FTSE Futures Dip as BoE Holds Rates Amid UK Tax Hike

The Bank of England is expected to keep rates on hold, as UK inflation remains above 2% and the government’s tax hike looms. US stocks rallied Wednesday, with the Dow up nearly 1%, the S&P 500 gaining over 1%, and the Nasdaq rising 1.4%, while FTSE futures fell 0.14% ahead of the BoE decision. Oil prices rose as Middle East tensions escalated, with Brent crude up 0.55%, but Russian supply concerns capped further gains.

Equities

The FTSE 100 closed flat on Wednesday, holding steady as investors awaited key interest rate decisions from the Federal Reserve and the Bank of England. Energy stocks helped support the index, with rising oil prices boosting the sector. Meanwhile, the FTSE 250 edged up 0.1%.

Shares in Compass Group fell 4.7% after BNP Paribas downgraded the catering company’s stock to “underperform” from “outperform.” In contrast, Softcat rose 6.5% after the IT services provider upgraded its 2025 operating profit growth forecast. Ferrexpo, a premium iron ore pellet producer, saw its shares drop 5.6% after reporting an unexpected loss, with uncertainty around the war in Ukraine weighing on sentiment. GSK shares declined 1.7% after the US health department said it was reviewing the future of its HIV prevention division.

In the US, Wall Street rallied after the Federal Reserve left interest rates unchanged in the 4.25%-4.50% range, as widely expected. The central bank maintained its forecast for two rate cuts later this year, while also predicting slower economic growth and higher inflation.

The Dow Jones Industrial Average rose 0.92% to 41,964.63, the S&P 500 gained 1.08% to 5,675.29, and the Nasdaq Composite climbed 1.41% to 17,750.79. Stocks extended their gains as Fed Chair Jerome Powell spoke, stating that the impact of Trump’s tariff policies on inflation remained uncertain.

Among major US companies, Boeing saw its stock surge 6.84% after saying that recent tariffs were unlikely to have a near-term impact on its business. General Mills, the maker of Pillsbury and Cheerios, fell 2.05% after cutting its full-year sales outlook. Consumer discretionary stocks led gains in the S&P 500, rising nearly 2%.

Markets are now focused on upcoming central bank meetings, with the Bank of England, Swiss National Bank, and Riksbank all set to announce policy decisions. Investors are also watching for updates on trade policy, as the European Union plans to reduce steel import quotas by 15% in response to US tariffs.

Forex & Commodities

The US dollar held near a five-month low after the Federal Reserve signalled that two interest rate cuts were likely this year. The dollar index was up 0.1% at 103.51, while the euro traded at $1.0894. Sterling hit a four-month high of $1.3015 before settling at $1.2992 ahead of the Bank of England’s rate decision, with the central bank expected to hold rates steady. The yen strengthened slightly to 148.46 per dollar, benefiting from expectations that the Bank of Japan may raise rates later this year.

Gold reached a record high of $3,057.21 per ounce before holding at $3,047.1. The Fed’s decision to maintain its benchmark rate at 4.25%-4.50% and expectations of lower rates later this year continued to drive demand for bullion. With geopolitical tensions in the Middle East escalating, investors have sought gold as a safe-haven asset, pushing prices higher for the 16th time this year.

Oil prices climbed on Thursday, supported by strong demand expectations in the US and a weaker dollar. Brent crude rose 0.5% to $71.12 per barrel, while West Texas Intermediate (WTI) increased 0.6% to $67.58. A larger-than-expected drop in US distillate inventories, including diesel and heating oil, boosted sentiment, although rising US crude stockpiles capped further gains. Ongoing tensions in the Middle East and US airstrikes on Houthi targets in Yemen have also contributed to supply concerns.