Britain’s blue-chip share index has posted its biggest one-day jump of 2023 after US inflation slowed by more than expected last month.
The FTSE 100 index gained 133.5 points on Wednesday to 7,416 points, up 1.83%, its best day since November 2022.
Copper producer Antofagasta led the risers, jumping by 5.5%, followed mining giant Glencore (+4.87%), packaging firm Smurfit Kappa (+4.9%) and electrical products distributor RS Group (+4.5%).
Bank shares also rallied, after UK lenders passed this year’s Bank of England stress tests.
City traders were cheered by the news that US consumer prices rose by 3% in the year to June, the slowest inflation rate in more than two years, down from 4% in May.
As the dollar declined, the pound hit $1.30 for the first time since April 2022.
Easing US inflation figures lifted hopes that past increases in interest rates were succeeding in cooling prices. That could mean America’s central bankers may finally pause their increases in borrowing costs soon, easing fears that they would trigger a recession to fight inflation.
The drop in US inflation in June can largely be attributed to a fall in energy prices, which fell by 16.7% over the last year, with gas prices falling by 26.5%.
Annual core US inflation, which strips out food and energy, cooled to 4.8% from 5.3% in May. This measure is closely watched by policymakers.
Ronald Temple, chief market strategist at Lazard, said there was “nothing not to like” in the US inflation report.
“Shelter [housing] inflation decelerated as expected, services ex-shelter rose at less than a 2% annualised rate, and core goods prices were down due to slightly lower used-car prices that are likely to decline further through year-end,” Temple said.
“It’s too early to pop the champagne, but it’s not too early to start