European stocks gain as budget optimism lifts the FTSE 100

European equities advanced on Tuesday, with the FTSE 100 rising 0.81% to 9 611.95, supported by investor interest ahead of Chancellor Rachel Reeves’s upcoming budget. Bank shares led the gains, with Lloyds up 3.80%, NatWest rising 3.60% and Barclays adding 2.30%, following reports they are set to avoid a tax increase in the budget.

The broader European market also strengthened, with the pan-European STOXX 600 finishing 0.91% higher. Major national indices saw similar gains, as Germany’s DAX rose 1% and France’s CAC 40 advanced 0.86%. Materials and financial stocks were among the strongest performers, supported by hopes of a ceasefire in Ukraine and expectations of US interest rate cuts. Reuters reported that Ukraine has indicated support for the broad framework of a potential peace agreement with Russia. Defence shares in Europe climbed around 1% after dropping more than 5% over the previous two sessions, reflecting optimism that the conflict may be approaching an end. 

US equities traded firmly higher on Tuesday as investors assessed the outlook for artificial intelligence (AI) and the likelihood of an imminent Fed rate cut. Bond markets also firmed, with the yield on the 10-year US Treasury note easing to the 4% mark ahead of the Thanksgiving holiday.

The S&P 500 gained 0.70%, the Nasdaq rose by 0.39% and the Dow added more than 550 points. Communication services, health care and materials led the advance, while the broader technology sector underperformed. Even so, Alphabet climbed around 1.30% and Meta advanced more than 2.50% following reports that Meta is exploring a multibillion-dollar deal to use Google’s AI chips. Nvidia dropped over 3.50% and is now down roughly 15% for the month, leaving it on course for its weakest monthly showing since September 2022 if the trend persists. Oracle slipped over 2%, while AMD fell more than 7%.

Asian markets ended the day mostly higher, supported by hopes of a favourable US policy shift. Japan’s Nikkei 225 rose by 0.07% to 48 659.52, Hong Kong’s Hang Seng advanced 0.69% to 25 894.55 and China’s Shanghai Composite gained 0.87% to close at 3 870.02. The Chinese yuan touched 7.08 against the US dollar, its strongest level since October 2024. Over the past four weeks, the US dollar has weakened around 0.40% against the yuan. 

Brent crude oil futures slipped 1.80% to $62.23 a barrel on Tuesday, after reports indicated that Ukraine had agreed to the terms of a revised peace proposal aimed at ending the conflict with Russia. President Zelenskiy said discussions with the US are ongoing, while Russia’s stance remains uncertain. In precious metals, gold edged up 0.02% to $4 140.18 per ounce, whereas silver fell 0.33%, reflecting mixed investor sentiment amid the evolving geopolitical backdrop.

According to local reports, the central bank indicated that South Africa’s financial system remains robust despite global tensions and rising debt risks. It noted that local markets have begun to stabilise after earlier periods of volatility and that fiscal conditions are gradually improving. Equities firmed on the day, with the All Share Index closing 0.25% higher at 110 295.21. The JSE Top 40 matched this 0.25% gain, while the JSE Resource 10 outperformed, advancing 1.23%.