​FTSE 100 rises as energy and China-linked stocks lead gains

​​​FTSE 100 makes small gains

​The FTSE 100 rose 0.2% on Monday, as energy stocks and China-exposed financials drove the index higher. The gains came as the STOXX Europe 600 remained steady, with mixed performances across the continent.

​The UK benchmark's outperformance reflects its heavy weighting towards energy and financial stocks. These sectors have proven particularly sensitive to recent developments in oil markets and US-China trade relations, providing a boost to the index.

​Traders looking to capitalise on index movements can access the FTSE 100 through our trading platform, which offers real-time pricing and analysis tools. The platform provides access to thousands of markets beyond UK equities.

​The index's composition, with significant exposure to overseas earners, means it often benefits when sterling weakens. This dynamic played out again today as the pound slipped towards $1.31 against the US dollar.

​Energy sector drives index higher

​Energy shares led the FTSE 100's advance, supported by oil prices trading above $65 per barrel. Brent crude has extended its longest winning streak since September after OPEC+ paused planned output hikes.

BP climbed up to 2% following news that it would sell US onshore stakes for $1.5 billion. The disposal fits with the company's strategy to focus on higher-return projects while generating cash for shareholder returns.

​Shell gained around 1% as the broader energy sector benefited from stronger oil prices. The rally in crude has provided welcome support for energy majors after a challenging period of price volatility earlier in the year.

​China-exposed financials rally on trade optimism

​Financial stocks with significant China exposure posted strong gains amid signs of easing US-China trade tensions. Standard Chartered and Prudential both rose more than 2%, while HSBC also traded higher.

​Beijing's decision to suspend rare earth export controls boosted market sentiment. The move suggests a more conciliatory approach from China, raising hopes for improved trade relations between the world's two largest economies.

​These developments particularly benefit UK banks with Asian operations. Standard Chartered generates the majority of its revenue from Asia, making it highly sensitive to regional economic and political developments.

​Sterling weakness supports overseas earners

​The British pound slipped towards $1.31 against the dollar, providing a tailwind for FTSE 100 companies that generate significant overseas revenues. A weaker currency translates their foreign earnings into more sterling when repatriated.

​This currency effect is particularly pronounced for the FTSE 100 given its international makeup. Many constituents derive the majority of revenues from outside the UK, making them beneficiaries of sterling weakness.

​Gilt yields remained little changed despite the currency moves. The 10-year gilt yield has been relatively stable recently as investors weigh domestic economic data against expectations for Bank of England (BoE) policy.

​Bank of England rate decision in focus

​Market attention is turning towards Thursday's BoE policy announcement. Traders are pricing in around a 28% probability of a rate cut, up from earlier estimates following recent weak economic data.

​Recent indicators have painted a mixed picture of the UK economy. While inflation remains above target, growth has disappointed and the jobs market shows signs of cooling. This creates a challenging backdrop for policymakers.

​Expectations for more aggressive easing in December have risen. Many analysts now anticipate the Bank will need to cut rates more substantially to support growth, particularly if economic weakness persists through the autumn.

​Interest rate decisions typically generate volatility across UK assets. Traders can position ahead of such events, though careful risk management remains essential given the uncertainty around policy outcomes.

​What this means for traders

​Today's price action demonstrates how sector rotation continues to drive market performance. Energy and financials provided support while other areas lagged, highlighting the importance of understanding sector dynamics.

​The interplay between oil prices, currency moves and China-related sentiment created multiple trading opportunities. Those who monitor these relationships can identify potential positions before broader market moves develop.

​However, the modest gains and mixed European performance suggest caution remains appropriate. With the BaoE decision looming and fiscal policy uncertainty growing, volatility could increase in coming sessions.

​Traders should also note reports that Chancellor Rachel Reeves is considering new property and exit taxes to address a £20 billion fiscal gap. Such policy changes could impact specific sectors and individual stocks significantly.