FTSE 100 hits new record high
Britain’s blue-chip share index has hit a new all-time high at the start of trading, as investors anticipate a cut in UK interest rates today.
The FTSE 100 index has gained 0.8% to a new intra-day peak of 8,695 points, up 72 points today, above the previous record of 8,692 points set last month.
Anglo American (+3.7%) are the top riser, after reporting this morning that all its businesses delivered their full year production guidance last year (although it also warned of tough trading in the diamond market).
They are followed by AstraZeneca (+3.4%) after it reported a jump in profits this morning.
The FTSE 100 slumped on Monday amid fears of a global trade war, but has recovered since Donald Trump paused tariffs on Canada and Mexico for a month.
Jim Reid, strategist at Deutsche Bank, says:
After a severe allergic reaction on Monday after the tariff news, markets continued to be relatively sedated yesterday as investors continued to price out the chance of aggressive tariffs.
Key events
The Bank of England is likely to cut interest rates at noon today to fight off the risk of the UK falling into recession.
It could also hint at further rate cuts soon, as Andrew Wishart, senior UK economist at Berenberg, explains:
● Fending off another recession: Alongside a widely anticipated 25bp reduction in the bank rate this Thursday 6 February, the Bank of England (BoE) may hint that it could lower interest rates again in March. Until now, the BoE has cut at alternate meetings, but a stagnating economy and declining employment argue for more urgent action. The central bank judged the labour market to be broadly in balance at the 18 December meeting, before payroll data for December revealed further job losses. On that basis, it is sensible for the BoE to lower interest rates to prevent a larger drop in employment. Chart 1 shows that policymakers tend to take corrective action when surveys of employment slump.
● New forecasts will support rate cuts: The BoE’s new forecast will be based on two interest rate cuts this year (market pricing during the 15-day averaging window in late January) as opposed to four in the previous edition. This, alongside disappointing growth, will depress the GDP and inflation projections. Quarterly GDP growth was zero in Q3 and most likely in Q4 too, falling short of the BoE’s forecasts of 0.2% qoq and 0.3% qoq respectively. Therefore, we expect the BoE to revise down its GDP forecast for 2025 from 1.5% yoy to 1.0% and lower its forecast for CPI inflation for Q1 2027 from 2.1% yoy in November to about 1.7%. A forecast of below 2% inflation in two years’ time is a signal that looser policy is needed.
● Not that simple: Not all of the Monetary Policy Committee (MPC) will be on board with that message, and the most hawkish member, Catherine Mann, is likely to dissent by voting to hold the policy rate unchanged at 4.75%. Rate cuts would be uncontroversial if the current downturn were driven purely by demand – but we doubt it is. In our view, the recent fall in employment is instead primarily a consequence of an impending rise in labour costs. A further increase in the minimum wage and a hike in payroll taxes on 1 April will raise the cost of low-paid and part-time employment substantially. The MPC has so far played down the acceleration in average weekly pay growth as a volatile aberration. But our analysis shows that the compression of the bottom half of the pay distribution by increases in the minimum wage over recent years means that the policy is now exerting upward pressure on headline measures of pay growth. A big increase in costs is a supply shock, and not one that monetary policy can directly counteract.
AstraZeneca’s shares are now up 5% after it beat City forecasts for revenue growth this morning.
That’s helping to drive the FTSE 100 to a new intraday peak (now 8,713 points!) this morning, as AstraZeneca is the most valuable company on the index.
Neil Wilson, analyst at TipRanks, reports:
The FTSE 100 hit a record high clear of 8,700 thanks to strong numbers from its largest weighting AstraZeneca, while traders in London also looked on hopefully to an expected rate cut by the Bank of England. The FTSE 100 rose 1% and the DAX added about 0.8% while the CAC in Parise rose 0.4% as European shares turned broadly higher amid a deluge of positive corporate earnings.
The record high shows that for all the doom and gloom, talk of trade wars and tariffs, and broad geopolitical risk, investors keep putting money to work at companies with good valuations.
Blockbuster cancer drugs helped AstraZeneca to beat quarterly estimates with revenues up 21%, sending shares up 5% to top the blue chips, while Anglo American dragged the miners sharply higher.
The FTSE 100 has made a fairly rollicking start to the year.
Since the start of 2025, the blue-chip share index has gained 6.5%, which is actually more than the 5.7% it gained during 2024.
The UK market may be benefiting from a ‘rotation’ out of technology stocks, where AI-focused firms were hit by the emergence of China’s DeepSeek last month.
FTSE 100 climbs over 8,700 to new high
Boom! The FTSE 100 index has now climbed over the 8,700-point mark for the first time.
The index has now gained almost 1% today to 8,704 points, a new record.
Today’s FTSE 100 record high comes almost five years after the markets crashed at the start of the Covid-19 pandemic.
