FTSE 100 today: Stocks edge up as budget, Fed pause reassure investors

The FTSE 100 index inched upward on Thursday as investors welcomed a budgetary announcement and a Federal Reserve decision to maintain interest rates. The benchmark index climbed by 0.56% at 04:28 ET (08:28 GMT). German and French markets also saw gains, with the DAX up 0.46% and the CAC 40 rising 0.84%. The British pound weakened slightly, falling 0.10% to $1.3316.

Oil giant Shell led the index, climbing 3.25% following strong third-quarter earnings and an increased buyback program. Chancellor John Healey highlighted the need for fiscal discipline, raising taxes on banks and betting firms. The Budget aimed to reduce the deficit to 3.4% of GDP by 2027, but the Office for Budget Responsibility raised its 2026 growth forecast to 1.2% and cut 2027 to 1%, with inflation expected to hit 3.1% in 2026 and 3.4% in 2027 before reaching the Bank of England’s 2% target in 2028.

Headroom under the current budget rule was estimated at around £15 billion in 2029-30, down from £23.6 billion in March. The deficit improvement is largely attributed to frozen tax thresholds and "fiscal drag," rather than the bank levy. Gross financing requirements were lower than expected at £312 billion. Temporary energy support measures, such as a VAT cut on electricity and a £100 rebate for some households, provided about 0.2% of GDP in stimulus this year and 0.1% in 2027, helping to trim near-term inflation by 0.1-0.2 percentage points.

Companies like BAE Systems and Babcock International saw gains, following the Budget's reaffirmation of the government's commitment to 3% NATO spending by 2030. The Federal Reserve maintained interest rates at 3.75%-4% in a 10-2 vote, with some dissent from Fed officials. The UK Oil and Gas Manufacturers' Organisation reported a vessel on fire after an apparent attack in the Strait of Hormuz.

Iran claimed to have shut the strait, while President Trump endorsed Vice President JD Vance's outreach to Iran, denying reports of restarting peace talks.