FX.co ★ FTSE 100 Hits Fresh Record High

UK stocks are experiencing an upward trend on Friday morning, with the FTSE 100 index poised to conclude the month with a significant gain. This optimism is largely driven by the anticipation of further monetary easing by central banks in the near future.

However, the market's potential gains are being somewhat curbed by uncertainties surrounding the trade and economic policies of U.S. President Donald Trump and concerns about the possibility of new tariffs being introduced by his administration.

Currently, the FTSE 100 index has increased by 28.82 points, or 0.33%, reaching 8,675.70, after achieving a new record high of 8,692.61 earlier today. The index is projected to close the month with an impressive gain exceeding 6%.

Shares of Smiths Group have surged by more than 11% following the company's announcement of plans to divest certain divisions and enhance its share buyback program.

Next has risen by 2.5%, while St. James's Place has seen a gain of around 1.7%. Other companies, including Entain, Rolls-Royce Holdings, BAE Systems, Mondi, JD Sports Fashion, F&C Investment Trust, Melrose Industries, and Shell, have experienced increases ranging from 1% to 1.5%.

Conversely, Smith (DS), Sainsbury, Admiral Group, Fresnillo, Segro, and Airtel Africa have declined by 1% to 1.6%. Furthermore, Prudential, Auto Trader Group, Convatec, and Whitbread are exhibiting slight losses.

In economic news, data released by the Nationwide Building Society indicates that house prices in the UK rose by a mere 0.1% in January, following a 0.7% increase in December. Economists had predicted a 0.3% rise for January. On an annual basis, house prices grew by 4.1%, which is slower than the 4.7% increase observed in December, with expectations for a 4.3% rise.

Nationwide's Chief Economist Robert Gardner commented on the housing market's resilience despite ongoing affordability challenges. Gardner also highlighted that house prices remain elevated relative to average earnings, and the required deposit continues to be a significant hurdle.

Alex Kerr, an economist at Capital Economics, noted that higher mortgage rates have begun to impact prices. However, he believes this influence will not be long-lasting. Kerr anticipates that the Bank of England will reduce its key interest rate from the current 4.75% to 3.5% by early 2026, which suggests that mortgage rates could decline from 4.6% in December to approximately 4% next year.

Kerr forecasts that house prices will grow by a rate above the consensus, increasing by 3.5% by the fourth quarter of 2025 and 4.5% by the fourth quarter of 2026.