London midday: Stocks stay up as BoE stands pat; Fed cut provides a boost

London stocks were still firmly in the black just after midday on Thursday after the Bank of England left rates unchanged, as widely expected.

The FTSE 100 was up 1.4% at 8,366.59, while sterling was 0.7% higher against the dollar at 1.3305.

The BoE left the cost of borrowing unchanged at 5%. The Monetary Policy Committee, which cut interest rates for the first time in four years in August, opted to leave them unchanged by a majority of 8 to 1.

GDP growth has stalled recently, with data last week showing the economy stagnating for the second consecutive month in July. Analysts had been expecting in a 0.2% uplift.

But data from the Office for National Statistics on Wednesday showed inflation holding steady at 2.2% in August, above the BoE’s long-term 2% target, while core inflation and services inflation both accelerated.

Paul Dales, chief UK economist at Capital Economics, said: "By leaving interest rates at 5.00% the Bank of England showed it is more like the ECB than the Fed and is cutting interest rates gradually rather than rapidly.

"We expect only one further 25bps cut this year (at the next meeting in November), although the pace of cuts may quicken next year with rates eventually falling to 3.00% rather than to the 3.25-3.50% priced into markets."

Stocks had kicked the session off with strong gains after the Fed announced a 50 basis points rate cut on Wednesday.

Russ Mould, investment director at AJ Bell, said: "Central banks have a reputation of moving at a snail’s pace, spending too long analysing data and subsequently playing catch-up with their monetary policy decisions. It feels as if the Federal Reserve has had enough of this criticism and wants to be seen in a different light.

"A half-percentage point interest rate cut is certainly not messing around and shows it is serious about getting ahead of events and not being behind the curve.

"The tone of the Fed’s comments makes this cut feel like a calm and collected decision, not one of panic. That’s reassuring for the markets as there was a danger that such a big rate cut could send the wrong message."

In equity markets, Next jumped after the clothing retailer once again upgraded annual earnings guidance as full price sales in the first six weeks of the second half of the year "materially exceeded" expectations, rising 6.9%.

It lifted 2024/25 pre-tax profits forecasts £15m to £995m, up 8.4% on last year, after interim profits for the six months to July surged 7.1% to £452m.

Retailers in general were higher, with JD Sports, Primark owner AB Foods and Burberry also up sharply.

Heavily-weighted miners rallied, with Anglo American, Antofagasta, Rio Tinto and Glencore among the top performers as copper prices hit a two-month high.

Equipment rental firm Ashtead was also a high riser after an initiation at ‘buy’ by Berenberg.

Online grocer and logistics group Ocado surged after it upgraded its revenue guidance for Ocado Retail - its joint venture with Marks & Spencer - following a strong third-quarter performance which saw retail revenues jump 15.5%.

The company is now targeting low double-digit percentage growth in sales over the year to 3 December, from the £2.8bn generated last year. That’s up from earlier guidance for mid-high single-digit growth given in July.

Marks & Spencer also gained on the news.

Bytes Technology advanced as it said trading has remained strong since it updated the market at its annual meeting in July.

IG Group and Drax were both lower as they traded without entitlement to the dividend.

Close Brothers reversed earlier gains to trade down after saying it had agreed to sell its wealth management arm for up to £200m to funds managed by Oaktree Capital Management and as it released in-line full-year results.

Market Movers

FTSE 100 (UKX) 8,366.59 1.37%
FTSE 250 (MCX) 21,111.72 1.33%
techMARK (TASX) 4,866.14 0.89%

FTSE 100 - Risers

Burberry Group (BRBY) 640.40p 5.29%
Glencore (GLEN) 398.20p 4.83%
Anglo American (AAL) 2,226.00p 4.83%
Spirax Group (SPX) 7,530.00p 4.29%
Antofagasta (ANTO) 1,849.50p 4.05%
Rio Tinto (RIO) 4,954.50p 3.97%
Fresnillo (FRES) 584.00p 3.73%
Prudential (PRU) 655.40p 3.70%
Ashtead Group (AHT) 5,742.00p 3.65%
JD Sports Fashion (JD.) 155.20p 3.33%

FTSE 100 - Fallers

National Grid (NG.) 1,022.00p -2.71%
SSE (SSE) 1,954.00p -2.13%
Vodafone Group (VOD) 76.70p -1.77%
BT Group (BT.A) 146.50p -1.08%
Severn Trent (SVT) 2,655.00p -1.01%
Airtel Africa (AAF) 119.80p -0.66%
Darktrace (DARK) 580.80p -0.48%
British American Tobacco (BATS) 2,858.00p -0.35%
Sainsbury (J) (SBRY) 296.20p -0.34%
Imperial Brands (IMB) 2,180.00p -0.18%

FTSE 250 - Risers

Bytes Technology Group (BYIT) 508.50p 7.14%
Ocado Group (OCDO) 373.50p 6.84%
Softcat (SCT) 1,575.00p 5.28%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,440.00p 5.17%
Future (FUTR) 1,094.00p 4.69%
Trustpilot Group (TRST) 228.00p 4.35%
Kainos Group (KNOS) 913.00p 4.22%
Watches of Switzerland Group (WOSG) 409.80p 4.22%
Babcock International Group (BAB) 484.00p 4.04%
Ibstock (IBST) 187.40p 4.00%

FTSE 250 - Fallers

IG Group Holdings (IGG) 919.50p -2.90%
Drax Group (DRX) 626.50p -2.26%
Close Brothers Group (CBG) 516.00p -2.18%
Energean (ENOG) 886.50p -2.10%
Foresight Group Holdings Limited NPV (FSG) 520.00p -1.89%
PPHE Hotel Group Ltd (PPH) 1,245.00p -1.19%
Patria Private Equity Trust (PPET) 535.00p -0.93%
North Atlantic Smaller Companies Inv Trust (NAS) 3,980.00p -0.75%
Hilton Food Group (HFG) 894.00p -0.67%
FirstGroup (FGP) 155.50p -0.64%