The blue-chip FTSE 100 closed 1.4% higher to record its best session in more than a month
Britain’s FTSE 100 ended higher on Wednesday as energy and mining shares rallied on the back of higher commodity prices and Compass Group posted a strong earnings report.
The blue-chip FTSE 100 closed 1.4% higher to record its best session in more than a month while the domestically focused mid-cap index also advanced 1.4%.
Miners climbed 3.9% as metal prices rose on signs of lower domestic COVID-19 infections in China.
Oil majors Shell and BP rose nearly 3.7%, each tracking a recovery in crude prices on supply concerns and expectations that Beijing would provide more economic stimulus after China’s factory-gate inflation eased.
Compass Group jumped 7.4% to the top of the index, after the catering company raised its annual revenue forecast and announced a 500 million pound ($616.65 million) share buyback following a strong first half.
A lot of corporates so far have been pretty successful in passing on the higher costs to consumers and we’ve seen UK stocks being relatively attractive because they are relatively cheap and you’re still earning a decent return, said Stuart Cole, head macro economist at Equiti Capital.
However, if you look at the BRC (British Retail Consortium) figures this week they are showing that consumers are starting to curtail their spending as the cost of living crisis bites and real income is severely eroded, he said.
An economic think-tank said Britain was on course to enter a technical recession in the second half of this year and faced a big hit to living standards from surging prices.
Nevertheless, the FTSE 100 has outperformed its pan-European peers so far this year, helped by a jump in commodity stocks due to a surge in metal and oil prices amid the geopolitical tensions.