The FTSE 100 surged on Tuesday for a second straight session as London was propelled higher by a US tech rebound and hopes of an interest rate cut in December.
Disappointing UK jobs data has almost made an interest rate cut in December a near certainty after budget fears sent the UK unemployment rate to 5%.
The FTSE 100’s inverse relationship with the pound kicked in, and London’s leading index surged 0.9% to a fresh record high.
“The FTSE 100 made new record highs on Tuesday, taking its cue from a strong rebound on Wall Street and the added tailwind of sterling weakness,” said AJ Bell investment director Russ Mould.
UK markets also benefited from an encouraging session for US stocks last night. AI jitters last week are turning out to be a blip. We’ll need a couple more positive sessions for this to be confirmed, but surging recoveries for Nvidia and Palantir overnight demonstrated that demand for the world’s leading AI stock is alive and well.
Vodafone was among London’s top performers after saying it would hike its dividend amid positivity in the German market.
“Vodafone put on a confident face this morning, unveiling a new progressive dividend policy and guiding to the top end of FY26 expectations – the first signal that its self-declared growth phase is gaining traction,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“With pressure mounting ahead of the print, the return to service revenue growth in Germany marks a meaningful step in turning around its largest market.”
Housebuilders inevitably enjoyed increased chances interest rate cut, with Berkeley Group rising 2%.
“The chances of a December rate cut have risen throughout the morning following the unemployment figures, and now stands at 86%,” explained Chris Beauchamp, Chief Market Analyst at IG.
“This expectation of looser policy has given a boost to housebuilder shares – Berkeley, Barratt Redrow and Persimmon are all higher this morning, notably head of figures from the latter two this week.”
Although the FTSE 100 posted strong gains on Tuesday, it still has its fair share of losers.
Croda was the top faller, down 3%, while supermarkets felt the pressure of a deteriorating UK jobs market. Tesco, Sainsbury’s and Marks & Spencer were all lower by 2% at the time of writing.