London is set for a mildly positive open on Friday, and the reason is narrower than the headline. FTSE 100 futures are barely in the green. The tone is being set by the public finances, two days after John Healey's first Budget, and by an energy sector that has just had its best quarter since 2022.
The index closed on Thursday at 10,722.07, up 0.26 per cent. The FTSE 250 rose 0.14 per cent. Shell climbed 2.1 per cent and did most of the lifting. Energy stocks as a group gained nearly 1.64 per cent even as the oil price dipped on the day. Haleon fell about 15 per cent, its worst session in four years as a listed company, after it cut its forecast for organic revenue growth. One stock can hold an index up. Another can show how brittle the rest of the market is.
How Shell became the biggest company in the FTSE 100
Shell reported adjusted earnings of 8.1 billion pounds for the three months to September, up from 4.1 billion a year earlier. That is its second-highest quarterly result on record. The company lifted its share buyback from 2.25 billion pounds to 3.75 billion. The shares are up about 46 per cent this year. At roughly 232 billion pounds, Shell has moved past HSBC, valued at about 223 billion, and sits at the top of the index.
The arithmetic is the oil price. Brent averaged 94.90 dollars a barrel in the third quarter, against 69.10 dollars in the same quarter of 2025. Refining margins nearly quadrupled, to about 42 dollars a barrel at Shell. TotalEnergies told a similar story: adjusted net income of 6.8 billion pounds, more than double a year ago. The war in Iran is the common cause. It is also why Shell's own oil and gas output fell 17 per cent in the first nine months of the year, after it halted the Pearl gas-to-liquids plant in Qatar in March.
The Numbers Behind Friday's Open
- FTSE 100 closed Thursday at 10,722.07, up 0.26 per cent. Futures point to a small rise on Friday.
- Shell adjusted earnings: 8.1 billion pounds in the third quarter. Buyback raised to 3.75 billion pounds.
- Brent averaged 94.90 dollars a barrel in the quarter, up from 69.10 dollars a year earlier.
- The OBR puts UK growth in 2027 at 1.0 per cent, down from 1.6 per cent. Headroom is 15 billion pounds.
- Bank Rate is 3.75 per cent. The next Bank of England decision is on Thursday 5 November.
Why gilt issuance is the story under the futures
Thursday's relief rally, covered in our note on the morning after the Budget, took the 10-year yield down to 5.308 per cent. Traders called the package a no-harm statement. Friday's question is what happens when the Debt Management Office has to sell the debt that statement implies.
The Office for Budget Responsibility now sees growth in 2027 at 1.0 per cent, cut from 1.6 per cent, and it has raised its borrowing forecasts. Headroom against the main fiscal rule is 15 billion pounds, down from the 24 billion pounds Rachel Reeves had in the spring. Healey says the buffer will be rebuilt to 22 billion pounds by the end of the forecast. Investors will price the path, not the promise. Higher gilt yields feed into mortgages, business loans and the cost of public projects. Domestically exposed shares feel that before the oil majors do.
Banks are the other moving part. The surcharge on the largest lenders goes from 3 per cent to 6 per cent from January 2027 to April 2028. That helped Shell overtake HSBC at the top of the index this week. UK Finance had warned that an 8 per cent rate could forgo about 20 billion pounds of output over a decade. Six per cent is the rate Healey chose. The sector still has to decide whether that is a flesh wound or the start of a longer argument. The lobby's warning, filed before the rate was set, is here.
What to watch before the Bank of England
The next scheduled shock is Thursday 5 November, when the Monetary Policy Committee announces its decision. Bank Rate stands at 3.75 per cent. A move away from that, or a split that changes the path traders have priced, would reprice mortgages and every rate-sensitive share on the London list. BT Group also reports second-quarter figures that morning. Its cash flow is the number that supports the dividend, and it is a useful read on UK corporate spending when gilt yields are still above 5 per cent.
For households, the link is direct. The 100 pound energy payment in Healey's Budget arrives against a quarter in which oil averaged nearly 95 dollars. Shell's result is the corporate version of the same bill. Andy Burnham said on Friday that he would have liked the household payment to be larger, and that the war left him short of room. The equity market can live with that for a morning. The gilt market will keep the receipt.