The FTSE 100 closed at the highest level in its history on Tuesday in defiance of concerns about an ongoing rate of rate of inflation within the U.K. The benchmark index gained 1.4 percent to close at 8,220 which was fueled by increases in major mining companies, energy giants, as well as financial shares. The rise was the latest achievement for London’s equity market that has been struggling in recent times to keep up in the wake of Wall Street
Inflation data sparks mixed reactions
Inflation data from HTML0 has triggered mixed reactions. increase coincides with the fact that U.K. inflation data revealed an unexpected increase to 6.1 percentage and rekindling concerns of there is a chance that the Bank of England (BoE) could keep rates at a higher level for a longer. As consumer prices remain rising, traders in the equity market did not seem to be concerned, predicting that the resilience of corporate earnings as well as a stronger pound will remain a boon for large-cap exporters.
Energy and Miners Lead the charge
The shares in BP as well as Shell increased by more than two percent as they reflected the rise in oil prices. Glencore as well as Rio Tinto gained more than three percent thanks to a strong demand for commodities. The FTSE’s large involvement in mining, energy multinationals as the main reason for its performance, which is higher than specific indexes that are geared towards the domestic market.
Sterling Weakness Aids exporters
It was the sterling dropped 0.6 percent on the dollar which was its third day-long decline. This has boosted the overseas profits of FTSE listed companies. The effect of currency has typically had a positive effect on the index, helping international-oriented businesses counteract domestic headwinds.
Bank of England Policy in the spotlight
The markets are looking ahead to the next BoE policy meeting and traders are split over whether a rate hike is in the near future. U.K. gilt yields climbed up, with those with a 10-year yield increasing to 4.35 percent, indicating a an expectation of inflation that is sticky. However, equity markets seem to be betting on the fact that global demand and the resilience of corporations can outweigh local tightening of monetary dangers.
