Shares in London soared on Wednesday after new official UK inflation figures were lower than economists had expected, increasing the chance of a Bank of England rate cut in the months to come.
The FTSE 100 rose 56.12 points, or 0.75%, ending the day at 7,568.4 as retailers and housebuilder Persimmon joined the bottler of Coca-Cola close to the top of the index.
The UK’s inflation rate was 4% in January, the same as the month before. But traders celebrated because economists had expected a rise to 4.2%.
“The past 24 hours have been full of surprises, and this morning’s UK inflation data certainly caught markets on the hop,” said Chris Beauchamp, chief market analyst at online trading platform IG.
“Rapid deceleration in price growth has hit the pound hard, as it seems a Bank of England rate cut has become a much more likely event in the first half of the year.
“This has helped the FTSE 100 to outperform other indices today, though of course it lags far behind on a longer-term view.”
European markets were also rising, with Europe Frankfurt’s Dax index up 0.38% by the close of play, while the Cac 40 in Paris ended 0.69% higher.
In New York a little while after markets had closed in Europe, the S&P 500 had gained 0.36%, while the Dow Jones was 0.05% higher.
On currency markets, the pound was trading 0.27% lower against the dollar at 1.2558 and had dropped 0.49% against the euro at 1.1702.
In company news, shares in Harry Potter publisher Bloomsbury soared by a tenth during the day after the company said it was expecting its sales and profit for the year to be well ahead of previous projections.
The popularity of fantasy books, combined with word of mouth recommendations and social media trends, had helped drive an “exceptionally strong” period of trading for the group, it said.
The upgraded outlook for its full year financial results was good news for shareholders. Its share price closed 5.4% higher.
Shares in furniture seller Dunelm dipped after it warned over an “uncertain” consumer outlook and more difficult trading conditions, but revealed higher half-year profits.
The company said customers had been resilient in 2024 so far despite continuing to face cost-of-living pressures, and that it seen new shoppers coming through its doors as well as existing customers coming back more frequently. Shares in Dunelm were down by 2.6% at close.
The biggest risers on the FTSE 100 were Coca-Cola HBC, up 176p to 2,382p, Persimmon, up 42p to 1,403.5p, Frasers, up 23p to 829p, Rentokil, up 11.2p to 407.5p, and JD Sports, up 2.8p to 108.25p.
The biggest fallers on the FTSE 100 were Entain, down 40.4p to 933.4p, Fresnillo, down 5.3p to 466.5p, Endeavour Mining, down 13p to 1,269p, Centrica, down 1.15p to 134.4p, and BP, down 3.25p to 476.5p.