London’s blue-chip stock surged to a near two-week high on Thursday, bolstered by the Bank of England’s decision to maintain current interest rates. This move, which aligned with market expectations, spurred traders to anticipate the potential for a future rate cut following the comments from policymakers.
The FTSE 100 recorded its third consecutive day of gains, closing 0.8% higher. This rise was partly due to a 0.4% decline in the pound, which benefits the exporter-heavy index as companies earning in dollars see increased profits with a weaker sterling.
Additionally, the mid-cap FTSE 250, more focused on domestic markets, gained 0.6%. The Bank of England’s Monetary Policy Committee voted 7-2 to keep the rates at a 16-year high of 5.25%, a decision made just before the July 4 election. Some policymakers noted that their stance was now “finely balanced,” suggesting a nuanced approach to future rate adjustments.
Following the rate decision, market analysts revised their expectations, now seeing a 46.5% chance of a rate cut in August, up from 30% previously. Governor Andrew Bailey welcomed the recent data showing inflation returning to its 2% target but cautioned that it was premature to lower rates.
Jefferies economist Modupe Adegbembo observed that the Monetary Policy Committee appeared inclined to reduce rates and ease restrictions, indicating a willingness to overlook some of the recent strong data on services inflation.
Sectoral gains were led by precious metal miners, as bullion prices hit a two-week high due to increased expectations of a U.S. rate cut. Automobiles, parts, and retailers also saw advances, though chemical stocks faced challenges.
Ocado shares dropped by 12% following the announcement that its Canadian partner had paused plans to open a Vancouver warehouse. Conversely, CMC Markets saw a nearly 12.8% rise after forecasting higher operating income for 2025, driven by strong retail and institutional trading coupled with stringent cost controls.
Tate & Lyle’s shares fell by 9% after the company struck a $1.8 billion deal to acquire U.S.-based CP Kelco from J.M. Huber Corp. Additionally, Tate & Lyle’s shares were trading ex-dividend, contributing to the decline.
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