By Callum Keown
London markets rebounded on Friday led by optimism over Federal Reserve rate cuts and an oil price boost for commodity stocks.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.62% reversed two days of losses, climbing 0.7% and the domestically-focused FTSE 250 /zigman2/quotes/210598417/delayed UK:MCX +1.49% also rose 0.4%.
What’s moving the markets?
Oil prices rebounded /zigman2/quotes/209723049/delayed CL00 -1.32% after several days of losses after the U.S. Navy destroyed an Iranian drone the Strait of Hormuz, reigniting tensions.
The FTSE 100’s oil and mining heavyweights reacted positively, making substantial gains having fallen in recent days.
U.S. stocks were led higher on Thursday after New York Fed president John Williams said it “pays to act quickly to lower rates at the first sign of economic distress.”
Market expectations for a 50 basis point cut at the Fed’s July meeting rose as a result, according to CME’s FedWatch tool.
The probability then fell again when a New York Fed spokesperson insisted Williams’ comments were part of an academic speech and not about policy actions.
London stocks ignored the caveat to trade higher on Friday.
AJ Bell investment director Russ Mould said: “The market’s obsession with when or if the U.S. Federal Reserve will hit the button on rate cuts continues, with hopes of action at its meeting at the end of this month growing.
“This puts the FTSE 100 on course for a strong end to the week.”
Which stocks are active?
Oil and mining stocks were among the biggest risers following the increased tensions between the U.S. and Iran. Antofagasta /zigman2/quotes/200173667/delayed UK:ANTO +2.81% led the way, jumping 2.8%, while Anglo American climbed 1.5%.
Advertising giant WPP /zigman2/quotes/202300097/delayed UK:WPP +2.32% fell 3% after French rival Publicis /zigman2/quotes/207669560/delayed FR:PUB +1.32% warned traditional marketing trends were declining, weighing on its performance, particularly in the U.S.
Shares in British media company ITV /zigman2/quotes/205378065/delayed UK:ITV +4.42% edged up 1.7% after it struck a deal with the BBC to launch a new streaming service BritBox. The service will launch in the fourth quarter and be priced at £5.99 a month.