime Minister and Chancellor, Keir Starmer, informed business leaders about the Government’s intentions to boost the economy and promote more investment in expanding businesses.

This included promises to cut red tape and get projects off the ground if it meant more financing for the UK.

Starmer claimed that the UK was open for business following the political ‘circus’ around Brexit, saying, ‘You have to expand your business; I have to develop my country.’

Deals worth tens of billions of dollars are scheduled to be announced at the conference, with the Government even sending the King to promote investment.

In an interview with Bloomberg TV, Starmer also dismissed reports that the UK government was considering increasing capital gains tax as high as 39%, calling it ‘wide of the mark.’

Oil Price Volatility and Sector Movements Shape FTSE 100 Gains

Meanwhile, oil price volatility continued into the new week, with Brent crude oil falling more than 2% to around 77 US dollars per barrel, given that global investors remain apprehensive about developments in the Middle East crisis.

Vistry, a housebuilder, was the index’s notable gainer after falling last week.

Utilities SSE, Severn Trent, and United Utilities were among the biggest gainers.

Russ Mould, investment director at AJ Bell, stated that defensive companies are “in vogue,” meaning that investors are concerned about what may happen in the future.

In London, gaming stocks were under pressure from the news that the Government was preparing a tax crackdown on the industry.

Bunzl climbed 2.4% on the FTSE 100 after JPMorgan upgraded it to ‘overweight’ from ‘neutral’ and raised its target price to 3,980 pence from 3,660p.

All things considered, futures trade indicates a 16-point increase to 8,308 on the FTSE 100 index, suggesting a higher session based on US development and UK employment data.

London’s gains are anticipated to be hampered by pressure on energy companies after OPEC cut its global oil demand projection for this year and next.

DAX Hits Record High as Investors Anticipate ECB Rate Cuts

Elsewhere in Europe, investors are bracing for the third ECB rate cut this week, with the DAX 40 setting a record high overnight.

On Monday, October 14, the German 30 index (DAX 40) rose by 0.69%, following a 0.85% increase the previous day, to close at 19,508.

Market bets on 25 basis points the ECB’s rate cuts in October and December boosted demand for DAX-listed stocks. As a 25-basis point (bp) rate decrease has already been factored in, the focus will shift to ECB President Christine Lagarde’s advice on future rate revisions.

Key Economic Data from Germany to Influence DAX

Investors will be watching wholesale prices and ZEW Economic Sentiment numbers from Germany on Tuesday.

Economists expect wholesale prices to rise by 1.9% year on year in September, following a 1.1% drop in August. A sharp rise in wholesale pricing may indicate increased demand, which could result in higher consumer costs. Signs of an increase in inflation could temper bets for a December ECB rate decrease, which might impact demand for DAX-listed equities.

Meanwhile, increasing sentiment about the German economy may reduce expectations of an ECB rate reduction in December.

Better-than-expected results might send the DAX below 19,350. In contrast, poor statistics might support bets on multiple Q4 2024 ECB rate cuts, perhaps sending the DAX to 19,750.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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