Shares of banks and retailers lifted UK’s blue-chip FTSE 100 index on Tuesday, while Liz Truss prepared to take charge as the country’s new prime minister amid fears around surging prices and a looming recession. The FTSE 100 edged up 0.2% and was set to extend gains into a third straight session.
Truss, who will replace Boris Johnson, will be travelling to see Queen Elizabeth in Scotland before appointing a new team of ministers to tackle the economic crisis. Some investors are alarmed that tax cuts promised by Truss could aggravate Britain’s inflation problem, speeding up the Bank of England’s interest rate hikes and worsening a recession that the BoE expects to start this year and end only in 2024.
Traders are expecting a 66.7% chance of a 75-basis-point hike by the BoE at its meeting next week. The rate-sensitive banking sector advanced 1.0%.
“At the moment, at least, the market is tending to overlook the downside consequence of the recession and are focussing on the fact that interest rates are of a higher potential for banks and financial institutions to make more…
