The recent performance of the UK's FTSE 100 index has garnered attention, reflecting a 1.09% increase at the close of trading. This uptick aligns with a broader rally among European blue-chip indices observed on Monday, as market analysts speculate on a potential easing of monetary policy by the European Central Bank (ECB).
Despite this overall optimism in European markets, the outlook for the Bank of England appears more tempered. The central bank's Monetary Policy Committee is scheduled to convene next week, with expectations among certain analysts leaning toward maintaining current interest rates. As the committee's meeting approaches, the UK is bracing for a wave of significant economic data releases.
Key updates on the labor market, economic growth, and consumer price indices are set for publication on Tuesday, Wednesday, and September 18, respectively. Analysts at Daiwa Capital Markets expressed their forecasts indicating that after the UK’s gross domestic product (GDP) exhibited stagnant performance in June, a rebound is anticipated in July, projecting a monthly growth rate of 0.3%.
This continued growth trajectory would keep the three-month rate steady at 0.6%—an outlook partly supported by an increase in retail sales, predicted to reach 0.5% month-on-month as improved weather conditions enhance consumer demand. Furthermore, the Purchasing Managers' Index (PMI) data also suggests an upswing in services sector activity, while the manufacturing output index has ascended to its highest point in over two years.
On a broader note across Europe, anticipation builds as the ECB's Governing Council prepares to announce its interest rate decisions this Thursday, with many experts forecasting a 25-basis-point reduction in rates. Following closely, the Federal Open Market Committee (FOMC) of the Federal Reserve will hold its own meeting a week after the ECB announcement.
Market observers are cautiously optimistic about possible monetary policy adjustments from the world's largest economy; however, the pace and extent of any rate cuts remain uncertain. Recent comments from the Fed prior to the blackout period have hinted at an ‘open mind’ towards a 50 basis-point cut, further heightening market expectations.
Wednesday’s Consumer Price Index (CPI) figures will play a crucial role in shaping these expectations. Though anticipated data is expected to reinforce views favoring imminent policy easing, analysts from Commerzbank emphasize that an unexpected downward surprise in the data may be essential to bolster prospects for a 50 basis-point cut during the upcoming meeting.
Currently, futures tied to the Fed's meeting predict an average of 31 basis points for the next week along with a cumulative total of 108 basis points by the end of the year. Turning to corporate performance, Entain, a sports betting and gambling enterprise listed in London, has emerged as the standout gainer among blue-chip stocks in the city, witnessing a remarkable increase of 5.29% at market close.
This growth is attributed to the company reporting that its online net gaming revenue growth for the second half has surpassed expectations, signaling robust business performance amidst fluctuating economic conditions..