London’s stock market closed higher on Friday, with shares advancing despite inflation in the United States rising slightly more than expected in June. This positive performance comes as investors anticipate important interest rate decisions from both the US Federal Reserve and the Bank of England next week.

Market Performance:
The FTSE 100 index ended the day up 1.2%, closing at 8,285.71. The FTSE 250 performed even better, rising 2.3% to finish at 21,356.30. The AIM All-Share, which includes smaller companies, also improved, climbing 0.9% to 779.67.

European and US Markets:
Other European markets also saw gains, with Paris’s CAC 40 rising 1.2% and Frankfurt’s DAX 40 increasing by 0.7%. In the United States, stocks were trading higher at the time of the London market close, with the Dow Jones Industrial Average up 1.4%, the S&P 500 index up 0.8%, and the Nasdaq Composite up 0.5%.

US Inflation Data:
The US Bureau of Economic Analysis reported that the core personal consumption expenditures (PCE) index, which is the Federal Reserve’s preferred measure of inflation, rose 2.6% year-on-year in June. This figure was unchanged from May but slightly higher than the expected 2.5%. The core PCE index excludes volatile food and energy prices.

On a month-to-month basis, the core PCE index increased by 0.2% in June, matching May’s growth and aligning with forecasts. The headline PCE index, which includes food and energy prices, rose 2.5% year-on-year in June, showing a slight decrease from May’s 2.6% growth.

Upcoming Central Bank Decisions:
Investors are now looking ahead to the Federal Reserve’s interest rate decision on Wednesday. While it is widely expected that rates will remain unchanged, market participants will be closely watching for any hints about future policy moves, particularly regarding the September meeting.

The Bank of England is also set to announce its interest rate decision on Thursday, adding to the significance of the coming week for financial markets.

Notable Stock Movements:
NatWest Group was a standout performer, with its shares surging 7% after the bank raised its annual guidance and announced the acquisition of a £2.5 billion mortgage portfolio from Metro Bank. Despite reporting a decline in first-half income and profit, NatWest’s second-quarter results exceeded analyst expectations.

In the FTSE 250, power generation company Drax saw its shares rise by 14% following strong first-half results. The company reported a 37% increase in pre-tax profit and raised its interim dividend.

However, not all companies experienced positive outcomes. On London’s AIM market, gaming firm Webis saw its shares plummet by 29% after warning of unexpected losses due to challenges in its business-to-customer segment and weather-related disruptions to US race meetings.

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