UK’s FTSE 100 hits record high on BoE rate cut signal

The blue-chip index closed the session 0.3% higher, after advancing as far as 8,396.25 points earlier in the day, while the mid-cap FTSE 250 gained 0.2% to a 15-month high

Britain's FTSE 100 hit a record high for a fourth consecutive session on Thursday after the Bank of England held interest rates but signalled that more policymakers are warming up to a cut in borrowing costs soon.

The blue-chip index closed the session 0.3% higher, after advancing as far as 8,396.25 points earlier in the day, while the mid-cap FTSE 250 gained 0.2% to a 15-month peak.

The FTSE 100 has gained more than 8% so far this year, more than double its 3.8% gain in 2023, benefitting from a slowdown in inflation and renewed hopes of interest rate reductions, along with strong performances from multinational companies.

All-time highs for the FTSE 100 is extremely encouraging and may help change the narrative away from one focused on the exodus of big business from London’s public markets, towards one more focused on the opportunities within UK Plc for investors instead, according to Victoria Scholar, Head of Investment at interactive investor.

The Bank of England's Monetary Policy Committee (MPC) voted 7-2 to keep rates at a 16-year high of 5.25%. Nevertheless, Governor Andrew Bailey said it was possible the central bank would need to reduce rates by more than investors currently anticipate.

Money markets are fully pricing in an August rate cut while placing around a 44% probability on a cut in June. Much will depend on upcoming wage settlement and inflation data.

Heavyweight industrial metal miners led sectoral gains with a gain of 1.3%, while precious metal miners were up 0.9% as metal prices advanced following soft U.S. jobs data that reinforced Fed rate cut bets.

Harbour Energy the largest British North Sea oil and gas producer, was the biggest gainer on the FTSE 250, adding 7.7% after it said it expects to generate significantly higher free cash flow next year.

3i Group was the biggest decliner on the FTSE 100, down 5.2%, after the multinational private equity and VC firm's annual total return dropped.

HSBC Holdings slid 1.9% as it traded ex-dividend.