The FTSE 100 was firmly higher on Wednesday as UK-centric stocks helped London’s leading index outperform amid a sell off in technology shares.
Interest rates were again in focus ahead of next month interest rate decision after lower inflation data almost cemented a 25bps interest rate cut by the Bank of England on 7 November.
UK inflation has fallen to 1.7%, well below the Bank of England’s 2% target, leaving them little choice but to ease borrowing costs. It was likely the bank would cut rates before today’s inflation data with the economy struggling to produce any growth.
As one would expect, most stocks with exposure to the UK economy were having a good day on Wednesday and were among the top gainers.
“On a day when investors are dealing with the headache of a big sell-off in many tech stocks, the UK has come into its own and been a shining light on global markets,” said Russ Mould, investment director at AJ Bell.
“The FTSE 100 climbed 0.7% to 8,309 thanks to commodity producers taking centre stage, together with a healthy dose of gains from AstraZeneca, Rolls-Royce and HSBC.
“Providing back-up support was a group of stocks that stand to benefit from interest rate cuts in the UK.
“Housebuilders Taylor Wimpey and Persimmon, kitchens group Howden Joinery and DIY retailer Kingfisher were all in vogue after UK inflation hit a three-and-a-half year low, strengthening the argument for the Bank of England to cut the cost of borrowing next month.
“Investors are taking the view that financial pressures are easing on households and the public will soon be in a stronger position to spend money. This would be good for the economy and good for the army of stocks on the UK market that rely on consumers to make money.”
Whitbread was the FTSE 100’s top riser after announcing a bumper round of share buybacks and set out plans to return £2bn to shareholders over the next five years. Shareholders love share buybacks and the stock rose over 4% on Wednesday.
Miners also found support on Wednesday after days of steady selling. Antofagasta rose 2.8% and Endeavour Mining added 2.7%.
Insurance companies Admiral and Beazley were residing at the bottom of the leaderboard with losses around 2%-3%.