MARKET REPORT: FTSE 250 celebrates best week for two years

The FTSE 250 posted its best weekly performance in two years after weaker US inflation fueled hopes that central banks around the world could slow interest rate hikes.

The index, a better barometer of the UK economy than the more international FTSE 100, rose 1.23 percent or 238.97 points to 19,616.21.

It means the FTSE 250 has gained 7 percent this week — the best performance since November 2020, when the midcap index jumped 7.5 percent in the wake of a major Covid vaccine breakthrough and President Biden’s US election victory. .

This week’s rally boosted investors with money in midcap stocks.

But it was a different story for those who own stocks in the FTSE 100, with a top index of 0.78 percent, or 57.3 points, falling to 7318.04 as the stronger pound hit blue-chip multinationals holding dollar money. to deserve.

Analysts pointed to data Thursday that showed inflation in the US fell to 7.7 percent last month, the lowest level since January. It raised hopes that the worst of the inflationary crisis is over in the world’s largest economy — and sparked speculation that the Fed could reduce the rate at which it raises interest rates, which range between 3.75 percent and 4 percent.

The slump in US inflation took a hit on the dollar as the pound expanded its gains.

Russ Mold, investment director of AJ Bell, said: “Easing inflationary pressures will give central banks around the world the opportunity to pause interest rates or even switch to lowering interest rates.

“Cheaper money and cheaper credit can boost the economy, which is why the FTSE 250, which is seen as more sensitive to the economy, is flying.

“Investors, rightly or wrongly, are starting to price in interest rate cuts and the stimulus to the economy and corporate profits they can bring.”

However, the outlook for the economy remained bleak as official data showed GDP contracted by 0.2 percent in the three months to September, leaving Britain on the brink of recession.

With Chancellor Jeremy Hunt planning to raise taxes and cut spending in next week’s budget, analysts fear a quick recovery is unlikely.

Markets.com’s Neil Wilson said, “The news from the economy is certainly not that good, so the FTSE250 needs to get a handle on the effects of inflation.”

Back in the FTSE100, Prudential rose to the top of the leading standings following an easing of China’s Covid restrictions on close contact between business and visitors.

Shares in the Asian-focused insurer rose 7.6 percent or 70.9 pence to 1000.5 pence. China’s easing Covid measures also boosted oil prices, with crude oil up 2.5 percent. It helped BP by 1.6 percent or 7.65p to 478.4p and Shell by 1.9 percent or 45p to 2360p.

There was also a rally for Ocado, which benefited from the global recovery in technology stocks.

Shares of the online grocer rose 13.9 percent, or 98.8p, to 812p.

Defense stocks slumped as investors withdrew their money in response to the stronger pound. BAE Systems — which makes much of its money in dollars — fell 8.1 percent, or 63p, to 714p and QinetiQ fell 5.6 percent, or 19.6p, to 333.2p.

Investment firm M&G rose 2.1 percent or 3.85p to 189.15p after Jefferies issued a buy recommendation and set a price target of 235p.

Redrow has joined the group of housing giants who are sounding the alarm about the weakening real estate market. The group said the value of net private reservations in the first 18 weeks of the financial year was nearly a fifth lower than the same period last year, at £505 million versus £639 million. The stock fell 0.4 percent, or 1.8 pence, to 470 pence.