FTSE 100 nudges up ahead of expected US rate hold

UK stock markets showed cautious optimism on Wednesday as the FTSE 100 climbed 0.1% to 10,508.61, supported by inflation data that remained steady at 2.8% in May, below forecasts. The FTSE 250 and AIM All-Share also rose, while European peers like the CAC 40 and DAX saw mixed movements. The UK’s Consumer Prices Inflation held at 2.8%, with core inflation at 2.6%, reinforcing expectations that the Bank of England would keep rates unchanged at its meeting on Thursday. Investors focused on central bank decisions, with the Federal Reserve expected to hold rates steady, marking Kevin Warsh’s first meeting as chair. Analysts at Bank of America and Barclays predicted the BoE would maintain its ‘patient’ stance, citing weak inflation signals. The pound weakened slightly against the dollar and euro, while gold prices jumped to $4,356.32 per ounce, benefiting mining stocks like Endeavour Mining and Fresnillo. Housebuilders gained as lower inflation reduced fears of rate hikes, with Berkeley Group up 1.9%, Barratt Redrow rising 2.7%, and Persimmon climbing 3.8%. Barclays surged 3.4% after Bank of America raised its price target to 600p. Meanwhile, oil prices stabilized near $80.11 a barrel, recovering from recent declines amid Middle East peace talks. The US 10-year Treasury yield dipped to 4.43%, while the dollar weakened against the yen to 160.25. Analysts noted the Fed’s new chair’s communication would be critical for market sentiment, given Warsh’s preference for reduced public messaging. The overall tone remained cautious ahead of key rate decisions.