LONDON: Thr UK’s commodity heavy FTSE 100 rose on Tuesday as mining and energy stocks advanced, narrowly offsetting declines in services triggered by a stronger-than-expected British jobs report.
The internationally-focused FTSE 100 gained 0.3%, while the domestically focused FTSE 250 midcap ended the day nearly unchanged.
Industrial metal miners jumped 3.7%, touching a seven-week high as metal prices rose on hopes of improved demand after top consumer China cut borrowing costs to boost economic growth.
Heavyweight energy stocks added 0.7%, tracking gains in crude prices.
Weighing on the market was data released on Tuesday that showed Britain’s labour market looked much stronger than expected in the three months to April, bolstering bets of continued rate hikes by the Bank of England this year.
Rate-sensitive sectors like real estate and homebuilders fell 2.2% and 3%, respectively.
In the US, expectations that the Federal Reserve will pause in its interest hikes in a decision on Wednesday were bolstered by US data indicating consumer prices barely rose in May and the annual increase in inflation was the smallest in more than two years.
“CPI data today was the key deciding point in terms of what the Fed does,” said Ankit Gheedia, head of equity and derivatives strategy at BNP Paribas.
“We saw softness in core services, which is probably what is driving markets up quite strongly.” The European Central Bank is widely expected to raise rates by 25 basis points on Thursday, while the Bank of England is also seen delivering a similar-sized rate hike next week.
Among individual UK movers, online trading platform CMC Markets fell 2.5% after flagging a hit to first-quarter net operating income, while housebuilder Bellway lost 2.9% after flagging a renewed slowdown on concerns over higher mortgage rates. Admiral Group lost 5.1% after Citigroup downgraded the motor insurer’s rating to “sell” from “neutral”.
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