Global stocks rise as investors hopeful of US interest rate cut

Global stock markets were moving higher on Tuesday as investors await the US’s interest rate decision with bated breath.

London’s FTSE 100 made steady gains, helped by B&Q owner Kingfisher soaring by more than a tenth.

The blue-chip index was up by 31.42 points, or 0.38%, to close at 8,309.86.

Financial markets are expecting America’s Federal Reserve to reduce interest rates on Wednesday, with some participants increasingly predicting a reduction of 0.5 percentage points.

It would be the central bank’s first rate cut since 2020.

The Bank of England already implemented reduced rates by 0.25 basis points in August, while the European Central Bank announced its second consecutive cut last week.

James Knightley, chief international economist for ING, said the outcome is likely to be a “coin toss”, with some members of its rate-setting committee less certain that monetary policy should be eased.

“An economy growing at 2.5% to 3% with low unemployment, inflation above target and equities at all-time highs suggests there will be large pockets of resistance, which makes the outcome tomorrow a coin toss,” he said.

Nevertheless, the anticipation of a rate cut was helping lift the mood among investors and in New York, the S&P 500 and Dow Jones were both up about 0.4% by the time European markets closed.

In Paris, the Cac 40 was up 0.51% and in Frankfurt, the Dax closed 0.52% higher.

The pound was down about 0.4% against the US dollar at 1.3165, and down 0.3% against the euro at 1.184.

In company news, Kingfisher was the biggest riser on the FTSE 100 after the B&Q owner upgraded its full-year profit outlook.

The DIY giant, which also owns the Screwfix chain, said trading had improved in recent weeks and that it was seeing early signs of a recovery in the UK housing market.

It hopes this recovery will pave the way for stronger demand for large household purchases. Its share price closed 11.2% higher.

Elsewhere, shares in THG fell after the retail group said it was considering spinning off its technology platform Ingenuity to simplify the group, which would then consist of its beauty and nutrition divisions.

It also reported a slight slowdown in sales over the first six months of the year, with its nutrition arm, which includes Myprotein, falling by 7.5% compared with the prior year. Shares in THG closed 12.4% lower.

The biggest risers on the FTSE 100 were Kingfisher, up 32.6p to 322.9p, easyJet, up 30.1p to 517.4p, JD Sports Fashion, up 5.4p to 159.7p, IAG Group, up 6.8p to 206.4p, and Ashtead Group, up 176p to 5,522p.

The biggest fallers on the FTSE 100 were BAE Systems, down 62.5p to 1,273p, British American Tobacco, down 70p to 2,900p, Hikma Pharmaceuticals, down 38p to 1,915p, Pearson, down 17.5p to 1,040p, and Segro, down 14p to 890.4p.