London FTSE 250 closes out stellar week as firms rise on Bank’s interest rate hold
London’s FTSE 250 has surged to its best streak all year as investors reacted positively today to the Bank of England’s decision to hold interest rates at 5.25 per cent yesterday.
The FTSE 250, which is more domestically focused than the premier FTSE 100 index, surged six per cent over the week, with the majority of the gains made over the past two days.
Retail tech firm Ocado and BT group were among the fastest risers for the week, rocketing beyond 12 per cent and 10 per cent respectively.
Investors seemed to respond positively to a move by the Bank’s monetary policy committee to hold rates at 5.25 per cent for the second straight month yesterday.
The FTSE 250’s domestic focus tends to correlate more closely to the outlook for UK economy. Analysts say the market boost could signal some further confidence in the economy and hopes for a rate cut by mid 2024.
“The effects of this shift in sentiment can be clearly seen in the performance of the FTSE250 this week, with the index up over six per cent on the week, its best weekly gain this year, and most of that in the past 2-days, with strong gains from various REIT’s as well as the likes of Workspace Group and Hammerson,” Michael Hewson, market analyst at CMC Markets, told Morning Wire
“Housebuilders and property management companies are also seeing a strong rebound.”
After the bump for the FTSE 250 today, analysts at AJ Bell said it had been a “good week for equities” on both sides of the pond despite a 0.5 per cent dip on the premier FTSE 100 index today.
“The perceived safer havens of the big caps are still likely to remain in focus whilst economic uncertainty abounds,” said Derren Nathan, head of equity research, Hargreaves Lansdown. “The 250 is likely to be a more fertile fishing ground for growth stocks than the FTSE 100 but with that comes an elevated risk of volatility. “
Mining firm Endeavour and JD Sports also ticked up beyond four per cent today to take them near the top of the fastest risers.
The FTSE 250 bump comes despite analysts at Threadneedle street slashing their outlook for the economy in a set of forecasts yesterday.
The forecasts, based on market expectations for interest rates, show that growth will be flat in the third quarter of this year and expand just 0.1 per cent in the fourth, both downgrades on its August forecast.