LONDON — The UK’s benchmark FTSE 100 index managed to claw out minor gains on Friday, defying a broader risk-off sentiment sweeping through global markets. Investor confidence was bolstered by new data suggesting that the inflationary threats stemming from the Middle East conflict might not be as severe as previously anticipated.
The blue-chip FTSE 100 closed marginally higher by 0.07%, whereas the mid-cap FTSE 250 slipped 1%. Despite the flagship index’s resilient finish to the session, both indexes locked in losses for the week, with the mid-caps breaking a consecutive two-week winning streak.
Market sentiment was lifted after a fresh Bank of England survey of over 2,000 British firms revealed that corporate inflation expectations are beginning to cool. According to the data, 57% of businesses intend to raise prices over the coming year in response to the energy price shock triggered by the war with Iran—a notable 7 percentage point drop from April’s figures. Economists suggest that a cooling domestic labor market could prevent severe second-round inflation effects, potentially allowing the Bank of England to hold interest rates steady while other global central banks tighten policy.
Preventing further global economic damage remains heavily contingent on a near-term diplomatic breakthrough to reopen the critical Strait of Hormuz shipping corridor. Structurally, Iran has demanded a verified ceasefire between Israel and Hezbollah as a baseline condition for any Washington-mediated peace accord to conclude the four-month-old war.
Domestically, higher borrowing costs and geopolitical uncertainty continue to chill the property sector, with Halifax mortgage data revealing an unexpected 0.1% decline in British house prices for May. Traders widely anticipate that the Bank of England will hold its benchmark lending rate at 3.75% during its upcoming meeting, though money markets are still pricing in up to two quarter-point hikes later this calendar year.
Geopolitical factors were accompanied by domestic political intrigue, as Labour Mayor Andy Burnham signaled intent to launch a future leadership challenge against Prime Minister Keir Starmer should he secure re-election later this month.
In sectoral and corporate movements:
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Pharmaceutical and Personal Care equities spearheaded the gainers, advancing 2.1% and 2% respectively, while Precious Metal Miners plummeted 6% amid shifting global commodity trends.
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Evoke surged 15% following a finalized £243 million ($326 million) all-share acquisition agreement by Greek gaming and lottery giant Bally’s Intralot.
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Raspberry Pi skyrocketed 27% to achieve an all-time trading high, leading the mid-cap index after the compact computing firm officially upgraded its full-year profitability forecast.
