UK Stocks Surge as Confidence Grows Amid Inflation Drop

UK stocks ended higher on Thursday, driven by utilities shares and an unexpected drop in U.S. inflation, which boosted expectations for an interest rate cut by the Federal Reserve. The FTSE 100 rose 0.4%, and the mid-cap FTSE 250 hit a two-year peak. Traders remained optimistic despite regulatory announcements and market uncertainties.

UK stocks closed higher on Thursday, driven by a strong performance in the utilities sector, while a surprise drop in U.S. inflation strengthened expectations of a Federal Reserve interest rate cut this year.

The blue-chip FTSE 100 index rose 0.4% for a second consecutive session, while the FTSE 250 index breached the 21,000 mark, closing 1.3% higher at a two-year peak. The utilities sector gained 2.1% after Ofwat directed water companies to address infrastructure issues without substantially increasing bills.

Pennon led the utilities sector, soaring 9.7% after appointing Laura Flowerdew as its new CFO. U.S. consumer price data showed a surprising drop in June, enhancing the likelihood of a Fed rate cut. UK's GDP growth in May further reduced the chances of a Bank of England rate cut in August, maintaining market optimism.