London close: Stocks jump as investors eye interest rate peak
London stocks jumped on Thursday, while sterling fell further after the Bank of England hiked rates for the tenth month in a row.
"While the likes of Powell, Lagarde, and Bailey refrained from stating that this week’s rate hike is the final twist of the knife, it could yet be one and done for some," explained Josh Mahony, senior market analyst at IG.
"Meanwhile, growing optimism that inflation has peaked brings confidence that this year will allow for the dovish pivot theme to build a bullish financial market environment this year.”
The FTSE 100 added 0.76% to 7,820.16, while the pound was down 0.90% against the US dollar at 1.2264.
In parallel, the second-tier index surged by 3.60% to 20,614.69.
The BoE lifted interest rates by 50 basis points as expected, but also hinted that inflation may have peaked. Rates were increased to 4% - the highest level since October 2008 - as the Bank looks to tackle inflation.
The Monetary Policy Committee voted 7–2 to hike rates by 0.5 percentage points, with Swati Dhingra and Silvana Tenreyro opting to keep rates at 3.5%. They had also voted for no change in December.
The BoE said in a statement: "Global consumer price inflation remains high, although it is likely to have peaked across many advanced economies, including in the United Kingdom.
Looking ahead, Bank said further tightening in monetary policy would be required "if there were to be evidence of more persistent pressures".
This appeared to mark a softening from its earlier stance, as the Bank had previously said it would "respond forcefully, as necessary" to signs of further inflation and "further increases in Bank Rate may be required".
On Wednesday night, the US Federal Reserve lifted interest rates by 25 basis points, as expected, but markets rallied after Chair Jerome Powell warned that more interest rate hikes were coming and said it would be "very premature to declare victory" on inflation but acknowledged that "the disinflationary process has started".
In equity markets, fashion retailer JD Sports Fashion surged to the top of the FTSE 100 as the company revealed it is aiming to grow revenues and margins by double digits over the next five years alongside a rapid store expansion under a strategy outlined by new chief executive Regis Schultz.
Advertising giant WPP rallied as French peer Publicis surged on the back of its full-year results.
Oil and gas giant Shell slipped even as it posted a record fourth-quarter profit of $9.8bn, driven by higher trading from its liquefied natural gas (LNG) operations. Annual earnings doubled to $39.87bn, also a record, as the company cashed in on soaring energy prices inflamed by Russia's invasion of Ukraine a year ago. The full-year dividend was lifted 16% to $1.03 a share.
Shell also announced a new share buyback programme of $4bn, which is expected to be completed by the first quarter 2023 results announcement.
BT Group reversed earlier losses to trade sharply higher as the telecoms company reiterated its full-year outlook despite seeing third-quarter revenues slip.
Standard Chartered was knocked lower by a downgrade to ‘neutral’ at Goldman Sachs.
Centrica shares slid as the British Gas owner suspended the forced instalment of prepayment meters, after an investigation showed the homes of vulnerable customers were being broken into.
Cyber security firm NCC tumbled after it warned on profits, saying that market headwinds were impacting current trading and that it expects to cut jobs.
Market Movers
FTSE 100 (UKX) 7,820.16 0.76%
FTSE 250 (MCX) 20,614.69 3.60%
techMARK (TASX) 4,528.51 2.31%
FTSE 100 - Risers
Ocado Group (OCDO) 734.80p 11.30%
JD Sports Fashion (JD.) 181.50p 11.15%
Persimmon (PSN) 1,531.00p 8.62%
SEGRO (SGRO) 920.20p 8.26%
Scottish Mortgage Inv Trust (SMT) 805.40p 7.79%
Hargreaves Lansdown (HL.) 944.00p 6.98%
Ashtead Group (AHT) 5,732.00p 6.94%
BT Group (BT.A) 132.40p 6.86%
RS Group (RS1) 1,022.00p 6.74%
Taylor Wimpey (TW.) 126.50p 6.66%
FTSE 100 - Fallers
Airtel Africa (AAF) 111.20p -4.39%
Centrica (CNA) 98.18p -3.13%
BAE Systems (BA.) 830.00p -2.81%
BP (BP.) 478.80p -2.77%
Standard Chartered (STAN) 669.60p -2.59%
Rio Tinto (RIO) 6,064.00p -2.23%
HSBC Holdings (HSBA) 591.00p -1.71%
Shell (SHEL) 2,337.50p -1.23%
Reckitt Benckiser Group (RKT) 5,626.00p -1.19%
Imperial Brands (IMB) 2,034.00p -0.78%
FTSE 250 - Risers
Carnival (CCL) 878.80p 13.69%
Future (FUTR) 1,715.00p 12.61%
Molten Ventures (GROW) 395.00p 12.28%
Currys (CURY) 78.20p 12.03%
ASOS (ASC) 982.00p 10.15%
Hammerson (HMSO) 29.21p 9.69%
LondonMetric Property (LMP) 207.00p 9.12%
Liontrust Asset Management (LIO) 1,290.00p 8.95%
Target Healthcare Reit Ltd (THRL) 87.10p 8.74%
JTC (JTC) 785.00p 8.73%
FTSE 250 - Fallers
Paragon Banking Group (PAG) 576.00p -5.26%
NCC Group (NCC) 176.20p -4.45%
Hunting (HTG) 339.00p -3.56%
Balfour Beatty (BBY) 363.00p -1.47%
Virgin Money UK (VMUK) 187.90p -1.34%
Ferrexpo (FXPO) 156.80p -1.07%
Tullow Oil (TLW) 34.68p -0.86%
Telecom Plus (TEP) 1,960.00p -0.71%
Wood Group (John) (WG.) 139.80p -0.57%
Harbour Energy (HBR) 309.40p -0.51%