The U.K.’s main stock index was off to a strong start to the week thanks to solid gains for heavyweight HSBC Holdings PLC HSBA, +3.85% after the banking giant posted forecast-beating results.
Meanwhile, investors were looking ahead to the U.K. budget, due to be delivered by Chancellor Philip Hammond toward the end of the trading day.
How markets are performing
The FTSE 100 UKX, +0.78% rose 0.8% to 6,994.45, after dropping 0.9% on Friday on back of a wave of global equity selling. The index slid 2.2% last week, and was poised for 7% drop for October, its worth monthly decline since January 2016.
The pound GBPUSD, -0.1403% was buying $1.2833, little changed from $1.2828 seen late Friday in New York.
What’s moving markets
Chancellor Hammond’s budget, known as the Autumn Statement, is the last before Brexit. He is expected to show a period of austerity is ending. A promise to boost government spending could provide support for the British pound. That could weigh on the FTSE 100, as the index’s multinational companies generate most of their sales in other currencies.
What are strategists saying?
With Brexit negotiations deadlocked, “it is going to be extremely arduous for Philip Hammond to talk about tax cuts and an increase in spending,” said Naeem Aslam, chief market analyst at Think Markets U.K., in a note to clients.
“Should no Brexit deal be achieved over the coming weeks, then the government will need to rewrite its economic strategy and spending plans. Hammond will use this opportunity to urge the Conservative party to unite behind Theresa May’s final push for a Brexit deal,” said Jasper Lawler, head of research at London Capital Group, in a note to clients.
Stocks in focus
The banking sector provided the lion’s share of gains for the main index, with HSBC HSBA, +3.85% HSBC, -1.23% climbing 3.6% after third-quarter profit beat forecasts, while Standard Chartered PLC STAN, +1.30% rose 0.8% and Royal Bank of Scotland Group PLC RBS, -4.09% RBS, -4.09% added close to 1%.
Oil companies were modestly higher, with Royal Dutch Shell Group PLC RDS.A, -0.05% RDSA, +0.44% rose 0.6% and BP PLC BP, -1.18% BP., +0.36% rose 0.8%.
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