LONDON, Dec 16 — UK shares rose today as upbeat economic outlook from the US Federal Reserve powered global risk sentiment ahead of a Bank of England meeting, while Domino’s Pizza Group surged more than 27 per cent.
The blue-chip FTSE 100 gained 1 per cent, breaking a six-day slump on the Fed’s upbeat tone despite the central bank ramping up stimulus removal plans. Miners led the gains, adding 2.1 per cent on strong copper prices.
Domino’s Pizza Group jumped to the top of the mid-cap FTSE 250 index after raising its medium-term sales forecast and saying it had reached an agreement with its franchisees over commercial terms for profit-sharing.
Caught between a surge in inflation and the fast-spreading Omicron variant, the Bank of England remains in a tough spot as policymakers decide whether they should delay its first interest rate hike since the Covid-19 pandemic again or take action.
“Normally investors have a really good idea of what decision the bank was going to make because it is signposted ahead of time. But what happened in November has knocked people’s confidence, they’re just not sure which way the BoE is going to jump,” said Danni Hewson, financial analyst at AJ Bell.
The British central bank kept borrowing costs unchanged in November, surprising markets that had bet on the first rate hike since the pandemic.
“If the market expected an interest rate rise, we would be seeing a lot more movement at the top for our financial industries, and that’s not happening. Most investors think that we’re not going to see any kind of a change.”
Interest rate futures indicated a 66 per cent chance that the BoE will raise rates to 0.25 per cent from 0.1 per cent when it announces its policy decision at 1200 GMT, up from less than 50 per cent before the decade-high inflation numbers for November.
Rate-sensitive banks added 1.2 per cent ahead of the decision.
Online fashion retailer Boohoo plunged 14.3 per cent after warning that expectations for its 2021-22 year will be lower than previously guided, blaming higher returns, delivery disruptions and pandemic-related cost inflation. — Reuters
