Stocks gain as traders bet on interest rate moves

18/12/2025 04:35 AST

London's stock market rallied Wednesday as the pound faltered on expectations of cuts to Bank of England interest rates, after data showed UK inflation falling faster than forecast.

Stock markets rose across Asia and Europe but London was the clear winner, as investors assessed also the outlook for US borrowing costs.

"European markets are enjoying a positive start to the day, led by the FTSE 100 which has been in buoyant mood following a welcome decline in UK inflation," noted Joshua Mahony, chief market analyst at traders Scope Markets. London's benchmark stocks index jumped 1.7 percent in late morning deals, while Paris flattened and Frankfurt edged up.

Britain's annual inflation rate slowed to 3.2 percent in November, cementing expectations that the Bank of England will cut its main interest rate on Thursday and again on more than one occasion in 2026. Analysts had expected inflation to have cooled only slightly to 3.5 percent from 3.6 percent in October.

Eurozone inflation remained at 2.1 percent in November, hovering just above the target set by the European Central Bank, slightly revised official data showed Wednesday. The ECB is expected to hold interest rates steady Thursday for its fourth straight meeting with inflation in check, although debate is heating up about the path forward.

Elsewhere on Wednesday, oil prices rebounded after US President Donald Trump ordered the blockade of "sanctioned" Venezuelan tankers. The gains pared some of the 2.7 percent in losses suffered Tuesday after the US president said a deal to end the war in Ukraine was closer than ever.

Such a move could ease sanctions on Russian oil, adding to oversupply concerns already weighing on the market. Investors continued to study Tuesday's release of US non-farm payrolls reports, which showed that unemployment in the world's biggest economy had jumped to a four-year high of 4.6 percent in November. Analysts said the data did little to change expectations that the Federal Reserve would likely keep key US interest rates unchanged in January.

Wall Street investors on Tuesday largely shrugged at the jobs data, with many concerned that the tech-led stocks rally over the past two years may have gone too far and that the vast sums invested in artificial intelligence might not see returns as soon as hoped. In corporate news, the share price of Chinese chipmaker MetaX Integrated Circuits Shanghai soared more than 550 percent on its home city debut Wednesday.

Key figures at around 1045 GMT

London - FTSE 100: UP 1.7 percent at 9,852.74 points

Paris - CAC 40: FLAT at 8,102.42

Frankfurt - DAX: UP 0.1 percent at 24,103.70

Tokyo - Nikkei 225: UP 0.3 percent at 49,512.28 (close)

Hong Kong - Hang Seng Index: UP 0.9 percent at 25,468.78 (close)

Shanghai - Composite: UP 1.2 percent at 3,870.28 (close)

New York - Dow: DOWN 0.6 percent at 48,114.26 (close)

Euro/dollar: DOWN at $1.1720 from $1.1747 on Tuesday

Pound/dollar: DOWN at $1.3329 from $1.3422

Dollar/yen: UP at 155.46 yen from 154.80

Euro/pound: UP at 87.92 pence from 87.52

Brent North Sea Crude: UP 2.4 percent at $60.33 per barrel

West Texas Intermediate: UP 2.6 percent at $56.68 per barrel.

AFP