FTSE 100 gains as bargain hunters target Reckitt Benckiser, miners rally

The FTSE 100 started the week on the front foot, helped higher by Reckitt Benckiser and a strong session for mining companies.

However, London’s leading was down 0.1% at the time of writing after finding resistance at 7,750. Traders will eye a break of last week’s high of 7,775 for further gains in the index.

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Reckitt Benckiser was the best performer as traders stepped into the stock after a sharp sell-off on Friday. Miners were also stronger following upbeat economic news from China.

“The FTSE 100 ticked higher at the start of the week with bargain hunters swooping on Reckitt after a big sell-off last week linked to baby food legal claims,” said AJ Bell investment director Russ Mould.

“Mining stocks moved higher as Chinese industrial production was above expectations. Given the world’s second largest economy is the most rapacious global consumer of commodities, the fortunes of the resources space are closely tied to its economic fortunes.

There was interest in Ocado shares which gained 2.8% and Beazley continued to tick higher.

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US futures were also higher, helping lift the mood ahead of major central bank meetings this week. The Bank of England and the Federal Reserve will meet to decide on interest rates this week, and no change is expected in the benchmark rates.

Last year, the March meetings were earmarked for the first rate cuts by the BoE and the Fed. However, resilience in the US economy and persistently high inflation in the UK have pushed expectations of the first rate cut back to June.

“At one time, this week would have been pegged as the point at which central bankers in the US and UK pivoted to rate cuts but although that is now unlikely, the meetings of the Federal Reserve and Bank of England will still be watched closely for signals of when this pivot might finally come,” Russ Mould said.

Indeed, the timing of the UK’s first rate cut is still the subject of intense speculation. With inflation well above the BoE’s 2% target and the UK recession deemed only to be shallow, the reasons to cut rates aren’t present.

“The Bank of England will be minded to keep interest rates on hold when it meets on Thursday and there’s been no significant economic data which would prompt them to take action at this juncture,” said Laith Khalaf, head of investment analysis at AJ Bell.

“If anything the National Insurance cut announced in the Budget will probably raise some inflationary concerns. At the last vote in February two members of the Bank’s committee wanted to raise interest rates to 5.5%, so victory against inflation is not universally accepted by policy makers.”

The major drivers for FTSE 100 stocks will be the commentary accompanying the rate decision and the Bank of England’s economic projections and the shift in the language around inflation.

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