Financials Give FTSE 100 A Lift As Earnings Lift Midcaps

On Thursday, the benchmark FTSE 100 index in the UK climbed higher, as the weakness in healthcare and energy shares was offset by financial stocks’ gains. Meanwhile, the mid-cap index saw some support, thanks to robust corporate earnings reports.

The FTSE 100 rises

There was a 0.1% rise in UK’s FTSE 100 index, with the biggest boost seen in 3I Group, as the private equity company reported a strong first quarter. There was a 0.6% and 0.7% rise in the insurance and bank sectors, respectively.

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However, the commodity-heavy blue-chip index had its gains capped because of a 1% drop in the shares of oil majors like BP and Shell. This was prompted because of a fall in crude prices because of concerns about demand after the first and biggest interest rate hike from the European Central Bank (ECB) was seen in over a decade.

Doubts about FTSE 100

Even though the United Kingdom is dealing with a severe cost-of-living crisis recently, the FTSE 100 index has managed to deliver a better performance than all of its global peers in 2022. This is because the particular index has heavy exposure to defensive and commodities sectors.

But, there have been doubts about whether the index will be able to continue with its performance in the second half of the year as well. This is because of increasing worries about a global economic recession.

Market analysts said that with a rise in the risks of global recession and once inflation hits a peak, it is expected that equities will once more turn to quality and this means growth names can also see a boost. Therefore, US equities may have to deal with more downside from their current levels, as opposed to their European and US counterparts, if a recession were to happen.

In other news, the competition for the candidate that will replace Boris Johnson as the British Prime Minister is getting more intense. The race is now between Liz Truss and Rishi Sunak, the foreign secretary and former finance minister, as they are the ones who managed to win the final votes of the lawmakers. The selection will happen on September 5th.

The FTSE 250

There was also a 1.6% gain recorded in the mid-cap FTSE 250 index, as it managed to outperform the FTSE 100 as well as the European STOXX 600 index. There was a 26.6% rise in the Frasers Group to the top of the domestically focused index. This was after Mike Ashley’s fashion and sportswear group announced that it was expecting to make higher profits in the coming year.

There was also a 10.0% gain in IG Group after the online trading platform reported an annual profit that was a bit higher than expected. A 3.0% fall was recorded in Dechra Pharmaceuticals, as the veterinary drug producer declined to the bottom of the FTSE 100 index. Meanwhile, there was a 9.4% drop in Carnival Corp because of its stock offering plans.

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