FTSE 100 ends higher as Fed rate cuts are expected; UK Budget looms

London's FTSE 100 gained ground on Friday as investors awaited the UK budget announcement next week. Blue-chip index ended the week with a 1.7% decline, a greater weekly drop than in April, when markets were shook by President Donald Trump's tariff announcements.

The domestically focused mid-cap index has now lost for an eighth consecutive day, with a 0.1% drop on Friday. Its weekly loss is 2.2%.

The rally that began on Thursday, which was sparked by the optimistic forecast of chip giant Nvidia, has been short-lived, as fears about an AI bubble have resurfaced.

Markets recovered some ground after New York Fed president John Williams, who is a voting member on the Federal Open Market Committee (FOMC), suggested that the central bank can still cut rates. This boosted both expectations for rate cuts and the overall sentiment.

On the UK market, stocks of homebuilders and beverages rose by 3.4%, respectively.

As investors watched developments surrounding a new U.S. plan to end the Russian conflict in Ukraine, the aerospace and defence stock market fell by 3.2%, their lowest level in three months.

Gold prices recovered from their earlier losses after a drop of more than 1%. Industrial metal miners, however, fell by 1.8% as copper prices dropped to the lowest level for over two weeks.

The economic indicators for Britain’s businesses, consumers and public finances all showed signs of distress ahead of the budget next week.

Data released on Friday indicated that budget concerns were weighing heavily on the UK's economy. This highlights her challenge to reduce borrowing without further stifling already sluggish economic growth.

ASOS, a fast-fashion retailer, dropped 5.3% among individual movers after it forecast a lower annual profit than analysts expected. (Reporting and editing by Shreya Biwas and Deepa Babyington; Reporting by Utkarsh Tushr Hathi)

(source: Reuters)