Britain’s FTSE 100 rose on Wednesday after recording back-to-back monthly gains, with investors awaiting the Federal Reserve’s policy decision later in the day for hints on its interest rate path.
The blue-chip index rose 0.3%, as of 0830 GMT, after posting monthly gains of 2.4% and 4.2% in April and March, respectively.
Investors are awaiting a new statement and comments from Fed Chair Jerome Powell that could give a clearer sense of how recent disappointing US inflation readings have changed the expectation for rate cuts this year.
Money markets are pricing in about 28 basis points of US rate cuts this year, down from about 150 bps estimated at the start of 2024, as per LSEG data.
“The (Fed’s) tone will be more towards that there hasn’t been enough evidence of inflation coming down to a point where there is confidence to start cutting rates in May or June,” said Karim Chedid, head of EMEA investment strategy for iShares at BlackRock.
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“With this sort of tone, I expect that European markets will benefit from the interest rate differentials/macro tailwind.”
Traders are anticipating rate cuts of about 38 bps from the Bank of England by the end of 2024, and nearly 60 bps from the European Central Bank, taking the pressure off European stock markets form higher rates, compared to their US peers.
GSK advanced 1.7% after the drugmaker raised its full-year profit forecast and said its sales would be higher in the first half of the year.
Haleon fell 1.7% after the consumer healthcare firm’s first-quarter revenue missed estimates.
Dragging UK midcap stocks lower, Aston Martin dropped 7.2% after the luxury carmaker posted a bigger-than-expected first-quarter pretax loss.
The mid-cap FTSE 250 was flat. Market activity was likely to be light with several European bourses closed for Labour Day.
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