London Stock Market Rises on Weak US Jobs Data; Awaits ECB Rate Decision

British equities climbed on Wednesday, propelled by weaker-than-expected US labor data, which fueled anticipation of a rate cut in September, while investors awaited the European Central Bank’s (ECB) interest rate decision on Thursday. The blue-chip FTSE 100 gained 0.2% following two consecutive sessions of declines, while the mid-cap FTSE 250 edged up 0.3% to 20,779.84 points.

Investors welcomed signs of moderation in the US labor market, as data revealed a significant drop in job openings to their lowest level in over three years, reinforcing expectations of a rate cut by the Federal Reserve next month. Traders are currently pricing in a 65% probability of a September rate cut by the Fed. Moreover, optimism was bolstered by the anticipation of a 25-basis point cut by the ECB in its upcoming meeting.

Analysts anticipate the Bank of England to follow suit with similar rate adjustments. The UK central bank is set to convene in two weeks to decide on interest rates. “We are finally getting to the point where central banks are going to start cutting interest rates,” remarked Fiona Cincotta, senior market analyst at City Index. “The outlook is looking encouraging, and there’s potential for the FTSE to retake that all-time high over the coming months.”

On the individual stock front, Paragon Banking was the top gainer on the mid-cap index, surging 5.2% after reporting its half-year results. Retailer WH Smith rose 3.2% following the release of its results for the 13 weeks ended June 1. However, Centrica stumbled 5% after the gas owner indicated that profitability would be heavily skewed towards the first half of the year.

Discount chain B&M experienced the most significant decline on the FTSE 100, dropping 5% after unveiling its preliminary full-year results. Investors are now shifting their attention to the US payrolls report scheduled for release on Friday.

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