The London stock market rallied yesterday as investors waited for clear signs that interest rates will fall this summer.
After three days of decline, the FTSE 100 rose 0.6 per cent, or 49.14 points, to 8,191.29 and the FTSE 250 gained 1.2 per cent, or 250.21 points, to 20,409.93. .
The rally came ahead of crucial May inflation data, released today, and tomorrow’s final interest rate decision ahead of the Bank of England election.
Inflation is expected to fall back towards the 2 percent target, after falling from 11.1 percent in October 2022 to 2.3 percent in April this year.
Whatever the numbers show, the Bank is widely expected to leave interest rates unchanged at a 16-year high of 5.25 percent this week before finally moving ahead with the cuts after Election Day.
Rate expectations: After three days of decline, the FTSE 100 rose 0.6%, or 49.14 points, to 8,191.29 and the FTSE 250 gained 1.2%, or 250.21 points, to 20,409 .93.
There is much debate about whether this will happen in August or September and whether there will be more than one cut this year, and investors will wait for clues from the Bank tomorrow.
Fiona Cincotta, senior market analyst at City Index, said investors are awaiting official inflation figures today and the Bank of England’s latest interest rate decision tomorrow.
‘The FTSE is struggling to get above that 8200 level because we are seeing a consolidation phase ahead of the inflation data and the Bank of England decision. We are waiting for the next catalyst.
‘There is a sense of optimism around the inflation reading, which is expected to fall to 2 per cent, which is the target. It will help the Bank feel more comfortable with a cut in August.’
That, of course, would be too late for Rishi Sunak and Jeremy Hunt, but it would be an early boost for Keir Starmer and Rachel Reeves should Labor win the July 4 election.
Stock Watch – Blackbird
Shares in cloud video editing group Blackbird fell after it warned of challenges in one of its key markets.
The AIM-listed company said the media and entertainment business was proving “time-consuming and expensive”.
With broadcasters under pressure from weak advertising revenue, Blackbird said it “has proven to be a challenging task to increase our share” of the media and entertainment market.
The shares fell 8.5 per cent, or 0.35p, to 3.75p.
AstraZeneca – the largest company on the London stock exchange, valued at £192bn – suffered a setback in trials of a breast cancer drug seen as a potential future blockbuster.
The company said its drug Truqap, combined with the chemotherapy agent Paclitaxel, failed to meet its main targets in a late-stage trial to improve patients’ overall survival.
The shares fell 0.1 per cent, or 12 pence, to 12,416 pence. Bosses at Telecom Plus, which sells everything from gas and electricity to home insurance and broadband under the Utility Warehouse brand, were keen to announce a record as customer numbers surpassed one million and profits rose by 17.6 per cent to £100.5 million.
Co-chief executive Stuart Burnett said he was “delighted” with the performance which he added was achieved “by helping households stop wasting time and money”.
But this did little for the share price, which fell 0.8 per cent, or 14p, to 1,860p.
Melrose Industries, owner of the GKN Aerospace business, has hired former British Land chief executive (up 1.7 per cent, or 7.4p, to 435.2p), Chris Grigg, to replace Justin Dowley as president. Dowley will leave at the end of March next year.
Melrose shares added 0.4 per cent, or 2p, to 580p.