FTSE Gains as Labour Market Cooling Signals Rate Cuts

London's stock markets saw a rise on Thursday as mounting evidence of a cooling labour market increased confidence among investors that the Bank of England might lower interest rates by August. By 1001 GMT, the blue-chip FTSE 100 had climbed by 0.5%, with the FTSE 250 index also gaining 0.5%.

In the UK, annual wage growth excluding bonuses decreased to its lowest level since the second quarter of 2022, reaching 5% in the three months leading up to May. Additionally, company payroll figures showed a reduction of 41,000 employees in June following a 25,000 drop in May. Sarah Coles, head of personal finance at Hargreaves Lansdown, remarked that this indicates a growing slack in the labour market, likely alleviating inflation pressures, which could prompt earlier rate cuts by the Bank of England.

Traders are predicting a 77% likelihood of a 25 basis point cut in rates next month, slightly down from 80% the day before. Overall, two rate reductions are anticipated by year-end. This data follows Wednesday's report of inflation reaching its peak since January 2024 at 3.6%. In corporate developments, Ocado's shares soared by 14% on positive earnings, while EasyJet's shares fell due to challenges such as strikes and rising fuel costs.

(With inputs from agencies.)