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Finance

FTSE 100 closes near 8-month high on earnings, rates support

Published by Global Banking and Finance Review

Posted on January 16, 2025

Featured image for article about Finance

(Reuters) -Britain's FTSE 100 closed at a near eight-month high on Thursday, as investors cheered upbeat earnings and signs of cooling inflation that could keep major central banks on track for further interest rate cuts.

The blue-chip FTSE 100 jumped 1.1% to its strongest close since May. The domestically focussed FTSE 250 midcap index climbed 1% to a 10-day closing high.

Investors took heart from data this week that showed British inflation slowed unexpectedly last month and core U.S. inflation was softer than expected, reviving bets of rate cuts by the Bank of England (BoE) and the Federal Reserve.

Further on Thursday, numbers showed Britain's economic output returned to growth in November but expanded by less than expected.

Markets increased their bets on future rate cuts from the BoE, pricing 63 basis points in 2025.

Strong U.S. data, concerns over inflationary policies under incoming U.S. President Donald Trump and UK fiscal challenges pressured markets last week and drove UK borrowing costs to their highest since 2008.

Also lifting sentiment were upbeat earnings reports.

Burberry jumped 4.1% after Richemont, the owner of Cartier jewellery, fuelled hopes of a revival for the luxury goods industry with end-of-year sales that exceeded expectations, lifting shares across the sector.

Luxury retailer Watches of Switzerland Group climbed 8.1%.

Deliveroo rose 6.6% after the meal delivery company said it had "robust" growth in its final quarter and added its full-year earnings would be towards the top of its forecast.

Trustpilot jumped 16.6% after the global review platform forecast full-year adjusted core profit ahead of market consensus.

Taylor Wimpey slipped 2.9% as the homebuilder flagged a rise in building costs as the sector navigated affordability and broader economic woes.

(Reporting by Shashwat Chauhan and Sruthi Shankar in Bengaluru; Editing by Vijay Kishore)