BoE Expected to Hold Rates Steady, US markets reopen

UK inflation hit the Bank of England’s 2% target, but the BOE is expected to maintain current interest rates on Thursday, likely impacting the pound. US markets were closed yesterday for Juneteenth and reopen today. Tech stocks led a rally in Asian markets overnight, though European futures indicate a subdued start.

Equities

London's FTSE 100 gained 0.2% on Wednesday, closing above the 8,200 level for the first time in a week, driven by higher copper prices that boosted industrial miners. The mid-cap FTSE 250 saw a slight decline of 0.1%. The pound rose 0.1% against the dollar, last trading at $1.2723.

UK services inflation dropped to 5.7%, while headline inflation hit the Bank of England's target of 2%. This data led to mixed reactions in the market, with some seeing the potential for at least one rate cut this year. However, concerns remain over domestic price pressures and their impact on future rate decisions.

Helios Towers experienced a significant drop of 7.8% in its share price following a discounted secondary share placement. Anglo American's shares rose by 1.7% after the miner projected a 30% decline in output at its key Chilean copper mine in 2025. On the other hand, homebuilder Berkeley Group saw a 6.3% decline despite raising its earnings outlook for 2025.

In the US, markets were closed for a public holiday on Wednesday.

Forex & Commodities

The British pound held steady at $1.2718 on Thursday ahead of the Bank of England's rate-setting meeting. The dollar firmed slightly, rising 0.04% against the yen to 158.14 and ticking up 0.05% against a basket of currencies to 105.26, nearing last week's one-month high.

The Swiss National Bank is expected to cut its key policy rate by 25 basis points, with the Swiss franc hovering near a three-month high against the dollar at 0.8838 and a four-month high against the euro at 0.94785.

Meanwhile, the Australian and New Zealand dollars edged higher, with the Aussie at $0.66745 and the Kiwi at $0.61345. New Zealand's economy grew faster than expected in the first quarter, but market views on monetary policy remain unchanged, with rate cuts anticipated by year end.

Gold prices climbed to their highest level in two weeks, with spot gold up 0.6% at $2,341.15 per ounce and US gold futures rising 0.4% to $2,355.10. Softer US economic data has increased the likelihood of interest rate cuts from the Federal Reserve this year. ANZ analysts maintain a positive outlook for gold, targeting $2,500 per ounce by the end of 2024.

Oil prices dipped slightly after hitting seven-week highs. Brent crude futures slipped 6 cents to $85.27 a barrel, while US West Texas Intermediate crude fell 10 cents to $81.47 per barrel. Despite thin trading due to a US federal holiday, oil prices were buoyed by optimism over summer demand and concerns over conflicts in Europe and the Middle East. Brent and WTI had both gained over $1 in the previous session following a Ukrainian drone strike at a Russian oil terminal and warnings of potential conflict in the Middle East.