FTSE 100 Jumps 1 Percent at the Open as Europe Waits on the Bank of England

European stocks opened higher on Thursday, November 5, extending a strong week, as investors waited for the Bank of England to decide whether to raise interest rates for the first time in more than three years.

London set the pace. The FTSE 100 opened up 114.04 points, or 1.05 percent, at 10,943.25, according to opening figures reported by Jin10. Paris rose with it. The CAC 40 opened up 82.47 points, or 1.01 percent, at 8,260.36. Spain's IBEX 35 gained 162.84 points, or 0.84 percent, to 19,534.34, and Italy's FTSE MIB added 159.48 points, or 0.31 percent, to 51,190.50. Germany lagged. The DAX opened almost flat, up 4.17 points, or 0.02 percent, at 26,483.50, while the Euro Stoxx 50 rose 21.69 points, or 0.35 percent, to 6,287.40.

Market notes from XTB put the FTSE 100 at a three month high in early trade and the STOXX 600 up 0.43 percent, with the DAX flat at the opening bell. ADVFN reported the STOXX 600 up 0.5 percent on the morning, with European shares trading near their highest levels since August and France and Britain both up about 1 percent despite a day of demonstrations in France.

A week built on the US result

Thursday's open followed a powerful Wednesday. The FTSE 100 closed up 1.79 percent at 10,829.21 on Wednesday, the DAX finished up 2.22 percent at 26,437.67, the CAC 40 gained 1.96 percent to 8,177.89, and the Euro Stoxx 50 rose 1.97 percent to 6,265.71. ADVFN said Wednesday was the STOXX 600's largest single day gain since June.

The buying followed the United States midterm elections, where Democrats won control of both chambers of Congress, and a sharp fall in oil prices on hopes that a changed Washington would push harder to end the war with Iran. Wall Street closed Wednesday with the Dow Jones Industrial Average up 3.03 percent, its best day in more than a year.

Noon in London is the day's real test

The Bank of England announces its decision at 12:00 GMT. Consensus forecasts expect the Monetary Policy Committee to raise Bank Rate by 25 basis points to 4.00 percent from 3.75 percent. That would be the first increase since August 2023, a turn in the policy cycle after more than two years without a rise. Governor Andrew Bailey holds a press conference at 12:30 GMT.

Traders care about two things beyond the headline number. The first is the vote split, with one forecast putting it at seven votes for a rise and two for no change, against three and six at the previous meeting. The second is the wording of the Monetary Policy Report: whether the Bank presents this as one step against inflation linked to energy costs and the Iran conflict, or the start of a series.

Sterling traded near 1.3489 dollars ahead of the decision and the euro near 1.1261 dollars, both firmer as the dollar softened.

What happens next

A rise to 4 percent with calm guidance would let the morning rally run. A rise paired with warnings of more to come would hit housebuilders, banks and rate sensitive shares first, and would test a FTSE 100 that has just set a three month high. The decision lands at noon, and the market will grade it within minutes.