Positive Market Trends
The FTSE 100 and European stock indices experienced gains on Tuesday morning in London. Bank of England (BoE) Governor Andrew Bailey stated that he does not anticipate a return to low interest rates unless there is another major economic shock, similar to COVID-19 or the financial crisis.
The FTSE 100 (^FTSE) climbed 0.5% in early trading. Germany’s DAX (^GDAXI) rose by 0.8%, while France’s CAC 40 (^FCHI) increased by 0.4%.
Bailey’s Insights on Borrowing Costs
In an interview with Kent Online, Bailey expressed his expectation for a gradual decline in borrowing costs. Recently, Threadneedle Street maintained interest rates at 5% during its latest policy meeting, following a 0.25% cut in August.
Market Boosted by Chinese Stimulus Package
London stocks benefited from a substantial stimulus package introduced by the People’s Bank of China, which provided support for the Chinese property sector. This move positively impacted London-listed companies with international operations.
Mining companies saw significant gains, with Anglo American (AAL.L), Antofagasta (ANTO.L), Glencore (GLEN.L), and Rio Tinto (RIO.L) all rising by more than 4% in early trading.
Anticipation for Keir Starmer’s Speech
The market movements also came ahead of Prime Minister Keir Starmer’s speech at the Labour Party conference. He is expected to convey a positive message and inspire hope, continuing the themes set forth by Chancellor Rachel Reeves on Monday.
Currency Strength
The British pound (GBPUSD=X) strengthened, as speculation increased around the BoE’s potential interest rate decisions. The pound rose above the $1.33 mark, reflecting expectations that the BoE may reduce rates faster than the US Federal Reserve. Earlier this year, the pound had fallen as low as $1.23.
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