UK shares climb on rate-cut hopes, miners lead gains

UK shares climb: UK shares rose on Friday, driven by gains in base metal miners, as investors remained optimistic about potential interest rate cuts from the Bank of England following recent economic data. The FTSE 100 and the mid-cap FTSE 250 both added 0.6 per cent each, with the FTSE 100 hitting an over-one-week high. Both indexes were on track to post gains for the week, breaking a two-week losing streak.

Industrial metal miners climbed 2 per cent, tracking the increase in base metal prices on expectations of US Federal Reserve rate cuts. Most major sectors traded in the green, while defensive telecommunications service providers dropped 0.5 per cent.

Dampening market optimism 

The retail sales surged by a stronger-than-expected 3.4 per cent in January, data showed on Friday, yet it did little to dampen market optimism.

Stuart Cole, chief macroeconomist at Equiti Capital, commented, "Firstly, this is just one month's numbers, and given how weak retail sales have been until now, we will need more evidence that consumption really is recovering. And secondly, the growth numbers this week were pretty terrible and are at the forefront of market thinking at the moment."

Data indicating softer inflation and the economy slipping into recession has bolstered hopes that the Bank of England will cut rates from their nearly 16-year highs. Money markets are pricing in about 72 basis points of rate cuts this year.

Among stocks, Segro advanced 1.3 per cent after the warehousing group cited optimistic prospects for its investment market business in 2024 and posted a better-than-expected annual profit. NatWest gained 2.1 per cent after confirming Paul Thwaite as its permanent chief executive and reporting forecast-beating profit for 2023.

(with Reuters inputs)