FTSE 100 rises, mid-cap stocks rally on BOE rate hold
The blue-chip FTSE 100 ended 1.6% higher at 10,378.82 points, while the midcap FTSE 250 added 1.2%, snapping a five-day losing streak
London’s FTSE 100 index rose on Thursday, with upbeat results from Rolls-Royce and Glencore bolstering sentiment, while rate-sensitive mid-cap stocks rallied after the Bank of England held its interest rate steady.
The blue-chip FTSE 100 ended 1.6% higher at 10,378.82 points, while the midcap FTSE 250 added 1.2%, snapping a five-day losing streak.
Engineering firms were mixed as Rolls-Royce jumped 7.6% after reiterating its profit outlook, offering the biggest boost to the benchmark index, while Weir Group slipped 4% after reporting a decline in first-quarter orders.
Water utility United Utilities climbed 11.1% to the top of the FTSE 100 after the company forecast a rise in annual revenue and raised its five-year investment plan.
Glencore shares rose 2.6% after reporting a 19% increase in its first-quarter copper production, while Irish energy distributor DCC declined 5.8% after rejecting a 4.95-billion-pound ($6.66 billion) takeover proposal.
Meanwhile, the Bank of England kept its main lending rate steady at 3.75%, as widely expected and set out scenarios for the economic impact of the Iran war.
We are still minded to think that the recessionary risks facing the economy will limit any second round inflation effects but if oil prices continue to move higher, it is hard to see how the Bank avoids having to hike later this year, said Luke Bartholomew, deputy chief economist at Aberdeen.
The pound rose 0.7% against the dollar, while gilt yields slid across the board.
Global oil prices declined from a four-year high, but concerns that the Iran-U.S. war could worsen and lead to a protracted Middle East oil supply disruption lingered.
Rising crude prices stoked inflation worries, bolstering gold prices, which in turn lifted shares of precious metal miners by 5%.
The FTSE 100 is up nearly 2% this month, far below European benchmarks, as markets view Britain as highly vulnerable to the rise in energy prices due to the country’s heavy use of natural gas.