London close: Stocks manage gains as BoE holds rates

London markets closed on a positive note on Thursday, bolstered by the Bank of England's decision to maintain interest rates, in line with market expectations.

The FTSE 100 index saw a modest rise of 0.33%, closing at 8,381.35 points, while the FTSE 250 recorded a gain of 0.19%, ending the day at 20,531.30 points.

In currency markets, sterling was last up 0.1% on the dollar to trade at $1.2510, while it dipped 0.15% against the euro, changing hands at €1.1609.

"The pound and gilt yields decreased as Britain's leading stock index reached a new high following the Bank of England's move [towards] lower interest rates," said TickMill market analyst Patrick Munnelly.

Munnelly noted the FTSE 100 hit a new intraday record before its record close.

"Gilt prices also increased, causing the yield on the 10-year benchmark gilt to remain relatively stable at 4.138%.

"The BoE's Monetary Policy Committee voted seven-two to maintain rates at 5.25%, with deputy governor Dave Ramsden and Swati Dhingra advocating for a cut to 5%."

Bank of England holds interest rates, US jobless claims rise

In economic news, the Bank of England (BoE) opted to maintain interest rates at 5.25%, a decision widely anticipated by market analysts.

The stance marked the sixth consecutive meeting where the BoE held rates steady.

Despite the latest data from the Office for National Statistics indicating a decline in consumer price inflation to 3.2% in March from 3.4% in February, with a peak of 11.1% recorded in October 2022, the Monetary Policy Committee (MPC) remained cautious, voting seven-two in favour of maintaining rates, with Swati Dhingra and Dave Ramsden advocating for a reduction to 5%.

That marked a shift from March, when the MPC voted eight-one to keep rates unchanged, with only Dhingra in favour of a cut.

The BoE said it expected consumer price inflation to approach its 2% target in the near term, but forecasted a slight increase to around 2.5% in the latter half of the year, primarily due to the normalisation of energy-related base effects.

Despite acknowledging upside risks to inflation from geopolitical factors, the BoE noted limited impact on oil prices from recent developments in the Middle East.

"We've had encouraging news on inflation and we think it will fall close to our 2% target in the next couple of months," said governor Andrew Bailey.

"We need to see more evidence that inflation will stay low before we can cut interest rates.

"I'm optimistic that things are moving in the right direction."

In the UK housing market, recent weeks saw a slight increase in mortgage rates, dampening demand for housing.

According to the latest RICS UK residential survey, near-term sales expectations had softened, with a decline in the net balance of new buyer enquiries to -1% in April from +6% in March, indicating a reversal from three consecutive months of positive readings.

The survey highlighted mixed buyer demand across the UK, with declining demand primarily seen in London and southern England.

Additionally, the net balance for sales expectations over the next three months fell to -1%, the lowest level since October, painting a picture of near-term stagnation in the housing market.

"With financial markets recently paring back expectations around the potential scale of monetary policy loosening this year, near-term sales expectations appear to have been adversely effected," RICS said.

Across the Atlantic, the US Department of Labor reported a surge in Americans filing for unemployment benefits during the week ended 4 May, reaching a nine-month high.

Initial jobless claims rose by 22,000 to 231,000, surpassing market expectations and halting a four-week streak of downside surprises.

The four-week moving average for initial claims also increased, reflecting heightened volatility in the labour market.

Continuing claims rose by 17,000 to 1.78 million.

On a non-seasonally adjusted basis, claims increased notably in several states, including New York, California, Indiana, and Illinois.

Finally on data, China's customs agency reported a notable uptick in both exports and imports for April, surpassing economists' forecasts.

Exports rose 1.5%, reversing a decline recorded in March, while imports surged 8.4%, outstripping expectations for a 4.8% increase.

BAE manages gains, 3i Group in the red

On London's equity markets, weapons maker BAE Systems edged up 0.76% after as it reaffirmed its annual guidance.

The company expressed optimism regarding increased orders driven by global geopolitical tensions and heightened defence spending by various countries.

BAE said it expected sales to climb 10% to 12% above 2023 figures, with underlying earnings before interest and tax projected to increase by 11% to 13% compared to the prior year's performance.

