FTSE 100 climbs for third day as banks and miners lead recovery

UK stocks rebound from recent volatility

​The FTSE 100 extended its winning streak for a third consecutive session, building on last week's recovery from heightened market turbulence. Banking stocks provided significant support, benefiting from expectations of prolonged higher interest rates and improved sentiment around the sector's profitability outlook.

​Mining stocks also rallied strongly, with copper producers particularly well-supported. The ongoing theme of supply constraints in key industrial metals continues to underpin valuations, even as broader economic uncertainty persists. Anglo American remained in focus after BHP walked away from fresh merger talks.

​European markets mirrored this positive momentum, helped by dovish commentary from Federal Reserve (Fed) officials. New York Fed President John Williams signalled that rate cuts could arrive "in the near term", providing a boost to risk appetite across global equity markets.

​The recovery marks a significant turnaround from last week's volatility, though traders remain cautious about sustainability. Key economic data releases and the UK budget later this week will test whether this rebound has legs or represents merely a temporary reprieve from selling pressure.

​Sterling steadies ahead of budget announcement

​The British pound held firm against major currencies as traders positioned themselves ahead of Wednesday's much-anticipated UK budget. Sterling has outperformed most major currencies this month despite ongoing fiscal uncertainty and speculation about potential tax rises and spending cuts from the government.

​Currency markets appear relatively sanguine about the budget's potential impact, with the pound trading in a narrow range. This stability suggests traders are either confident in the government's fiscal management or have already priced in expected measures. The contrast with previous budget periods is notable.

​Market participants will scrutinise the budget for its implications on growth, inflation and public finances. Any surprises on tax policy or spending plans could trigger significant moves in both sterling and UK assets. The chancellor's balancing act between fiscal responsibility and growth support will be critical.

​Advertising sector faces headwinds

​The advertising industry is encountering significant challenges, with multiple companies issuing profit warnings. M&C Saatchi warned that profits would be hit by the US government shutdown, highlighting the sector's vulnerability to broader economic and political developments.

​S4Capital compounded concerns by issuing its own profit warning, citing cautious client spending patterns. The convergence of these downgrades suggests widespread pressure across the advertising industry rather than company-specific issues. Brands are clearly tightening marketing budgets amid economic uncertainty.

​Jobs market shows signs of cooling

​UK employment data revealed further softening, with job vacancies falling below 800,000 for the first time since 2021 according to Adzuna. This decline marks a significant shift from the tight labour market conditions that characterised much of the post-pandemic period.

​Graduate roles have fallen particularly sharply, suggesting companies are becoming more selective about hiring at entry level. This trend could have implications for wage inflation and consumer spending patterns as the labour market loses some of its previous tightness.

​The cooling jobs market provides the Bank of England (BoE) with additional evidence that inflationary pressures are easing. However, it also raises concerns about economic growth and consumer confidence. The central bank faces a delicate balancing act between controlling inflation and supporting employment.

​Bitcoin on track for worst month since 2022

​Cryptocurrency markets continued their weak run, with bitcoin heading for its worst monthly performance since the 2022 market collapse. The digital asset has failed to find support despite previous expectations of renewed buying interest following recent institutional developments.

​The sustained weakness suggests broader risk-off sentiment is weighing on crypto markets. When traditional assets struggle, cryptocurrencies often face amplified selling pressure as investors retreat to safer havens. Current price action reflects this dynamic clearly.