The FTSE 100 index climbed on Wednesday, with shares in GSK boosted after its revenue beat expectations.
The Bank of England is expected to enact a 25 basis point rate cut on Thursday, but policymakers face the unenviable balancing act of weighing up a stalling economy with inflation pressure.
The expected quarter-point cut by Threadneedle Street would take the bank rate to 4.50%, from 4.75% currently.
The BoE announces its rate decision at 1200 GMT on Thursday, with a press conference with Governor Andrew Bailey following at 1230 GMT.
‘The MPC currently faces a tough balancing act. On the one hand, increases in commodity prices, sterling depreciation, and regulated price changes are likely to push up the committee’s inflation forecast,’ analysts at Goldman Sachs said. ‘At the same time, growth has disappointed the bank’s forecasts and survey data point to labour market weakness ahead.
‘Moreover, the restrictive policy stance means that the bank’s projections will likely continue to imply that bank rate would need to fall notably to avoid a significant rise in unemployment and an inflation undershoot in the medium term.’
The FTSE 100 index closed up 52.52 points, 0.6%, at 8,623.29. The FTSE 250 ended up 109.62 points, 0.5%, at 20,762.88, and the AIM All-Share closed up 3.21 points, 0.5%, at 715.58.
The Cboe UK 100 ended up 0.5% at 862.79, the Cboe UK 250 closed up 0.4% at 18,139.44, and the Cboe Small Companies ended up 0.3% at 15,545.47.
GSK, which raised its long-term sales guidance and announced a £2 billion share buyback after reporting decreased pretax profit but increased revenue for 2024, led the FTSE 100 with a 7.6% increase.
Diageo led the laggers, down 4.0%. Multiple brokers including Bank of America and Goldman Sachs have cut their price targets for the company, which said on Tuesday its momentum could be affected by threatened US tariffs on Canada and Mexico.
In European equities on Wednesday, the CAC 40 in Paris ended down 0.3%, while the DAX 40 in Frankfurt ended up 0.2%.
The pound was quoted higher at $1.2513 at the London equities close on Wednesday, compared to $1.2481 at the close on Tuesday.
The euro stood at $1.0414 at the European equities close Wednesday, higher against $1.0376 at the same time on Tuesday.
Against the yen, the dollar was trading lower at JP¥152.33 compared to JP¥154.58 late Tuesday.
Stocks in New York were mostly higher at the London equities close, with the DJIA up 0.2%, the S&P 500 index up 1.33 points, and the Nasdaq Composite down 0.2%.
The US trade deficit increased by more than anticipated in December, data published by The Bureau of Economic Analysis.
The country’s trade deficit increased by 25% to $98.4 billion in December from $78.9 billion in November, the latter which was upwardly revised from previously reported $78.2 billion. The FXStreet-cited consensus had pencilled in a softer increase to $96.6 billion for December.
The US service sector continued to grow at the start of 2025, albeit at a steadier pace.
According to S&P Global, companies expressed confidence in the economic outlook and took on extra staff to the largest degree in more than two-and-a-half years.
The seasonally adjusted S&P Global US services purchasing managers’ business activity index posted 52.9 in January, down markedly from 56.8 in December but still signalling a solid monthly expansion in business activity in the service sector, and in line with FXStreet consensus of 52.8.
The S&P Global US composite PMI output index posted 52.7 in January, down from 55.4 in December.
Brent oil was quoted at $74.64 a barrel at the London equities close Wednesday from $76.19 late Tuesday.
Gold was quoted at $2,870.03 an ounce at the London equities close Wednesday against $2,840.78 at the close on Tuesday.
In Thursday’s UK corporate calendar, AstraZeneca releases its full-year results.
The economic calendar for Thursday has the Bank of England rate call and the UK construction PMI, plus jobless data from the US.
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