Virgin Money soars on Nationwide Takeover. Dollar Dips Before NFP

Equities

The FTSE 100 modestly increased by 0.2%, demonstrating a more reserved performance compared to the substantial gains seen in Wall Street and other continental European markets. The rise was underpinned by Rentokil Initial surging 17.7% after reporting a 50% jump in its annual profit.

Virgin Money UK saw its shares skyrocket by 35% following the announcement of a potential 2.9 billion pound takeover by Nationwide Building Society. This would position the combined entity as the country's second-largest savings and mortgage provider. The offer reflected a 38% premium over Virgin Money's closing price on the preceding Wednesday.

However, not all news was positive with Entain falling 4.9% after the gambling group indicated that regulatory measures in the UK and the Netherlands would negatively affect its profit forecast for the current financial year. Additionally, aerospace supplier Melrose saw a 2.3% fall in its share price, citing revenue headwinds as the primary cause.

Wall Street witnessed significant gains, with the S&P 500 climbing 1% to a record closing high, while the Nasdaq Composite finished up 1.5%. The technology sector, particularly companies involved in artificial intelligence and growth stocks, drove much of the optimism, bolstered by increasing investor confidence in potential Federal Reserve rate cuts within the year.

Noteworthy US companies such as Meta and Nvidia contributed significantly to the indexes' gains, with Meta adding 3.2% and Nvidia ending up 4.5%. However, not all companies enjoyed positive outcomes; Victoria's Secret & Co saw its shares plummet by 29.7% following a weak annual forecast.

Forex & Commodities

The dollar weakened across the board following comments by Federal Reserve Chair Jerome Powell, who suggested the US central bank is nearing the point where it might consider reducing interest rates, given its growing confidence that inflation is moving towards the 2% target. This stance marked a shift perceived as dovish by the market, especially compared to Powell's previous day's remarks, sparking optimism among investors for potential rate cuts in the coming months.

The euro, after initially dropping when the European Central Bank (ECB) decided to keep rates steady, rebounded to record its most significant daily gain against the dollar in about a month, reaching a six-week high.

The yen saw its most substantial rise against the dollar for the year, fuelled by speculation that the Bank of Japan (BOJ) might adjust its interest rate policy. This speculation was supported by statements from BOJ board member Junko Nakagawa, highlighting Japan's steady progress towards its 2% inflation target. The pound also appreciated against the dollar, following the UK finance minister's budget announcement, which included several tax cuts but left the market focus largely on the US dollar's direction.

In the commodities market, gold prices soared to all-time highs, driven by increasing bets on US monetary policy easing, alongside sustained demand for gold as a safe haven and central bank purchases.

Oil markets were mixed, with China's crude oil imports rising year-on-year in the first two months, despite a downward trend in purchases.