Harbour Energy surged 7.69%, buoyed by its own positive trading update, while broadcaster ITV added 1.78% following its first-quarter revenue report, although it reported challenges from lower production revenues attributed to the US writers' and actors' strike.

Telecoms group Airtel Africa reversed earlier losses to close 1.55% higher despite grappling with the impact of a weakened Nigerian naira, which led to a $549m negative foreign exchange headwind.

The company reported a pre-tax loss of $89m as a result.

Vodafone Group posted a modest gain of 0.8% ahead of its full-year results next Tuesday, although concerns persisted regarding the company's need to reset expectations following the sale of its Spanish and Italian businesses.

Watches of Switzerland Group jumped 3.66% after announcing its acquisition of Roberto Coin Inc for $130m.

On the downside, 3i Group declined 5.18%, despite reporting strong full-year results supported by robust growth in its portfolio companies.

Hipgnosis Songs Fund also faced a downturn, dropping 2.53%, following Concord's decision not to increase its offer for the company.

BA and Iberia owner IAG descended 0.96% ahead of its first-quarter results on Friday, while HSBC Holdings, Admiral Group, Petershill Partners, Lancashire Holdings, SThree, and Ibstock all registered losses as they traded without entitlement to the dividend.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,381.35 0.33%
FTSE 250 (MCX) 20,531.30 0.19%
techMARK (TASX) 4,725.94 0.29%

FTSE 100 - Risers

Anglo American (AAL) 2,736.00p 3.09%
JD Sports Fashion (JD.) 120.20p 2.91%
Rightmove (RMV) 572.80p 2.14%
St James's Place (STJ) 473.00p 1.81%
RS Group (RS1) 822.50p 1.79%
Ocado Group (OCDO) 352.10p 1.79%
Taylor Wimpey (TW.) 143.20p 1.70%
Marks & Spencer Group (MKS) 270.30p 1.58%
Airtel Africa (AAF) 117.70p 1.55%
Frasers Group (FRAS) 835.50p 1.52%

FTSE 100 - Fallers

3i Group (III) 2,820.00p -5.18%
HSBC Holdings (HSBA) 690.90p -4.15%
Melrose Industries (MRO) 595.60p -1.62%
Pearson (PSON) 1,000.50p -1.43%
InterContinental Hotels Group (IHG) 7,792.00p -1.22%
Halma (HLMA) 2,307.00p -0.90%
Admiral Group (ADM) 2,748.00p -0.90%
Spirax-Sarco Engineering (SPX) 9,085.00p -0.76%
Smith & Nephew (SN.) 1,001.50p -0.60%
Associated British Foods (ABF) 2,686.00p -0.56%

FTSE 250 - Risers

Harbour Energy (HBR) 301.10p 7.69%
Watches of Switzerland Group (WOSG) 336.80p 3.63%
PZ Cussons (PZC) 105.60p 3.33%
Hays (HAS) 97.15p 3.30%
Genuit Group (GEN) 455.50p 3.17%
Hochschild Mining (HOC) 163.20p 3.03%
Domino's Pizza Group (DOM) 330.00p 3.00%
SDCL Energy Efficiency Income Trust (SEIT) 65.40p 2.99%
Trustpilot Group (TRST) 213.00p 2.90%
Pagegroup (PAGE) 454.60p 2.85%

FTSE 250 - Fallers

Patria Private Equity Trust (PPET) 534.00p -5.49%
Petershill Partners (PHLL) 200.00p -4.76%
Baltic Classifieds Group (BCG) 236.50p -4.25%
Bellevue Healthcare Trust (Red) (BBH) 141.60p -3.41%
Paragon Banking Group (PAG) 715.00p -3.25%
Hipgnosis Songs Fund Limited NPV (SONG) 102.00p -2.49%
Wizz Air Holdings (WIZZ) 2,140.00p -2.37%
4Imprint Group (FOUR) 6,370.00p -2.30%
Man Group (EMG) 255.60p -2.29%
Inchcape (INCH) 782.50p -2.00%