UK's FTSE 100 logs strongest week in six months on defensive-sector rally

By Reuters News

Oct 16 (Reuters) - Britain's blue-chip stocks had their best week in six months, as investors flocking to defensive sectors offset a rout in AI-linked stocks, while finance minister John Healey's reassurances on fiscal discipline also helped risk appetite.

The export-heavy FTSE 100 .FTSE closed 0.38% higher at 10,881.90 points, logging a weekly gain of 3.1%, the biggest since early April, while the midcap FTSE 250 .FTMC gained 0.45%.

  • UK's large-cap ETFs attracted $3.38 billion in estimated net inflows year to date, already the biggest annual total since 2020, data from Morningstar showed

  • "Flows into passive funds typically follow performance, but they also reflect investors looking to diversify away from US mega-cap technology and broaden their equity exposure," said Michael Born, an analyst at Morningstar

  • Consumer staples supported gains. Cigarette maker British American Tobacco BATS.L rose 2.1%, while Johnnie Walker owner Diageo DGE.L gained 1.9%

  • The beverages .FTNMX451010 and medical equipment and services .FTNMX201020 sectors advanced 7.8% and 6.9%, respectively, in the week

  • Homebuilders .FTNMX402020 jumped over 6% in the week after Healey reaffirmed his commitment to fiscal discipline on Thursday

  • Banks .FTNMX301010 were muted on Friday, recovering from early losses triggered by a report that Healey was likely to tax the lenders in the budget

  • Bank of England Governor Andrew Bailey said signs of second-round inflation were limited ahead of next week's inflation data

  • Traders are pricing in four BoE rate hikes over the next 12 months, according to LSEG data

  • Defence stocks .FTNMX502010 extended a strong run on the day: BAE Systems BAES.L and Babcock International BAB.L rose 2.6% and 3.6%, respectively

  • THG THG.L had its best week in six months, surging 30% after the e-commerce firm raised its annual adjusted core profit forecast on Thursday

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