Despite stronger-than-expected inflation throughout the UK, the British FTSE all-share index continued an upward trend on Wednesday. Surprisingly, the geopolitical struggles have affected the share price positively. Bank of England (BoE) has reported the possibility of rate cuts easing due to a number of factors.

Donald Trump, the US presidential candidate, alarmed international investors by questioning Washington’s backing for Taiwan. 

According to a source, Washington was considering increasing restrictions on the export of cutting-edge semiconductor technology to China, which has strongly impacted FTSE tech sector stocks.

Globally, technology equities plummeted, while defensive stocks, which investors gravitate toward during uncertain economic times, rose.

There is now increased uncertainty about when the Bank of England will start its cycle of monetary policy relaxation.

Recently, statistics on consumer prices in Britain showed that inflation remained at 2%, confounding predictions of a slight decline. This dynamic put pressure on the second-tier FTSE AIM All-Share Index, while the top-tier index benefited, keeping Sterling in check.

Importantly, the Office for National Statistics has just published a June report. According to the data, the yearly growth rates of core and headline consumer prices remained constant at 3.5% and 2.0%, respectively.

AJ Bell Report: Tech FTSE All-Share Index Today 

According to the latest data, average weekly FTSE All-Share index earnings increased by 5.7% over the three months. Compared to the period of last year, the growth is undoubtful. This indicator is crucial for the Bank of England. Using this data, BoE is going to decide whether to cut interest rates next month.

Furthermore, money markets increased their odds of an interest rate drop next month from 30% to 39.1%. Compared to forecasts of 1.9% in June, inflation maintained at 2%, according to Wednesday’s data from the consumer price index.

With a 1.4% increase, heavyweight energy companies were among the top gainers in London. Rising oil prices largely influenced the trajectory.

The FTSE all-share index has also showcased a significant shift in the British sportswear and apparel retailer Frasers. The data revealed a 13.1% increase in yearly profit. Besides, analysts are predicting more growth in the upcoming fiscal year. As a result, Frasers surged 7.6% to the top of the FTSE 100.

The blue-chip FTSE 100 index (.FTSE) increased by 0.3% as it recovered from earlier in the day losses of up to 0.4%. Overall, the sentiment remains positive, reflecting strong earnings growth, increased odds of an interest rate drop, and significant gains in both energy companies and the FTSE 100 index.

FTSE 250 Surges: Outpacing FTSE 100 with Hidden Growth Potential

This year, the FTSE 250 has gained 8.2%, outpacing the FTSE 100 by about 3%. It recently reached its greatest level since April 2022, surpassing 21,200 points, a two-year high. Given the statistics, such an outcome is not surprising. FTSE 250 has a tendency to outplay its older sibling.

Since FTSE 250 consists of a roster of smaller-cap stocks, it usually has higher growth chances. Therefore, finding cheap stocks on the 250 is a terrific method to benefit from the additional growth potential.

Additionally, at 19.8, the index’s average price-to-earnings (P/E) ratio is almost at its lowest point in the last two years.

The Animal Genetics company predicted 2024 adjusted pre-tax profit to be in line with the market view. Besides, the company assumed that in 2025, adjusted operating profit would be lower than its prior projection. As a result, the mid-cap FTSE 250 index (.FTMC) fell 0.6%. Genus (GNS.L) fell 10.8%.

Overall, FTSE 250 has surged over the past year, increasing by 33%. Strategic initiatives and strong financial performance support this surge. The management revealed a 20% increase in underlying operational profit and a 15% increase in sales of retirement income in its most recent interim results.

Therefore, lately, analysts have concluded that FTSE 250 may still be a hidden treasure, especially at such an excellent valuation. As for now, the investors will be keeping an eye on the UK payrolls and retail sales data on Thursday. The next FTSE all-share index news is going to determine BoE’s further policy actions in August.