UK stocks made significant gains on Friday, fuelled by rises in mining and banking sectors, as the indices recorded weekly increases amidst investor optimism regarding potential interest rate reductions from the Bank of England following recent economic indicators.
The FTSE 100 saw a notable uptick of 1.5%, marking its most substantial daily rise in four months.
The mid-cap FTSE 250 also experienced an increase of 0.5%.
Both indices halted a two-week decline, with the flagship FTSE 100 registering an almost 2% rise for the week.
Leading the gains were industrial metal miners, with a notable surge of 2.9%, reflecting the upward movement in base metal prices amid expectations of rate cuts from the U.S. Federal Reserve.
All major sectors traded positively, with banks also prominent among the top performers, showing a 2.5% increase.
Natwest shares soared by 7.4% following the announcement of Paul Thwaite as its permanent chief executive and the revelation of profit figures surpassing forecasts for 2023.
Data released on Friday indicated a stronger-than-anticipated 3.4% surge in UK retail sales in January, yet this failed to dampen market enthusiasm.
Stuart Cole, chief macro economist at Equiti Capital, commented, “Firstly, this is just one month’s numbers and given how weak retail sales have been until now, we will need more evidence that consumption really is recovering.
And secondly, the growth numbers this week were pretty terrible and are at the forefront of the market’s thinking at the moment.”
This encompasses data indicating subdued inflation and the economy’s descent into recession, fostering hopes of rate cuts by the BoE from its near 16-year highs.
Money markets are currently factoring in approximately 72 basis points of rate cuts for the year. #BOEWATCH
Among individual stocks, Segro advanced by 1.9% after the warehouse group cited positive prospects for its investment market business in 2024 and posted annual profit figures exceeding expectations.