London’s FTSE 100 inched higher on Tuesday, as a weaker pound boosted shares of exporters and a set of positive earnings helped lift confidence in the economy’s recovery.
The blue-chip FTSE 100 index rose 0.5%, with healthcare, financials and consumer staples stocks among the top boost.
A softer pound lifted shares of large, dollar-earning companies such as AstraZeneca Plc and British American Tobacco. But lower oil prices resulted in losses in oil heavyweights BP Plc and Royal Dutch Shell.
“Yesterday’s rally in the U.S. was positive, with the yields stuck around 1.6% level and the stimulus check coming through. It is good for risk appetite and the FTSE is going to move up for the next couple of weeks,” said Neil Wilson, chief market analyst at Markets.com.
The FTSE 100 has risen 4.4% so far this year on optimism about a speedy economic recovery, aided by faster vaccine roll outs after a 14.3% slump last year, but fears of increasing inflation leading to higher interest rates has undermined investor sentiment.
“With the rebound in the economy and vaccine progress, the Bank of England is more likely to be raising rates not necessarily this year, but certainly next year,” Wilson said.
The Bank of England governor said economic growth in the United Kingdom would fall by 4% in the first quarter from the same period last year and by 19% compared to the first three months of 2019.
The domestically focused FTSE 250 index rose 0.8%, led by consumer discretionary stocks.
Specialist pension provider Just Group Plc rose 5.3% after it reported an 11% rise in annual earnings and flagged progress in shoring up its capital base.
Student housing provider Unite gained 2.8%, after it forecast a return to full occupancy and rental growth for the upcoming academic year and reinstated dividend for the pandemic-hit 2020.
(Reporting by Shivani Kumaresan in Bengaluru; Editing by Subhranshu Sahu and Arun Koyyur)