London close: Stocks lower as BoE goes for 12th consecutive rate hike

The FTSE 100 ended the session down 0.14% at 7,730.58, while the FTSE 250 slipped 0.04% to settle at 19,266.30.

Policymakers in the City unveiled their 12th consecutive rise in the Bank Rate at lunchtime, lifting it to 4.5%, in a move that markets were largely anticipating.

In currency markets, sterling was last down 0.97% on the dollar to trade at $1.2502, while it fell 0.32% against the euro to change hands at €1.1458.

“After a quiet session for Asia markets, European markets have slipped lower, with declines in basic resources and energy acting as a wider drag on sentiment,” said CMC Markets chief market analyst Michael Hewson.

“Today’s weakness in commodity prices, and metals prices more specifically, appears to be being driven by concerns over a slowdown in the Chinese economy after producer prices slipped further into deflation territory at -3.6%, and CPI hit its weakest level in two years.

“Glencore, Rio Tinto, Anglo American, Antofagasta are amongst the main decliners, as well as BP and Shell as oil prices slide back, along with telecoms, which are also under pressure.”

Bank of England goes for 12th interest rate hike in a row

In economic news, the Bank of England (BoE) raised interest rates to 4.5% at lunchtime, taking them to their highest level since 2008.

The 25-basis point increase - the 12th consecutive rate hike since December 2021 - had been widely expected.

In its decision, the Monetary Policy Committee (MPC) also hinted at the possibility of another rate hike soon, stating that their projections were contingent on a market-implied path for the Bank Rate, which could see it reaching 4.75% in the fourth quarter.

With inflation currently standing at 10.1% - the highest among G7 economies - the MPC said it expected a sharp decline in inflation for April, aided by the end of last year's price level surges and a continued easing of wholesale energy prices.

However, the committee acknowledged that food price inflation could recede more gradually than previously thought, meaning consumer price inflation was now expected to hover between 3% and 4% until spring next year, eventually reaching the BoE's 2% target by late 2024.

The Bank maintained its projection of a stagnant UK economy for the first half of this year, with growth expected to be supported by a stronger global economy, reduced energy costs, fiscal support measures from the spring budget, and the potential impact of a tight labour market on household savings.

It forecast the unemployment rate to remain below 4% until the end of 2024, before rising to around 4.5%.

Seven members of the MPC voted in favour of the rate hike, while two advocated for no change.

“With inflation having been at or above 9% for a full year, the BoE is rightly concerned that higher inflation could become entrenched,” said Anna Leach, deputy chief economist at the CBI.

“The future path for interest rates is as yet uncertain.

“With ongoing bouts of banking sector turbulence in the US, risks to financial stability seem likely to persist as global interest rates continue to ratchet up and the full impact of past rises continues to feed through.”

Elsewhere, new data from the Royal Institution of Chartered Surveyors showed house prices experiencing a milder decline last month.

The net balance of surveyors reporting an increase in house prices over the past three months improved to -39 in April, compared to March's -43.

That figure topped consensus expectations of -40, and made for the highest reading in the last five months.

“Although the news flow around housing does appear to have steadied over the past month, key indicators from the RICS survey point to a series of challenges,” said Simon Rubinsohn, chief economist at the RICS.

“Most notably, buyer demand still appears to be subdued in the face of relatively high borrowing costs, the prospect of at least one more interest rate hike and ongoing affordability challenges.”

Across the pond, data from the US Labor Department showed that the number of Americans filing for unemployment benefits increased more than expected last week.

Initial jobless claims rose by 22,000 to 264,000, surpassing expectations for a rise to 245,000.

That represented the highest level since 30 October 2021.

At the same time, the four-week moving average reached 245,250, marking the highest level since 20 November 2021.

Still stateside, the Bureau of Labor Statistics released data showing that US producer prices felt their slowest growth rate since January 2021 in April.

The producer price index (PPI) for final demand rose by 2.3% year-on-year, with a month-on-month increase of 0.2%.

