UK Stock Index Hits Three-Month High Amid Market Volatility

The UK's main stock index reached a three-month high on Friday, boosted by real estate shares due to hopes of interest rate cuts. The FTSE 100 ended flat but marked its second straight monthly gain. Inflation data from the U.S. and eurozone influenced market movements, with various sectoral performances highlighted.

The UK's main stock index soared to a three-month high on Friday, driven by increased real estate shares amid expectations of interest rate cuts. However, energy shares fell, curbing some intra-day gains.

The blue-chip FTSE 100 index ended the day flat but secured its second consecutive monthly gain and third weekly advance. The mid-cap FTSE 250 rose by 0.3%, despite a weekly and monthly decline.

Economic data influenced market behavior, with the U.S. Personal Consumption Expenditure index rising by 2.5% annually in July, slightly below the anticipated 2.6%. Meanwhile, eurozone inflation hit a three-year low in August, likely prompting a rate cut from the European Central Bank next month.

Rate-sensitive real estate investment trusts climbed 1.6% and real estate shares rose 1.5%, making significant sectoral gains. Conversely, the oil and gas index fell by 1.1%, affected by demand concerns and potential increased OPEC+ supply.

Precious metal miners also experienced a 1.1% drop due to softer gold prices spurred by firming U.S. dollar and Treasury yields. Notably, Anglo American's stock declined by 1.3% following agreements with Chinese firms despite slowing the development of its polyhalite fertiliser mine in England.

Financial markets experienced turbulence in August amidst U.S. recession fears impacting risky assets. However, relief emerged as the Federal Reserve hinted at a forthcoming rate cut. August also reported the first monthly drop in British house prices since April, although future market prospects appear promising.

(With inputs from agencies.)