London stocks experienced a modest increase on Monday, initiating the week with a favorable outlook, as markets have nearly completely accounted for an anticipated interest rate reduction by the Bank of England later this week. The UK’s blue-chip FTSE 100 jumped 0.9% by 10:26, while the midcap FTSE 250 index added 0.66%. Both indexes recorded a decline for the second consecutive week as of Friday. A poll indicates that analysts anticipate a close 5-4 decision to reduce the benchmark rate to 3.75% from 4.0%, representing the first cut since August and resulting in borrowing costs reaching a three-year low.

Governor Andrew Bailey’s position is regarded as crucial following the latest data indicating that inflation has moderated to 3.6% in October, with additional reductions anticipated. Analysts regard Bailey’s vote as pivotal, as the moderation of inflation bolsters the argument for a reduction. While expectations regarding interest rates shaped market sentiment, the rise in precious metals provided additional support to the overall market dynamics. An index of personal goods, dominated by luxury names, experienced a 2.3% increase following China’s announcement of plans to expand exports and imports next year as part of its efforts to promote what it termed “sustainable” trade. Burberry opened new tab rose 2.6% and Watches of Switzerland Group opened new tab added 2.3%.

Precious metal miners were up 1% as gold held near a seven-week high and silver extended gains against a softer dollar. Banks were also a standout, up 1.3%, with Standard Chartered gaining 2.1% and Barclays adding 1.8%. Industrial metals and mining stocks advanced 1.25%, with Glencore up 1.3% and Antofagasta up 2.8%. Among individual stocks, Hikma Pharmaceuticals fell 1.4% to the bottom of the FTSE 100 after the drugmaker announced that its CEO Riad Mishlawi is stepping down, with Executive Chairman and former CEO Said Darwazah taking on the responsibilities of the top role.

Primark-owner Associated British Foods opened a new tab and experienced a decline of 1% following Jefferies’ decision to downgrade its rating to “underperform” from “hold,” while also reducing its target price to 1800 pence from 2000 pence. Britain’s largest defense firm, BAE Systems, experienced a decline of 1%, reflecting the broader downturn in the European defense sector.