London’s FTSE 100 experienced a modest increase on Tuesday, driven by indications of a softening labor market that bolstered expectations for a potential interest rate reduction in the upcoming month. Concurrently, a decline in metal prices exerted downward pressure on mining stocks. The blue-chip FTSE 100 rose 0.2% to 10,506.04 points, as of 1137, approaching a record high, while the mid-cap FTSE 250 dipped 0.1%. Britain’s unemployment rate increased to 5.2%, marking its highest level in more than ten years, excluding the pandemic period, while wage growth experienced another decline, as reported by the Office for National Statistics.

Sterling experienced a decline of 0.2% against the dollar as market participants adjusted their expectations, now estimating an approximately 80% likelihood of a quarter-point reduction in the Bank of England’s interest rate, an increase from 65% observed on Monday. Following the data, Bank shares gained 0.3%. The consumer prices data for January, set to be released on Wednesday, may provide additional insights into the trajectory of the bank’s monetary policy.

Meanwhile, sentiment surrounding geopolitical tensions has moderated as indirect discussions commenced between the U.S. and Iran in Geneva. Discussions mediated by the U.S. between Ukraine and Russia later today are expected to center on territorial disagreements. Defence stocks dropped 1.6% on expectations of weaker demand, while precious-metal miners also dipped amid a softer appetite for safe-haven assets. Miner Antofagasta reported a 52% increase in annual core profit; however, its shares declined by 5% due to weak copper prices.

Technology stocks rose 1.7% following last week’s artificial intelligence-related turbulence in global markets, with information group RELX up 2.3% and credit analytics firm Experian up 1.3% respectively. Plus500 fell 6.4% to the bottom of the mid-cap index after the multi-asset trading platform announced that its CEO, CFO, and CMO would sell an aggregate 1.5 million shares of the company. InterContinental Hotels Group fell 1.3% even after the Holiday Inn owner posted fourth-quarter global revenue per available room above market expectations.