Stock markets in both the US and UK climbed sharply on Monday after US inflation came in lower than expected, bolstering expectations that the Federal Reserve will begin cutting interest rates.
The latest data showed US inflation eased to 3% in September, below forecasts of 3.1%. The news pushed both the S&P 500 and the Nasdaq up around 1%, with each hitting new record highs as investors priced in rate cuts in the coming months.
In London, the FTSE 100 closed at a record high of 9,645.62, up 0.7% (67 points), extending a run of gains across European markets.
Joe Mazzola, head of trading and derivatives strategy at Charles Schwab, said the figures reinforced market expectations:
“Friday’s inflation data came in cooler than expected, reinforcing expectations that the Fed will cut rates next week and again in December, as the labour market continues to soften.”
Other Market News
- A new survey of UK purchasing managers suggests business activity is improving, offering fresh signs that the UK economy may be stabilising.
- NatWest reported a 30% jump in pre-tax profits, helping lift banking shares.
- UK retail sales unexpectedly rose to their highest level since July 2022, boosted by demand for the new iPhone 17 and strong online gold purchases.
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