Global markets climb hours before US poised to drop interest rate
The blue-chip index was up by 31.42 points, or 0.38%, to close at 8,309.86.
Global stock markets experienced an uptick on Tuesday as investors held their breath for the US interest rate decision.
The FTSE 100 in London saw a steady climb, buoyed by a surge of over 10% in shares of B&Q’s parent company, Kingfisher.
The premier index finished up by 31.42 points, or 0.38%, settling at 8,309.86.
Financial circles are anticipating that the US Federal Reserve will slash interest rates on Wednesday, with some betting on a hefty cut of 0.5 percentage points.
This would mark the Fed’s first reduction in rates since 2020.
Back in August, the Bank of England had already trimmed rates by 0.25 basis points, and the European Central Bank followed suit with its second consecutive cut last week.
ING’s chief international economist, James Knightley, commented that the decision is likely to be a “coin toss”, given the split views within the rate-setting committee on whether to ease monetary policy.
“An economy growing at 2.5% to 3% with low unemployment, inflation above target and equities at all-time highs suggests there will be large pockets of resistance, which makes the outcome tomorrow a coin toss,” he remarked.
Despite the uncertainty, the prospect of a rate cut has been boosting investor sentiment, with New York’s S&P 500 and Dow Jones both rising around 0.4% by the close of European trading.
In Europe, Paris’s Cac 40 ended the day 0.51% higher, while Frankfurt’s Dax closed with a gain of 0.52%.
The pound has seen a slight dip, falling about 0.4% against the US dollar to 1.3165 and dropping 0.3% against the euro to 1.184.
In corporate news, Kingfisher emerged as the biggest riser on the FTSE 100 after the B&Q owner upgraded its full-year profit outlook. The DIY behemoth, which also owns Screwfix, reported improved trading in recent weeks and early signs of recovery in the UK housing market.
This recovery is expected to boost demand for large household purchases, leading to an 11.2% increase in its share price.
On the other hand, shares in THG took a hit after the retail group announced it was considering spinning off its technology platform Ingenuity, simplifying the group to its beauty and nutrition divisions. The company also reported a slight slowdown in sales over the first half of the year, with its nutrition arm, including Myprotein, falling by 7.5% compared with the previous year.
Shares in THG closed 12.4% lower.
The top performers on the FTSE 100 were Kingfisher, rising 32.6p to 322.9p, easyJet, increasing 30.1p to 517.4p, JD Sports Fashion, up 5.4p to 159.7p, IAG Group, climbing 6.8p to 206.4p, and Ashtead Group, surging 176p to 5,522p.
The biggest losers on the FTSE 100 were BAE Systems, falling 62.5p to 1,273p, British American Tobacco, dropping 70p to 2,900p, Hikma Pharmaceuticals, down 38p to 1,915p, Pearson, decreasing 17.5p to 1,040p, and Segro, falling 14p to 890.4p.
