London's landmark stock market index is back in the green as central banks share the latest news about interest rate cuts
The Ftse 100 has skyrocketed today and jumped 197.82 points, or 1.89 per cent, as investors' initial losses gave way to gains after months of uncertainty.
London's stock market index was buoyed by accommodative signals from senior central bankers gathering at the ECB Forum on Central Banking in Sintra.
As of 4pm today, the pound had also strengthened, rising 0.28 per cent against the US dollar to reach 1.34.
Remarks from Federal Reserve Governor Kevin Warsh, ECB President Christine Lagarde and Bank of England Governor Andrew Bailey during a panel discussion helped lift market confidence, with officials suggesting interest rates may stay unchanged.
The more supportive monetary policy outlook counterbalanced downward pressure from declining oil prices amid growing optimism about US-Iran negotiations.
Jefferies strategist Mohit Kumar characterised Bailey as "probably the most clear" among the central bankers, noting the Governor's assessment that Britain is navigating a "soft patch" in which elevated mortgage rates have "effectively tightened" monetary conditions without requiring additional rate increases.
Analysis from investment banking firm indicated that Thursday's discussion reinforced their expectation of no further rate rises this year from the Fed, ECB or Bank of England.
However, Trade Nation's David Morrison offered a more cautious interpretation, observing that Bailey "didn't mince his words when he said that rate cuts this year were 'off the table'".
European bourses demonstrated resilience despite turbulence in Asian and US technology shares, with investors shifting capital away from tech stocks towards more defensive holdings.
Healthcare and utilities attracted particular interest, with AstraZeneca providing substantial support for the Footsie's 100's advance.
Russ Mould, investment director at AJ Bell, noted that "Asian markets wobbled on renewed fears around excessive AI spending and whether all the good news for the chip supply firms was fully priced in".
He added that "European markets managed to keep their cool and push ahead as investors rotated away from tech into more defensive-style sectors."
The divergence reflects the relatively modest weighting of technology companies in UK and European indices compared with their American and Asian counterparts.
Mr Morrison also highlighted growing concerns about financial stability, noting that central bankers are monitoring developments with uncertain risk profiles that could potentially destabilise markets.
He pointed specifically to a notable increase in leverage across bond and equity markets in recent months.
The investment expert warned that, with many indices trading at or near record highs while investors continue buying dips with borrowed funds, conditions are ripe for a sharp sell-off should even a modest correction occur.
