London close: Stocks firmer as Bank of England keeps policy on hold

The FTSE 100 ended the session up 0.25% at 6,779.68, and the FTSE 250 was 0.05% firmer at 21,568.56.

Sterling was in a mixed state, meanwhile, last trading 0.25% weaker against the dollar at $1.3931, while gaining 0.26% on the euro to €1.1687.

“Last night, the Federal Reserve maintained its dovish stance and that triggered the bullish moves seen in European stocks today,” said CMC Markets analyst David Madden.

“Several hours ago the Bank of England kept their policy unchanged too, so that contributed to the positive move also.”

Madden noted that Fed chair Jerome Powell said overnight that the US economy was predicted to grow at a faster rate than initially thought in 2021, but that rates were likely to stay near zero through 2023, which acted as a “green light” for the bulls.

“Powell cautioned that higher inflation is on the cards but it should only be temporary and therefore not warrant higher interest rates.

“Bond yields have increased today, but it hasn’t spooked equity markets.”

Earlier, the stewards of the Bank of England announced they had voted unanimously to keep policy unchanged, arguing that it was nowhere near close to starting to raise short-term interest rates.

Market expectations were quenched, with the bank rate at 0.1% and its asset purchasing programme maintained at £875bn.

Like the US Federal Reserve the day before, the Monetary Policy Committee said it did not intend to tighten monetary policy "at least until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably."

Since the committee's last set of economic projections in February, global GDP had grown more quickly than expected, first quarter UK growth was stronger, and the outlook for consumption at home in the second quarter had improved slightly.

Still, risky asset prices remained resilient, sterling had appreciated, and mortgage credit conditions had eased a tad, the policymakers noted, with inflation expectations remaining well-anchored.

In equity markets, M&G was down 4.2%, CRH lost 0.92%, Hikma was off 0.27%, and Segro was 0.73% weaker, as those stocks went ex-dividend.

Ocado slumped 4.94% even as the online grocer said it expected positive revenue growth in the second quarter after reporting a 40% rise in revenue for the 13 weeks to the end of February, as more Britons had their groceries delivered during the current national lockdown.

National Grid lost 0.29% after it agreed to buy Western Power Distribution from PPL Corp of the US for £7.8bn, and to sell Narragansett Electric to PPL for $3.8bn (£2.7bn), to shift its business towards electricity.

Passenger transport operator National Express fell 0.89% after saying it swung to a loss in 2020 as it took a hit from the Covid-19 pandemic.

Housebuilder Crest Nicholson was knocked 4.7% lower by a downgrade to ‘sell’ from ‘neutral’ at UBS.

OSB Group shares slid 4.72% after the bank revealed it might have to write off as much as £28.6m because of possible customer fraud.

In a statement after the market closed on Wednesday, OSB said it had become aware of possible fraudulent activity by a customer it funds secured against property lease receivables and underlying assets.

On the upside, Standard Life Aberdeen gained 2.2% after an upgrade to ‘buy’ at Deutsche Bank.

888 Holdings rallied 4.5% as the online gambling company lifted its dividend despite a sharp fall in annual pre-tax profits on the back of higher costs.

Market Movers

FTSE 100 (UKX)6,779.680.25%
FTSE 250 (MCX)21,568.560.05%
techMARK (TASX)4,221.230.37%

FTSE 100 - Risers

Informa (INF)598.60p4.10%
Antofagasta (ANTO)1,770.50p3.63%
DCC (CDI) (DCC)6,152.00p3.36%
Evraz (EVR)556.80p3.07%
Schroders (SDR)3,534.00p2.55%
HSBC Holdings (HSBA)441.55p2.54%
Smurfit Kappa Group (CDI) (SKG)3,416.00p2.46%
Entain (ENT)1,553.00p2.24%
Standard Life Aberdeen (SLA)288.00p2.20%
WPP (WPP)941.20p2.19%

FTSE 100 - Fallers

Ocado Group (OCDO)1,979.50p-4.97%
M&G (MNG)205.10p-4.20%
Compass Group (CPG)1,503.00p-2.40%
Spirax-Sarco Engineering (SPX)11,280.00p-2.39%
Rolls-Royce Holdings (RR.)124.70p-1.97%
Coca-Cola HBC AG (CDI) (CCH)2,296.00p-1.96%
Intertek Group (ITRK)5,494.00p-1.93%
Ferguson (FERG)8,714.00p-1.89%
Associated British Foods (ABF)2,417.00p-1.79%
Just Eat Takeaway.Com N.V. (CDI) (JET)6,886.00p-1.66%

FTSE 250 - Risers

Petrofac Ltd. (PFC)102.15p9.02%
Ferrexpo (FXPO)385.80p7.11%
CMC Markets (CMCX)456.00p6.05%
Cineworld Group (CINE)121.30p4.54%
888 Holdings (888)348.50p4.50%
Playtech (PTEC)438.20p4.31%
IG Group Holdings (IGG)883.00p3.82%
Airtel Africa (AAF)87.20p3.81%
Micro Focus International (MCRO)489.00p3.56%
Spectris (SXS)3,243.00p3.38%

FTSE 250 - Fallers

4Imprint Group (FOUR)2,240.00p-6.67%
Wetherspoon (J.D.) (JDW)1,320.00p-4.90%
Crest Nicholson Holdings (CRST)364.20p-4.86%
OSB Group (OSB)441.20p-4.46%
Trainline (TRN)455.40p-3.64%
Wood Group (John) (WG.)281.20p-3.50%
Baillie Gifford US Growth Trust (USA)313.00p-3.40%
Greggs (GRG)2,092.00p-3.33%
Centrica (CNA)53.86p-2.88%
NCC Group (NCC)278.00p-2.80%