FTSE 100 gains ahead of potential Bank of England rate cut

The FTSE 100 jumped higher on Monday, ahead of key economic data and an expected interest rate cut by the Bank of England later this week.

The FTSE 100 index rose 102.28 points, 1.1%, to close at 9,751.31. The FTSE 250 rose 172.61 points, 0.8%, to close at 22,049.16, but the AIM All-Share fell 2.13 points, 0.3%, to 749.23.

In Europe, the CAC 40 in Paris closed up 0.7%, while the DAX 40 in Frankfurt closed up 0.2%.

This week’s program includes central bank decisions in the UK, Europe and Japan – As well as inflation and retail sales prints in the US and UK.

Also, Tuesday brings US non-farm payrolls data for October and November.

Joshua Mahoney at Scope Markets said: “Despite the fact that we have an incredibly busy week ahead, traders are taking a largely positive stance, with the Fed’s rate cut meaning that the jobs report and inflation data will have little immediate impact on monetary policy.

“Meanwhile, the high level of market confidence surrounding both a Bank of England rate cut and a Bank of Japan rate hike reduces the risk that we see any major unexpected disruption for traders.”

At that time the value of the pound was said to be more than $1.3390 London Shares closed at 1.3356 on Monday compared to 1.3356 on Friday.

Awaiting the BOE rate call, Fidelity International’s Tom Stevenson said: “The conventional wisdom is that rates will fall a quarter percentage point to 3.75% on Thursday, with a 90% chance of a cut in swap market pricing.

“This would be the sixth rate cut since the Bank began cutting in the summer of 2024.

“But the decision is still a close call, and it is possible that the bank governor Andrew Bailey Will be forced to use his casting vote this week.”

He added: “Interest rates are believed to be approaching the so-called ‘neutral rate’ at which they neither stimulate nor inhibit the economy, and this has led to an almost equal split on the Monetary Policy Committee between those who think rates should fall further to boost growth and those who think caution should be exercised until it is clear that inflation is under control.”

Stocks in New York were little changed at the close of London equities on Monday.

The Dow Jones Industrial Average was down 0.1%, as was the Nasdaq Composite, while the S&P 500 index was 0.1% higher.

The yield on US 10-year Treasuries was reported at 4.17%, down from 4.19% on Friday. The yield on US 30-year Treasuries was down to 4.83% from 4.86%.

Morgan Stanley said this week’s US jobs data could be more important for equities’ sentiment about interest rate policy than last week’s FOMC meeting.

The bank commented, “With equity returns/interest rate correlations falling deeply into negative territory last week, we are now firmly back in the good-is-bad/bad-is-good regime. This means moderate labor market weakness may be viewed in a bullish context by equity markets.”

Meanwhile, the Chairman of the New York Federal Reserve john williams He said that after a year full of uncertainty, the US economy appears to be taking a “new turn” with solid growth expected in 2026.

“The surprising thing is that despite all the uncertainty, the US economy has shown great resilience and looks set to pick up pace next year,” Mr Williams said.

On the FTSE 100, financials led gains, with Prudential up 3.2%, Hiscox up 3.0%, Barclays up 2.2% and NatWest up 3.0%.

Helon gained 2.9% as Morgan Stanley named it a “top pick” in the home and personal care sector.

After lagging in 2025, Helion is poised to accelerate organic sales growth in 2026 in the broker’s view as it lags behind in US destocking.

Marks & Spencer was named as Jefferies’ favorite UK retailer with a gain of 2.0%.

The broker remains generally cautious on consumer sentiment, with M&S being its only “buy” rating in the retail sector.

Reflecting this caution, Jefferies downgraded Tesco, Next and Associated British Foods.

BAE Systems lagged behind, falling 0.4% amid hopes of progress in Ukraine.

Over the weekend, the President of Ukraine Volodymyr Zelensky Admitted that the country would be willing to give up its long-term goal of NATO membership if the US and Europe offered security guarantees to prevent future Russian aggression.

On Monday, Mr Zelensky said two-day talks in Berlin with US envoys on ending the war with Russia were “not easy” but “productive”.

Shares of Ukraine-focused Ferrexpo rose 6.2%.

Elsewhere, TT Electronics fell 20% after DBAY advisers said it planned to vote against TT’s proposed £287 million takeover and ruled out a bid.

DBAY Advisors, an Isle of Man-based asset management firm, is the largest shareholder in TT with a stake of just under 25%.

Last Tuesday, DBAY said it was considering a bid for TT, which makes electronic components.

However, on Monday, DBAY ruled out any such move, confirming it would vote against the agreed takeover by Switzerland’s Secor Technologies, a bid it considers “unattractive”.

Also late Monday, TT said it believed the all-cash offer from Secor “fairly values” the company. However, he believes the share options currently “undervalue TT and its future prospects”.

Therefore, TT now only considers the terms of the all-cash offer to be “fair and reasonable”. Last month, Secor revised its offer for TT to 150 pence per share, all in cash. TT shareholders can also choose to receive 0.0084 of a Secor share.

On the FTSE 250, Frasers jumped 7.9% after launching a share buyback of up to £70 million.

The owner of the Sports Direct, Flannels and Frasers retail chains said the buyback would be completed by April 24 next year.

Bank of America called it an “early holiday gift” to shareholders, which should be 2% earnings enhancing and “well received”.

“As such, the impact in itself is modest, but it is an important signal to the market following the allocation of £2.4 billion in capital expenditure over 2025 and 2026 and the build-up of stake in listed investments and investment properties,” the broker said.

At the time of closing of the London Stock Exchange on Monday, Brent oil was quoted at $ 60.39 per barrel, which is less than $ 61.30 late on Friday night.

The biggest risers on the FTSE 100 included Airtel Africa, up 12.20 pence at 319.20p, Antofagasta, up 108.00 pence at 3,040.00p, Prudential, up 34.00 pence at 1,106.50p, Auto Trader, up 19.00 pence at 621.00p, and Hiscox, up Were. 40.00p at 1,389.00p.

The biggest fallers on the FTSE 100 were Fresnillo, down 48.00p at 2,856.00p, Rightmove down 6.60p at 527.20p, Hikma Pharmaceuticals down 13.00p at 1,503.00p, Smith & Nephew down 10.00p at 1,205.50p and BP, down 1.80p at 437.45p.

Tuesday’s economic calendar features UK jobs and average earnings data, US non-farm payrolls data and US retail sales data.

Tuesday’s UK corporate calendar features full-year results from Hollywood Bowl and a trading statement from IG Group.