UK Stock Market Surges as Inflation Drops More Than Expected

The UK's main stock indexes soared following a significant drop in inflation, suggesting a potential rate cut by the Bank of England. The FTSE 100 and FTSE 250 saw notable gains, while sectors like precious metals and real estate led advancements. Meanwhile, investor sentiment predicts upcoming rate cuts.

The UK's primary stock indexes experienced a notable surge on Wednesday after inflation figures revealed a greater-than-anticipated decline, strengthening arguments for a potential rate cut by the Bank of England. The prestigious FTSE 100 neared a four-week peak with a nearly 1% increase, whereas the FTSE 250 appreciated by 0.9%, reaching a two-week high.

Spearheading the sectoral growth were precious metal miners, climbing 3.3%, and the interest-sensitive real estate sector, which rose 3%. CPI data indicated British inflation had decreased to an annual rate of 1.7% in September from August's 2.2%, surpassing the anticipated 1.9% downturn from a Reuters survey.

The British pound fell 0.6% against the dollar, providing additional momentum for UK equities. Aaron Hussein of J.P. Morgan Asset Management noted that the Bank of England is likely to feel encouraged about progress in tackling inflation, hinting at a possible steady pattern of rate reductions. Despite these expectations, non-life insurers saw a decline, affected by inquiries from the Financial Conduct Authority, while investments in the market like Quilter and Tate & Lyle showed varying degrees of growth due to different market dynamics.

(With inputs from agencies.)