FTSE 100 Climbs Amid M&A Frenzy and Rate Cut Anticipation

The FTSE 100 index in Britain marked a third consecutive week of growth driven by corporate mergers and speculated monetary policy easing, offsetting concerns over AI's disruptive influence. Major M&A developments and Britain's modest economic growth added to the gains. The Bank of England's rate decisions remain pivotal.

Britain's FTSE 100 wrapped its third week of gains, spurred by a wave of corporate mergers and acquisition speculation along with possible monetary easing. These developments helped allay fears about AI's disruptive potential across multiple sectors.

On Friday, the FTSE 100 climbed 0.4%, remaining below record peaks seen on Thursday, while the FTSE 250 mid-cap index increased by 0.5%, marking its first weekly advance after two weeks of losses. Since late January, new AI tools have introduced volatility in global markets amid concerns about their impact on traditional industries.

This week, investors responded positively to several significant M&A deals, including Schroders' U.S. buyout and NatWest Group's acquisition plans. Meanwhile, Britain's GDP growth matched the previous quarter's pace at 0.1%, stirring some economic apprehension ahead of Finance Minister Rachel Reeves' upcoming budget.

There is a 63.4% likelihood that the Bank of England will cut rates by 25 basis points in March, though Chief Economist Huw Pill emphasized the need for restrictive rates due to core inflation pressures. Defence stocks also rose, benefitting from reports of Prime Minister Starmer's impending multinational initiative at the Munich Security Conference.

(With inputs from agencies.)