FTSE 100 Reaches Record Peak on Rate Cut Speculation
The FTSE 100 index surged to a historic high on Tuesday, closing up 82.48 points, or 0.8%, at 10,556.17. This milestone was fueled by growing investor confidence that the Bank of England will implement an interest rate cut in March, following the release of higher unemployment data and a decline in the pound.
Market Movements and Economic Indicators
In London, the FTSE 250 also performed strongly, ending up 180.35 points, or 0.8%, at 23,555.82, while the AIM all-share index closed down 4.73 points, or 0.6%, at 806.61. European equities mirrored this positive trend, with the CAC 40 in Paris rising 0.5% and the DAX 40 in Frankfurt gaining 0.8%.
The pound weakened to 1.3531 US dollars from 1.3629 dollars the previous day, and the euro dipped to 1.1830 dollars from 1.1854. Against the yen, the dollar strengthened to 153.61 yen from 153.44.
Unemployment data revealed a rate of 5.2% for the three months ending December, up from 5.1% in the previous period, exceeding consensus expectations. The Office for National Statistics reported a 0.4% annual decline in payrolled employees, with a monthly decrease of 6,000.
Analyst Insights and Sector Performance
Pantheon Macroeconomics analyst Rob Wood commented, "The rise in unemployment and drop in earnings growth indicate fading inflation pressures, providing the Monetary Policy Committee with grounds to cut rates in March rather than April." Deutsche Bank analyst Sanjay Raja added, "The jobs market remains weak, with surveys pointing to limited hiring plans and potential further redundancies."
In response to rate cut hopes, property stocks saw significant gains. Barratt Redrow surged 3.1%, Land Securities rose 2.4%, and Persimmon increased 1.1%. Conversely, mining stocks faced declines, with Antofagasta falling 5.7% after posting revenue and operating profit below analyst forecasts, despite a 53% rise in pre-tax profit to $3.16 billion.
On the FTSE 250, Raspberry Pi shares jumped 36% amid social media speculation about AI-driven demand, while SSP Group gained 6.6% following a UBS upgrade to "buy." Applied Nutrition rose 6.2% after raising its revenue forecast to around £140 million for the financial year.
Global Markets and Commodities
In New York, stocks were mixed after a long weekend closure, with the Dow Jones marginally higher, the S&P 500 down 0.1%, and the Nasdaq Composite 0.2% lower. US Treasury yields remained stable, with the 10-year at 4.05% and the 30-year at 4.68%.
Commodity prices declined, with Brent oil dropping to $67.17 a barrel and gold falling to $4,882.00 an ounce. Among smaller caps, boohoo Group shares fell 6.7% as the company confirmed plans to raise £35 million in equity to pay down debt and improve liquidity.
Top Performers and Upcoming Events
The biggest risers on the FTSE 100 included Coca-Cola Europacific Partners, Barratt Redrow, Airtel Africa, Pearson, and Compass Group. The biggest fallers were Endeavour Mining, Antofagasta, Weir Group, Anglo American, and Fresnillo.
Looking ahead, Wednesday's economic calendar features UK CPI and PPI data, French CPI, and US building permits and industrial production figures. Corporate results are expected from BAE Systems and Glencore.
