London stocks opened in a holding pattern this week as investors await key monetary policy decisions from the US Federal Reserve and the Bank of England, according to commentary from Hargreaves Lansdown. While the Fed is widely expected to cut interest rates, persistently high wage growth in the UK means a domestic rate cut remains unlikely this year.
“London stocks opened in a holding pattern, with investors scanning the horizon for a catalyst as central bank decisions loom large,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown. “With the Fed expected to cut and the Bank of England likely to stay put, traders are watching for cues that could shift sentiment.”
UK labour market cools but wage growth remains high
Analysis from Hargreaves Lansdown points to emerging signs of cooling in the UK labour market, but notes that wage growth remains stubbornly high and well above levels consistent with the Bank of England’s inflation target. A slight dip in pay growth and falling payrolls suggest that momentum is easing, but sticky services inflation is keeping expectations for a rate cut “firmly on ice”.
Britzman suggests that with UK rates likely to remain on hold as we move into 2026, markets may need to recalibrate their expectations around the timing and pace of any future policy easing.
In UK company news, the commentary highlighted the confirmation by Unilever that Srinivas Phatak is its permanent chief financial officer. The move was widely expected and is seen as a consolidation of the influence of new chief executive officer Fernando Fernandez, with several key leadership roles now held by long-time allies. Britzman noted that the promotion of Phatak signals continuity and alignment at the top, which should support the execution of the agenda from the new CEO.
US markets await federal reserve’s forward guidance
Across the Atlantic, US equities held firm ahead of Wednesday’s Federal Reserve meeting, with both the S&P 500 and Nasdaq closing at fresh highs. According to Britzman’s analysis, a 25-basis-point rate cut is fully priced in by the market.
However, investor focus will be squarely on the Fed’s forward guidance, particularly the “dot plot” of future rate projections and the tone of Chair Jerome Powell’s press conference, which will shape expectations for the pace of further easing.
Commodities rise on rate cut hopes and geopolitical tensions
Commodity markets have also been active. Gold reached another record high, which Hargreaves Lansdown attributes to a weaker US dollar and growing conviction around impending Fed rate cuts, fuelling demand for real assets.
Oil prices extended gains for a third consecutive session, sparked by renewed supply concerns following Ukrainian strikes on Russian infrastructure. The commentary also noted that the EU is reportedly considering sanctions on firms in India and China that are facilitating Russian oil flows, with potential for further major sanctions.
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