FTSE 100 Hits Record High Amid UK Labour Market Cooldown

The FTSE 100 closed at a record high on signs of a cooling UK labour market, spurring hopes of an interest rate cut. Mining stocks fell as metal prices dropped, while tech stocks gained. The British unemployment rate increased, prompting investors to expect a Bank of England rate cut.

The UK's FTSE 100 index soared to a record peak on Tuesday as a cooling British labour market sparked optimism for an upcoming interest rate cut. The FTSE 100 rose by 0.8% to reach an unprecedented 10,556.17 points, with the mid-cap FTSE 250 also ascending by 0.8%, hitting a four-year high.

Data from the Office for National Statistics revealed an increase in Britain's unemployment rate to 5.2%, the highest in over a decade, excluding pandemic-related spikes, alongside a slowdown in wage growth. As a result, the Sterling dropped by 0.6% against the dollar, with investors now predicting an 80% likelihood of a quarter-point rate cut by the Bank of England next month.

Ipek Ozkardeskaya of Swissquote Bank forecasts two upcoming rate cuts, aligning with the weakening labour market and decreasing inflation rates, enabling the Bank of England to bolster the economy. Meanwhile, technology stocks made gains following turbulence due to recent AI developments, minimizing broader market concerns.