UK Stocks Gain on Mining Strength and Interest Rate Optimism

26 June 2025

REUTERS/Toby Melville

London’s equity markets showed notable resilience on Thursday, June 26, 2025, as investor attention pivoted to improved commodity prices, resilient industrial names, and signals of potential Bank of England easing. The FTSE 100 closed up 0.4 percent and the FTSE 250 climbed 0.6 percent, reaching a two-week high.

Market strength was anchored by gains in the mining and industrial sectors. Precious metal miners such as Fresnillo, Antofagasta, Anglo American, and Endeavour Mining performed strongly, driven by higher commodity prices tied to a weaker dollar.

Energy giants saw modest upticks despite ongoing speculation. Shell reported it was not pursuing a bid for BP a refrain that helped stabilize its shares while BP remained flat. Among mid-cap companies Inchcape led the day, rising 6.2 percent after reaffirming its full-year outlook and unveiling cost-saving measures aimed at mitigating U.S. tariff impact.

However, corporate earnings results cast a wider spotlight on market sentiment. Associated British Foods edged up 1.1 percent following reports of potential bioethanol plant closures without government support. Moonpig, conversely, dropped 9.6 percent after a weak forecast accompanied its CEO’s resignation. UK adtech group Next 15 plunged 25 percent after issuing disappointing full-year profit guidance.

Adding to the momentum, contraction in UK retail sales highlighted by CBI data reinforced expectations that the Bank of England may cut interest rates by 25 basis points in September. The combination of a cooling consumer environment and signs of macroeconomic softness suggests policymakers could take a more accommodative stance.

This rally aligns with a broader theme of risk appetite returning to global markets. While London’s venture into higher ground is supported by domestic drivers, it is also underpinned by favorable trading conditions abroad, including strong performance in mining and renewed expectations of global central bank support .

Nevertheless, markets are not without caution. Although mining and energy sectors have bolstered gains, fragility in consumer spending and uneven corporate performance suggest investors remain selective. Key upcoming central bank announcements in both the UK and U.S. may either extend or cap this rally.

Looking ahead, the policy environment remains crucial. With the BoE’s next rate decision on the horizon and the Federal Reserve's actions under the microscope, markets will scrutinize inflation signals and labor data closely. Should the Fed act dovishly or the BoE signal rate cuts, the FTSE indices could gain further traction. Conversely, hawkish surprises or persistent economic slack could dampen prospects.

Overall, Thursday’s session reflected a cautiously optimistic London market buoyed by commodity leadership, defensible corporate updates, and emerging central bank clarity. Investors seem to be betting that even as consumers stay cautious, fiscal and monetary support may still provide lift at the sector level.