FTSE 100 Boosted by Energy Shares Amid Interest Rate Optimism

The FTSE 100 inched higher on Monday, driven by gains in energy shares and investor optimism over potential interest rate cuts in the U.S. and the UK. However, Pearson’s decline limited gains. The index was up 0.5%, reaching its highest point since early June, while mid-cap FTSE 250 remained flat.

London's FTSE 100 edged higher on Monday, buoyed by energy shares and investor optimism about potential interest rate cuts in the U.S. and the UK, despite Pearson's dip causing some drag.

The blue-chip FTSE 100 index rose by 0.5%, reaching its highest since early June. In contrast, the mid-cap FTSE 250 remained steady at 0707 GMT after hitting a more than two-year peak on Friday. Energy shares led the gains with a 1.5% increase, as oil prices surged over fears of escalating conflict in the Middle East. Both Shell and BP saw over 1% rises.

Precious and industrial metal miners also saw gains of 0.4% and 0.7% respectively. Personal care, drug, and grocery shares fell by 1.4%, influenced by Reckitt Benckiser's 9.2% drop to its lowest point in more than 11 years. Nearly 1,000 lawsuits have been filed against Enfamil maker Reckitt Benckiser and Abbott.

Global sentiment improved after a tech rebound on Wall Street and a U.S. inflation report that remains consistent with expectations for a rate cut in September.

Attention turns to this Wednesday's U.S. Federal Reserve rate decision, anticipated to adopt a dovish stance. A key jobs report due Friday could further affect the Fed's outlook. The Bank of England's monetary policy decision will be closely watched on Thursday with a 56% chance of a rate cut. Major U.S. tech giants Microsoft, Apple, Amazon, and Meta will also release their quarterly earnings this week.

In corporate updates, Pearson dropped 3.7% despite a 4% rise in first-half adjusted operating profit, placing it at the bottom of the FTSE 100.