The FTSE 100 moved modestly higher on Wednesday, recovering some ground following the previous session’s decline, as investors remained cautious ahead of Thursday’s Bank of England interest rate announcement.
London equities found support from stabilising global technology stocks and stronger earnings from US chipmaker Advanced Micro Devices (NASDAQ:AMD), although uncertainty surrounding UK monetary policy and the US midterm elections limited gains.
London Markets Recover Following Previous Session’s Decline
The FTSE 100 edged into positive territory after Tuesday’s retreat ended the benchmark’s longest winning streak since August.
Investor sentiment improved slightly following a stabilisation in global semiconductor shares, supported by AMD’s latest earnings performance.
However, broader market activity remained subdued as investors assessed early results from the US midterm elections, where Democrats recorded initial gains.
Attention in London remained focused on the Bank of England’s upcoming monetary policy decision, with interest rate expectations continuing to influence trading across UK equities.
Marks & Spencer Shares Fall Despite Stronger Profits
Marks & Spencer Group Plc (LSE:MKS) shares declined 1.74% despite the retailer reporting a substantial improvement in half-year profitability.
Adjusted profit before tax more than doubled to £403.2 million for the six months ended 26 September 2026, compared with £184.1 million in the corresponding period last year.
The result exceeded analysts’ consensus forecast of £399 million.
Despite the stronger earnings performance, investors took profits following the stock’s recent gains.
Sentiment towards UK retailers also remained cautious after Associated British Foods (LSE:ABF) warned on Tuesday of continued pressure on margins at its Primark fashion business.
Bank of England Rate Decision in Focus
Investors are preparing for Thursday’s announcement from the Bank of England’s Monetary Policy Committee.
Money markets were pricing in an approximately 80% probability of a 25-basis-point increase in Bank Rate to 4%.
Expectations of tighter monetary policy reflect concerns over persistent services inflation and elevated energy costs.
Market participants will also examine comments from Bank of England Governor Andrew Bailey for indications of whether a potential rate increase could represent the peak of the current tightening cycle.
The decision could influence expectations for borrowing costs, consumer spending and the outlook for interest-rate-sensitive sectors.
UK Fiscal Policy Adds to Market Considerations
Investors are also assessing the government’s autumn fiscal plans and their potential implications for economic growth and inflation.
The spending framework outlined by Chancellor John Healey has placed emphasis on maintaining fiscal discipline, adding another consideration for markets evaluating the direction of UK monetary policy.
Any indication that the Bank of England is approaching the end of its tightening cycle could influence investor sentiment towards domestically focused companies.
Market Outlook
The FTSE 100’s modest recovery reflects a balance between improving sentiment in global technology markets and uncertainty surrounding domestic monetary policy.
Thursday’s Bank of England decision is expected to be a key near-term catalyst for UK equities, with investors particularly focused on the central bank’s assessment of inflation and its guidance on future interest rates.
Corporate earnings and developments surrounding the US midterm elections are also likely to influence market direction.
More About the FTSE 100
The FTSE 100 is the UK’s leading blue-chip equity index, comprising 100 of the largest companies listed on the London Stock Exchange by market capitalisation. The index covers a broad range of sectors, including financial services, energy, consumer goods, healthcare and industrial businesses.
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