Wall Street Hits New Highs, Dollar Drops

Equities

The FTSE 100 reached an all-time high on Wednesday, lifted by a surge in housebuilder stocks fuelled by hopes for an impending interest rate cut. Closing at 8445.80 points, a modest increase of 0.2%, the index had earlier touched an intraday peak of 8474.71 points before losing some ground.

Burberry's performance stood in stark contrast, as its shares dropped 7.3% following a report of a 12% slump in fourth quarter like-for-like sales. The luxury brand's annual profits also fell by 34%, signalling a broader slowdown in the sector. Meanwhile, Compass Group saw its shares fall by 3.0%. On a more positive note, Experian's shares advanced 8.1% after forecasting annual organic revenue growth of between 6% and 8% for fiscal year 2025.

Wall Street's major indices also recorded notable gains. The S&P 500 climbed 1.17% to close at 5308.15, while the Nasdaq Composite rose by 1.40% to 16742.39. Both indices achieved record closes, with the S&P 500 reaching its highest point since March 28.

Nvidia was a standout performer in the US, with shares jumping 3.6%. This gain made it the S&P 500's largest index point contributor. Microsoft and Apple also contributed significantly to the index's performance, with respective advances of 1.7% and 1.2%. GameStop, however, fell sharply by 18.9%, ending a recent rally driven by bullish comments from Keith Gill, known as "Roaring Kitty," on social media platform X. Other meme stocks, including AMC Entertainment and Koss Corp, also suffered significant losses, dropping 20% and 19.2%, respectively.

Forex & Commodities

The US dollar experienced a notable decline, falling to a one-month low against a basket of major currencies, after US consumer price data for April indicated a slowdown in inflation, thus increasing the likelihood of an interest rate cut by the Federal Reserve as early as September. The dollar weakened 0.66% to 104.35, with significant drops against the yen and the euro, indicating a shift in investor sentiment towards expectations of easing monetary policy.

The British pound saw an uplift, rising 0.69% to 1.2675 against the dollar, benefiting from the weaker greenback and ongoing speculation about rate adjustments. Gold prices rose, with spot gold reaching $2,391.78 per ounce, a three-week high, driven by the dollar's slide and reduced bond yields which enhance the appeal of non-yielding assets like gold.

In the commodities market, oil prices increased, with Brent futures climbing to $83.07 a barrel, supported by signs of stronger demand in the US and the broader expectation of a rate cut. The oil market also reacted to geopolitical tensions and a significant drawdown in US crude inventories, suggesting robust demand.