Surprise SNB Cut Plus Dovish BOE Power Financial Shares

Equities

On Thursday, the FTSE 100 surged, closing at its highest level since May 2023, with a significant uplift of 2%. This rally was particularly buoyed by the financial sector, which saw a 4.5% increase, as the Bank of England held interest rates steady at 5.25%, hinting at potential rate cuts in the not-too-distant future. The depreciation of the pound against the dollar further amplified gains for the exporter-heavy index.

Next stood out with a 6.7% jump to a record high, following the announcement of a stronger-than-expected profit for the fiscal year 2023-24. Additionally, the FTSE 250 index enjoyed a 1.3% rise, reaching its highest point in over a year, despite a setback from Dowlais Group, which plummeted 9.7% in its worst day on record after projecting flat revenue for the current year compared to 2023.

Wall Street witnessed a similarly optimistic scene, with major stock indexes like the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite hitting record closing highs for the second consecutive day. The upbeat mood was largely fuelled by the Federal Reserve's reassurances about potential rate cuts this year and impressive earnings forecasts from chipmakers.

Micron Technology saw a notable surge, with shares up more than 14% after an all-time high, thanks to a surprising quarterly profit and a forecast that third-quarter revenue would exceed expectations. Meanwhile, Apple's shares dipped 4.1% following a lawsuit filed by the US Department of Justice, accusing the tech giant of monopolising smartphone markets.

Additionally, the spotlight was on Reddit, as its shares closed at $50.44, significantly above its initial public offering price, following its debut on the New York Stock Exchange.

Forex & Commodities

On Thursday, the US dollar saw a notable rise following the Swiss National Bank's unexpected decision to cut interest rates, which heightened global risk appetite and highlighted the greenback's appeal amid robust economic growth in the US.

This move contrasted with the Bank of England (BoE), which opted to maintain its benchmark interest rate, leading to a slide in Sterling. The Fed's less restrictive policy outlook further boosted investment flows towards the US, underscoring the dollar's strength.

Gold took a slight step back after a record rally, influenced by the Federal Reserve's indication of potential rate cuts in 2024, with spot gold dropping by 0.3%.

Oil prices dipped due to the prospect of a Gaza ceasefire easing Middle East geopolitical tensions and the stronger dollar, which tends to inversely affect oil prices.