(Reuters) - Britain’s FTSE 100 hit its highest level in more than two weeks on Tuesday, helped by broad gains on a combination of generally positive corporate results from Wall Street and Europe and bets that major central banks would cut interest rates soon.
The main index .FTSE jumped 0.6% as its internationally-exposed stocks gained on a weak sterling after eurosceptic Boris Johnson won the Conservative Party leadership, clearing the way for him to become prime minister.
The domestically-focussed FTSE 250 .FTMC, which has broken ranks with the local currency in recent months, defied the drop in the pound and rose 0.5%.
“For the currency, a lot of the negative aspects have already been built in, some not only having to do with Johnson but also the overall state of the UK economy,” Cityindex analyst Fiona Cincotta said.
Despite briefly turning positive, sterling remained largely subdued as investors fretted over the possibility that Johnson, who has promised to deliver Brexit on Oct. 31, would take Britain out of the European Union without a withdrawal agreement.
“I would argue that if we get a sensible (withdrawal) announcement and that removes the uncertainty, the UK-focused stocks are in position to bounce back from here,” said Leigh Himsworth, portfolio manager at Fidelity International.
Though largely robust earnings on Wall Street kept the general mood bright, data from Refinitiv showed that companies listed on the pan-European STOXX 600 index were expected to report a modest drop in second-quarter earnings, compared with a modest gain estimated a week ago.
If that materialises, it would be the first back-to-back quarterly earnings decline since the second and third quarters of 2016, marking an earnings recession.
Small-cap IQE (IQE.L) jumped more than 25% on its strongest day in more than two years, as it reported some new deals in Asia which it hoped would offset a hit from the U.S.-China trade war.
But blue-chip supermarket chains shed between 0.5% and 2.3% after data from market researcher Kantar showed sales at all of Britain’s big four supermarket groups fell in the latest 12-week period.
Mid-cap Beazley BEZG.L gained 5.2% after its first-half earnings nearly tripled from last year and the Lloyd’s of London insurer said it expected double-digit premium growth over the year.
Among smaller stocks, premium tonic water maker Fevertree (FEVR.L) slumped 9.6% after its growth in Britain slowed, while passport printer De La Rue (DLAR.L) tanked 16% to a more than 16-year low after a probe by Britain’s Serious Fraud Office.
Reporting by Shashwat Awasthi in Bengaluru; Editing by Patrick Graham and Emelia Sithole-Matarise