London midday: FTSE maintains modest losses as BoE hikes rates by 50 basis points

London stocks were still a little lower by midday on Thursday after the Bank of England lifted interest rates by 50 basis points, and as investors continued to digest another big rate hike from the US Federal Reserve.

The FTSE 100 was down 0.2% at 7,221.92, having come off its lows before the rate announcement, while sterling pared earlier gains against the dollar, up 0.2% at 1.1288.

The BoE lifted interest rates to 2.25% as it looks to combat surging inflation. This follows a 50 basis points increase last month - the biggest in 27 years - and takes the benchmark rate to its highest level since 2008.

Among the nine rate setters, five voted to raise rates by 50 basis points, three by 75bps and one opted for a 25bps hike.

"Should the outlook suggest more persistent inflationary pressures, including from stronger demand, the Committee would respond forcefully, as necessary," the Bank said in a statement.

UK consumer price inflation eased to 9.9% in August from 10.1% in July and the BoE said on Thursday that given the Energy Price Guarantee announced earlier this month, the peak in measured CPI is now expected to be just under 11% in October, down from a previous forecast of 13%.

The new energy package means that household bills will be capped at £2,500 for two years, saving the average household around £1,000 a year.

"Nevertheless, energy bills will still go up and, combined with the indirect effects of higher energy costs, inflation is expected to remain above 10% over the following few months, before starting to fall back," the Bank said.

On Wednesday, the US Federal Reserve hiked interest rates by 75 basis points as expected and vowed to "keep at it" in the face of surging inflation. The US central bank also cut its economic growth expectation for this year to 0.2% from 1.7% growth in June.

Victoria Scholar, head of investment at Interactive Investor, said: "Today’s announcement suggests the Bank of England is concerned about the UK’s economic deteriorating outlook amid the looming threat of recession.

"The central bank’s decision was more dovish than markets expected, particularly following the Fed’s hawkish 75-basis point rise yesterday and the recent depreciation for the pound. The timid increase will do little to stem the slide in sterling but may avoid inadvertently inducing unnecessary pain for the economy which is already grappling with slowing demand and deteriorating confidence."

In equity markets, Hargreaves Lansdown slumped as it traded without entitlement to the dividend. Crest Nicholson, IG Group, Essentra, JTC and Redrow were also ex-dividend.

JD Sports tumbled after the sportswear retailer posted a drop in interim profits and said it remained cautious about trading through the remainder of the second half, given widespread macroeconomic uncertainty and inflationary pressures.

Polymetal tanked after the Anglo-Russian precious metals miner said it swung to a net loss in the first half amid lower gold sales.

Gambling software development company Playtech was also in the red even as it hailed an "excellent" first-half performance, with a rise in revenues and earnings driven by regulated B2B markets and the Snaitech business.

Royal Mail fell after saying it wants to take talks with the Communication Workers Union to arbitration, having failed to make any progress over pay rises after five months. It also said it will "review" agreements aimed at protecting jobs and conditions that were signed nine years ago when the company was privatised.

On the upside, banks rose after the rate hike, with Lloyds, Standard Chartered and Barclays among the top gainers on the FTSE 100.

Miners were also on the rise, with Glencore and Anglo American higher.

Imperial Leather maker PZ Cussons was trading up as it said first quarter like-for-like sales rose 6.7% on the back of higher prices but also reported a fall in annual profits due to lower revenues and brand impairment.

Market Movers

FTSE 100 (UKX) 7,221.92 -0.22%
FTSE 250 (MCX) 18,481.15 -1.25%
techMARK (TASX) 4,208.54 -0.74%

FTSE 100 - Risers

Lloyds Banking Group (LLOY) 49.30p 1.72%
Rio Tinto (RIO) 4,797.50p 1.64%
Standard Chartered (STAN) 608.40p 1.64%
Glencore (GLEN) 493.90p 1.63%
Anglo American (AAL) 2,860.00p 1.62%
Barclays (BARC) 170.42p 1.56%
Associated British Foods (ABF) 1,342.00p 1.44%
Kingfisher (KGF) 240.70p 1.35%
Croda International (CRDA) 6,704.00p 1.09%
Admiral Group (ADM) 2,178.00p 0.88%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 116.00p -6.34%
Hargreaves Lansdown (HL.) 844.40p -5.29%
Dechra Pharmaceuticals (DPH) 2,826.00p -4.07%
Melrose Industries (MRO) 104.10p -3.39%
Intermediate Capital Group (ICP) 1,132.50p -3.33%
British Land Company (BLND) 385.30p -3.22%
Land Securities Group (LAND) 581.40p -3.04%
SEGRO (SGRO) 825.40p -2.87%
InterContinental Hotels Group (IHG) 4,363.00p -2.81%
Entain (ENT) 1,167.50p -2.42%

FTSE 250 - Risers

Ferrexpo (FXPO) 136.60p 3.09%
QinetiQ Group (QQ.) 344.40p 2.93%
Investec (INVP) 406.30p 2.76%
PZ Cussons (PZC) 197.80p 1.33%
BH Macro Ltd. GBP Shares (BHMG) 4,880.00p 1.24%
Close Brothers Group (CBG) 1,060.00p 1.05%
Babcock International Group (BAB) 325.00p 0.99%
Beazley (BEZ) 621.00p 0.89%
Plus500 Ltd (DI) (PLUS) 1,695.00p 0.89%
Games Workshop Group (GAW) 6,455.00p 0.86%

FTSE 250 - Fallers

Polymetal International (POLY) 200.00p -11.50%
Aston Martin Lagonda Global Holdings (AML) 148.70p -9.93%
Playtech (PTEC) 444.00p -6.33%
Wood Group (John) (WG.) 131.45p -5.19%
Darktrace (DARK) 336.00p -5.00%
Great Portland Estates (GPE) 472.40p -4.80%
Royal Mail (RMG) 204.70p -4.75%
Redrow (RDW) 476.00p -4.65%
Balanced Commercial Property Trust Limited (BCPT) 88.90p -4.20%
Molten Ventures (GROW) 330.00p -3.96%