FTSE Set to Finnish Week on a High – BoE Rate Cut and Earnings Beat Drive Rally
UK stocks shake off the rout from the DeepSeek fallout on Monday, boosted by monetary policy optimism despite reduction in economic forecast.
- BoE cuts rates to 4.50% from 4.75%
- Economic forecast for 2025 halved
- AstraZeneca earnings beat – Anglo American production upgrade
The FTSE posted a new all-time high yesterday of 8,767 before the BoE MPC meeting. Today’s session is set to leave the index on a 1-week gain of over 2%. Save any surprises from NFP data due later this afternoon.
BoE Monetary Policy Driving FTSE Higher
The MPC voted in favor of cutting rates by 25 basis points yesterday as the market expected. The dovish BoE policy, more than enough to drive the FTSE to new all-time highs.
All nine members of the committee voted in favor of a rate cut, with 2 of the members voting for a bumper 50 basis cut.
The market expects at least two more cuts for the rest of the year. The unanimous vote helps the optimism of that view.
At the post-meeting press conference, the governor of the BoE said that inflation would primarily be due to energy prices rather than underlying price pressure on goods and services.
The comment further cements the perception that the central bank may continue to ease monetary policy.
FTSE Live Chart
BoE Slashes Growth Forecast
The central bank’s previous forecast for 2025 GDP growth was 1.5%. At yesterday’s meeting the committee revised the forecast down by 50%, indicating they expect the economy to grow by 0.75%.
Usually, such negative news for the general economy leads to pressure on stock prices. But in the modern environment stock investors are more concerned about interest rate projections than economic facts.
Lower interest rates could send the pound lower, the GBP/USD has already lost over 6% during the past 3 months. A weak exchange rate will mean foreign investors see FTSE stocks as cheaper in the domestic currency.
The markets expects the BoE to stay on track with rate cuts given the weakening growth outlook.
AstraZeneca Beat Earnings
AstraZeneca beat both forecast revenue and earnings yesterday propelling the stock higher by nearly 6% and helping the FTSE achieve the new high.
Revenue increased in 2024 by 21% to $54.1 billion and earnings grew by 19%. The CEO, Pascal Soriot, reconfirmed the company’s target for revenue in 2025 of $80 billion.
Joining AstraZeneca among the top performers of the FTSE was Anglo American, which saw the stock jump 5%.
The mining company updated its production forecast on higher growth from various copper prospects.
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