London stocks are expected to open sharply higher on Thursday, with the FTSE 100 forecast to gain more than 113 points as investors respond to the Democrats’ sweeping victory in the US midterm elections, falling oil prices and a strong Wall Street rally, while awaiting the Bank of England’s latest interest rate decision.
Futures indicate the FTSE 100 will open 1.1% higher at 10,942.61, extending Wednesday’s 1.8% advance, which saw the blue-chip index close at 10,829.21.
The Bank of England is widely expected to raise interest rates by 25 basis points to 4% from 3.75% at midday Thursday, as policymakers respond to persistent inflation and the economic consequences of elevated energy prices.
Investors will be watching the Monetary Policy Committee’s voting breakdown and accompanying guidance for indications of whether further increases could follow in 2027.
Global equity markets rallied after Democrats secured control of both the US House of Representatives and Senate, delivering a significant political setback for President Donald Trump and changing the balance of power in Washington.
Wall Street recorded substantial gains on Wednesday, with the Dow Jones Industrial Average surging 3%, the S&P 500 advancing 1.6% and the Nasdaq Composite rising 1.4%.
The election outcome has prompted investors to reassess expectations for US government spending, regulation and foreign policy, particularly the administration’s approach to the conflict with Iran.
Oil prices continued their sharp decline, with Brent crude falling to $93.95 a barrel, compared with $99 at Wednesday’s London close.
The retreat followed growing expectations that political pressure on the White House could encourage renewed diplomatic efforts to resolve the Middle East conflict.
President Trump acknowledged that higher fuel prices resulting from the Iran war had contributed to Republican losses in the midterm elections, although he defended the decision to launch military operations.
Speaking to reporters in Washington, Trump agreed that energy costs had influenced voters but maintained that military action had been necessary to prevent Iran from acquiring nuclear weapons.
The President also suggested that dissatisfaction among voters had centred more on rising fuel prices than opposition to the conflict itself.
The decline in crude prices has provided relief for financial markets, potentially reducing inflationary pressures and improving the outlook for airlines, manufacturers and other energy-intensive businesses.
However, lower commodity prices could weigh on major oil producers such as BP and Shell, limiting gains across London’s energy sector.
Sterling strengthened to $1.3491 against the US dollar, compared with $1.3464 at Wednesday’s close, reflecting continued weakness in the American currency following the election results.
The euro also advanced to $1.1260 against the dollar, while the US currency eased to ¥157.92.
Asian markets delivered a mixed performance on Thursday, with Japan’s Nikkei 225 declining 1.8% despite positive sentiment across much of the wider region.
Japan’s composite purchasing managers’ index slipped to 52.1 in October from 52.3 in September, indicating a modest slowdown in private-sector growth while remaining above the level signalling economic expansion.
China’s Shanghai Composite edged 0.1% lower, while Hong Kong’s Hang Seng surged 3.6%, reflecting stronger demand for selected Asian equities.
Australia’s S&P/ASX 200 climbed 2.6%, supported by economic figures showing a substantial improvement in the country’s trade balance.
Australia’s goods trade surplus widened to A$2.83 billion in September, compared with A$184 million in August, largely reflecting a decline in imports.
Gold strengthened to $4,127.91 an ounce, up from approximately $4,041.83 on Wednesday, as investors continued assessing the implications of the US election results and currency movements.
Thursday’s UK corporate calendar includes full-year results from Asos, alongside half-year updates from Autotrader Group, BT Group and National Grid.
Trading statements are also expected from Croda International, Diageo and Next, providing fresh insight into conditions across retail, telecommunications, utilities, chemicals and consumer goods.
Economic releases include UK and eurozone construction purchasing managers’ indices, German factory orders and eurozone producer price inflation.
In the United States, investors will assess weekly jobless claims and nonfarm productivity figures for further indications of labour market conditions and inflationary pressures.
The FTSE 100’s expected advance reflects improving global investor sentiment following the US elections and the substantial retreat in oil prices, although uncertainty remains over the outlook for interest rates and developments in the Middle East.
Attention will now turn to the Bank of England’s midday policy announcement, major UK corporate earnings and movements in energy and currency markets, as investors assess whether London’s blue-chip index can extend its recent gains.
