The UK stock market started the week on a positive note, with the FTSE 100 index rising 0.5% amid optimism that US interest rates may have peaked.
The FTSE 100 closed up 65 points at 7,426, while the midcap FTSE 250 index added 60 points to 17,914. Insurer Phoenix Group led the blue-chip risers, initially jumping over 6% after upgrading its near-term cash forecasts. The company said it expects to generate around £1.8 billion in 2023, versus previous guidance of £1.3-£1.4 billion.
“As a result, the group expects to have significant surplus cash at its holding company at the end of 2023, which creates further balance sheet optionality,” Phoenix said. The cash will allow it to pursue growth opportunities or enhance shareholder returns.
Defence firm BAE Systems gained 0.2%, saying recent trading was in line with guidance. It pointed to strong order flow and sales growth this year. Analysts see BAE as a prime beneficiary of rising global defence budgets.
Aviation stocks were also in demand, with Rolls-Royce up 3.5% and Melrose 3% higher. The uplift comes as a major industry event kicked off in Dubai.
In property, British Land rose 2% after guiding that 2024 earnings rental value growth would be at the top of its previous 2-4% range for campuses and 3-5% for retail parks. Rival Land Securities added 1% ahead of its interim results on Tuesday.
Advertising firm Brave Bison leapt 15% on news of £4 million in new and renewed contracts. Its chair said trading conditions have improved since a June lull.
But the positive start to the week could prove short-lived if Tuesday’s US CPI reading comes in hotter than expected. Markets may have to reassess their view that the Fed is nearly done with rate hikes. For now, peak rate hopes are providing a supportive backdrop for stocks.
