FTSE 100 closes higher as gold and oil climb

The FTSE 100 made steady progress on Monday, despite underperforming European peers, supported by gains in the price of gold and oil.

The FTSE 100 index closed up 13.23 points, 0.1%, at 9,221.14. The FTSE 250 ended 108.91 points higher, 0.5%, at 21,684.45 and the AIM All-Share finished up 4.10 points, 0.5%, at 769.73.

In Europe, the CAC 40 in Paris ended up 0.9%, before a no-confidence vote which could see France’s Prime Minister Francois Bayrou step down, while the DAX 40 in Frankfurt closed 0.9% higher.

In France, opposition parties across the board have made it clear they will vote against Mr Bayrou’s minority government, making it highly improbable that he will get enough backing to survive: he needs a majority of the 577 MPs in the National Assembly.

Mr Bayrou himself, who according to officials has invited his ministers for farewell drinks on Monday evening, appears to acknowledge that his time has run out.

In remarks on Sunday, he criticised political parties that he said “hate each other” and yet were joining forces “to bring down the government”.

In New York, at the time of the London equities market close, the Dow Jones Industrial Average was up 0.1%, the S&P 500 rose 0.3%, while the Nasdaq Composite climbed 0.7%.

Gold jumped to 3,644.14 dollars an ounce against 3,589.49 dollars on Friday.

Stephen Innes of SPI Asset Management said gold’s gains are the “logical crescendo of a market where rate-cut wagers, political meddling and creeping stagflation fears are converging into a perfect tailwind for bullion”.

Mr Innes pointed out that gold has gained 9% in the past three weeks and nearly 40% in the year to date.

“The real rate profile is heading negative again, and gold thrives when bonds can’t keep pace with inflation,” he added.

But he noted there was more to gold’s gains than just “monetary arithmetic”.

“The political backdrop has turned gold into the ultimate protest asset. Trump’s tariff salvos have already juiced stagflation chatter, and his courtroom push to fire Fed governor Lisa Cook is cutting straight to the heart of central bank independence.

“Traders know this script – when faith in the Fed wobbles, gold becomes the one institution that doesn’t default, dilute or lie,” Mr Innes said.

The pound rose to 1.3545 dollars late on Monday afternoon in London, compared with 1.3527 dollars at the equities close on Friday.

The euro edged up to 1.1749 dollars, against 1.1743 dollars. Against the yen, the dollar was trading higher at 147.60 yen compared with 146.94 yen.

The yield on the US 10-year Treasury was quoted at 4.05%, narrowed from 4.07% on Friday. The yield on the US 30-year Treasury was quoted at 4.71%, trimmed from 4.79%.

On the FTSE 100, Marks & Spencer rose 2.9% as Citi upgraded it to ‘buy’ from ‘neutral’.

With the shares 18% below “pre-cyber levels, we see an attractive entry point for a business with good underlying momentum,” Citi said in a research note, noting April’s cyber attack.

The broker thinks the retailer is gaining share with younger customers in fashion, and seeing a larger mix of ‘bigger baskets’ in food.

Entain rose 1.2%, amid reports that it is looking to sell its Australian venues business, comprising market-leading pub poker provider Australian Poker League and a booming trivia arm.

The Australian Financial Review said the gambling operator, which owns Ladbrokes and Coral, has issued preliminary sales documents to private equity firms with the goal of offloading a business it views as non-core.

Babcock International Group climbed 1.7%, after a well-received investor presentation on Friday.

The “Marine Investor Day gave us confidence that there is upside risk to the mid-single-digit growth guidance for the division and a clear pathway to the 9% (plus) margin”, said Jefferies analyst Chloe Lemarie.

But Phoenix Group fell 7.6%, after mixed first-half results.

The London-based retirement savings firm reported better-than-expected operating profit, but this was offset by a larger-than-forecast drop in IFRS shareholders’ equity – an area of investor focus for Phoenix.

Meanwhile, ingredients maker Treatt Group leapt 18%, after accepting a £156.6 million offer from Natara Global Ltd.

Natara makes “aroma ingredients” for the flavour and fragrance sectors. It is based in Hartlepool, England and is majority-owned by the UK and European private equity firm Exponent.

FTSE 100 index heavyweights BP rose 0.7% and Shell firmed 0.4% as the oil price climbed.

A barrel of Brent traded at 66.31 dollars late on Monday afternoon, up from 65.14 dollars on Friday.

The oil price rose after eight key members of the Opec+ alliance said on Sunday that they have decided to increase production by 137,000 barrels per day (bpd) from next month. Those countries had already increased production by 2.2 million bpd in recent months.

The energy alliance raised output by around 550,000 per day in both August and September this year.

The biggest risers on the FTSE 100 were Marks & Spencer, up 9.9 pence at 352.1p, Fresnillo, up 60.0p at 2,178.0p, Croda International, up 60.0p at 2,525.0p, Howden Joinery, up 19.0p at 855.5p and ICG, up 42.0p at 2,192.0p.

The biggest fallers on the FTSE 100 were Phoenix Group, down 51.0p at 619.0p, Diageo, down 74.5p at 1,959.5p, Airtel Africa, down 5.6p at 215.6p, Haleon, down 6.7p at 359.0p and Unilever, down 73.0p at 4,696.0p.

Tuesday’s local corporate calendar has full-year results from homewares retailer Dunelm and half-year results from transport operator Mobico and technology group Computacenter.

The global economic calendar on Tuesday has French industrial production data and the British Retail Consortium retail sales monitor.

Later in the week, US inflation figures and the ECB interest rate decision, both on Thursday, will be closely watched.

Contributed by Alliance News