In February 2020, the FTSE recorded its biggest weekly losses since 2008, briefly dropping through the 5,000 point mark in early March 2020 before rebounding:
Evelyn de Rothschild left bank in 2004 after sexual misconduct complaint
Anna Isaac
The financier Sir Evelyn de Rothschild left the bank that bears his family name in 2004 after an investigation into a sexual misconduct complaint, it has emerged.
Staff at Rothschild & Co were told on Wednesday that the late banker, who was a financial adviser to Queen Elizabeth II, left in March 2004 after the complaint in late 2003.
The Guardian revealed on Tuesday that several women had accused De Rothschild, who died aged 91 two years ago, of exploiting his position at the bank to abuse them while they worked with him.
Among the allegations are that he seriously sexually assaulted and harassed several women in the mid and late 1990s when they worked for NM Rothschild.
Markets across Europe are rallying, as “investors get some confidence back”, reports Matt Britzman, senior equity analyst at Hargreaves Lansdown, helping to push the FTSE 100 to a new all-time high.
Britzman says:
“UK markets are kicking off the day with a spring in their step, as the US tariff chatter finally quietens down, letting investors zero in on a wave of big earnings reports and hopes for another Bank of England rate cut – markets are practically betting the house on a quarter-point cut today.
This positive vibe is spreading across Europe, giving global markets a much-needed boost. Seems like investors may be ready to dance to the tune of good news again.
Germany’s DAX has risen by 0.6% in early trading, while France’s CAC is up 0.4%.
FTSE 100 hits new record high
Britain’s blue-chip share index has hit a new all-time high at the start of trading, as investors anticipate a cut in UK interest rates today.
The FTSE 100 index has gained 0.8% to a new intra-day peak of 8,695 points, up 72 points today, above the previous record of 8,692 points set last month.
Anglo American (+3.7%) are the top riser, after reporting this morning that all its businesses delivered their full year production guidance last year (although it also warned of tough trading in the diamond market).
They are followed by AstraZeneca (+3.4%) after it reported a jump in profits this morning.
The FTSE 100 slumped on Monday amid fears of a global trade war, but has recovered since Donald Trump paused tariffs on Canada and Mexico for a month.
Jim Reid, strategist at Deutsche Bank, says:
After a severe allergic reaction on Monday after the tariff news, markets continued to be relatively sedated yesterday as investors continued to price out the chance of aggressive tariffs.
AstraZeneca profits jump
Julia Kollewe
AstraZeneca has reported a jump in annual profits boosted by strong sales of its cancer, lung and immunology treatments, a week after it decided not to go ahead with a planned £450m investment in Merseyside, prompting a series of recriminations with the government.
Britain’s biggest drugmaker, which is also the largest listed company, said revenues rose by 21% to $54.1bn (£43bn) in 2024. Pre-tax profit jumped by 38% to $8.7bn last year on a constant currency basis.
The results statement did not mention last week’s decision to pull the plug on the expansion of its childhood flu vaccine factory at Speke, Liverpool, into a large vaccine hub, after it failed to agree the amount of state support despite months of wrangling with government.
German factory orders have jumped, bringing some relief to Europe’s largest, and most beleagured, economy.
Industrial orders jumped by 6.9% month-on-month in December, beating forecasts of a 2% rise, but were still 6.3% lower than a year ago.
Firms reported increased demand for large-scale orders such as aircraft, ships, trains, and military vehicles, where new orders were 55.5% higher than in November “due to several large orders”, statistics body Destatis reports.
Pound dipping ahead of Bank of England decision
Sterling is weakening a little this morning, as the City anticipates a cut to UK interest rates at noon.
The pound, which hit a one-month high yesterday, has lost a third of a cent against the US dollar back to $1.2473.
Bloomberg: Nissan looking for new partner as Honda deal set to collapse
Bloomberg are reporting that Nissan is seeking a new partner as it prepares to end negotiations to form a joint holding company with Honda.
The fresh ally would ideally be from the technology sector and be based in the US, the people said, asking not to be identified because the information isn’t public.
Although its sales are slowing globally, North America remains Nissan’s most important market and the wider shift toward electrification and automation is pushing all carmakers to seek alliances with hi-tech industries.
Engineering firm IMI hit by cyber attack
UK engineering firm IMI has revealed it has been hit by a cyber attack after hackers gained unauthorised access to its systems.
In a statement to the City this morning, IMI said it is responding to a cyber security incident involving unauthorised access to the company’s systems.
The London-listed company says:
As soon as IMI became aware of the unauthorised access, the company engaged external cybersecurity experts to investigate and contain the incident.
In parallel, the company is taking the necessary steps to comply with our regulatory obligations.
An update will be provided as and when appropriate.
Such cyber attacks are a growing risk for companies; in recent years. Royal Mail, the Guardian and leading London hospitals have all been hit.
A report yesterday found that ransomware payments fell by more than a third last year to $813m (£650m) as victims refused to pay cybercriminals and law enforcement cracked down on gangs.
Nissan-Honda merger ‘basically over’
The $60bn merger between Nissan and Honda to create the world’s third-largest carmaker looks on the brink of collapse this morning.
