UK mid-cap stocks outperform after soft U.S. inflation data
Aug 10 (Reuters) - Britain's main equity indexes closed higher on Wednesday, with the mid-cap index outpacing the blue-chip FTSE 100 as investors cheered signs of moderating inflationary pressures in the United States.
The FTSE 100 (.FTSE) edged up 0.3% to close at a fresh two-month high, but strength in sterling and weakness in healthcare stocks weighed on the internationally oriented index.
The midcap FTSE 250 index (.FTMC) rallied 1.9% along with Wall Street after data showing a slower-than-expected rise in U.S. consumer prices prompted traders to cut their bets on aggressive interest rate hikes by the Federal Reserve next month.
"The market is thinking the Fed won't be hiking as aggressively so sterling has jumped and because the FTSE 100 has a lot more multinational companies - it's got dollar revenues and earnings - it is underperforming," said Patrick Armstrong, chief investment officer at Plurimi Wealth.
The FTSE 100 has outperformed its global peers with a 1.7% rise this year as higher interest rates boosted bank stocks, while oil and mining majors benefitted from a surge in commodity prices earlier this year following Russia's invasion of Ukraine.
The domestically focussed mid-cap index however has shed almost 14% in 2022 as a severe cost-of-living crisis and higher borrowing costs risk sending the British economy into a recession.
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