London midday: Stocks firmly in the red as BoE lifts rates to 13-year high

London stocks were still firmly in the red by midday on Thursday after the Bank Of England hiked rates to 1.25%.

The FTSE 100 was off 2.6% at 7,088.24, having extended losses earlier in the session. Meanwhile, sterling lost ground against the dollar, trading down 0.9% at 1.2065.

The BoE hiked interest rates by 25 basis points to the highest level in 13 years amid surging inflation.

Six members of the Monetary Policy Committee voted for a 25 basis points hike, while three voted for 50 bps. Jonathan Haskel, Catherine Mann and Michael Saunders were the hawks. In the last few days, expectations of a 50 bps hike had grown.

The BoE said: "The scale, pace and timing of any further increases in Bank Rate will reflect the Committee's assessment of the economic outlook and inflationary pressures.

"The Committee will be particularly alert to indications of more persistent inflationary pressures, and will if necessary act forcefully in response."

Earlier, the Swiss National Bank unexpectedly lifted interest rates for the first time in 15 years. The Bank lifted its policy rate from -0.75% to -0.25%, where it has been since 2015. It marked the first hike by the SNB since September 2007.

The SNB said: "The tighter monetary policy is aimed at preventing inflation from spreading more broadly to goods and services in Switzerland.

"It cannot be ruled out that further increases in the SNB policy rate will be necessary in the foreseeable future to stabilise inflation in the range consistent with price stability over the medium term. To ensure appropriate monetary conditions, the SNB is also willing to be active in the foreign exchange market as necessary."

On Wednesday, the US Federal Reserve increased interest rates by 75 basis points - its biggest hike since 1994. Meanwhile, the European Central Bank indicated last week that it would lift rates in July in the face of surging inflation.

In equity markets, Persimmon, Intermediate Capital, 3i Group, Ferrexpo and Pets at Home fell as they traded without entitlement to the dividend.

Retailers were also under the cosh after disappointing updates from Halfords, Boohoo and Asos. JD Sports, Next, Frasers and Currys were all weaker.

Shaftesbury slumped after it and Capital & Counties agreed the terms of a £3.5bn all-share merger that will create a combined group with a portfolio valued at around £5bn.

Mike Fox, Head of Sustainable Investments at Royal London Asset Management -which owns a 3% stake in Shaftesbury - said: "The terms announced today are unattractive and fail to reflect the inherent value of the Shaftesbury estate. It is unclear why it is in the interests of Shaftesbury shareholders to accept them."

On the upside, Informa rallied after it said trading in the first five months of the year had been "robust" and backed its guidance for FY22.

Harbour Energy rose as it announced a $200m share buyback programme.

Car dealership Inchcape also racked up strong gains after saying that full-year pre-tax profit was set to be ahead of market expectations as it has continued to trade strongly since its first-quarter update at the end of April.

Market Movers

FTSE 100 (UKX) 7,088.24 -2.55%
FTSE 250 (MCX) 18,756.23 -2.90%
techMARK (TASX) 4,171.64 -1.80%

FTSE 100 - Risers

Informa (INF) 528.00p 3.00%
Harbour Energy (HBR) 378.00p 2.80%
London Stock Exchange Group (LSEG) 7,216.00p 1.81%
Meggitt (MGGT) 770.20p 0.03%
Endeavour Mining (EDV) 1,778.00p -0.06%
AstraZeneca (AZN) 9,839.00p -0.17%
Vodafone Group (VOD) 125.68p -0.35%
Coca-Cola HBC AG (CDI) (CCH) 1,758.00p -0.42%
Reckitt Benckiser Group (RKT) 5,932.00p -0.50%
SEGRO (SGRO) 957.20p -0.60%

FTSE 100 - Fallers

Persimmon (PSN) 1,988.50p -9.41%
RS Group (RS1) 809.50p -8.06%
JD Sports Fashion (JD.) 102.40p -8.04%
Intermediate Capital Group (ICP) 1,355.50p -7.63%
3i Group (III) 1,050.50p -6.62%
Halma (HLMA) 1,866.00p -6.23%
ITV (ITV) 65.94p -5.83%
Next (NXT) 5,696.00p -5.73%
Prudential (PRU) 945.60p -4.91%
Scottish Mortgage Inv Trust (SMT) 699.20p -4.84%

FTSE 250 - Risers

Inchcape (INCH) 702.50p 3.01%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 633.90p 2.24%
Indivior (INDV) 286.20p 1.13%
Hochschild Mining (HOC) 111.20p 1.09%
ContourGlobal (GLO) 252.00p 0.60%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 482.50p 0.52%
Assura (AGR) 67.50p 0.22%
Centamin (DI) (CEY) 77.26p 0.16%
BH Macro Ltd. GBP Shares (BHMG) 4,460.00p 0.11%
Jlen Environmental Assets Group Limited NPV (JLEN) 121.40p 0.00%

FTSE 250 - Fallers

Hammerson (HMSO) 20.38p -10.93%
Frasers Group (FRAS) 579.50p -10.57%
Shaftesbury (SHB) 526.00p -9.62%
Tullow Oil (TLW) 50.85p -8.21%
Oxford Instruments (OXIG) 1,996.00p -8.02%
TUI AG Reg Shs (DI) (TUI) 145.80p -7.58%
Currys (CURY) 68.75p -7.22%
Wood Group (John) (WG.) 177.95p -7.12%
Crest Nicholson Holdings (CRST) 261.00p -6.92%
IWG (IWG) 200.60p -6.74%