London midday: Stocks decline as BoE holds interest rates steady

The BoE’s Monetary Policy Committee said it would hold interest rates at 0.5% and the asset purchase programme at £375bn, as expected by analysts.

The decision to hold fire on rates comes amid low inflation, weak wage growth, a decline in oil prices, a strong pound and concerns about a slowdown in emerging markets.

Ian McCafferty remained the only policymaker to vote in favour of a rate hike, recommending a 25 basis point rise.

While many analysts are expecting a rate increase in May, several big banks recently pushed their forecasts back to around November.

In between, IHS Global Insight analyst Howard Archer has moved his prediction from May to August. “This is primarily a consequence of the fact that we now believe consumer price inflation will stay lower for longer, and we have become warier about UK GDP growth prospects,” he said.

Consumer price inflation rose 0.1% year-on-year in November, well below the BoE's 2% target.

Elsewhere, Asian stocks were mostly lower after a weak session on Wall Street. Shares in Hong Kong and Japan finished in negative territory but Shanghai swung to a positive close after falling earlier.

China’s yuan fell sharply in the offshore market on Thursday by as much as 0.7% to 6.6128 to the dollar despite the People’s Bank of China setting the rate stronger against the dollar. The PBoC fixed the yuan at 6.5616 to one US dollar, slightly stronger from the previous fix of 6.5630 on Wednesday.

Across the Atlantic, Federal Reserve official James Bullard will speak in Memphis at 1330 GMT while the initial jobless claims report will be released at the same time.

On the company front, Tesco’s shares jumped after reporting an impressive like-for-like (LFL) sales improvement over the Christmas period. Group LFL sales bounced back with a 2.1% rise in the six weeks to 9 January, with the UK LFLs climbing 1.3% as the prior year's three '£5 off £40' national coupon campaign was abandoned.

Home Retail fell after saying full year profit is expected to come it at the lower end of expectations as Argos sales over the festive period dipped.

Moss Bros was flat after the formal menswear specialist reported a rise in sales for the 23 weeks from 2 August to 9 January, as its promotional strategy offset a challenging trading environment in autumn.

Asos declined despite saying sales of £446.9m in the four months to 31 December were up 22% on the same period a year before, or 27% higher at constant currency rates.

William Hill gained after reporting full year adjusted operating profits were in line with expectations.

JD Sports Fashion rallied as it said Christmas sales sprinted ahead by 10.6% and full year headline profit before tax and exceptional items is expected to beat forecasts of £136m by up to 10%.

Market Movers
techMARK 3,084.87 -2.62%
FTSE 100 5,836.53 -2.09%
FTSE 250 16,328.91 -2.20%

FTSE 100 - Risers
Tesco (TSCO) 164.65p +4.01%
Sainsbury (J) (SBRY) 249.90p +0.89%
Anglo American (AAL) 233.30p +0.80%
BHP Billiton (BLT) 622.60p +0.48%
BP (BP.) 337.35p +0.45%
Sports Direct International (SPD) 429.60p +0.42%
Pearson (PSON) 703.00p +0.36%

FTSE 100 - Fallers
InterContinental Hotels Group (IHG) 2,307.00p -7.27%
Hargreaves Lansdown (HL.) 1,254.00p -6.42%
TUI AG Reg Shs (DI) (TUI) 1,193.00p -5.02%
Johnson Matthey (JMAT) 2,446.00p -4.94%
Aberdeen Asset Management (ADN) 231.40p -4.77%
Ashtead Group (AHT) 993.50p -4.75%
Merlin Entertainments (MERL) 409.70p -4.68%
Carnival (CCL) 3,720.00p -4.59%
Hikma Pharmaceuticals (HIK) 2,110.00p -4.57%
Schroders (SDR) 2,563.00p -4.44%

FTSE 250 - Risers
B&M European Value Retail S.A. (DI) (BME) 269.00p +4.79%
JD Sports Fashion (JD.) 1,096.00p +3.59%
Euromoney Institutional Investor (ERM) 1,050.00p +3.45%
William Hill (WMH) 373.60p +1.14%
3i Infrastructure (3IN) 171.00p +0.89%
Halfords Group (HFD) 334.40p +0.72%
Clarkson (CKN) 2,121.00p +0.57%
Hansteen Holdings (HSTN) 113.60p +0.26%
Enterprise Inns (ETI) 101.50p +0.20%
Ibstock (IBST) 213.80p +0.14%

FTSE 250 - Fallers
Restaurant Group (RTN) 530.50p -16.85%
Thomas Cook Group (TCG) 111.90p -6.36%
Ted Baker (TED) 2,540.00p -5.72%
Worldwide Healthcare Trust (WWH) 1,771.00p -5.70%
Betfair Group (BET) 3,667.00p -5.27%
Bovis Homes Group (BVS) 910.00p -4.96%
Henderson Group (HGG) 272.10p -4.89%
Computacenter (CCC) 829.00p -4.71%
WH Smith (SMWH) 1,633.00p -4.56%
Greene King (GNK) 862.50p -4.54%

FTSE TechMARK - Risers
XP Power Ltd. (DI) (XPP) 1,530.00p +1.93%
IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 204.68 +0.14%

FTSE TechMARK - Fallers
Sarossa (SARS) 1.34p -6.62%
Torotrak (TRK) 3.40p -5.29%
Electronic Data Processing (EDP) 62.75p -3.46%
Oxford Biomedica (OXB) 7.60p -2.31%
Triad Group (TRD) 26.75p -1.83%
Skyepharma (SKP) 388.25p -1.83%
Consort Medical (CSRT) 1,025.00p -1.82%
KCOM Group (KCOM) 116.75p -1.68%
BATM Advanced Communications Ltd. (BVC) 16.75p -1.47%
E2V Technologies (E2V) 225.25p -1.21%