​​Markets surge higher as UK retail sales impress and global sentiment improves

​​​FTSE 100 maintains momentum amid positive data flow

​The FTSE 100 continued its positive trajectory, climbing 0.3% as investors responded favourably to encouraging UK retail sales data. The index's third consecutive day of gains reflects growing confidence in domestic economic resilience despite ongoing global uncertainties.

​Mining stocks led the charge higher, benefiting from firmer commodity prices and renewed appetite for cyclical sectors. Major miners posted solid gains throughout the session, providing crucial support for the broader index alongside banking stocks including HSBC.

​However, the FTSE 100 slightly lagged the Euro Stoxx 50, with European country benchmarks generally outperforming their British counterpart. Some consumer staples companies, including Unilever, posted modest declines while certain lenders like Barclays and NatWest failed to participate fully in the rally.

​The mixed sector performance highlights how stock selection remains crucial even within broader market advances. Individual company fundamentals continue driving returns despite the generally positive sentiment across UK equities.

​Global markets reach fresh milestones

​US markets delivered stellar performances, with the S&P 500 closing at a fresh record high as investors embraced prospects of Federal Reserve (Fed) monetary easing. The benchmark index's advance reflects growing confidence that the Fed will begin cutting interest rates in September, with markets now pricing in a 95% probability.

​The Dow Jones and Nasdaq 100 also posted strong gains of 0.8% and 1% respectively, while futures pointed to further advances ahead of Friday's crucial payrolls report. This broad-based rally demonstrates the market's faith in Fed policy support and underlying corporate earnings strength.

​Amazon delivered one of the session's standout performances, surging 4.3% as investors responded positively to the e-commerce giant's diversification efforts. The company's satellite Wi-Fi deal announcement through Project Kuiper highlighted Amazon's expanding reach beyond traditional retail and cloud computing.

​Asian markets extended Wall Street's gains overnight, with Japan, Taiwan, and China all posting advances. This global rally demonstrates the interconnected nature of modern financial markets and the significant influence of US monetary policy on international investment flows.

​UK retail sales deliver exceptional July performance

​British consumers demonstrated remarkable spending power in July, with retail sales volumes surging 5% on a monthly basis excluding petrol. This exceptional performance far exceeded economists' expectations and provided clear evidence of underlying economic strength.

​Clothing retailers emerged as standout performers, benefiting from favourable weather conditions and new product launches. Sales volumes in this sector rose 2.5% monthly and an impressive 5.5% annually, marking the strongest yearly growth since January 2023.

​Online retailers also delivered strong results, with non-store sales volumes climbing 2.5% in July to reach their highest level since February 2022. Retailers attributed this success to good weather and sporting events, particularly the Women's Euros championship.

​The broad-based nature of retail strength suggests genuine consumer confidence rather than isolated sector-specific factors. This resilience bodes well for continued economic growth and supports optimism about corporate earnings across consumer-focused companies.

​Ashmore emerged as the FTSE 250's biggest faller, dropping 15% after reporting disappointing earnings. Net outflows of $5.8 billion and a 22% year-on-year (YoY) revenue decline highlighted challenges facing specialist asset managers.

​In the US, technology stocks painted a mixed picture. While Amazon and Broadcom gained strongly, Salesforce fell nearly 5% after issuing weak revenue guidance, underlining the market's increasingly selective approach to artificial intelligence (AI)-related investments.

​Central bank policy drives market optimism

​The Fed's likely September rate cut creates a favourable environment for risk assets globally. Lower interest rates reduce borrowing costs for companies while making stocks more attractive relative to bonds.

​Treasury yields continued their descent to four-month lows, creating supportive conditions for equity valuations across international markets. When bond yields fall, equities become relatively more attractive to income-seeking investors.

​This monetary policy outlook supports both US and UK markets, though the transmission mechanisms differ. American companies benefit directly from lower borrowing costs, while British firms gain from improved global liquidity conditions.

​The Bank of England's own policy decisions will be influenced by Fed's actions, creating interconnected policy cycles that affect trading conditions across both markets.