The stocks leading the FTSE 250 fightback

It’s been a painful year for mid-cap investors, but an easing in political turmoil has offered encouragement in recent days. Discover the stocks on the march.

Support from a stronger pound lifted the mood of mid and small-cap investors today as the FTSE 250 continued its recent outperformance over London’s top flight.

From its low point for the year on 12 October, the UK-led second-tier benchmark has rebounded by over 8% to reflect calmer conditions in financial markets since the shock of the unfunded tax cuts in Kwasi Kwarteng’s mini-budget at the end of September.

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Trading conditions remain hugely uncertain, but pressure on UK borrowing costs has eased significantly after a fall in the 10-year gilt yield to around 3.6%. Currency headwinds have also softened as the pound topped $1.16 at one point today, aided by US weakness as traders speculate whether the pace of Federal Reserve rate rises is finally near its peak.

Mid-cap investors who took the plunge a fortnight ago are now sitting on some decent returns, with 13 stocks up by a fifth and the next 12 best-performing companies all up by at least 16%.

The consulting and engineering business John Wood Group (LSE:WG.) leads the way in the FTSE 250 following a 38% surge, while other stocks up by more than 20% include electronics components business discoverIE Group (LSE:DSCV), private equity firm Bridgepoint Group When Issue (LSE:BPT) and the cruise ship operator Carnival (LSE:CCL).

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Cyber security business Darktrace (LSE:DARK) is up 24%, having warned in its latest update earlier this month about the potential impact of a weaker pound on future reporting  periods.

For longer-term investors, however, these recent gains scratch the surface after some hefty losses this year. Wood, for example, remains 24% lower and Bridgepoint is down 57%.

Until recently, sterling weakness had offered the international-focused FTSE 100 some protection during a turbulent 2022.

Fund administration group Link also noted today that UK investors have received an additional £5.7 billion of dividends this year because of the value of dollar payouts. Around two-thirds of UK-listed companies declare dividends in dollars or euros.

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In today’s trading, the top flight lost 28 points at 6,985 and has improved by a modest 2% since 12 October as concern grows over the chances of recession in the US economy.

Unilever (LSE:ULVR) and Diageo (LSE:DGE) shares were among the session’s biggest fallers as slowing quarterly sales growth at Nurofen and Dettol business Reckitt Benckiser (LSE:RKT) heightened fears that financially  stretched households are trading down to cheaper brands.

The fallers board also featured Scottish Mortgage(LSE:SMT) Investment Trust, which suffered in a tech-led sell-off as investors reacted to last night’s disappointing numbers from Alphabet (NASDAQ:GOOGL).

In the FTSE 250 index, investors found value in speciality chemicals firm Synthomer (LSE:SYNT) following its recent difficulties as the shares rose another 10.4p to stand 29% higher over the past fortnight at 115.7p.

Investors also returned to pubs chain Mitchells & Butlers (LSE:MAB) following a rise of 5.9p to 110.1p, while the airlines easyJet (LSE:EZJ) and Wizz Air (LSE:WIZZ) improved 13.7p to 330.3p and 96p to 1509p respectively.