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FTSE 100 LIVE: Stocks gain as BoE's Bailey touts gradual reduction in rates

How major markets are performing on Tuesday

Lucy Harley-McKeown
Updated
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The FTSE 100 and European indices rose on Tuesday morning in London as the Bank of England (BoE) governor Andrew Bailey said he doesn't expect a return to low rates, unless there is another unprecedented economic shock such as Covid or the financial crisis.

  • The FTSE 100 (^FTSE) rose 0.5% in early trade, while Germany's DAX (^GDAXI) climbed 0.8% and the CAC 40 (^FCHI) was 0.4% higher in France.

  • Speaking to Kent Online, Bailey told the regional newspaper he expects a gradual drop in borrowing costs.

  • Threadneedle Street held interest rates at 5% in its latest policy meeting, after cutting by 0.25% in August.

  • London stocks were higher, in part due to a bumper stimulus package introduced by the People's Bank of China overnight, which influenced London-listed companies with foreign business.

  • The package, which offered relief to the Chinese property sector, also boosted miners. Anglo American (AAL.L), Antofagasta (ANTO.L), Glencore (GLEN.L) and Rio Tinto (RIO.L) were all among the top gainers on Tuesday morning, up more than 4% respectively.

  • The moves also came ahead of prime minister Keir Starmer's speech at the Labour party conference. He is set to try to strike a positive tone and inspire hope — a continuation of chancellor Rachel Reeves' message on Monday.

  • The pound (GBPUSD=X) was higher as bets ramp up around the Bank of England's potential interest rate path. The pound rose past the $1.33 mark on bets that the BoE will cut rates faster than its US counterpart. Earlier this year the pound had dipped as low as $1.23.

Follow along for live updates:

Live6 updates
  • Lucy Harley-McKeown

    Gold hits new record highs

    Pedro Goncalves writes:

    Gold prices surged to a new record high in the early hours of Tuesday, propelled by dovish signals from US Federal Reserve officials and escalating tensions in the Middle East.

    US gold futures were steady at $2,653 at the time of writing having earlier reached a fresh peak of $2,663 during the session. The precious metal had also touched an all-time high on Monday.

    “Gold prices continue to be well-supported amid a series of dovish Fed rhetoric overnight,” said Yeap Jun Rong, market strategist at IG.

    Fed officials reinforced expectations of further rate cuts, with Chicago Fed president Austan Goolsbee suggesting there are “lots of cuts” to come in the next 12 months. Minneapolis Fed president Neel Kashkari added that future policy adjustments would depend on economic data. Markets are currently pricing in 75 basis points of rate reductions by the end of 2024, according to the CME FedWatch Tool.

    The ongoing conflict between Israel and Hezbollah has added further momentum to gold’s rally, as investors seek safe-haven assets to hedge against the risk of broader regional conflict

    “Tensions in the region will likely remain elevated, keeping gold’s bullish bias intact,” added Yeap Jun Rong.

    As geopolitical uncertainty persists and expectations of further Fed rate cuts rise, gold is expected to maintain its upward trajectory.

  • Lucy Harley-McKeown

    Starmer to try to stir hope in conference speech

    Looking ahead to 2pm, Keir Starmer is set to try to hammer home the message that there is “light at the end of this tunnel”.

    After chancellor Rachel Reeves promised no return to austerity in her conference address, and tried to strike an optimistic note, this will be the companion piece.

    The address will be the first time a prime minister has spoken at a Labour conference in 15 years.

  • Lucy Harley-McKeown

    Chinese markets boosted by stimulus

    The People's Bank of China's latest stimulus package put a fire under markets on Tuesday in Asia, sending crucial real estate stocks surging and propping up indices. The central bank lowered its Reserve Requirement Ratio (RRR) by 50 basis points and reduced lending rates on existing mortgages. It also hinted at further measures to stimulate the economy, according to reports.

    The Hang Seng (^HSI) jumped almost 4% and the SSE Composite (000001.SS) gained 4.1%.

  • Lucy Harley-McKeown

    How US stocks are faring in premarket

    US stocks are ticking up in premarket, set to build on record closes the day before:

  • Lucy Harley-McKeown

    Monday trade in the US: Stocks extend winning streak

    From our US colleagues:

    US stocks rose Monday, as the Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) eked out record closes, extending a winning streak on Wall Street. Investors looked to Federal Reserve speakers and a key inflation reading for clues to the odds of another big rate cut.

    The Dow rose more than 0.1% after closing at an all-time high on Friday. The S&P 500 edged up more than 0.2% to finish at its own record. The tech-heavy Nasdaq Composite (^IXIC) climbed 0.1%.

    The market is labouring with concerns about the health of the US economy, which have persisted after the Fed's bold pivot to cutting interest rates last week. The big question now is whether upcoming data releases this week will support Fed Chair Jerome Powell's assertion that conditions remain strong.

    Much will depend on Friday's reading on the PCE index — the Fed's preferred inflation gauge — and Thursday's second quarter GDP print. Experts believe that cooling inflation, not a rising risk of recession, will give policymakers the green light for another 0.5% cut this year.

  • Lucy Harley-McKeown

    Good morning!

    Hello from London. Lucy Harley-McKeown here ready to bring you the business and markets headlines. Yesterday we had the key note address at the first day of the Labour party conference from chancellor Rachel Reeves. Today we're looking ahead to a speech from prime minister Keir Starmer after a rocky week of scrutiny of the party for receiving gifts.

    There are also various company updates coming down the pipeline, including TUI (TUI1.DE) and AG Barr (BAGL.XC).

    Let's get to it.

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