British Mid-Cap Stocks Soar to Two-Year High Amid Robust Earnings and Wall Street Rebound

British mid-cap stocks reached a two-year high, fueled by strong company earnings and positive U.S. inflation data. The FTSE 250 and FTSE 100 indexes rose significantly. The market was buoyed by recovery in tech shares and potential rate cuts by the Federal Reserve and Bank of England. Notable performers included NatWest, Drax Group, Babcock International, and Jupiter Fund Management.

British mid-cap stocks rallied to their strongest finish in more than two years on Friday, driven by upbeat company earnings reports and a Wall Street rebound following benign U.S. inflation data. The FTSE 250 index of domestically oriented UK stocks closed up 2.3% at its highest level since March 2022, while the blue-chip FTSE 100 rose 1.2% to close at a two-month high.

The global mood improved as tech shares bounced back on Wall Street and an in-line U.S. inflation report upheld bets for a September interest rate cut by the Federal Reserve. Meanwhile, the Bank of England's first interest rate cut since 2020 hangs in the balance next week after higher-than-expected British services prices data, with traders pricing in a 50% chance of a quarter-point rate cut on Aug. 1.

Among notable movers on the FTSE 100, NatWest shares surged 7% to a near decade high as it raised its outlook and acquired a 2.4-billion pound ($3.1 billion) mortgage book from Metro Bank. "The company is feeling confident to go on the offensive," said AJ Bell head of financial analysis Danni Hewson.

Boosting mid-cap stocks, Drax Group surged nearly 14% after the power generator posted higher first-half profit and expected annual profit to reach the top-end of market expectations. Babcock International climbed 8.6% after maintaining its full-year forecast, while Jupiter Fund Management rose 6.8% following forecast-beating profit reports.

(With inputs from agencies.)