According to reports from Japan, Nissan CEO Makoto Uchida met with Honda CEO Toshihiro Mibe today, and explained that he wishes to terminate their merger discussions.
A break-up would scupper the deal which was announced last December, and was
Talks have appparently stumbled after Honda proposed that Nissan should become a subsidiary, which was not part of the original plan.
The AFP newswire reports:
Nissan’s board is in favour of abandoning merger talks with Honda, although calling them off has yet to be decided by executives at the two Japanese carmakers, a source close to the matter told AFP on Thursday.
“The latest conditions put on the table by Honda are unacceptable for Nissan… It needs to be formalised, but basically, it’s over,” the source said.
Honda has a market value of ¥7.6trn ($50bn/£40bn), about five times larger than Nissan’s ¥1.54trn ($9.8bn/£7.9bn).
Bank could cut faster than City expects this year
The money markets currently indicate the Bank will cut interest rates three or four times this year.
But some, such as Pimco economist Peder Beck-Friis, think it may cut faster, telling clients:
Looking ahead, we see room for deeper cuts than what financial markets expect. Trade uncertainty is rising, labour demand is falling, fiscal policy is tight, and the policy rate is well above our neutral estimate of 2-3%.
Ashley Webb, UK economist at Capital Economics, takes a similar view, explaining:
Despite the recent weak news on activity and the uncertainty around the global outlook due to Trump’s US import tariffs, the stronger news on domestic price pressures means the Bank of England will probably continue to cut interest rates only gradually.
But while CPI inflation may rebound from 2.5% in December last year to around 3.0% later this year, we think a fall to below 2.0% next year will prompt the Bank to cut interest rates from 4.75% now to 3.50% by early 2026, rather than to 3.75-4.00% as investors anticipate.
Bank of England likely to cut growth forecasts
The backdrop to today’s Bank of England decision is “underwhelming”, points out Kathleen Brooks, research director at XTB, which could prompt the central bank to predict lower growth this year.
Brooks says:
UK growth has weakened in recent months and the outlook looks poor. The OBR is expected to slash its growth forecasts next month, which will be included in the chancellor’s spring statement. The Bank of England is likely to do the same this Thursday.
The BoE had expected GDP to expand by 1.5% this year, that looks lofty after a spate of weak economic data, and it could be revised down to 1%. The risk is that growth could undershoot downwardly revised forecasts, as the Citi economic surprise index is close to its lowest level for a year.
This suggests that UK economic data has surprised to the downside by a wide margin.
Introduction: Bank of England expected to cut rates today
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The UK is likely to get its first interest rate cut in three months today, as the Bank of England tries to prod the stagnating economy into life.
The City is confident that the BoE will ease policy at noon today – a cut to Bank Rate, from 4.75% to 4.5%, is a roughly 95% prospect according to money market pricing (it was as high as 98% earlier this week).
Economists predict the Bank’s monetary policy committee (MPC) will vote 8-1 to cut, with only the hawkish Catherine Mann opposing a reduction in borrowing costs for the first time this cycle.
It may also lower its growth forecasts for this year, and raise its inflation forecast in its latest monetary policy report [MPR]. That would be awkward for chancellor Rachel Reeves ahead of next month’s spring statement.
Sanjay Raja, Deutsche Bank’s chief UK economist, says:
Downgrades to GDP growth across the forecast horizon look likely, particularly given the weaker H2-24 data. Equally, a faster rise in the jobless rate looks likely too, with the Bank’s unemployment rate projection rising to 4.6%.
While near-term pay growth will almost certainly be revised higher, we expect private sector pay momentum to broadly converge to the Bank’s November MPR projections.
And last but not least, we expect the MPC to highlight a near-term pick up in inflation, but expect medium-term disinflationary pressures to push CPI lower at the end of the forecast horizon, relative to the November MPR.
These are difficult times for the Bank. It has already been assessing the impact of the business tax increases in last autumn’s budget, which could push up prices, hit profit margins, weaken hiring and lift unemployment.
Now, it also has the challenge of Donald Trump’s return to the White House, and the risk of a global trade war.
Mark Ashbridge, managing director of Ashbridge Partners, points out that many of Trump’s policies are inflationary – which could push up US borrowing costs, with a knock-on effect on the other side of the Atlantic.
Ashbridge explains:
“Globally, our bond markets and swap rates are interlinked and partially driven by what’s happening in the US, a country which is now under a new administration since the Bank of England last reviewed the base rate.
“Fundamentally, Donald Trump’s policies are inflationary and what we don’t know at this stage is just how extreme or not these changes might be and therefore the impact of them.
The agenda
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9am GMT: European construction sector PMI
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9.30am GMT: UK construction sector PMI
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10am GMT: Eurozone retail sales for December
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Noon GMT: Bank of England interest rate decision
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12.30pm GMT: Bank of England press conference
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1.30pm GMT: US initial jobless claims
