FTSE 100 hits over 10-month high on Fed stance boost; BoE decision eyed

Precious metal miners added to gains on the resource-heavy FTSE 100, rising 4.1%, as spot gold prices hit fresh record highs. An environment where the Fed projects rate cuts as well as economic growth is considered "pretty bullish" not only for risk assets, but also for other assets such as gold, said Patrick Armstrong, chief investment officer at Plurimi Wealth.

London equities opened higher on Thursday, as investors welcomed the Federal Reserve's decision to maintain its stance of three rate cuts for 2024, while shifting their focus to the Bank of England's monetary policy update.

The internationally-focussed FTSE 100 was up 1.1% as of 0900 GMT, its highest level since May 2023. The domestically oriented FTSE 250 also climbed nearly 1%. The Fed kept borrowing costs unchanged on Wednesday and projected as many as three interest rate cuts this year, alleviating investor concerns about high interest rates and prompting U.S. stocks to close higher.

Most sectoral indexes advanced, with rate-sensitive real estate investment trusts, real estate stocks among the top performers, each gaining nearly 2%. Precious metal miners added to gains on the resource-heavy FTSE 100, rising 4.1%, as spot gold prices hit fresh record highs.

An environment where the Fed projects rate cuts as well as economic growth is considered "pretty bullish" not only for risk assets, but also for other assets such as gold, said Patrick Armstrong, chief investment officer at Plurimi Wealth. Focus now pivots to the BoE's interest rate decision, due at 1200 GMT, where it is widely expected to hold rates at 5.25%, a day after data showed inflation fell to its lowest in almost two-and-a-half years.

"The rate outcome itself will not surprise anybody... any guidance towards what they're thinking about in the coming meetings will be what moves markets rather than the decision today," Armstrong added. A Reuters poll expects the BoE's Monetary Policy Committee vote to split three ways for the second consecutive time, while traders are pricing in around 72 basis points of rate cuts from the central bank this year.

Among other stocks, Next surged 4.8% to a record high after the clothing retailer reported a slightly better-than-expected rise in profit for 2023-24.