MARKET REPORT: Rate hopes send Footsie to another record high

The FTSE 100 powered to another record high yesterday.

Borrowing costs also fell on fresh hopes that interest rates will be cut this summer.

On another record-breaking day on the stock market, the blue-chip index rose above 8300 for the first time to an all-time high of 8335. 

It finished the day up 1.2 per cent, or 100.18 points, at 8313.67 – its highest ever close.

The Footsie is up nearly 8 per cent so far this year in a boost for savers with money tied up in the stock market through pensions, ISAs and other investments.

Record high: On another record-breaking day on the stock market, the blue-chip index rose above 8300 for the first time to an all-time high of 8335

‘The blue-chip index has hit another record high and the sun is shining – exactly what’s need to put investors in a chipper mood,’ said Russ Mould, investment director at broker AJ Bell.

The rally came as traders bet the Bank of England will press ahead with interest rate cuts this summer – though they are unlikely to start as soon as this week. 

The central bank’s rate-setting monetary policy committee (MPC) is widely expected to leave rates unchanged at 5.25 per cent tomorrow.

But falling inflation is likely to pave the way for the Bank to cut rates in the coming months – possibly in June – with at least one more reduction pencilled in for later in the year. 

The yield on ten-year government gilts – a key measure of borrowing costs on the bond markets – fell below 4.14 per cent to its lowest level for nearly four weeks. 

Jens Larsen, a director at the Eurasia Group consultancy, said there was a ‘push among MPC members to start cutting rates soon’ even as the US resists such a move amid worries about inflation. 

Stock Watch – Centaur Media

Shares in takeover target Centaur Media tumbled after a private equity firm ended its pursuit.

The firm, which owns titles including The Lawyer, last month said it received a ‘highly preliminary expression of interest’ from WPEF, a holding company controlled by the private equity firm Waterland. 

But yesterday WPEF said it ‘does not intend to make an offer’. Centaur insisted it remains ‘confident’ in its future. 

Shares crashed 20.2 per cent, or 10.5p, to 41.5p.

He added: ‘While I don’t think it will happen on Thursday they should have enough votes in June. There is good reason for them to get on with it.’

Susannah Streeter, head of money and markets at investment platform Hargreaves Lansdown, said hopes of interest rate cuts are boosting share prices.

The FTSE 250, meanwhile, gained 1.2 per cent, or 248.54 points, to 20413.08. Switzerland’s Pictet Asset Management upgraded UK stocks to ‘neutral’ from ‘underweight’ as it believes interest rate cuts will drive up earnings for domestic London-listed companies. 

Analysts at Deutsche Bank Research were even more optimistic. 

They told clients to buy shares in 24 London-listed firms, including the Irish conglomerate DCC (up 4.6 per cent, or 250p, to 5745p) and Holiday Inn owner IHG (up 2.3 per cent, or 176p, to 7902p).

And the bank expects recruiters to bounce back once candidate and client confidence improves.

Page Group rose 0.8 per cent, or 3.6p, to 446.8p, Hays added 1.5 per cent, or 1.4p, to 93.6p, Robert Walters inched up 0.8 per cent, or 3p, to 371p and S Three gained 1.5 per cent, or 6.5p, to 435.5p.

The broker also issued a ‘buy’ rating on IWG which it said is benefiting from flexible working.

The office space provider said revenues were flat at £727million in the first quarter to the end of March.

Despite this, Deutsche Bank Research also issued a ‘buy’ rating on IWG as it is benefiting from flexible working. Shares rose 0.8 per cent, or 1.5p, to 191.3p.