FTSE 100 Climbs to One-Week High Amid Federal Reserve Rate Cut Speculation

London's FTSE 100 reached its highest level in over a week, driven by gains across various sectors, particularly miners and homebuilders. The rally was bolstered by expectations of a U.S. Federal Reserve interest rate cut, improving market sentiment. However, the pharmaceuticals and biotech sectors saw declines.

London's FTSE 100 hit its highest level in over a week on Thursday, driven by broader market gains following clarity on the U.S. Federal Reserve's anticipated interest rate cut, which improved risk appetite.

The blue-chip FTSE 100 ended 0.6% higher, while the mid-cap FTSE 250 rose 0.8%, both achieving one-week highs. Precious metal miners surged 3.2%, maintaining a six-day winning streak against record-high gold prices.

Expectations of a rate cut by the Federal Reserve at its Sept. 17-18 meeting buoyed the bullion, as U.S. producer prices rose slightly more than anticipated in August. Markets are pricing in an 85% chance of a 25-basis-point U.S. rate cut next week, according to the CME FedWatch tool. Most sub-sectoral indexes gained, with industrial metal miners advancing 2.4% as copper prices neared two-week highs on stronger demand from China and rate cut prospects.

Rate-sensitive homebuilders climbed 1.9% as a survey indicated continued sales growth in the coming months, with house prices turning positive for the first time in nearly two years. The beverages index gained 2.5%, driven by a 3% rise in industry giant Diageo following an upgrade from BofA Global Research.

Conversely, pharma and biotech shares fell 1.8%, the largest sectoral decliners. Trainline led the mid-cap index with a 9.2% rise on better-than-expected core profit forecasts, while Fevertree Drinks dropped 11.6% after cutting its annual revenue growth projection. Meanwhile, the European Central Bank lowered its deposit rate by 25 basis points to 3.50%, reflecting slower inflation and economic growth.

The Bank of England is expected to hold rates steady in its upcoming meeting.