BoE Rate Cuts Muted, Markets Cheer The Prospect Of Rate Reductions -

BoE Rate Cuts Muted, Markets Cheer The Prospect Of Rate Reductions

Mar 21, 2024Jeremy ParkinsonFinance, No picture0

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At the opening of the London stock market on Thursday, there was a positive trend as investors reacted positively to the Federal Reserve’s decision to maintain its plan for three interest rate cuts in 2024. Attention also turned to the upcoming monetary policy update from the Bank of England. The FTSE 100, which is focused on international companies, rose by 1.625, reaching its highest level since May 2023. Following the Fed’s decision to keep borrowing costs unchanged and project up to three interest rate cuts this year, investor concerns about high interest rates were eased, leading to a higher close for U.S. stocks. Most sectoral indexes showed gains, particularly in rate-sensitive areas such as real estate investment trusts and real estate stocks, which each rose by nearly 2%. There were also gains in the precious metal mining sector on the FTSE 100, with a 4.1% increase as spot gold prices reached new record highs.UK housing developers and property stocks continue to rise after the Bank of England indicates a potential rate cut. The UK homebuilders’ index and FTSEReal Estate index, which includes commercial property firms and real estate investment trusts (REITs), have seen gains of 1.6% and 2% respectively. The Bank of England has decided to keep interest rates at a near 16-year high of 5.25%, but has suggested that the UK economy is moving in the right direction for potential rate cuts. FTSE 100 housebuilders Barratt, Persimmon, Taylor Wimpey, and Berkeley have all seen gains between 1.7% and 2.4%. Additionally, FTSE 100 commercial property firm Land Securities has risen by about 3%, while British Land is the top percentage gainer on the real estate index, with an increase of around 4%.3i Group performed well in its third-quarter results, with its largest portfolio company, the Benelux discount retailer Action, experiencing significant growth in the 2023 financial year. Net sales reached €11.32bn and operating EBITDA increased by 34% to €1.62bn compared to 2022. Shares in fashion retailer Next also rose after the company reported a better-than-expected 5% rise in annual profits and announced plans for lower prices for customers in the current year. Next maintained its guidance for 2024, expecting pre-tax earnings of £960m based on a 2.5% increase in full price sales. Total sales for the year to January 2024 increased by 6% to £5.8bn, and pre-tax profit of £918m surpassed the upgraded forecast of £915m.
FTSE Bias: Bullish Above Bearish below 7800