This week in London, the main focus domestically has been on the UK fiscal budget. Geopolitical issues such as Russia-Ukraine are still in the background for Andy, but President Donald Trump, with his deal with Putin on diesel, and Elon Musk, with Starlink or Starshield (Starlink's military version controlled by the US government), seem to be overshadowing him in involvement in the situation.
With that, they are undermining the power of the Prime Minister, who, after all, not too long ago was just the mayor of Greater Manchester, a small industrialized working-class city in the north of England. It’s maybe a big job to go from that to taking on the Soviet (former USSR, United Soviet States of Russia).
The Autumn Budget 2026 Dominates the Agenda. The week was anchored by the delivery of the 2026 Autumn Budget on Wednesday, October 28. Facing tight fiscal constraints and persistent cost-of-living pressures, the Treasury announced a mix of targeted relief and strategic tax adjustments.
Autumn Budget and Fiscal Relief Measures
Cost-of-Living & Energy Relief: Key measures included an extended zero-rating of VAT on domestic electricity bills through July 2027. It also included a plan to phase out gas standing charges by late 2027 and a one-off £100 Household Energy Payment for Council Tax Bands A–D set for early 2027.
Business & Tax Adjustments: The Chancellor announced a temporary 3-percentage-point increase to the Bank Corporation Tax Surcharge, taking it to 6%. This was alongside extended fuel duty freezes and a 20% business rates reduction for hospitality venues starting in 2027.
Fiscal Devolution Roadmap for English Mayors. Alongside the Budget, the government launched a major fiscal devolution initiative. Metro mayors across England are set to retain 20% of regional business rates starting in April 2027.
This progresses toward receiving a direct share of local basic-rate income tax revenues by 2028. Seed funding of £285 million was also earmarked to establish new "Good Growth Funds."
Local Government & SEND Debt Intervention. Addressing severe financial strains among local authorities, the Department for Levelling Up announced a £5 billion bailout plan. The initiative will see the central government pay off up to 90% of accumulated local council debts tied to rising costs in Special Educational Needs and Disabilities (SEND) provision.
Health & Social Care Targeting. While major spending increases were restrained, the health sector saw focused capital injections. Allocations were made for NHS adoption of robotic surgical equipment (£100 million) and AI-driven diagnostics aimed at waiting list reduction.
Carer’s Allowance Reform. A long-term reform plan was outlined to replace the earnings limit "cliff edge" with a gradual benefit taper system by 2030. This is intended to avoid total loss of support for minor wage increases.
UK equity benchmarks navigated a volatile trading week marked by major corporate earnings, Autumn Budget announcements, and global tech drag, with both indices closing near flat to slightly lower overall.
The FTSE 100, which can be more of a reflection of a global economic outlook rather than UK domestic, is heavy in commodities, particularly oil. The stock index can benefit from higher oil prices even though UK low-income citizens suffer economically during times of higher oil prices. The FTSE 100 was even described by one Wall Street analyst in the US this past week as a hedge.
Equity Markets and Commodity Price Volatility
FTSE 100 — Heavyweight Earnings vs. Global Tech Drag. The blue-chip index fluctuated within a defined band, trading between early-week highs around 10,774 and midweek lows near 10,643. It settled at 10,729.78 at Friday’s close.
Energy majors provided critical downside buffers throughout the week. BP and Shell tracked crude oil's rally above $118/bbl, while resource stocks capitalized on broader commodity price firmness.
Health sector performance proved resilient following strong clinical and financial results from AstraZeneca. However, financial heavyweights like NatWest faced selling pressure following earnings disclosures, limiting broader market upside.
Sentiment in the latter half of the week was tempered by severe tech weakness imported from U.S. megacap earnings misses (Amazon, Intel) and European semiconductor drags (ASML). This pulled the index off its weekly highs by Friday's close.
FTSE 250 — Domestic Sentiment & Mid-Cap Volatility. The mid-cap index saw wider swing ranges. After dipping to early-week lows around 24,110, the index rallied past 24,840 midweek before retreating to close at 24,453.36 on Friday.
Mid-caps directly digested Wednesday's 2026 Autumn Budget. While hospitality tax reductions and targeted energy relief offered localized support, corporate tax adjustments and persistent rate-cut uncertainty kept broader domestically-focused equities grounded.
A general shift toward risk-averse positioning into the weekend dragged mid-caps down nearly 0.9% on Friday. This mirrored broader European equity corrections.
In commodities, Brent crude oil traded as high as $118, which could be interesting for up-and-coming macroeconomic data prints for inflation. This will show how that price spills over into the price of goods and services, not even just in real inflation, but also the psychological reaction by the collective to drive inflation even higher.
This serves as the self-fulfilling prophecy of inflation. Precious metals are quite defining this week as gold traded under $4,000 support levels and silver breached the psychological level of $50 an oz to trade under that price.
Global Risk Sentiment and Cryptocurrency Headwinds
Stock markets this week saw quite the risk-off sentiment sell-off after all the market events were digested and it took its direction to the downside. We saw selling this week across the globe broadly in the US, Europe, and Asia, so there was nowhere to hide geographically.
What we must also remember is that tech is so heavily concentrated in stock market indexes in the US and Asia. Then, outside of that, a lot of other sectors are not starting to be part of the AI trade as this technology's utility is rolled out cross-sector.
In forex this week, we saw slight dollar strength with the risk of higher energy prices, yet not a great deal of strength after a Fed that held and kept its mouth shut. The euro (EUR/USD) saw some selling this week but nothing major, around 0.40% for the week. Japanese yen JPY/USD.
Cryptocurrency this week saw risk-off from both sides, with the general risk-off tech sell-off it is already tied to and its own sell-off catalyst in the Binance $6 billion dollar hack.
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