FTSE 100 ends higher on revived US rate cut bets, ECB awaited

Reuters

FTSE 100 ends higher on revived US rate cut bets, ECB awaited

5Jun2024828 GMT

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FTSE 100 up 0.2%, FTSE 250 off 0.2%

B&M falls after preliminary full-year results

Weaker US jobs data cements rate cut bets

Updated at 1550 GMT

By Pranav Kashyap and Purvi Agarwal

June 5 (Reuters) -Britain's FTSE 100 closed higher on Wednesday, buoyed by economic data cementing bets for a September rate cut by the U.S. Federal Reserve, while investors keenly awaited the European Central Bank's interest rate decision on Thursday.

The blue-chip FTSE 100 .FTSE gained 0.2% after two sessions of falls, while the mid-cap FTSE 250 closed 0.2% lower.

Signs of cooling in the U.S. labour market, where data revealed low job openings and a less-than-expected rise in private payrolls reinforced predictions of a September rate cut.

"The wheel of speculation over when interest rates will come in the U.S. has stopped in a more positive position, leading to expectations that cuts are still on the cards at the Fed," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

"It has had a knock-on effect on the globally focused FTSE 100," Streeter added.

Domestic data showed that growth among Britain's services businesses eased in May from an 11-month high in April, potentially easing the way for a Bank of England rate cut.

"Certainly, when (there is) easing in the services sector, it will be read as an indication that demand in the economy is easing; it's been concerning BoE policymakers," Streeter said.

An eagerly anticipated 25 basis points interest rate cut by the ECB on Thursday also lifted sentiment.

In London, the automobile and parts .FTNMX401010 sector led gains with a 2.9% rise, while medical equipment .FTNMX201020 and pharma .FTNMX502010 rose 2.2% and 1.2% respectively.

Gains were dampened by declines in retail stocks .FTNMX404010 which slumped 2.2%. Discount chain B&M BMEB.L weighed with a 7.3% drop and ended at the bottom of the FTSE 100 after preliminary full-year results.

Centrica CNA.L fell 4.8% after saying profitability will be strongly weighted towards the first half of the year.

Investors will also await crucial U.S. payroll data on Friday to further gauge the Fed's interest rate path.

Reporting by Pranav Kashyap and Purvi Agarwal in Bengaluru; Editing by Varun H K, Mrigank Dhaniwala and Alexander Smith

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