The FTSE 100 made steady gains on Thursday as investors positioned for a potential US interest rate cut in September and breathed a sigh of relief as the global bond sell-off eased.
London’s leading index was 0.2% higher after a solid session for US stocks amid jobs data that pointed to a need for the Federal Reserve to reduce borrowing costs.
“Ahead of non-farm payrolls on Friday, sharply lower job openings across the Atlantic suggested a weakening in the labour market which could push the Federal Reserve to cut interest rates more aggressively,” said AJ Bell investment director Russ Mould.
“Markets remain twitchy however, and the pressure on Chancellor Rachel Reeves is unlikely to dissipate in any meaningful sense before she delivers her Autumn Budget in late November.”
Reeves’ decision to schedule the budget for the end of November could be seen as unusual, but fortunately, bond markets took the news well, and the sell-off of long-dated gilts experienced at the beginning of the week has slowed.
As bond market tensions eased, the focus shifted to the US, and strong gains for tech stocks spilt over into the European session.
“SPX managed a 0.5% gain, with the Nasdaq outperforming on the back of an 11% surge in Alphabet shares after a favorable antitrust ruling relieved it from being forced to spin-off Google Search engine,” explained Ahmad Assiri, Research Strategist at Pepperstone.
In the UK, Next was the FTSE 100’s top riser as consumer-facing stocks enjoyed the easing in interest rate tensions. Next rose 2.5% while Autotrader gained 2%.
JD Sports also joined the rally but remained below 100p mark, which is proving to be a strong level of resistance. Tesco, Marks & Spencer and Sainsbury’s all joined the rally.
Admiral Group was the top faller with losses of 3% as the stock moved below levels seen before they released a strong half-year report in August.