British equities opened the week on a positive note, with the FTSE 100 index closing up 0.52%. Investors responded favorably to dovish signals from China, anticipating further cuts in US interest rates. Stocks linked to China saw notable gains after the country's Politburo announced plans to ease monetary policy in 2025, marking the first such move in 14 years.
This decision aims to facilitate additional fiscal stimulus measures and an expanded budget deficit. As the week progresses, investors are keenly awaiting the release of US inflation data scheduled for Wednesday, which may significantly influence the Federal Reserve’s upcoming interest rate decisions.
BofA Securities projects a deceleration in US annual core inflation for November, predicting it to ease to 3.2% from 3.3%, with the overall rate standing at 2.6% year-over-year. "From a fundamental standpoint, we do not see material upside risk to inflation," a representative from BofA remarked. "We continue to expect the Fed to cut by 25bps in December.
For the Fed to refrain from pausing in December, we believe inflation data would need to exceed our predictions and align with a 0.30%+ month-over-month increase for Core PCE." The session proved lucrative for major mining companies, with Antofagasta ($ANTO) up by 4.91%, Glencore ($GLEN) rising 4.46%, Rio Tinto ($RIO) increasing by 3.84%, and Anglo American ($AAL) gaining 2.70%.
These companies also benefited from optimism surrounding China’s anticipated stimulus measures..