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Updated December 20th, 2023 at 16:51 IST

FTSE 100 surges to seven-month high as inflation eases

The FTSE 250 midcap index also saw a 0.9 per cent increase, hitting a seven-month high.

Business Desk
Stock markets
Representative image of stock market | Image:Unsplash
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British equities witnessed an upswing on Wednesday, with the FTSE 100 rising tohighest level since May 24. The surge was fuelled by investor optimism stemming from an unexpected drop in domestic inflation. The pound also saw a 0.5 per cent decline in response to data revealing a greater-than-anticipated decrease in British inflation for November, reaching its lowest level since September 2021.

The annual increase in the consumer prices index retreated to 3.9 per cent from October's 4.6 per cent, prompting investors to factor in the likelihood of two quarter-point rate cuts by the Bank of England in the first half of the upcoming year, with the first potentially occurring as early as March.

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The FTSE 250 midcap index also saw a 0.9 per cent increase, hitting a seven-month high. Rate-sensitive sectors such as real estate, real estate investment trusts, and homebuilders experienced gains ranging from 0.8 per cent to 1.1 per cent. Heavyweight energy stocks rose by 1.6 per cent, buoyed by elevated crude oil prices, while banks recorded a 1.2 per cent jump.

Across various FTSE 350 sectors, positive momentum prevailed, with travel and leisure, as well as life insurers, emerging as top gainers, each surging over 1 per cent. Additionally, yields on UK government bonds dipped, with the benchmark 10-year gilt yield closing at 3.549 per cent.

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Among individual stocks, Intertek Group witnessed a 3.1 per cent surge following an upgrade in its rating by Exane BNP Paribas from "underperform" to "outperform." Petrofac, an oilfield services provider, saw a 40 per cent surge after securing a substantial $1.4 billion contract.

(With Reuters inputs)

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Published December 20th, 2023 at 16:51 IST

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