FTSE 250 is world’s best-performing index today

Peak interest rate hopes fuelled a wave of bets on mid-cap stocks today as the FTSE 250 index shed its worst-performing tag with a market-leading 3% rise.

Even though the Bank of England made clear it is much too early to be talking about rate cuts, the dominance of property and rate-sensitive stocks on the FTSE 250 risers' board showed traders are thinking the worst is over for rising borrowing costs.

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The most-popular stock by some distance in London’s second tier was distribution centre-focused Tritax EuroBox Euro (LSE:BOXE), followed by shopping centre owner Hammerson (LSE:HMSO) and a large number of other real estate investment trusts.

Among the biggest stocks in the FTSE 250, British Land Co (LSE:BLND) jumped 22.7p to 320.1p as the Meadowhall and Paddington Central owner’s shares returned to the levels of early October.

Its former blue-chip shares have slumped from 470p in February as higher interest rates have weakened demand for property and caused a 12.3% slide in the value of its portfolio in the last financial year.

Derwent London, whose estate includes the new Soho Place mixed-use development on the corner of Oxford Street and Charing Cross Road, boosted confidence in the sector today when it reported “ongoing strong letting activity” in the second half of the year.

Its vacancy rate also reduced to 3.7% by 30 September compared with 4.5% at the end of June, helping to send shares 177p higher at 2022p near the top of the FTSE 250 index.

Hopes that mortgage costs have peaked also benefited a number of housebuilders, including Persimmon (LSE:PSN) as the former FTSE 100-listed company rallied 42p to its highest level since September at 1,074p.

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Persimmon, which traded at 3,000p in 2021, went below the 1,000p threshold for the first time in a decade earlier this summer. This reflected concerns that its exposure to first-time buyers puts it at the sharp end of the current squeeze on mortgage affordability.

In all, only five stocks were in negative territory in the FTSE 250 by mid-afternoon as investors eyed potential bargains after a bruising run for mid-cap valuations.

As we reported last month, the FTSE 250 has been the worst performing of all major benchmarks since global stock market selling started on 14 September.

The slump in mid-cap confidence follows a series of profit warnings as the strain of higher financing costs and faltering consumer demand begins to be felt.

Major world stock market performance on 2 November 2023

Source: SharePad. Performance as at 15:30 GMT.

In today’s session, however, the tone of corporate updates was more encouraging as shares in Trainline (LSE:TRN), OSB Group (LSE:OSB) and Helios Towers (LSE:HTWS) all posted double-digit percentage share price gains on the back of their respective statements.

For John Morgan, the long-serving boss of the fit-out, urban regeneration and construction firm Morgan Sindall Group (LSE:MGNS), the conditions are best described as “challenging yet manageable”.

Shares rose 98p to 1996p today as he reported an order book worth £9.1 billion at the end of September, up 7% from the year end position and level with the half year.

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At Trainline, the rise of 25.6p to the highest level since May at 288.4p came as the ticketing firm tightened full-year guidance towards the upper end of its forecast range.

Peel Hunt has a 440p target price, believing that investment in technology and features to help customers save money continue to boost the appeal of the stock. It said: “Trainline continues to up its game to make rail travel more attractive and less complex. Another upgrade to earnings flies in the face of a share price that continues to expect the opposite.”

Helios Towers rebounded 6.9p to 68.35p after the Africa and Middle East-focused telecoms infrastructure firm increased its full-year guidance and reported faster-than-expected progress strengthening its balance sheet, with net leverage now within its target range.

The recovery for OSB Group after a profit warning in July came as the buy-to-let and retail savings business forecast stronger-than-expected loan book growth of 9% for the year. This compares with guidance of 5% earlier in the year.

The shares rallied 46p to 334.4p, but analysts at Jefferies value the stock at 780p.

Best FTSE 250 stocks on 2 November 2023

Source: SharePad. Performance as at 15:30 GMT.