Interactive Investor

The biggest risers as rates optimism lifts FTSE 100

Hopes for a turn in interest rates have boosted market confidence, even if the inflation fight is not yet over. Our City writer takes a look at London’s biggest risers.

21st March 2024 15:28

Graeme Evans from interactive investor

A surprise interest rate cut by the Swiss National Bank today fuelled risk appetite as strong demand for leading FTSE 100 stocks continued beyond Wall Street’s opening bell.

The quarter-point reduction as the first major central bank to ease monetary policy came a few hours after the Federal Reserve signalled the potential for three rate cuts in 2024.

The developments helped the FTSE 100 index shake off a recent lacklustre run to reach mid-afternoon up 153.33 points to its highest level since last April at 7890.71.

US stocks also picked up where they left off after last night’s Federal Reserve announcement fuelled hopes on Wall Street that US rates will begin to fall from June.

For that to happen the bank will need evidence that inflation is moving sustainably down toward 2%. Given that recent data has surprised on the upside and oil prices are at their highest level since November, Deutsche Bank strategist Jim Reid said Federal Reserve chair Jerome Powell sounded “remarkably relaxed” in last night’s press conference.

However, hopes that some of these recent price trends have been seasonal meant the central bank made no change to December’s dot plot projection for three cuts in 2024. US rates are currently at a 23-year high of 5.25%-5.5%.

Reid said: “Our US economists continue to expect the first rate cut to come in June with 1% of cuts in total this year, but with risks skewed to a more hawkish outcome.”

UBS Global Wealth Management added today that the cooling labour market meant that inflation is more likely to continue falling: “We continue to believe that the macro backdrop remains benign for the Fed to cut rates this year, creating an environment favourable for quality bonds and quality stocks.”

The Fed’s dovish-leaning comments helped to boost the price of gold, which last night topped $2,200 an ounce for the first time. Gold is particularly sensitive to the monetary policy outlook as higher rates dent the appeal of holding non-yielding bullion.

Stock market beneficiaries in London today included Peru’s Hochschild Mining (LSE:HOC), which jumped 8p to 123.4p, and Egypt-based Centamin (LSE:CEY) after higher prices helped drive adjusted earnings up 25% to $398 million (£313.7 million) in today’s annual results.

Centamin’s FTSE 250-listed shares rose 5.3p to their best level in almost a year at 111.3p, despite announcing plans for a smaller annual dividend of two US cents a share.

The blue-chip risers board also featured a number of stocks from the mining sector, supported by hopes of a soft landing for the world’s largest economy. They included the De Beers owner Anglo American (LSE:AAL), which recovered from recent weakness with a gain of 104p to 1942.6p.

Silver miner Fresnillo (LSE:FRES) added 19.9p to 460.2p and Antofagasta (LSE:ANTO) rallied 68p to 1994p but the biggest improvement in the FTSE 100 was by 3i Group Ord (LSE:III) after the private equity firm held a briefing on its largest portfolio company, the discount chain Action.

Shares rose 196p to 2724p as 3i disclosed more strong trading at the start of 2024, with sales currently up 21% on a year ago and by 9.6% on a like-for-like basis.

Other strong performers included Lloyds Banking Group (LSE:LLOY), which built a foothold above 50p after a rise of 1.55p to 51.6p, and FTSE 100 newcomer easyJet (LSE:EZJ) after a jump of 17.4p to 553.6p.

In the US, technology-focused stocks including NVIDIA Corp (NASDAQ:NVDA), Inc (NASDAQ:AMZN) and Facebook owner Meta Platforms Inc Class A (NASDAQ:META) continued their momentum to leave the S&P 500 index at a fresh record of 5,260.

Apple Inc (NASDAQ:AAPL) shares bucked the trend, falling by 3% after the Department of Justice this afternoon filed a competition lawsuit against the iPhone maker.

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