London stocks remained in the red just after midday on Thursday as the Bank of England hiked rated by 50 basis points to tackle surging inflation, as expected, and as investors digested a hawkish policy announcement from the US Federal Reserve.
At 1220 GMT, the FTSE 100 was down 0.5% at 7,462.50, while sterling was extending losses against the dollar, off 1% at 1.2299.
At 3.5%, interest rates are now at their highest level since October 2008. Last month, the Bank hiked rates by 75 basis points, which was the biggest increase for 33 years.
Data released on Wednesday by the Office for National Statistics showed that consumer price inflation eased to 10.7% in November from October’s 41-year high of 11.1%, as transport costs fell back. This was below consensus expectations of 10.9%.
Giles Coghlan, chief market analyst at HYCM, said: “After a year of successive interest rate hikes and soaring inflation, today’s decision from the Bank of England has not come as a surprise to economists or the markets, both of which had fully priced in another 50bps increase.
“While yesterday’s CPI reading provided some respite to the economy, the cost-of-living grinds on and a print of 10.7% hardly constitutes a Christmas miracle.
“At its last meeting, the central bank projected a five-quarter recession, and with the Autumn statement out of the way, fiscal conservatism is the BoE’s modus operandi. The UK is ultimately heading towards stagflation and a deep recession – especially if energy prices surge again once the Russian oil price cap and crude oil embargoes take place.”
Overnight, the Fed upped rates by 50 basis points, as expected, and struck a hawkish note. Although this marked a slowdown in hikes, with the Fed having lifted rated by 75 basis points at each of its last four policy meetings, the central bank also adjusted up its expectations for rate rises next year.
Still to come, the European Central Bank is expected to lift rates by 50 basis points when it announces its latest policy decision shortly.
In equity markets, DS Smith, AB Foods and Burberry all fell as they traded without entitlement to the dividend.
Electricals retailer Currys tumbled as it cut its full-year profit outlook and said it swung to a loss in the first half after its international business took a hit due to heavy discounting from competitors. In an update for the half to 29 October, the company said it now expects 2023 adjusted pre-tax profit of between £100m and £125m, down from previous guidance of £125m to £145m on a like-for-like basis.
Government outsourcer Serco lost ground even as it lifted 2022 revenue guidance slightly, adding that revenue the following year would increase.
On the upside, Great Portland, Land Securities and Big Yellow all rose after rating upgrades at Goldman Sachs.
Shipping services firm Clarkson surged after an upgrade to ‘overweight’ at JPMorgan.
Market Movers
FTSE 100 (UKX) 7,462.50 -0.45%
FTSE 250 (MCX) 18,954.07 -0.44%
techMARK (TASX) 4,414.63 -0.38%
FTSE 100 – Risers
International Consolidated Airlines Group SA (CDI) (IAG) 133.60p 1.77%
Berkeley Group Holdings (The) (BKG) 3,864.00p 1.31%
Land Securities Group (LAND) 643.40p 1.23%
Taylor Wimpey (TW.) 103.35p 1.08%
Antofagasta (ANTO) 1,475.00p 1.06%
Barratt Developments (BDEV) 407.10p 0.87%
British Land Company (BLND) 402.90p 0.62%
British American Tobacco (BATS) 3,287.00p 0.58%
GSK (GSK) 1,449.80p 0.42%
Harbour Energy (HBR) 315.00p 0.41%
FTSE 100 – Fallers
Associated British Foods (ABF) 1,579.50p -3.04%
Melrose Industries (MRO) 127.15p -2.08%
Burberry Group (BRBY) 2,093.00p -2.01%
Smith (DS) (SMDS) 319.80p -1.99%
Convatec Group (CTEC) 232.20p -1.94%
Ocado Group (OCDO) 676.40p -1.77%
Airtel Africa (AAF) 111.90p -1.76%
Croda International (CRDA) 6,894.00p -1.74%
Experian (EXPN) 2,934.00p -1.68%
Intermediate Capital Group (ICP) 1,205.00p -1.67%
FTSE 250 – Risers
Clarkson (CKN) 2,990.00p 4.36%
Octopus Renewables Infrastructure Trust (ORIT) 99.40p 2.58%
Big Yellow Group (BYG) 1,181.00p 2.34%
Kainos Group (KNOS) 1,700.00p 2.22%
Redrow (RDW) 465.00p 1.75%
Mitchells & Butlers (MAB) 134.00p 1.75%
Bellway (BWY) 1,949.50p 1.72%
SSP Group (SSPG) 232.80p 1.70%
Babcock International Group (BAB) 294.00p 1.66%
PZ Cussons (PZC) 219.00p 1.62%
FTSE 250 – Fallers
Currys (CURY) 61.40p -5.97%
ASOS (ASC) 510.50p -4.58%
Syncona Limited NPV (SYNC) 189.40p -3.86%
Bridgepoint Group (Reg S) (BPT) 192.70p -3.60%
Molten Ventures (GROW) 373.80p -3.11%
Hochschild Mining (HOC) 68.60p -2.70%
Fidelity China Special Situations (FCSS) 236.00p -2.68%
RHI Magnesita N.V. (DI) (RHIM) 2,100.00p -2.51%
Network International Holdings (NETW) 296.20p -2.50%
TR Property Inv Trust (TRY) 312.50p -2.34%
