(MENAFN- DailyFX (IG)) ​​​What's driving the FTSE 100 near record levels?

​The FTSE 100 maintained its position near all-time highs as investors weighed a mixed bag of corporate updates against improving global sentiment. The UK's benchmark index showed resilience despite political uncertainty and fiscal pressures weighing on gilt markets.

​Utilities and financial stocks provided the main thrust higher, with SSE's dramatic surge following its £33 billion investment announcement offsetting declines elsewhere. The banking sector also contributed to gains as investors digested the broader economic landscape and positioned ahead of the Budget.

​The steady performance comes as the wider STOXX Europe 600 pushed to fresh records, rising 0.5% as optimism built over an imminent resolution to the US government shutdown. This positive backdrop helped support UK equities despite domestic headwinds from the housing sector.

​Gilt yields rose across the curve, led by longer-dated maturities, as bond markets continued to price in fiscal uncertainty. Meanwhile, sterling slipped 0.3% against the US dollar, reflecting ongoing concerns about the UK's economic trajectory and political stability.

​SSE leads FTSE 100 gains with major investment plan

​SSE emerged as the standout performer, with shares surging more than 12% after unveiling an ambitious five-year capital investment programme. The utility giant announced plans to invest £33 billion in grid infrastructure and renewable energy projects, signalling strong confidence in the UK's energy transition.

​To fund this massive expansion, SSE confirmed a £2 billion equity raise, which investors welcomed as a necessary step to capitalise on structural opportunities in the power sector. The company's focus on regulated assets and renewables positions it well for long-term growth as the UK pursues its net-zero targets.

​The investment plan encompasses significant upgrades to electricity transmission networks, recognising the critical need for grid capacity as renewable generation expands. SSE's strategy aligns with government priorities around energy security and decarbonisation, providing visibility on future earnings streams.

​This substantial capital deployment underscores the opportunities available in the utilities sector as the energy transition accelerates. For traders and investors, SSE's announcement highlights how infrastructure spending can drive share price performance, particularly when backed by regulatory support and clear strategic direction.

​Homebuilders weigh on UK index performance

​In contrast to utilities' strength, the housebuilding sector faced significant pressure following a downbeat update from Taylor Wimpey. The company's cautious commentary on housing demand sent ripples through the sector, dragging peers Berkeley and Persimmon lower alongside property portal Rightmove.

​Taylor Wimpey's assessment reflects ongoing challenges in the UK housing market, where elevated mortgage rates and cost-of-living pressures continue to dampen buyer appetite. The company's more conservative outlook suggests the sector's recovery from recent difficulties may take longer than some had hoped.

​The weakness in housebuilders illustrates how interest rate sensitivity can create divergent performance within the index. While some sectors benefit from higher rates, residential property developers typically suffer as mortgage affordability deteriorates and demand softens accordingly.

​Defence and consumer stocks deliver positive surprises

​BAE Systems provided steady reassurance with its unchanged guidance, despite reporting over £27 billion in orders. Strong demand for Typhoon jets and Type 26 frigates underpins the defence contractor's outlook, with geopolitical tensions continuing to support elevated defence spending across NATO countries.

Avon Technologies jumped more than 10% after delivering a strong profit beat and reporting a record order book. The respiratory protection specialist's performance highlights continued momentum in the defence sector, with military modernisation programmes driving consistent demand for specialised equipment.

​In the consumer sector, Fuller Smith & Turner offered an upbeat assessment ahead of the crucial Christmas period. The pub operator reported Christmas bookings up 16% year-on-year (YoY), with steady sales across food, drink and accommodation pointing to resilient consumer spending in hospitality.

​Experian also lifted its full-year outlook after first-half revenue grew 12%, supported by AI-driven automation tools and robust consumer growth in the United States. The credit data firm's upgrade demonstrates how companies leveraging artificial intelligence (AI) can drive operational improvements and revenue expansion.

​Global markets lift as US political uncertainty eases

​The broader improvement in market sentiment stemmed from optimism about an imminent end to the US government shutdown. This development helped lift equities globally, with utilities leading sector gains across Europe as investors rotated into defensive areas while maintaining exposure to risk assets.

​Softer US jobs data also contributed to the positive mood, as it reduced concerns about the Federal Reserve (Fed) maintaining restrictive monetary policy for an extended period. Markets interpreted the employment figures as consistent with a gradual cooling in the labour market rather than an abrupt deterioration.

​European bourses hit fresh records, with the STOXX 600's advance to all-time highs providing a supportive backdrop for UK stocks. This coordinated strength across markets suggests investors are becoming more comfortable with the economic outlook, despite persistent inflation concerns and geopolitical risks.

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