London markets were bumped higher this morning by investors pouring into industrial giants.
The capital’s premier FTSE 100 index climbed 0.59 per cent to 7,163.79 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, added 0.61 per cent to hit 19,127.22 points.
Investors are seemingly focussing on stocks that are proven dividend payers instead of speculative growth stocks amid mounting concern about the global economic trajectory.
Miners Antofagasta, Rio Tinto and Glencore, all of which are big dividend payers, were among the biggest risers on the FTSE, all jumping more than 2.2 per cent.
This morning’s rise builds on a positive start to the week in which London and European stocks have rallied from last week’s pummelling.
Investors have ditched equities in response to the world’s top central banks bearing down on inflation by reining in stimulative monetary policy.
Last week, the US Federal Reserve lifted rates 75 basis points, the steepest jump since 1994, while the Bank of England signed off a fifth successive rate rise.
The Swiss central bank also surprised markets by lifting borrowing costs 50 basis points, the first lift in over a decade.
Higher borrowing costs tend to weigh on stocks by making fixed income assets such as bonds more attractive. They also downgrade earnings calculations used by traders to identify profitable equities.
Middle-class favourite and online supermarket Ocado was the biggest faller on the FTSE 100 despite news emerging last night revealing it has raised £575m in a funding round.
The pound continued to gain ground on the greenback, strengthening 0.5 per cent to buy $1.2311.
Yields on UK government debt edged lower in a sign that investors are paring back risk appetite.