London stocks are expected to open higher on Monday, with the FTSE 100 forecast to gain around 44 points as falling US Treasury yields support investor sentiment, while attention turns to the UK Budget, renewed EU relations and developments in the Middle East.
Futures indicate the FTSE 100 will open about 0.4% higher at 10,734.36, after Friday’s 0.3% decline left the blue-chip index at 10,690.36.
US government bond yields continued to retreat, with the benchmark 10-year Treasury yield falling to 4.97% from 5.02%, while the 30-year yield eased to 5.30% from 5.33%.
The decline reflects renewed demand for government bonds as investors reassess economic growth prospects and the sustainability of artificial intelligence infrastructure spending.
Wall Street ended lower on Friday, with the Dow Jones Industrial Average falling 1.2%, the S&P 500 declining 0.5% and the Nasdaq Composite slipping 0.2%.
Asian markets were mixed on Monday, with Japan’s Nikkei 225 falling 0.8%, while Hong Kong’s Hang Seng gained 0.5%. China’s Shanghai Composite was broadly unchanged and Australia’s S&P/ASX 200 advanced 0.2%.
UK political developments are also attracting attention ahead of Chancellor John Healey’s Budget on Wednesday, 28 October.
Prime Minister Andy Burnham has called for a renewed discussion about Britain’s relationship with the European Union, including the possibility of restoring freedom of movement or rejoining the single market.
Burnham said the country should consider the economic and migration implications of closer European integration, although he ruled out recommending membership of the euro or Schengen area.
The Prime Minister is scheduled to meet EU leaders in Brussels on 20 November, with discussions expected to address future trading arrangements and Britain’s longer-term relationship with the bloc.
Meanwhile, the Treasury is reportedly preparing to announce £20.4 billion in additional funding for the National Wealth Fund and British Business Bank, supporting investment in artificial intelligence, defence, infrastructure and green energy.
The funding, expected to be allocated over approximately five years, is intended to support the creation and maintenance of around 100,000 jobs by 2035.
Energy markets remained sensitive to geopolitical developments, with Brent crude easing to $114.84 a barrel, compared with $116.34 at Friday’s London close.
US Central Command said American military forces had helped Gulf countries export more than 1.5 billion barrels of crude oil through the Strait of Hormuz since the summer, despite restrictions and threats linked to the conflict with Iran.
According to the US military, more than 3,000 commercial vessels have transited the strategically important waterway with American support, with over 95% of shipping movements proceeding safely.
The update offered some reassurance about the continued movement of energy supplies, although geopolitical uncertainty remains elevated.
Gold recovered above $4,000 an ounce, trading at approximately $4,008.50 after falling below that level last week.
In currency markets, sterling traded at $1.3375 against the dollar, broadly unchanged from Friday, while weakening slightly against the euro to €1.1916.
International political developments also remain in focus following Luiz Inácio Lula da Silva’s victory in Brazil’s presidential election, securing a fourth term after defeating Flávio Bolsonaro in Sunday’s runoff.
Brazil’s electoral authority confirmed that Lula received 51.79% of valid votes, compared with 48.21% for Bolsonaro, in a closely contested election.
The outcome could influence expectations for economic policy, investment and trade across Latin America’s largest economy.
Meanwhile, US President Donald Trump announced that German carmaker Audi plans to invest $4.2 billion in its first American manufacturing facility, located near Macon, Georgia.
The proposed factory is expected to create approximately 4,500 jobs and have annual production capacity of 200,000 vehicles, with construction planned for 2027 and production targeted for the early 2030s.
On London’s corporate calendar, investors will be watching half-year results from Airtel Mobile Commerce and full-year figures from Quadrise, while Germany’s latest ifo business climate index will provide further insight into the European economic outlook.
The FTSE 100 enters the week with a more positive outlook following Friday’s decline, supported by easing government bond yields and a modest retreat in oil prices.
However, Wednesday’s UK Budget, major corporate earnings and central bank interest rate decisions remain key market risks, with investors looking for greater clarity on taxation, economic growth and borrowing costs.
