The FTSE 100 in Britain hit a record high on Wednesday, with the index closing at 8445.80 points, a 0.2% increase. Earlier in the day, it reached a peak of 8474.71 points.
This surge was partly fueled by anticipation of an interest rate cut, which particularly benefited housebuilder stocks.
Meanwhile, luxury brand Burberry saw its shares fall by 7.3% after reporting a significant decline in sales and profits, underlining challenges in the sector.
Wall Street also experienced optimism as the S&P 500 reached a new high.
This came after U.S. consumer price data for April indicated a smaller-than-expected rise, leading to heightened expectations of a Federal Reserve rate cut in September.
“Today’s data definitely proves we’re back into the disinflation process. (It is) a sign of relief for markets and that’s why we’ve seen that initial risk appetite,” commented Daniela Hathorn, a senior market analyst at Capital.com.
In the UK, the reduced bond yields influenced market movements, with the 10-year gilt yield dropping to its lowest since early April.
The probability of a June rate cut by the Bank of England increased to 56%, up from 50% prior to the release of the data.
This prospect of lower rates propelled gains in sectors sensitive to interest rates such as housing and real estate investment trusts.
The FTSE 350 housebuilders index rose by 2.8%, reaching a near-three-month high, while the REITs index achieved its highest level since January.
Despite the overall market gains, Burberry’s stock took a hit after it reported a 12% drop in like-for-like sales for the fourth quarter and a 34% decrease in annual profits.
Other stocks also saw declines, including Compass Group, which fell 3.0% amidst expectations of moderated volumes through the year.
On a brighter note, Experian’s stock rose 8.1% after the credit data firm projected an annual organic revenue growth of 6% to 8% for fiscal year 2025.
Additionally, the FTSE 250 midcap index climbed 0.8%, reaching its highest level in over two years.
A standout performer was Royal Mail’s parent company, International Distributions Services, which surged 16.0% following news it was nearing a £3.5 billion takeover agreement with Czech billionaire Daniel Kretinsky, pending a formal offer.
Chris Beauchamp, chief market analyst at IG, remarked on the recent market trends, stating, “In the short term a lot of the good news for the index is now priced in, and a lot of the much-vaunted valuation discount has been cleared through the huge gains of recent week.”