SUPERNEWS

Equities

FTSE 100 Hits Record High on Rate Cut Optimism

FTSE 100 hits new record high at 8,015.63, driven by rate cut expectations and gains in mining and oil stocks.

By Bill Bullington

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4/2, 05:08 EDT
BP p.l.c.
GSK plc
RELX PLC PLC
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Key Takeaway

  • FTSE 100 hits a record closing high of 8,015.63 points, driven by optimism over anticipated interest rate cuts.
  • Central banks' signals towards easing monetary policy, including the Federal Reserve and Bank of England, boost global markets.
  • Gains in commodity stocks, especially in mining and oil sectors like Shell Plc and Glencore Plc, significantly contribute to the index's rally.

Record Highs Amid Rate Cut Hopes

The UK's FTSE 100 index achieved a new milestone by closing at an all-time high, reflecting broader market optimism spurred by the anticipation of lower interest rates. On a notable Tuesday, the index rose by 0.7% to 8,015.63 points, surpassing its previous record of 8,014.31 set in February 2023. This achievement places the FTSE 100 in the company of other European indexes like the Stoxx 600, CAC 40, and DAX, which have also reached record highs in recent months. The rally in the FTSE 100 was primarily fueled by gains in mining and oil stocks, with significant contributions from major companies such as GSK Plc, Rolls-Royce Holdings Plc, BAE Systems Plc, RELX Plc, and BP Plc.

Central Banks Signal Rate Cuts

The global stock market, including the FTSE 100, has been buoyed by signals from major central banks indicating a move towards cutting interest rates. Following a meeting of the Federal Reserve, which reiterated forecasts for three quarter-point rate cuts this year, markets worldwide have responded positively. The Bank of England's governor, Andrew Bailey, further fueled these expectations by suggesting that markets are correct in anticipating more than one reduction in borrowing costs this year. This stance was echoed by the Swiss National Bank's unexpected rate cut, marking a shift towards loosening monetary policy among central banks.

Commodities Drive Gains

Commodity stocks, particularly in the energy and mining sectors, have played a pivotal role in driving the FTSE 100's recent gains. Companies like Shell Plc and BP Plc saw their shares outperform as oil prices were lifted by geopolitical tensions in the Middle East and tighter supply from Mexico. Similarly, mining companies such as Glencore Plc and Rio Tinto Plc experienced a rise in their stock prices. This surge in commodity stocks underscores the significant impact of global economic factors on the UK's leading index.