London hailed as Europe’s best stock market: Wall Street backs UK, while Germany ranks last

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

The latest survey of fund managers by Wall Street giant Bank of America (BofA) revealed that the UK was “the most popular stock market in Europe” while Germany was “the least popular”.

It was the latest evidence of a shift in sentiment toward British stocks.

For much of the past two years, the City has been in the throes of deep soul-searching amid disastrous valuations that have left UK-listed companies vulnerable to foreign takeovers and strangled any appetite for new IPOs.

The BofA poll found the mood was changing, with a positive view of Britons.

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

So far this year, it has risen by more than 7 percent. In New York, Wall Street stocks have reached record highs.

Meanwhile, UK 10-year bond yields (which fall as their prices rise) fell to their lowest level since February.

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

This comes at a time when industrial crisis has led to Germany being labelled the “sick man of Europe”, while both it and France are mired in political division.

The positive mood towards Britain comes despite the pessimism that has surrounded Labour’s first months in government.

Chancellor of the Exchequer Rachel Reeves has lamented her economic legacy from the Tories and Prime Minister Keir Starmer has warned of “painful” measures in the Budget.

Business leaders fear the pessimism could end up affecting investment, as tax increases and a raft of new rights for workers are also likely to take their toll.

However, official data show that the economy has seen significant growth this year, with gross domestic product expanding at the strongest pace among all G7 countries in the first half. Meanwhile, unemployment has been falling.

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

That has allowed the Bank of England to begin cutting interest rates, with a quarter-point cut last month and the next rate decision due tomorrow.

Rate-setters are widely expected to leave rates at 5 percent, although overnight trading in the bond market suggested there was a 36 percent chance they could be cut again this week.

Those prospects could get a further boost if the US Federal Reserve decides to implement a massive rate cut tonight.

The US is seen as certain to cut its rate for the first time since 2020 by at least a quarter of a percentage point, but markets are betting that a half-point increase is the more likely outcome.