FTSE 100 Climbs Amid Commodity Boost and Interest Rate Speculation

The FTSE 100 experienced an increase thanks to rises in commodity stocks, though banking shares fell. Commodity sectors led the gains as oil prices were buoyed by Chinese stimulus hopes, while the BoE considers further rate cuts to tackle inflation amid a challenged British manufacturing sector.

The UK's FTSE 100 opened the new year on a positive note, gaining 0.5% to hit its two-week high, with the commodity sector leading the charge. The precious metals and mining indexes jumped by 2.2%, as gold prices and U.S. policy updates under President Trump attracted investor focus.

Oil heavyweights BP and Shell each saw their shares climb over 1%, lifting the FTSE 100 amid forecasts for new stimulus measures targeting China's economic slowdown. Meanwhile, banking stocks such as HSBC, Barclays, and NatWest Group, suffered losses ranging from 1% to 1.4%, limiting further growth for the index.

Despite a successful 2024 with a 5% rise, UK manufacturing activity slumped last December with reduced jobs and foreign demand under tax pressures. The Bank of England remains cautious on rate cuts, with traders anticipating significant easing after a year of progressive economic policies.

(With inputs from agencies.)