FTSE 100 gains with eyes on European and Canadian rate cuts

The FTSE 100 gained on Wednesday as investors looked forward to the first interest rate cuts by major western central banks since the global hiking cycle started around two years ago.

The European Central Bank is widely predicted to cut interest rates at its meeting tomorrow and hopes will be this opens the doors to the Bank of England and Federal Reserve to follow suit.

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London’s leading index was 0.2% higher at 8,251 at the time of writing.

“The FTSE 100 moved higher on Wednesday with a broad spread of companies across multiple sectors enjoying solid gains,” said AJ Bell investment director Russ Mould.

“A recent fall in oil prices may not be good news for two big energy firms which bestride the index but for others it means a potential reduction in inflationary pressures and more scope for central banks to begin easing rates.

“The Bank of Canada and European Central Bank are expected to steal a march on the Federal Reserve and Bank of England by cutting rates over the next 24 hours. The market will also weigh US employment data and a reading from the services sector across the Atlantic.”

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Investor’s trading week will really heat up tomorrow, with interest rate decisions being closely followed by Non-Farm Payrolls on Friday – the last major economic data reading before the Federal Reserve makes its interest rates decision next week.

Markets had a hint of optimism going into the announcements, and there was a clear risk-on tone to trade in UK stocks. The gains were broad on Wednesday, with many cyclical sectors enjoying a boost.

St James’s Place was again the best performer as the beleaguered wealth manager enjoyed buying pressure from bargain hunters. Bargain hunters also took a shine to GSK, gaining 1.9%, after it sank on Monday due to litigation concerns.

There was a mild bid for housebuilders ahead of the rate decisions. Persimmon added 0.6% and Taylor Wimpey rose 1.7%.

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