London midday: FTSE falls flat after BoE holds rates

London stocks were brought back down to earth with a bump but the pound spiked as the Bank of England surprisingly left monetary policy unchanged on Thursday.

The FTSE 100 had started in confident fashion as markets expected interest rate cut from the Bank's Monetary Policy Committee, but after less than 15 minutes had fallen from above 6,740 to almost flat at 6,684.48.

However the MPC voted 8-1 to maintain the Bank Rate at 0.5% and unanimously asset purchase programme at £375bn.

A statement from Bank said most MPC members expect policy to be loosened in August, with the precise size and nature of "stimulatory measures" to be decided following staff forecasts in August.

Markets had confidently priced in a 25 basis points cut to take the headline rate down to 0.25% from 0.50%, which would have been the first interest rate cut since 2009, while there was also hope for further quantitative easing or other stimulus measures to cushion what is expected to be a negative shock to the economy from the Brexit vote.

BoE governor Mark Carney last week had stated the Brexit result meant a deteriorated outlook for the British Economy and that "some monetary policy easing will likely be required over the summer".

Maike Currie, investment director for personal investing at Fidelity International, said: “Much like the Brexit result, the Bank of England has defied market expectations by choosing to maintain interest rates at 0.5%.

“After seven years, and almost 90 meetings of policy inaction, today’s interest rate decision from the Bank of England was always going to make investors sit up right."

She added: "With a new prime minister and cabinet in place, political uncertainty has abated and the Bank of England has wisely decided to keep its powder dry for now."

Overnight, new Prime Minister Theresa May had sacked George Osborne as Chancellor and replaced him with Phillip Hammond, who further pleased the City by confirming there would be no 'emergency budget' as Osborne has threatened, by while also appointing former London Mayor and leading Brexit campaigner Boris Johnson as Foreign Secretary, with Amber Rudd Home Secretary.

In other macroeconomic news on Thursday, the Royal Institution of Chartered Surveyors indicated that the UK housing market was rather sent reeling by the Brexit vote, with expectations of falling prices and a sharp drop in enquiries about house purchases and a fall in sales agreed.

The RICS survey, conducted after the June 23 vote to leave the EU, characterised it as a “marked drop in activity in the housing market”.

In corporate news, information services firm Experian was slightly lower after it issued a first quarter trading update showing total revenue growth of 5% at constant exchange rates in the three months to 30 June and 1% at actual exchange rates. North America contributed 5% of the total revenue growth at constant exchange rates, Latin America 8%, UK and Ireland 1% and EMEA Asia Pacific 9%. Latin America and UK and Ireland both declined at actual exchange rates by 6% and 5% respectively.

Supergroup, Cheltenham-based operator of the faux-Japanese fashion brand Superdry, proposed a special dividend in addition to the final year payment, after a year when revenue were up 21.3% to £590.1m. With underlying gross margin improved 60 basis points to 61.5%, underlying operating margin was down to 12.6% from 13.1%, though Supergroup claimed it was 13.6% excluding initial trading losses in key development markets. Underlying profit before income tax was up 16.3% to £73.5m, while underlying basic earnings per share were up 21.8% to 72p, from 59.1p.

Software company Micro Focus surged as it preliminary results came in at the high end of management expectations for the year to 30 April, with reported operating profit doubling year-on-year and the final dividend increasing by 50.7%. The FTSE 250 firm did point out that the results included the its combination with The Attachmate Group (TAG), which was announced in September 2014 and completed in November for that year.

Like-for-like sales skidded lower at Halfords in the first quarter as the timing of Easter and dreary weather exacerbated the recent cycling decline. Group revenue in the 13-week period to 1 July increased 2.1%, as retail rose 1.5% and Autocentres climbed 5.9%. But group like-for-like sales dipped 0.6%, with a 1.2% fall from retail outweiging a 3.1% gain from Autocentres.

B&M European Value Retail, having opened 12 new UK stores and five in Germany said it was "on course" to hit market profit forecasts after a period of strong first-quarter revenue but flat UK like-for-like sales. Group sales rose 21.5% to £554.8m on a reported basis over the 13 weeks ending 25 June, but UK like-for-like sales were flat on a reported basis.

Moneysupermarket.com was a riser as it said it expects solid half-year results, with revenues seen growing by 10% to £158m. The company said it is making some additional marketing investment and so adjusted operating profit is expected to grow by 6% to around £54m.

FTSE 100 - Risers

Anglo American (AAL) 836.80p 3.03%
Taylor Wimpey (TW.) 148.30p 2.77%
Sage Group (SGE) 662.50p 2.47%
Barratt Developments (BDEV) 414.50p 2.40%
Standard Life (SL.) 289.00p 2.37%
London Stock Exchange Group (LSE) 2,647.00p 2.36%
Rio Tinto (RIO) 2,518.00p 2.34%
Schroders (SDR) 2,565.00p 2.31%
Berkeley Group Holdings (The) (BKG) 2,680.00p 2.29%
Legal & General Group (LGEN) 190.00p 2.26%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,261.00p -1.41%
Marks & Spencer Group (MKS) 336.20p -0.62%
ITV (ITV) 184.20p -0.38%
Merlin Entertainments (MERL) 470.90p -0.34%
DCC (DCC) 6,675.00p -0.30%
BT Group (BT.A) 401.70p -0.24%
Experian (EXPN) 1,460.00p -0.21%
TUI AG Reg Shs (DI) (TUI) 990.50p -0.20%
Rolls-Royce Holdings (RR.) 745.00p -0.20%
Reckitt Benckiser Group (RB.) 7,536.00p -0.19%

FTSE 250 - Risers

Supergroup (SGP) 1,541.00p 14.91%
Moneysupermarket.com Group (MONY) 294.90p 8.94%
Micro Focus International (MCRO) 1,806.00p 8.01%
Shawbrook Group (SHAW) 177.60p 5.65%
CLS Holdings (CLI) 1,376.00p 5.36%
Hays (HAS) 112.60p 4.26%
Evraz (EVR) 167.90p 3.96%
Grafton Group Units (GFTU) 552.50p 3.95%
Hochschild Mining (HOC) 237.80p 3.57%
Aldermore Group (ALD) 140.20p 3.24%

FTSE 250 - Fallers

BTG (BTG) 676.50p -6.56%
Ibstock (IBST) 134.00p -5.17%
AA (AA.) 239.50p -4.28%
Cairn Energy (CNE) 198.60p -3.73%
NCC Group (NCC) 290.10p -2.62%
Polypipe Group (PLP) 234.00p -2.30%
Sports Direct International (SPD) 266.10p -2.17%
Synthomer (SYNT) 346.70p -2.12%
DFS Furniture (DFS) 212.10p -1.94%
Halfords Group (HFD) 328.50p -1.91%