Friday saw a strong rally in UK markets, with mid-cap stocks leading the charge. The FTSE 250 index closed up 2.3%, reaching its highest point since March 2022. Meanwhile, the blue-chip FTSE 100 climbed 1.2%, hitting a two-month high.

This upswing was fuelled by positive company earnings reports and a rebound on Wall Street following U.S. inflation data that met expectations. The data kept alive hopes for a potential Federal Reserve interest rate cut in September.

Several companies stood out:

  • NatWest shares jumped 7% after raising its outlook and acquiring a £2.4 billion mortgage book from Metro Bank.
  • Drax Group surged nearly 14% on higher first-half profits and an optimistic annual forecast.
  • Babcock International climbed 8.6% after maintaining its full-year forecast.
  • Jupiter Fund Management rose 6.8% on better-than-expected profits.

Looking ahead, the Bank of England’s interest rate decision next week is in focus. Recent higher-than-expected UK services prices data has created uncertainty, with traders pricing a 50% chance of a quarter-point rate cut on 1 August.