London hailed as Europe’s finest inventory market: Wall St backs UK

London was yesterday hailed as Europe’s favourite stock market as the FTSE 100 hit a two-week high.

The latest fund manager survey from Wall Street giant Bank of America (BofA) revealed that the UK was ‘the most preferred equity market in Europe’. Germany was ‘the most unloved’.

It was the latest evidence of a reversal in sentiment towards British stocks.

For much of the past couple of years, the City has been gripped by soul-searching amid bombed-out valuations that have left UK-listed businesses vulnerable to foreign takeovers – and strangled any appetite for new flotations.

The latest fund manager survey from Wall Street giant Bank of America revealed that the UK was ‘the most preferred equity market in Europe’

The BofA survey revealed that the mood was changing, with a positive view on British

shares for the first time since June 2021.Yesterday, the FTSE 100 rose 0.4 per cent as it joined in a global stock market rally amid hopes of interest rate cuts.

It is up more than 7 per cent for the year to date. In New York, Wall Street stocks hit record highs.

Meanwhile, yields on ten-year UK bonds – which fall as their prices rise – dropped to their lowest level since February. 

The BofA poll showed Britain topped the list of preferred equity markets in Europe, ahead of Spain, Switzerland, Italy, France and Germany. 

It comes as Germany’s industrial downturn has seen it labelled the ‘sick man of Europe’ while both it and France are engulfed by political division.

The positive mood towards Britain comes despite the doom and gloom that has surrounded Labour’s first couple of months in government.

Chancellor Rachel Reeves has lamented her economic inheritance from the Tories and Prime Minister Keir Starmer has warned of ‘painful’ measures in the Budget.

Business leaders fear the pessimism could end up denting investment, with tax hikes and a raft of new workers’ rights also likely to take their toll.

Yet official data shows that the economy has been enjoying significant growth this year, with gross domestic product expanding at the strongest pace among all the G7 nations in the first half. Meanwhile, unemployment has been falling. 

And figures today are expected to show inflation held steady at 2.2 per cent in August, close to the Bank of England’s 2 per cent target.

That has allowed the Bank of England to start reducing interest rates – with a quarter point cut last month and the next rates decision tomorrow.

Rate-setters are expected to leave rates on hold at 5 per cent though last night, bond market trading suggested there was a 36 per cent chance they could be cut again this week.

Those chances could be given a further boost if the US Federal Reserve decides to go for a jumbo rate cut tonight.

A first US cut since 2020, of at least a quarter of a percentage point, is seen as a certainty – but markets are betting that the most likely outcome is a half-point move.