London stocks advanced on Monday, lifted by a fall in oil prices amid hopes for progress in US-Iran peace talks and a rebound in technology shares after recent declines. The FTSE 100 Index closed up 31.55 points, or 0.3%, at 10,761.33.
Market Movers and Global Indices
The FTSE 250 ended 342.49 points higher, up 1.4%, at 24,795.85, while the AIM all-share added 4.84 points, or 0.6%, at 757.92. In Europe, the CAC 40 in Paris closed up 1.0%, and Frankfurt's DAX 40 advanced 0.6%.
Around the time of the London equities close, US stocks were trading higher. The Dow Jones Industrial Average was up 1.0%, the S&P 500 gained 0.6%, and the Nasdaq Composite rose 0.7%. New York's tech rally followed heavy losses last week as investors began to question whether massive investment in AI infrastructure will deliver an acceptable return.
AI Investment Concerns and Earnings
Tom Stevenson, investment director at Fidelity International, commented: "Investors are no longer in doubt that growth is coming, but they are starting to question whether they have paid too much for it." He added that the AI investment boom is colliding with a rising cost of capital, noting that with yields at or above 5%, the case for such investments is harder to make.
Supporting the technology sector, Anthropic, a leading artificial intelligence company, reported a more than 1,100% surge in quarterly revenue as it prepares to go public on Wall Street later this month. Revenue reached 17 billion dollars in the third quarter, up from 1.4 billion dollars a year earlier.
This week also brings results from Apple after the market close on Monday and chip maker Advanced Micro Devices on Tuesday. US midterm elections and Friday's nonfarm payrolls report will provide further direction.
US Manufacturing and Political Outlook
Goldman Sachs noted that public opinion polling suggests national sentiment has swung by around 10 to 11 percentage points towards the Democrats, while prediction markets imply high odds that Democrats will win the House majority with a wider margin of control (around 236 seats) than either party has had in several years. The Senate majority is more uncertain, with prediction markets currently favouring Democrats, but polls in decisive races are within the margin of error.
Diego Barnuevo, analyst at Ebury, suggested that a Democratic sweep would be neutral to mildly positive for the fiscal outlook, as Congress could restrain President Donald Trump's expansionary agenda and the deficit.
Ahead of the elections, two reports showed the US manufacturing sector remains strong. The S&P Global US manufacturing purchasing managers' index recorded 54.9 in October, above the 50.0 no-change mark but slower than September's 52-month high of 55.9. The Institute for Supply Management's manufacturing PMI registered 55.5, up from 54.5 in September, marking the 10th consecutive month of expansion.
Currency and Commodity Movements
The pound was quoted at 1.3417 dollars late Monday afternoon, higher than 1.3396 dollars at the London equities close on Friday. Against the euro, sterling eased to 1.1980 euros from 1.1996 euros. The euro rose to 1.1200 dollars from 1.1163 dollars, and the dollar advanced to 157.82 yen from 157.50 yen.
The yield on the US 10-year Treasury narrowed to 4.89% from 4.94%, while the 30-year yield fell to 5.25% from 5.31%. Gold was quoted at 3,968.02 dollars an ounce, up from 3,898.22 dollars on Friday.
Oil Prices and Sector Impact
Brent oil fell sharply amid signals that Iran and the US are ready to resume talks to end the Middle East war. Axios reported that US vice president JD Vance had sent a letter to Iranian national security chief Mohsen Rezaei about possible new talks. Iran said it was ready to reopen the Strait of Hormuz within two days should the US agree to ending the war on all fronts. President Masoud Pezeshkian said the country's supreme leader Mojtaba Khamenei had granted "powers" to the government in talks with the US.
Brent oil was trading at 105.09 dollars a barrel on Monday, lower than 117.61 dollars late on Friday. The lower oil price dragged Ithaca Energy, BP and Shell down 5.9%, 4.4% and 2.9% respectively. BP completed the six billion dollar sale of a 65% stake in its lubricants brand Castrol to private equity firm Stonepeak Partners, retaining a 35% stake.
While oil stocks faltered, airlines prospered on hopes for lower fuel costs. British Airways owner International Consolidated Airlines Group rose 3.8%, and Wizz Air added 5.2%. Lower bond yields boosted housebuilders, with Barratt Redrow up 3.5%, Vistry up 8.9%, and Howden Joinery up 3.9%.
Ibstock slid 10% after warning that second-half performance would be materially below expectations after weak trading in September and October. Chief executive Joe Hudson said: "Trading conditions deteriorated sharply during the third quarter, with weakness continuing into October."
The biggest risers on the FTSE 100 were JD Sports Fashion, Fresnillo, St James's Place, Weir Group and Kingfisher. The biggest fallers were Ithaca Energy, BP, Shell, Vodafone and Centrica. Tuesday's calendar includes an Australian interest rate decision, US factory orders, and full-year results from Associated British Foods and Hiscox.
