FTSE 100 Climbs as Bank Shares Rally Ahead of US Fed Decision

London’s FTSE 100 moved higher in Tuesday trading, driven by strong gains in banking stocks as investors positioned themselves ahead of key central bank decisions and a busy earnings period. The blue chip index rose as heavyweight lenders led the advance, pushing the banking sector to its highest level in well over a decade. Market sentiment was supported by expectations that interest rates may remain elevated for longer, a backdrop that typically benefits banks through improved margins. While global markets remained cautious, London equities found support from the strength of financial stocks, helping the FTSE 100 outperform more domestically focused indices. Investors were also digesting fresh UK data showing rising retail prices, which has added to uncertainty over the pace and timing of future rate cuts by central banks.

The FTSE 250, which is more closely tied to the UK economy, was broadly flat, reflecting a more mixed performance among mid sized companies. Mining shares slipped back from recent highs as metal prices eased, weighing on the resources sector after a strong run. Elsewhere, attention turned to developments beyond markets, with the prime minister preparing to travel to China in an effort to repair diplomatic and economic ties after years of strained relations. Global trade concerns continue to shape investor sentiment, particularly following renewed tariff threats from the United States, which have raised questions about the outlook for international growth. As a result, many investors are looking to corporate earnings updates for clearer signals on how companies are navigating a more uncertain global environment.

Focus is now firmly on central bank policy meetings, with the US Federal Reserve expected to hold interest rates steady when it concludes its latest gathering. In the UK, economists continue to debate the timing of potential rate cuts, with expectations building that borrowing costs could begin to ease later in the year if inflation pressures allow. Recent data showing a sharp rise in prices at British retailers has complicated that outlook, suggesting inflation may prove more persistent than hoped. Among individual stocks, footwear group Dr Martens fell sharply after forecasting flat revenue growth, highlighting the challenges facing some consumer focused businesses. As earnings season gathers pace, market participants will be watching closely to see whether strong banking performance can continue to support London’s main index.