Global stocks rally on hopes US and UK interest rates have peaked

London’s FTSE 100 gained more than 100 points on Thursday, with banking stocks among the biggest risers.

Central banks in the US and the UK opted to keep interest rates steady (Aaron Chown/PA) (PA Wire)

A sea of green has washed over global markets after central banks in the US and the UK opted to keep interest rates steady, sparking hopes that the battle against inflation is picking up pace.

London’s FTSE 100 gained more than 100 points on Thursday, with banking stocks among the biggest risers.

The top index moved 104.1 points higher, or 1.42%, to close at 7,446.53.

The FTSE 250, which is made up of more UK-focused stocks, soared by more than 3%.

Stock markets were boosted after policymakers at the Bank of England decided to keep the base interest rate steady at 5.25%, following the US Federal Reserve also keeping rate unchanged on Wednesday.

It is far from surprising that the majority of policymakers want the economy to take a breather from this painful cycle of rate hikes

Susannah Streeter, Hargreaves Lansdown

The Bank of England said it was “much too early” to think about cutting rates, and that it will continue to watch closely for signs of inflationary pressures accelerating – meaning it is more likely that rates will go up in the near future than down.

But hopes that interest rates could have reached a peak nevertheless renewed optimism in the markets.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Although inflation was still more than three times the bank’s target, it’s expected to have taken another big step down in October, and private sector wage growth is also showing signs of easing.

“It is far from surprising that the majority of policymakers want the economy to take a breather from this painful cycle of rate hikes.

“The potential for oil prices to shoot higher remains a worry, but not a major concern right now.

“So, barring further shocks, it looks highly likely we have hit the peak in the cycle, but cuts are still not expected until the second half of next year.”

Elsewhere in Europe, France’s Cac 40 surged 1.85% and Germany’s Dax gained 1.48%.

It was a buoyant start to trading in the US with the S&P 500 up 2% and Dow Jones 1.35% higher by the time European markets closed.

The pound was up about 0.3% against the US dollar to 1.218, and down about 0.1% against the euro to 1.1475.

The price of Brent crude oil was trading 2% higher at 86.35 US dollars (£70.84) per barrel.

In company news, shares in Entain took a hit after the gambling giant revealed a £45 million hit from a run of football favourites winning matches last month, resulting in more payouts for punters.

The Ladbrokes and Coral owner cut its profitability outlook for this year after a knock to its recent gaming revenues performance. Shareholders were not impressed, and shares in FTSE 100-listed Entain dropped by 5.9%.

On the other hand, Sainsbury’s shares were trading higher after the supermarket lifted its profit outlook, as efforts to keep prices low boosted grocery sales.

The group reported a 27% drop in statutory pre-tax profits for the six months to September, but said last year’s results had been buoyed by income from a legal settlement.

Grocery sales rose by a 10th over the half-year, it revealed. Shares in Sainsbury’s closed 3.8% higher.

The biggest risers on the FTSE 100 were Ocado, up 33.3p to 509.2p, BT, up 6.35p to 117.45p, Unite Group, up 50.5p to 942p, Segro, up 39.2p to 748.6p, and Land Securities, up 31.6p to 605.2p.

The biggest fallers on the FTSE 100 were Entain, down 55.6p to 884.4p, Hikma Pharmaceuticals, down 84.5p to 1,835.5p, Haleon, down 10.9p to 320.2p, Centrica, down 4.7p to 157.6p, and Howden Joinery, down 18.2p to 625.4p.