The FTSE 100 index closed up 0.6% while the FTSE 250 closed up 1.01%, driven by defence and energy stocks, amid escalating tensions between Russia and the West, as investors wait for a decision from the Bank of England on interest rates today.
The Bank’s Monetary Policy Committee is widely expected to raise interest by 50 or 75 basis points (0.5%-0.75%) amid soaring inflation and pressure on the pound, which hit historic lows in recent weeks.
On Wednesday, America’s Federal Reserve raised interest rates by 0.75%, with chair Jerome Powell vowing to ‘keep at’ the battle against inflation.
John Hardy, head of foreign exchange strategy at Saxo Bank, told CNBC, “If the Bank of England fails to hike 75 basis points, let’s shield our eyes for what is going to happen to the pound here.
“The Bank of England has to go 75, it has to match its global peers here when we have seen cable (pound-dollar) trading at its lowest level since 1985. It would really be quite a tone deaf performance from the Bank of England if they don’t go for 75 basis points at this week’s meeting.”
Large oil companies such as Shell (GB:SHEL) climbed in the wake of a speech where Vladimir Putin alluded to the use of nuclear weapons in Ukraine, as did defence stocks such as British Aerospace (GB:BA), which rose more than 4% in yesterday’s trading.
British business news today
Majority of Britons support tax rises and more spending (FT)
Truss tax cuts will spark ‘unsustainable’ rise in debt, warns IFS (Telegraph)
Business is ‘addicted to state handouts’ (Times)