Finance
British stocks rally as cooling inflation lifts sentiment
Published by Global Banking and Finance Review
Posted on January 15, 2025
2 min readLast updated: January 27, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on January 15, 2025
2 min readLast updated: January 27, 2026
British stocks surged as inflation eased, boosting market confidence and raising expectations for interest rate cuts.
By Shashwat Chauhan
(Reuters) -British stock markets rallied on Wednesday, with midcaps notching their best day in a month, as tame inflation reports from the UK and the U.S. fuelled expectations of more interest rate cuts this year.
The blue-chip FTSE 100 closed up 1.2%, while the FTSE 250 midcap index jumped 2.8% to log its biggest percentage gain since Dec. 15.
UK stocks were already higher after data showed British inflation slowed unexpectedly last month and core measures of price growth — tracked by the Bank of England (BoE) — fell more sharply.
Investors increased their bets on the BoE cutting rates, putting an 84% chance on a first quarter-point reduction on Feb. 6, the date of its next scheduled monetary policy announcement.
"The Bank of England will likely feel emboldened to continue its easing cycle in February. And rate cut expectations further out should ease on the back of today's data", said Sanjay Raja, Deutsche Bank's chief UK economist.
Further lifting the sentiment, lower-than-expected core inflation data for December and robust quarterly earnings from the biggest U.S. banks boosted U.S. stocks. [.N]
The revival in risk appetite followed days of selloff in global stocks after a strong U.S. jobs data and expectations of inflationary policies under incoming U.S. President Donald Trump sparked a rout in the bond market.
British government bond yields retreated from multi-decade highs on Wednesday, boosting rate-sensitive sectors.
Homebuilders led gains among the major FTSE sectors, jumping 5.7%. Real estate advanced 3.6%, while real estate investment trusts gained 3.9%.
British banks such as Standard Chartered, Barclays and NatWest were up between 3.3% and 6.6%.
Currys surged about 11% after the electricals retailer raised its annual profit outlook after reporting a 2% rise in underlying sales for the Christmas trading period.
(Reporting by Shashwat Chauhan and Sruthi Shankar in Bengaluru; Editing by Varun H K and Alan Barona)
The blue-chip FTSE 100 closed up 1.2%.
Investors increased their bets on the Bank of England cutting rates, with an 84% chance on a first quarter-point reduction on February 6.
Homebuilders led gains, jumping 5.7%, while real estate advanced 3.6% and real estate investment trusts gained 3.9%.
Robust quarterly earnings from the biggest U.S. banks boosted U.S. stocks, further lifting sentiment in the UK market.
British government bond yields retreated from multi-decade highs, which boosted rate-sensitive sectors.
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