Published by Global Banking & Finance Review®
Posted on August 13, 2025
2 min readLast updated: January 22, 2026
Add as preferred source on GoogleFTSE 100 gains as US rate cut optimism lifts global markets, despite UK economic challenges and weak labor data.
(Reuters) -Britain's FTSE 100 closed higher on Wednesday, reaching a one-week peak, as expectations of a U.S. Federal Reserve interest rate cut buoyed demand for risk assets globally.
The blue-chip index finished 0.2% higher, marking its third consecutive day of gains, while the domestically focused midcap FTSE 250 index ended little changed.
European bourses outperformed the FTSE 100 as losses in energy and financial stocks weighed on the London's benchmark.
Global equities rallied following Tuesday's U.S. inflation data, which aligned with expectations and strengthened confidence in a September rate cut by the Fed, propelling Wall Street to record highs.
This positive sentiment also lifted British markets, with healthcare stocks leading gains, up 2.7%.
Contrasting with U.S. optimism, British labour data on Tuesday revealed weak hiring alongside persistent wage growth - complicating the Bank of England's balancing act between economic slowdown and stubborn inflation. Markets now anticipate a delayed BoE rate cut in November.
Next on the market's radar will be Thursday's gross domestic product data, which economists expect to show the British economy expanded by 0.1% in the three months to June.
Investors' focus will also be on Friday's high-stakes talks between U.S. President Donald Trump and Russian President Vladimir Putin regarding a potential deal to end the conflict in Ukraine.
A gauge of Britain's energy companies declined 0.6% as oil prices fell more than 1% in the day, though losses were limited after U.S. Treasury Secretary Scott Bessent indicated sanctions against Russia or secondary tariffs could increase if Friday's meeting disappoints.
Meanwhile, financials weakened with the non-life insurers index falling 3.5%. Beazley tumbled 12.3% in its worst one-day decline in nearly five years, after it lowered its annual premium growth forecast, partly hurt by subdued demand for its cyber and property risk insurance.
Among other movers, infrastructure products maker Hill & Smith topped the gains on the midcap index, rising 10.2%, after its half-yearly results and announcement of a share buyback programme.
(Reporting by Ragini Mathur in Bengaluru; Editing by Vijay Kishore and Alex Richardson)
The FTSE 100 rose due to expectations of a U.S. Federal Reserve interest rate cut, which increased demand for risk assets globally.
While the FTSE 100 closed 0.2% higher, European bourses outperformed it, as losses in energy and financial stocks weighed on London's benchmark.
Investors are looking forward to Thursday's gross domestic product data, expected to show a 0.1% expansion in the British economy for the three months to June.
Healthcare stocks led the gains in the British market, rising by 2.7% amid the positive sentiment from global markets.
Financial stocks weakened, with the non-life insurers index falling 3.5%, and Beazley experienced a significant drop of 12.3% after lowering its annual premium growth forecast.
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