That followed a 0.4% decline between February and March.

Core wholesale inflation, which excludes volatile food and energy prices, rose by 0.2% from March and 3.2% year-on-year in April.

Finally on data, the National Bureau of Statistics in China reported earlier that consumer inflation in the People’s Republic in April reached its lowest level in more than two years.

The consumer price index (CPI) rose 0.1% year-on-year, falling from March’s print of a 0.7% uptick.

Airtel Africa slumps, Diploma manages gains after broker upgrade

Airtel Africa's shares slumped 5.34% after the release of its full-year results, while engine manufacturer Rolls-Royce declined 6.08% after it maintained its annual guidance, and said that large engine flying hours reached 83% of 2019 levels in the four months ended 30 April.

FirstGroup slid 5.27% as the company prepared to lose its TransPennine Express (TPE) train operator contract with the Department for Transport.

The government's patience was reportedly wearing thin after months of service cancellations, leading to the decision to bring TPE under state control.

Broadcaster ITV was down 2.13% after it reported a decrease in first-quarter total advertising revenue, and cited a challenging outlook due to a weak macroeconomic backdrop.

Vodafone's shares declined 2.01% after the company announced a strategic relationship with Emirates Telecommunications (e&), its largest shareholder.

As part of the arrangement, e&'s chief executive would also join Vodafone's board.

TBC Bank Group disclosed robust first-quarter financial results, benefiting from strong growth in the Georgian economy, although its shares fell 2.99% as they went ex-dividend.

Elsewhere, Petershill Partners was down 5.65%, Tesco lost 1.73%, HSBC Holdings was off 1.28%, and BP was 2.16% weaker as they also traded without entitlement to the dividend.

On the upside, Diploma was ahead 5.42% by the end of trading after it received an upgrade to 'buy' from 'hold' by Jefferies.

Melrose Industries was 2.01% firmer, maintaining its upward trajectory after it said on Wednesday that it was performing "materially ahead" of expectations.

Reporting by Josh White for Sharecast.com.

FTSE 100 -10.75 (-0.14%) 7,730.58

RISERS
Smurfit Kappa Group +3.71% 3,022p
Melrose Industries +3.08% 458,4p
3i Group +3.01% 1,798.5p
ConvaTec Group +2.73% 218.4p
Admiral Group +2.71% 2,234p
Hargreaves Lansdown +2.6% 803.6p
JD Sports Fashion +2.55% 168.6p
St. James’s Place +2.19% 1,145p
Halma +2.01% 2,433p
B&M European Value Retail +1.96% 488.7p

FALLERS
Rolls-Royce Holdings -6.65% 145.9p
Airtel Africa -5.34% 111.7p
Antofagasta -3.99% 1,382p
Anglo American -3.95% 2,347.5p
Glencore -3.94% 427.6p
Fresnillo -3.06% 690.4p
Persimmon -2.61% 1,304p
The Berkeley Group Holdings -2.39% 4,329p
Rio Tinto -2.05% 4,882.5p
BP -1.93% 477.7p

FTSE 250 -6.99 (-0.04%) 19,266.30

RISERS
Diploma +5.42% 2,840p
Bank of Georgia Group +3.49% 3,260p
Abrdn Private Equity Opportunities Trust +3.27% 458p
Currys +2.63% 56.6p
Asos +2.59% 500p
Caledonia Investments +2.56% 3,605p
Target Healthcare REIT +2.23% 77.9p
Mitchells & Butlers +1.9% 193.1p
HG Capital Trust +1.84% 359p
Ferrexpo +1.75% 110.4p

FALLERS
Petershill Partners -5.65% 157p
FirstGroup -4.79% 117.4p
Bridgepoint Group -4.66% 225p
IWG -4% 153.5p
PureTech Health -3.92% 208.5p
SThree -3.5% 400p
Hunting -3.42% 212p
TBC Bank Group -3.09% 2,350p
Tullow Oil -2.88% 24.26p
WAG Payment Solutions -2.81% 97p