London close: Stocks rise after BoE and ECB meeting minutes

UK stocks gained after the Bank of England decided to keep interest rates unchanged and the European Central Bank suggested it might consider further stimulus.

The BoE’s Monetary Policy Committee voted 8-1 to maintain rates at 0.50% and its asset purchase programme at £375bn, as expected by analysts. Policymaker Ian McCafferty again voted for an interest rate increase of 25 basis points.

In the policy meeting minutes the Bank highlighted weak inflation, low wages, potential risks from a slowdown in emerging markets as reasons for holding off on a rate rise.

“We still expect Bank of England to hike in the first quarter of 2016, probably in February, as inflation is expected to pick up in the beginning of next year,” said Danske Bank Markets.

Some analysts have now pushed their expectations for a rate hike to end of 2016, including Ernst and Young. “In our view, disinflationary forces will prove to be more intense than the MPC expects, with a rate rise unlikely to happen until the latter part of 2016,” said Martin Beck, senior economic advisor to the EY ITEM Club.

Howard Archer, chief UK and European economist at IHS Global Insight, said he believed analysts had “overreacted” by pushing back their expectations from 0.50% to 0.75% to late-2016 or early-2017. He sees a rate hike coming in the first half of 2016.

ECB reiterates QE stance

The ECB’s minutes of its 2-3 September meeting revealed the Governing Council reiterated that it would consider extending the asset purchase programme past September 2016 if needed. The central bank said would monitor risks closely including weak commodity prices, the euro exchange rate appreciation, lower-than-expected economic growth, subdued inflation and a slowdown in emerging economies.

Still to come, the Federal Reserve’s 16-17 September meeting minutes at 1900 BST will be under the microscope for hints on the first interest rate rise in nearly a decade.

Fed Chair Janet Yellen has said policymakers expected an increase at its October or December meetings this year but last Friday’s weaker-than-anticipated non-farm payrolls report prompted some analysts to push back their expectations until next year.

Despite a slowing of job gains in September, Fed official John Williams said on Tuesday he still expects the central bank to begin raising rates this year. He said he believed the labour market has continued to improve and there have been no signs of a worsening global outlook. Williams will speak again later in Washington. Fed officials James Bullard and Narayana Kocherlakota were also due to speak on Thursday.

Companies

Tesco jumped after UBS on Thursday morning issued a note saying it sees scope for the supermarket to recover trading and earnings momentum over the next two to three years and reiterated its ‘buy’ rating. The company on Wednesday reported operating profits were down 55% in the first half of the year.

Fresnillo edged higher after HSBC reiterated its ‘buy’ rating and raised the company’s target price from 760p to 810p.

BHP Billiton also had an uptick after an upbeat note from Jefferies on the metals and mining industry. “If commodity prices stabilise as we expect, highly leveraged miners should take advantage of the opportunity to strengthen their balance sheets via asset sales and equity issuances. Miners with financial flexibility are best positioned to buy high quality assets at a very weak point in cycle."

Inmarsat slumped as the company reiterated its guidance for the year and said there’s no material change in the trading environment for the group’s performance.

Rolls Royce rallied after saying it will step up plans to establish an Asian manufacturing capability to help the group double production with the introduction of new Boeing Co. and Airbus Group SE jets.

Ladbrokes gained after appointing Kristof Fahy as chief marketing officer to lead all brand and marketing activity across digital and retail.

Hays was lower as the recruitment company said currency movements have had an impact on its quarterly earnings.

Glencore declined on fresh fears over the company’s mounting debt and the repercussions it could have on the banking sector. Analysts at Bank of America said: “The banking industry may have significantly more exposure to Glencore than is generally appreciated in the market.”

Tullow Oil advanced after reaching an agreement with the government of Gabon over its licences in the Onal Complex Fields, regaining its 7.5% stake in the Onal Complex producing fields and the Ezanga block.

Market Movers

techMARK 3,029.32 +0.45%

FTSE 100 6,379.01 +0.67%

FTSE 250 16,997.72 -0.20%

FTSE 100 - Risers

Fresnillo (FRES) 704.00p +4.14%

BHP Billiton (BLT) 1,147.00p +3.52%

Burberry Group (BRBY) 1,492.00p +2.54%

TUI AG Reg Shs (DI) (TUI) 1,244.00p +2.47%

Tesco (TSCO) 201.75p +2.41%

Whitbread (WTB) 4,771.00p +2.40%

Centrica (CNA) 241.20p +2.12%

Diageo (DGE) 1,829.00p +1.98%

Royal Mail (RMG) 460.70p +1.88%

Anglo American (AAL) 676.20p +1.76%

FTSE 100 - Fallers

Inmarsat (ISAT) 938.00p -3.89%

Glencore (GLEN) 120.45p -2.86%

Wolseley (WOS) 3,694.00p -1.49%

Marks & Spencer Group (MKS) 491.70p -1.48%

Aviva (AV.) 475.80p -1.33%

Kingfisher (KGF) 353.90p -1.28%

3i Group (III) 483.30p -1.10%

Hikma Pharmaceuticals (HIK) 2,136.00p -0.97%

Smiths Group (SMIN) 1,002.00p -0.60%

London Stock Exchange Group (LSE) 2,457.00p -0.57%

FTSE 250 - Risers

Kaz Minerals (KAZ) 132.60p +8.16%

Electrocomponents (ECM) 189.30p +5.58%

FirstGroup (FGP) 103.00p +4.89%

Evraz (EVR) 93.35p +4.30%

Stagecoach Group (SGC) 339.90p +3.91%

Ladbrokes (LAD) 107.20p +3.57%

Vedanta Resources (VED) 527.50p +3.53%

Senior (SNR) 268.80p +3.15%

Drax Group (DRX) 271.80p +2.99%

Cineworld Group (CINE) 572.00p +2.79%

FTSE 250 - Fallers

Hays (HAS) 136.90p -7.19%

IP Group (IPO) 221.80p -6.37%

Vectura Group (VEC) 166.00p -5.41%

Riverstone Energy Limited (RSE) 870.00p -4.66%

John Laing Group (JLG) 186.90p -3.66%

OneSavings Bank (OSB) 364.70p -3.65%

Daejan Holdings (DJAN) 6,025.00p -3.60%

Aldermore Group (ALD) 256.80p -3.42%

Hunting (HTG) 440.20p -3.23%

Michael Page International (MPI) 465.80p -3.10%

FTSE TechMARK - Risers

Oxford Instruments (OXIG) 637.50p +4.25%

Filtronic (FTC) 6.88p +1.85%

Ricardo (RCDO) 912.50p +1.11%

Triad Group (TRD) 31.25p +0.81%

Innovation Group (TIG) 39.50p +0.64%

Consort Medical (CSRT) 938.00p +0.16%

IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 203.20 +0.05%

FTSE TechMARK - Fallers

NCC Group (NCC) 250.50p -1.57%

Oxford Biomedica (OXB) 7.60p -0.65%

BATM Advanced Communications Ltd. (BVC) 19.50p -0.64%

Skyepharma (SKP) 337.75p -0.59%

Spirent Communications (SPT) 75.50p -0.33%

XP Power Ltd. (DI) (XPP) 1,635.00p -0.30%

Sepura (SEPU) 173.00p -0.29%

SDL (SDL) 370.00p -0.27%