London open: Stocks rise as BoE makes emergency rate cut ahead of Budget

London stocks rose in early trade on Wednesday after the Bank of England announced an emergency rate cut just hours before the Budget.

At 0830 GMT, the FTSE 100 was up 1.3% at 6,039.06.

The Bank of England announced a 50 basis points interest rate cut as it looks to counter the "economic shock" from the coronavirus outbreak. Policymakers voted unanimously to cut rates to an all-time low of 0.25%.

The Bank also announced a new Term Funding plan to help small and medium-sized enterprises, financed by central bank reserves.

It said in a statement: "Although the magnitude of the economic shock from Covid-19 is highly uncertain, activity is likely to weaken materially in the United Kingdom over the coming months."

Neil Wilson, chief market analyst at Markets.com, said: "Unlike the Fed, which shot its bolt early, this is clearly part of a major coordinated response to the coronavirus pandemic with a twin pronged monetary and fiscal package. It’s a smart decision to move ahead of the scheduled meeting and do this on Budget day as it maximises the impact of the cut by tying it to the fiscal package.

"In the US the Fed has cut but we’re still waiting on the White House and a Congress to do their bit. Britain is in the best position to respond to the economic impact of the coronavirus. Heathrow has just said its numbers are down 4.8% - the damage is going to be significant and a rate cut is not enough."

Wilson said that while rate cuts alone are not amounting to much these days, with the term funding scheme measures and counter cyclical buffer being reduced to 0%, it ought to help the transmission to businesses.

Later in the day, all eyes will be on the new Conservative government’s first Budget.

"There will be a major support package in the Budget today," said Wilson. "The BoE’s cut is just a small portion of the response - it's not enough to counter the damage alone so we are now looking at a significant stimulus from the government today."

In equity markets, cruise operator Carnival and travel company TUI were among the biggest gainers following recent heavy losses on the back of virus-related concerns.

Housebuilders were also on the rise, with Taylor Wimpey, Persimmon, Barratt Developments and Berkeley all higher.

On the downside, security services company G4S was under the cosh as it posted a drop in full-year pre-tax profit and said it swung to a loss on a statutory basis as it took a £291m charge related to its UK cash business.

Market Movers

FTSE 100 (UKX) 6,039.06 1.32%
FTSE 250 (MCX) 17,763.71 1.23%
techMARK (TASX) 3,584.32 1.49%

FTSE 100 - Risers

Carnival (CCL) 1,720.00p 3.93%
Taylor Wimpey (TW.) 192.85p 3.74%
Persimmon (PSN) 2,558.00p 3.69%
TUI AG Reg Shs (DI) (TUI) 503.80p 3.24%
Barratt Developments (BDEV) 688.80p 3.21%
Centrica (CNA) 56.78p 2.83%
AstraZeneca (AZN) 7,137.00p 2.76%
Berkeley Group Holdings (The) (BKG) 4,345.00p 2.57%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,305.00p 2.52%
Standard Chartered (STAN) 484.90p 2.47%

FTSE 100 - Fallers

Croda International (CRDA) 4,408.00p -0.54%
Anglo American (AAL) 1,541.80p -0.36%
Rolls-Royce Holdings (RR.) 555.40p -0.36%
Glencore (GLEN) 155.06p -0.22%
Prudential (PRU) 1,097.50p 0.00%
London Stock Exchange Group (LSE) 7,036.00p 0.00%
Severn Trent (SVT) 2,399.00p 0.00%
Informa (INF) 600.20p 0.03%
M&G (MNG) 170.50p 0.18%
BAE Systems (BA.) 552.20p 0.25%

FTSE 250 - Risers

Spirent Communications (SPT) 222.50p 5.70%
Hunting (HTG) 222.80p 5.69%
Petrofac Ltd. (PFC) 231.50p 5.32%
Quilter (QLT) 139.50p 5.05%
Premier Oil (PMO) 24.08p 4.70%
Airtel Africa (AAF) 55.90p 4.68%
Cairn Energy (CNE) 74.75p 4.18%
Wood Group (John) (WG.) 279.30p 3.98%
McCarthy & Stone (MCS) 119.20p 3.56%
Hammerson (HMSO) 180.90p 3.34%

FTSE 250 - Fallers

G4S (GFS) 118.90p -10.43%
Watches of Switzerland Group (WOSG) 296.00p -4.70%
Finablr (FIN) 29.00p -3.20%
Hastings Group Holdings (HSTG) 152.80p -1.93%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 263.50p -1.31%
Fidelity European Values (FEV) 225.00p -0.66%
National Express Group (NEX) 348.20p -0.63%
Centamin (DI) (CEY) 125.05p -0.40%
IntegraFin Holding (IHP) 425.50p -0.35%
Fidelity Special Values (FSV) 212.00p -0.24%