London's FTSE 100 index advanced on Tuesday, moving closer to an all-time high as market participants strengthened their expectations for an imminent interest rate reduction from the Bank of England. The blue-chip index gained 0.2% to reach 10,506.04 points by late morning trading. This upward movement was primarily fueled by recent economic data suggesting a softening labor market, which has led traders to price in a higher probability of monetary policy easing at the central bank's next meeting.
Market Movers and Data Watch
In contrast to the FTSE 100, the domestically-focused FTSE 250 index experienced a slight decline of 0.1%. The mid-cap index was pressured by underperformance in the mining and defense sectors. A notable decliner was online trading platform Plus500, whose shares fell after the company disclosed a planned sale of existing shares by several top executives. The transaction, involving CEO David Zruia, CFO Elad Even-Chen, and CMO Nir Zats, will see 1.5 million shares, representing approximately 2.14% of the company's issued capital, sold via Goldman Sachs. The company clarified this is a secondary transaction that will not raise new capital for Plus500 and is related to the executives' personal financial planning.
Market attention now turns squarely to the UK's Consumer Price Index (CPI) data for January, scheduled for release on Wednesday. This inflation report is widely viewed as a critical input for the Bank of England's Monetary Policy Committee (MPC) ahead of its March 19 decision. A Reuters survey conducted on Monday indicated that 41 out of 63 polled economists anticipate the BoE will implement a 0.25 percentage point cut in March, lowering the Bank Rate to 3.50%. Analysts from major institutions are aligning with this view; Deutsche Bank's Sanjay Raja expects "the next Bank Rate cut to come in March," while TD Securities' James Rossiter noted that policymakers appeared "quite surprised at just how low the MPC's inflation projection is for 2026."
Investment Considerations for New Investors
For individuals beginning their investment journey in UK markets, navigating interest rate speculation can be a distraction. A more foundational step often involves selecting the right investment account. A Stocks and Shares Individual Savings Account (ISA) is a common starting point, as it provides a tax-efficient wrapper shielding investment gains and dividends from UK Income Tax and Capital Gains Tax. The annual ISA allowance for the current tax year stands at £20,000, but any unused portion is forfeited after the April 5 deadline. Within such an account, investors can hold cash, funds, exchange-traded funds (ETFs), investment trusts, bonds, or individual company shares. It is crucial to note that capital is at risk and the value of investments can fall.
Setting up an ISA requires a National Insurance number and can be done through banks, brokers, or other financial firms. While the application process is generally straightforward, fee structures can vary significantly between providers and require careful comparison. The Financial Conduct Authority (FCA) urges investors to verify the authorization of any firm using its online Firm Checker tool, warning that scammers sometimes impersonate the regulator itself.
Understanding Risks and Protections
Investors should be aware of the applicable safety nets, which are often more limited than assumed. The Financial Services Compensation Scheme (FSCS) covers investment claims up to £85,000 per person, per firm for failures occurring after April 1, 2019. Separately, the Bank of England's deposit protection for banks and building societies will be set at £120,000 starting December 1, 2025. Importantly, neither scheme protects against losses arising from normal market fluctuations or declining share prices.
Costs are another critical factor. Most share purchases in the UK are subject to a 0.5% stamp duty, or Stamp Duty Reserve Tax (SDRT). However, this rate can increase to 1.5% if shares are held within a depositary receipt scheme or a clearance service. For beginners seeking broad market exposure without the complexity of stock-picking, a low-cost index tracker ETF can be an effective solution, providing instant diversification across many companies with a single transaction.
Corporate Earnings Spotlight
Corporate updates provided specific catalysts for individual stocks. Chilean copper miner Antofagasta reported a 52% surge in its annual core profit, driven by stronger metal prices that offset a slight production dip and increased capital expenditure related to its Centinela expansion project. CEO Ivan Arriagada noted the Centinela second concentrator construction was approximately 70% complete by the end of the previous year. Broker Peel Hunt highlighted that the company's final dividend came in below market consensus, illustrating how such details can impact investor sentiment as much as headline profit figures.
In the hospitality sector, InterContinental Hotels Group (IHG) reported mixed results. The parent company of Holiday Inn saw a 2% decline in U.S. revenue per available room (RevPAR) for the fourth quarter, lagging behind rivals Hilton and Marriott. However, global room revenue increased by 1.6%. IHG also announced a new $950 million share buyback program and proposed a 10% increase in its dividend. CFO Michael Glover remarked that "RevPAR so far has been positive," suggesting the market may be focusing more on future trajectory than a single quarter's performance.
The power of corporate action was underscored by events at Schroders, where shares surged 28.5% last week after U.S. asset manager Nuveen announced an agreement to acquire the firm for £9.9 billion. This serves as a potent reminder that merger and acquisition news can dramatically reprice a stock before most retail investors can digest the official announcement.
