The FTSE 100 gained on Tuesday amid a broad recovery in the European shares after the announcement of a French snap election last week rocked equity markets.
London’s flagship index was 0.45% higher at the time of writing while the French CAC gained 0.4%.
“European markets enjoyed a strong start to Tuesday, with the FTSE 100 the biggest gainer among the continent’s key equity indices,” said Russ Mould, investment director at AJ Bell.
However, the chipper mood in stocks was capped by a series of significant events later in the week. Just as the US digested CPI and an interest rate decision within a tight time frame last year, UK investors will learn of the most recent CPI reading tomorrow before Thursday’s Bank of England’s interest rate decision.
“Attention then shifts back to the UK, with consumer price index data due on Wednesday, ahead of the Bank of England’s decision on Thursday, where rates are expected to remain unmoved,” said Guy Lawson-Johns, equity analyst, Hargreaves Lansdown.
As with the Federal Reserve last week, the main interest in the Bank of England’s rate decision will not be the decision itself but the accompanying commentary and subsequent press conference.
Tomorrow’s CPI reading could make the BoE’s job particularly tricky, especially if it comes in hotter than expected.
Despite the potential risks later in the week, the FTSE 100 gained on Tuesday with a distinct risk-on tone, with all the focus on a rebound in European stocks.
Whitbread was the top gainer after reporting strong growth in its German unit. UK sales could have been better, but shares rose over 3% on Tuesday. Ashtead was firmly at the bottom of the index after the plant hire group revealed the impact of higher interest rates on profits.
“US-focused plant hire firm Ashtead’s markets are slowing. Hot on the heels of news that it may be looking to move its main listing to the US, this was a slightly soft set of results,” said Matt Britzman, equity analyst, Hargreaves Lansdown.
“Whether you look at revenue, profit, or guidance, it’s hard to see much for markets to get excited about here. Management would be forgiven for giving slightly conservative guidance for the coming year after several disappointments of late, and it looks like that’s the case.”