London's stock market experienced a notable rise on Thursday, with the FTSE 100 index closing up by 0.12%, influenced by recent monetary policy decisions from key central banks in Europe. The Swiss National Bank announced a significant cut to its key interest rate, reducing it by 50 basis points to 0.5%.
This decision was attributed to a weaker-than-expected price trend within Switzerland and a sluggish recovery in the industrial sector, compounded by a robust Swiss franc and muted demand for goods. Meanwhile, the European Central Bank executed a widely anticipated 25 basis point rate cut, bringing the deposit facility rate to 3% as the year comes to a close.
Analysts, however, were particularly attentive to the ECB's statement, noticing an absence of references to a "restrictive" monetary policy. This omission suggests a potential shift towards further easing in the central bank's stance. Reflecting on this, ING commented, "Today's decision reflects a compromise between growth and inflation worriers, a gut feeling vs a model-based approach and doves against hawks.
At the same time, the ECB has dropped the reference to still-needed restrictiveness, keeping the door wide open for more rate cuts to come." In the UK, the Royal Institution of Chartered Surveyors reported an increase in the house price balance, which rose to 25% in November from 16% in October. Analysts had projected a reading of 19% for November 2024, marking the fourth consecutive improvement in this metric, now the highest since September 2022. In corporate news, shares of Diageo experienced a substantial increase of 2.77% on Thursday following an upgrade from UBS, which raised the stock rating from sell to buy.
UBS cited encouraging trends in US sell-outs and strong growth momentum for key brands such as Don Julio and Crown Royal. The report further noted that Diageo has demonstrated superior performance against the broader weak spirits industry, suggesting the company is nearing the conclusion of its earnings downgrade cycle..