UK Markets Soar as Inflation Eases, Boosting Economic Confidence

British stock markets rose significantly as UK and US inflation reports increased the likelihood of interest rate cuts. The FTSE 100 and FTSE 250 saw substantial gains, with major sectors like homebuilders and real estate climbing. Lower inflation data and strong US bank earnings further boosted market confidence.

British stock markets experienced a notable rally on Wednesday, riding high on midcaps' strongest day in a month, fueled by unexpectedly tame inflation reports from the UK and US, which have intensified expectations for further interest rate cuts within the year.

The FTSE 100 index increased by 1.2%, while the FTSE 250 surged 2.8%, marking its most significant gain since December 15. The uptick followed recent data showing an unexpected slowdown in British inflation and a notable drop in core price growth metrics, closely monitored by the Bank of England.

This optimistic outlook on rate cuts was bolstered by Deutsche Bank's UK economist, Sanjay Raja, who suggested that the Bank of England is likely to continue its easing cycle. In the US, confidence was further supported by better-than-expected inflation data and strong quarterly earnings reports from major banks.

(With inputs from agencies.)