Updated March 21st, 2024 at 15:17 IST

FTSE 100 surges past 10-month high boosted by Fed stance; focus shifts to BoE decision

On the resource-heavy FTSE 100, precious metal miners witnessed significant gains, rising by 4.1% as spot gold prices hit fresh record highs.

Reported by: Business Desk
FTSE 100 | Image:Freepik
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FTSE 100 performance: London equities soared on Thursday's opening as investors embraced the Federal Reserve's decision to uphold its stance of maintaining three rate cuts for 2024. Attention now turns to the Bank of England's monetary policy update.

The internationally-focused FTSE 100 surged 1.1 per cent by 0900 GMT, reaching its highest level since May 2023. Simultaneously, the domestically-oriented FTSE 250 also experienced an upswing, climbing nearly 1 per cent.

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In a pivotal move, the Fed kept borrowing costs unchanged on Wednesday, projecting up to three interest rate cuts this year. This decision alleviated concerns about high-interest rates, leading to a positive close for US stocks. Most sectoral indexes saw gains, with rate-sensitive real estate investment trusts and real estate stocks among the top performers, each surging by nearly 2 per cent.

On the resource-heavy FTSE 100, precious metal miners witnessed significant gains, rising by 4.1 per cent as spot gold prices hit fresh record highs.

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Patrick Armstrong, chief investment officer at Plurimi Wealth, noted, "An environment where the Fed projects rate cuts, as well as economic growth, is considered 'pretty bullish' not only for risk assets but also for other assets such as gold."

With attention now focused on the Bank of England's interest rate decision expected at 1200 GMT, investors anticipate the central bank to maintain rates at 5.25 per cent. This anticipation follows recent data showing a decline in inflation to its lowest level in almost two-and-a-half years.

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Armstrong added, "The rate outcome itself will not surprise anybody... any guidance towards what they're thinking about in the coming meetings will be what moves markets rather than the decision today."

A Reuters poll anticipates a three-way split in the BoE's Monetary Policy Committee vote for the second consecutive time. Traders are pricing in around 72 basis points of rate cuts from the central bank this year.

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In other market movements, clothing retailer Next surged 4.8 per cent to a record high after reporting a slightly better-than-expected rise in profit for the 2023-24 period.

(With Reuters inputs.)

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Published March 21st, 2024 at 15:16 IST