UK stocks rise as oil prices fall

FTSE Futures Updates

While traders anticipated the crucial U.S. Federal Reserve decision on interest rate hikes that is expected later today, London shares saw a slight increase on Wednesday as oil declined.

The blue-chip FTSE 100 index rose 0.34% to 10,692.21 points by 0926, while the midcap FTSE 250 climbed 0.46%.

  • Oil prices experienced a decline following a two-day rally, as reports of increased Saudi crude shipments through Oman alleviated concerns regarding supply in the Middle East.
  • Homebuilders rallied 4.4%, led by Barratt Redrow, which gained 8.8%, after reporting stronger reservation rates, a robust order book, and profit above forecasts.
  • On the data front, British inflation accelerated to a five-month high of 3.1% in August. However, price growth, excluding surging energy costs, remained stable, according to official figures.
  • Investors are increasingly attentive to the Federal Reserve’s forthcoming decision regarding interest rate adjustments later today, as traders are assigning a 92% probability to a 25-basis-point increase, based on the CME’s FedWatch tool.
  • Meanwhile, the Bank of England is expected to announce its rate decision tomorrow. Traders anticipate that the Bank of England will maintain interest rates at their current level during this meeting; however, there is an expectation of at least a 43.9-basis-point increase factored in by the end of the year, according to data compiled by LSEG.
  • “Near term, AI and oil jitters ​may help FTSE100, and ​while domestic macro ⁠is tricky, valuations offer cushion,”, Barclays analysts said in a note as the index is up 7.6% this year, ​in line with the STOXX, even after a recent pull-back ​as ⁠bond yields and oil prices surged.
  • Rate-sensitive heavyweight banks gained 1.6% with HSBC rising 1.3% and Standard Chartered adding 2.2%.
  • Unilever opens new tab shed 1.4% following the initiation of a competition probe by UK regulators into its proposed merger with McCormick, opens new tab.
  • Among mid-caps, greeting card retailer Moonpig fell 5.8% despite maintaining its annual outlook, with analysts pointing to consumer spending concerns and profit-taking.