UK stocks experienced a notable rebound on Friday, with the FTSE 100 index, a benchmark for blue-chip companies, increasing by 0.86% at closing. This surge comes amid heightened anticipation for a potential rate cut as the Bank of England prepares for its upcoming monetary policy meeting. Reckitt Benckiser ($RKT) emerged as the top performer, with shares soaring 7.39% at closing.
This followed a jury in the United States exonerating its Mead Johnson subsidiary from liabilities associated with a young boy's intestinal disease, allegedly linked to the company's formula for premature infants. The consumer goods giant expressed satisfaction with the verdict and stated that it would 'vigorously defend' against similar legal challenges in the future.
RBC Capital Markets weighed in on the decision, remarking, 'We don't pretend to be experts on US litigation, but this feels like a big deal to us, putting a spoke in the wheels of what has hitherto been an unremittingly adverse narrative.' They further added, 'Doubtless more will become apparent in coming hours and days, but this feels like good news for Reckitt.
We currently assume a £2 billion all-in liability in relation to the NEC claims for Reckitt.' Turning to economic developments, the Bank of England is scheduled to issue another monetary policy decision on November 7. Leading up to this meeting, analysts are projecting a 25-basis-point reduction in the bank rate.
The rate was previously lowered to 5% in August, where it remained steady in September. Morgan Stanley provided insights, stating, 'We see an 8:1 vote for a 25bp cut next week. We no longer expect a December cut but assume Governor Bailey will contextualize the OBR's hawkish assessment of the Budget, messaging continued gradual removal of restrictiveness.
We keep end-2025 rates at 3.25% and will reassess following the BoE meeting.' Additionally, recent analysis revealed that the UK's manufacturing sector contracted in October for the first time since April, as indicated by results from S&P Global's PMI survey, with the UK Manufacturing PMI registering at 49.9 in October, down from 51.5 the previous month.
This decline is largely attributed to falling new orders and reduced stock purchases. Furthermore, data from Nationwide Building Society illustrated that annual home price growth in the UK slowed to 2.4% in October, compared to 3.2% in September. The average home price during the reporting month was £265,738, a slight decrease from £266,094 in the prior month..