London’s top index today shook off a fourth rate rise in a row for the first time since the Bank of England was given control of monetary policy.
The capital’s FTSE 100 added 0.13 per cent to reach 7,503.27 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, slipped 0.64 per cent to close at 20,089.96 points.
Diverging fortunes of London’s two top indexes is likely to have been driven by the pound collapsing in response to the Bank sounding the alarm that the UK is headed for a recession soon.
A weaker pound makes exports cheaper for foregign buyers, boosting demand for their goods.
A large proportion of the FTSE 100 is made up of firms that rely on international buyers to generate income, meaning a drop in the pound boosted investor sentiment to the UK’s top companies.
Firms listed on the FTSE 250 are more reliant on the UK consumer, suggesting traders took the Bank’s forecasts of a coming spending slowdown as a sign these companies may struggle in the coming months.
Rate setters at Threadneedle Street announced they had voted 6-3 in favour of sending interest rates 25 basis points higher to one per cent, their highest level since 2009.
The pound weakened around 1.8 per cent against the dollar on the news.
Oil giant Shell was among the top risers on the FTSE 100 after it announced it had posted its best every quarter of underlying profits off the back of soaring energy prices.
It comes after BP also registered its best underlying quarterly earnings in over a decade this week.