London open: Stocks fall ahead of BoE rate announcement

London stocks fell in early trade on Thursday ahead of the latest policy announcement from the Bank of England, and after the US Federal Reserve lifted interest rates by 75 basis points - its biggest hike since 1994.

At 0845 BST, the FTSE 100 was down 0.9% at 7,205.67.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The biggest interest rate rise by the Fed in almost three decades of 0.75% didn’t come as much of a surprise, given just how red hot consumer prices still are, but it’s a drift higher from the bank’s widely flagged ‘dot plot’, and a sign that inflation has been roaring higher at a higher pace than policymakers expected just a few months ago.

"There is a growing expectation that this hike will be followed by another 0.75% rise in an attempt to front load efforts and bring down demand more quickly, even though this is expected to dent growth and see unemployment rise. Risks that there will be an uncomfortably hard landing for the US economy remain but it seems policymakers feel this may be a price to pay given the inflation shock the world is facing.

"The focus now is sharply trained on the Bank of England’s decision later. Worries have been rising that inflation could become too hot to handle for the Bank of England, given that the UK economy is already shrinking and is sorely lacking the insulation needed to protect itself from the impact of rate rises. There overall expectation is that it’ll keep the rate rise to 0.25% but given the harder line stance taken by the Federal Reserve, some policymakers may decide to swallow the bitter pill sooner rather than later and vote for a steeper hike of 0.5%."

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

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.

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) 7,205.67 -0.93%
FTSE 250 (MCX) 19,136.28 -0.93%
techMARK (TASX) 4,216.61 -0.74%

FTSE 100 - Risers

Informa (INF) 531.20p 3.63%
Harbour Energy (HBR) 377.20p 2.58%
BAE Systems (BA.) 768.80p 0.68%
SEGRO (SGRO) 968.40p 0.56%
Endeavour Mining (EDV) 1,788.00p 0.51%
London Stock Exchange Group (LSEG) 7,116.00p 0.40%
Severn Trent (SVT) 2,878.00p 0.35%
United Utilities Group (UU.) 1,048.00p 0.34%
BT Group (BT.A) 182.75p 0.30%
Meggitt (MGGT) 772.00p 0.26%

FTSE 100 - Fallers

Persimmon (PSN) 2,040.00p -7.06%
Intermediate Capital Group (ICP) 1,387.50p -5.45%
JD Sports Fashion (JD.) 105.70p -5.07%
Next (NXT) 5,766.00p -4.57%
Kingfisher (KGF) 235.40p -3.88%
3i Group (III) 1,085.50p -3.51%
Whitbread (WTB) 2,634.00p -3.41%
RS Group (RS1) 855.00p -2.90%
Halma (HLMA) 1,933.50p -2.84%
Ocado Group (OCDO) 815.60p -2.60%

FTSE 250 - Risers

Inchcape (INCH) 715.00p 4.84%
Baltic Classifieds Group (BCG) 139.40p 4.19%
Telecom Plus (TEP) 1,822.00p 2.24%
Darktrace (DARK) 358.70p 1.70%
Syncona Limited NPV (SYNC) 193.00p 1.58%
Capricorn Energy (CNE) 226.40p 1.34%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 486.00p 1.25%
C&C Group (CDI) (CCR) 199.40p 1.22%
Hochschild Mining (HOC) 111.30p 1.18%
Schroder Asia Pacific Fund (SDP) 519.00p 1.17%

FTSE 250 - Fallers

Shaftesbury (SHB) 534.00p -8.25%
Frasers Group (FRAS) 603.50p -6.87%
Ferrexpo (FXPO) 148.50p -5.47%
Aston Martin Lagonda Global Holdings (AML) 482.90p -5.35%
Marks & Spencer Group (MKS) 132.00p -5.07%
Synthomer (SYNT) 253.20p -4.60%
Moonpig Group (MOON) 215.40p -4.18%
Crest Nicholson Holdings (CRST) 268.80p -4.14%
Currys (CURY) 71.10p -4.05%
Wizz Air Holdings (WIZZ) 1,905.50p -3.69%