London stocks experienced a rise on Wednesday, largely due to gains from precious metal miners. Meanwhile, hawkish comments from the Bank of England’s Chief Economist, Huw Pill, reduced expectations of an interest rate cut in August. The blue-chip FTSE 100 index closed 0.7% higher, recovering from its worst performance in nearly a month the previous day. Gains for companies earning in dollars were limited by a rise in the pound. Pill’s speech, addressing strong price pressures in the economy, left the timing of an initial interest rate cut an “open question.”
Following Pill’s remarks, investors now estimate a 50% chance of a rate cut in August, down from 62% before his speech. The yield on Britain’s two-year gilt rose to a session high of 4.125% after the address. Earlier in the week, outgoing BoE Monetary Policy Committee member Jonathan Haskel indicated he was not yet prepared to support rate cuts. Another external MPC member, Catherine Mann, is scheduled to speak later in the day. Investors are also awaiting Britain’s GDP figures, due to be released on Thursday.
The FTSE 250 index, which focuses on domestic companies, saw a 1.4% increase. This was led by a 10.4% rise in SSP Group shares, as the restaurant operator maintained its fiscal year forecasts. Travel and leisure stocks benefited as well, rising by 2%, with SSP Group contributing to the boost. Precious metal miners advanced by 3.2%, with gold prices stabilising ahead of a key U.S. inflation report later in the week.
Travis Perkins saw a notable gain of 7.1% following the announcement that Pete Redfern would become the next CEO. Additionally, IAG, the owner of British Airways, rose by 3% after Morgan Stanley upgraded the stock from “Underweight” to “Overweight.”
The market’s performance on Wednesday highlights the significant influence of central bank communications and sector-specific developments. Investors remain attentive to upcoming economic data and further comments from BoE officials.
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