FTSE Rises After Tax Cuts, ECB Meeting Today

Equities

On Wednesday, the FTSE 100 index closed up by 0.4%, reflecting a positive trend as the UK government announced tax cuts ahead of the upcoming elections. The domestically focussed FTSE 250 also saw an uptick, rising by 1.1% to reach its highest level since early January. This move comes on the back of Finance Minister Jeremy Hunt's budget, which aims to spur economic growth with tax reductions and maintains confidence in achieving the Bank of England's 2% inflation target soon.

In company news, Premier Foods surged to a nearly 13-year high, climbing by 11.5%. This impressive jump was due to the company's announcement of a deal with the trustee of its pension scheme to suspend pension deficit payments starting April. Similarly, British Airways' parent company, IAG, enjoyed a 4.8% increase following an upgrade to "overweight" from "underweight" by J.P.Morgan. ConvaTech also reported positive momentum, with its stock price increasing by 6.1% after raising its mid-term forecast for revenue growth.

Across the pond, US markets saw gains after Federal Reserve Chair Jerome Powell assured that rate cuts could be expected later in the year, contingent on economic performance. The Dow Jones Industrial Average rose by 0.2% to 38,661.05, while the S&P 500 gained 0.51%, closing at 5,104.76. The Nasdaq Composite enjoyed a more substantial increase of 0.58%, ending at 16,031.54. Notably, tech-heavy sectors and companies benefited from Powell's remarks, contributing to the Nasdaq's robust performance.

Forex & Commodities

The US dollar weakened against a basket of currencies following comments from Federal Reserve Chair Jerome Powell indicating that the central bank expects to reduce its benchmark interest rate later this year. Economic data released showed US private payrolls rising less than expected in February, signalling a cooling labour market.

Powell's statement came amid ongoing concerns about inflation, causing the euro to rise by 0.37% against the dollar, reaching its highest level since early February. The British pound also saw an uptick, gaining 0.25% against the dollar as markets digested the UK's latest fiscal plans, including cuts to National Insurance Contributions and freezes on fuel and alcohol duty.

Gold prices surged to a new record, benefiting from the dollar's slip and increasing bets on US monetary easing. The precious metal gained 0.8%, hitting an all-time high during the trading session. This upward trajectory in gold prices reflects investors' anticipation of rate cuts, which tend to decrease the opportunity cost of holding non-yielding assets like gold.

Oil prices rebounded, influenced by a smaller-than-expected build in US crude stocks and Powell's assurances on rate cuts. US crude and Brent crude both saw increases, with investors eyeing potential impacts on global demand and supply dynamics.