On Friday, the FTSE 100 approached its all-time high, fueled by growing expectations of impending interest rate cuts.
The index, representing the UK’s leading 100 stocks, reached highs of 7,960 during the day but fell short of surpassing the 8,000 threshold, coming within 55 points of its record level.
Despite the Bank of England maintaining borrowing costs at a 16-year high for the fifth consecutive meeting, Governor Andrew Bailey’s comments on Thursday hinted that interest rate cuts were forthcoming.
The FTSE 100 had last hit a record high in February of the previous year, amid optimism that the UK might avoid a recession and global central banks could put a halt to interest rate increases.
The FTSE 100 ended the day 48.37 points higher, an increase of 0.6%, closing at 7,930.92.
According to Kathleen Brooks, research director at XTB, the week’s market rally was driven by signals that central banks are adopting a more dovish stance.
She highlighted that at the Bank of England, Catherine Mann and Jonathan Haskel, the two more hawkish members who had previously voted for rate hikes, shifted their positions in favour of keeping rates steady this month.
This change in voting patterns at the Bank is viewed as a significant move toward later rate reductions this year, with the market now anticipating the first rate cut in June, followed by two more within the year.
Banking and finance stocks played a significant role in boosting the FTSE 100, along with gains from consumer goods majors like Reckitt Benckiser.
