UK's FTSE 100 closes at seven-week high on fiscal reassurance, defensive buying
EWU•The FTSE 100 rose 1.1% to 10,840.35, its highest close since August 26, after the finance minister reaffirmed fiscal discipline and investors shifted toward defensive sectors. The FTSE 250 gained 0.26%.
1. FTSE reaches seven-week high
The FTSE 100 closed up 1.1% at 10,840.35, its highest level since August 26, while the FTSE 250 rose 0.26%. Finance minister John Healey said the budget would aim to bolster economic resilience and that he and Prime Minister Andy Burnham were aligned on maintaining fiscal discipline.
2. Defensive shares advance
Investors sought defensive sectors as a global selloff in AI-related stocks intensified. AstraZeneca rose 3.2%, GSK gained 2.9%, Unilever advanced 1.8% and British American Tobacco climbed 2.5%. Industrial metal miners fell 1.4%; Antofagasta dropped 4.1% after third-quarter copper production declined year-on-year. THG surged 16.3% after lifting its annual profit forecast, while Mondi slumped 7.9% after raising prices for several paper grades to offset higher energy costs.
3. Economic and rate signals
UK GDP rose 0.1% in August, against expectations of a 0.1% decline. Bank of England Chief Economist Huw Pill said a future rate increase should not be interpreted as the start of a prolonged series of hikes; economists polled expect the BoE to raise rates to 4% in November.
