London close: Stocks rise as BoE stands pat on policy

The FTSE 100 ended higher on Thursday as the Bank of England decided to keep policy unchanged and as UK retail sales data came in better than forecast.

The BoE voted unanimously to leave interest rates at 0.25% and the asset purchase programme at £435bn, in a move expected by analysts.

The Bank left the door open to further rate cuts but noted that recent economic data had been more positive than anticipated in the aftermath of the Brexit vote.

“We expect the BoE to cut by 15bp from 0.25% to 0.10% in November, but it is a close call and will be data-dependent,” said Dankse Bank.

In other UK news, the Office for National Statistics revealed UK retail sales fell less than expected in August. Sales dropped 0.2% on a monthly basis, better than the 0.4% decline forecast by the economists but a sizeable slowdown after a strong July, where sales have been revised up from 1.4% to 1.9%.

The annual rate of growth slowed slightly to 6.2% from a revised 6.3% but was much higher than the estimated 5.4%.

“Retail sales held up well in August following a strong July – yet another piece of evidence which shows the economy has fared better than expected since June’s referendum,” said Ben Brettell, senior economist at Hargreaves Lansdown.

In the eurozone, inflation was confirmed at 0.2% in August, unchanged from July and as expected by analysts, according to data from Eurostat.

Across the Atlantic, the Commerce Department revealed US retail sales fell 0.3% in August, more than the 0.1% drop expected by analysts and following an upwardly revised 0.1% increase a month earlier. It marked the first decline since March.

Separately, US industrial production fell 0.4% in August after rising a revised 0.6% in July, data from the Federal Reserve showed. Economists had been expecting a 0.2% decline.

Manufacturing output was also down 0.4% in August, reversing its increase in July, while the index for utilities fell back 1.4%.

“The weakness in retail sales and industrial production in August underline that the rebound in third-quarter GDP growth could be weaker than previously hoped, which is another reason for the Fed to pass on raising interest rates next week,” according to Capital Economics.

Company-wise, high street fashion stalwart Next was under the cosh after posting a drop in first-half profit and highlighting challenging trading since July.

Supermarket chain Wm. Morrison was on the front foot after it reported a jump in first-half profit.

Soft drink bottler Coca-Cola HBC was also bubbling higher after analysts at Credit Suisse upgraded their recommendation and lifted their target price on the shares given the attractive topline growth and earnings potential.

Hargreaves Lansdown slumped as its stock went ex-dividend and Liberum downgraded the company to ‘sell’ from ‘buy’ due to further downside risks.

Informa traded higher after announcing plans to buy Penton Information Services for £1.2bn.

Electronics distributor Electrocomponents surged after saying it expects to post a significant increase in first-half pre-tax profit following stronger-than-anticipated trading.

Shares in JRP Group, the newly merged Just Retirement and Partnership Assurance, gained as the retirement service provider raised its target for synergies from the deal as it delivered benefits ahead of schedule. The FTSE 250 company said it expects to achieve yearly savings of at least £45m by the end of 2018, a 13% increase on its prior prediction having so far made £15m since April's £1.6bn merger.

Market Movers

FTSE 100 (UKX) 6,732.12 0.88%
FTSE 250 (MCX) 17,756.59 0.71%
techMARK (TASX) 3,472.73 0.63%

FTSE 100 - Risers

Morrison (Wm) Supermarkets (MRW) 208.10p 7.49%
Tesco (TSCO) 169.65p 4.92%
Informa (INF) 726.00p 4.69%
RSA Insurance Group (RSA) 530.50p 4.22%
Coca-Cola HBC AG (CDI) (CCH) 1,727.00p 3.85%
Standard Life (SL.) 343.40p 2.66%
Sainsbury (J) (SBRY) 240.30p 2.21%
Diageo (DGE) 2,118.50p 2.15%
BHP Billiton (BLT) 1,002.00p 2.11%
Compass Group (CPG) 1,470.00p 2.08%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 1,273.00p -5.28%
Next (NXT) 4,957.00p -4.86%
Marks & Spencer Group (MKS) 313.10p -2.70%
Royal Bank of Scotland Group (RBS) 194.40p -1.52%
Associated British Foods (ABF) 2,726.00p -1.20%
Paddy Power Betfair (PPB) 8,805.00p -0.62%
British Land Company (BLND) 619.00p -0.56%
Randgold Resources Ltd. (RRS) 7,390.00p -0.54%
Intu Properties (INTU) 285.50p -0.52%
Centrica (CNA) 227.90p -0.48%

FTSE 250 - Risers

JRP Group (JRP) 115.00p 18.19%
Electrocomponents (ECM) 350.00p 15.97%
Ocado Group (OCDO) 272.80p 6.15%
Circassia Pharmaceuticals (CIR) 95.20p 5.78%
RPC Group (RPC) 901.00p 5.50%
NCC Group (NCC) 345.20p 5.31%
Acacia Mining (ACA) 500.00p 3.31%
Indivior (INDV) 330.30p 3.19%
Diploma (DPLM) 883.50p 2.97%
IP Group (IPO) 187.80p 2.90%

FTSE 250 - Fallers

Hochschild Mining (HOC) 255.20p -5.20%
Sports Direct International (SPD) 291.20p -4.90%
Inmarsat (ISAT) 715.50p -3.11%
Assura (AGR) 57.55p -2.87%
Big Yellow Group (BYG) 733.50p -2.52%
McCarthy & Stone (MCS) 170.30p -2.01%
OneSavings Bank (OSB) 265.00p -1.85%
Brown (N.) Group (BWNG) 188.80p -1.67%
Workspace Group (WKP) 683.00p -1.23%
Caledonia Investments (CLDN) 2,452.00p -1.13%