7th Nov 2024 16:59
(Alliance News) - The FTSE 100 ended lower on Thursday, while mid-caps jumped, as investors weighed election outcomes, central bank decisions and a slew of earnings.
The Bank of England said it would not cut interest rates "too quickly or too much" after lowering rates by 25 basis points. The US Federal Reserve is expected to follow suit later in the day.
The FTSE 100 index closed down 25.94 points, or 0.3%, at 8,140.74. The FTSE 250 ended up 165.06 points, 0.8%, at 20,611.76, while the AIM All-Share fell 0.81 of a point, 0.1%, at 738.23.
The Cboe UK 100 ended down 0.2% at 817.13, the Cboe UK 250 closed up 0.5% at 18,096.88, and the Cboe Small Companies ended down 0.6% at 16,305.35.
In Europe, the CAC 40 was 0.8% higher while the Dax 40 in Frankfurt jumped 1.7%.
In New York, at the time of the London close, the DJIA was down 0.1%, the S&P 500 was 0.6% higher, and the Nasdaq Composite rose 1.3%.
The Bank of England on Thursday cut its benchmark interest rate by 25 points reflecting "continued progress" in disinflation.
In a widely expected move, the BoE's Monetary Policy Committee voted decisively by 8 to 1 to lower rates to 4.75%, having cut borrowing costs for the first time in four years in August before leaving them unchanged in September.
Catherine Mann was the lone dissenting voice on the MPC, preferring to maintain bank rate at 5.0%.
Looking ahead, the BoE said a "gradual" approach to removing policy restraint remains appropriate, noting "significant uncertainty" around the labour market and a range of future paths for inflation.
"We need to ensure inflation stays low. So we will not cut interest rates too quickly or too much," the BoE said. "If things evolve as expected, it's likely that interest rates will continue to fall gradually."
The BoE's decision comes in the wake of last week's budget and the election of Donald Trump as US president, both of which are expected to put upward pressure on inflation.
The BoE said the budget was expected to boost the level of GDP by around 75 basis points at their peak in a year’s time, relative to the August projections. The impact on inflation was put at by just under 50 basis points.
"The impact of the budget announcements on inflation will depend on the degree to and speed with which these higher costs pass through into prices, profit margins, wages and employment," it said.
Bank of England Governor Andrew Bailey said it is too early to determine what impact Donald Trump's US re-election will have on the UK, and the central bank is in wait-and-see mode as far as the impact from last week's budget goes.
"Despite big spending increases in last week's UK budget, the Bank of England has signalled that it's not a game changer for future interest rate cuts. We think the Bank will keep rates on hold in December but accelerate the pace of cuts from February onwards," said ING's James Smith.
Later on Thursday, the US central bank is widely expected to reduce interest rates by 25 basis points, the day after Donald Trump's election win.
Kathleen Brooks at XTB Research said: "The market reaction to Trump’s win complicates the outlook for the Fed meeting tonight. We expect the Fed to cut rates, however, after a surge in borrowing costs and a surge in stocks, along with Trump’s expected influence on inflation, they may refrain from committing to future policy moves. This could be interpreted as being a hawkish move, which may weigh on the dollar and stocks later."
"There is still a 72% chance of a rate cut in December, however, we think that this is too richly priced and may get priced out later today," she added.
The pound, which was on the back foot in the wake of Trump's election triumph rallied. Sterling was quoted at USD1.2985 at the London equities close on Thursday, compared to USD1.2877 at the close on Wednesday.
The euro stood at USD1.0791, up against USD1.0728 at the same time on Wednesday. Against the yen, the dollar was trading at JPY153.11, down compared to JPY154.48 late Wednesday.
On the FTSE 100, BT fell 3.6% after lowering its revenue guidance for the full year following a challenging period of interim trading.
BT said its trading in the first-half had been impacted by a competitive retail environment and a weaker performance in its non-UK operations.
Revenue guidance for the full-year was revised to down to between 1% and 2%, reflecting a softer public sector and corporate environment as well as weaker non-UK trading.
BT previously guided adjusted revenue growth of between 0% and 1% in financial year 2025.
Sainsbury fell 4.1% after a slightly weaker-than-expected first half print.
Underlying retail earnings before interest and tax of GBP503 million was below the company compiled consensus of GBP516 million.
"There are small signs of progress in Sainsbury’s non-food operations after a troublesome first quarter, yet the company is still walking on a tightrope rather than sprinting on the field," commented AJ Bell's Russ Mould.
Supporting the blue-chip index, miners climbed after Chinese exports rose at a chunkier pace than expected. China is a major buyer of minerals.
Exports rose a strong 13% in October over last year - more the double the 5% increase analysts had predicted - figures published on Thursday by the Chinese customs authority showed.
Antofagasta rose 4.8%, Glencore climbed 3.5%, Anglo American advanced 3.6% and Rio Tinto gained 3.1%.
On the FTSE 250, RS Group soared 12% after backing guidance despite trading in the first-half being "tougher than anticipated".
Despite this, RS noted that it had realised faster than expected cost savings, improved execution and cash conversion and a stabilisation of sales per day.
Inline with its progressive dividend policy, RS lifted the interim dividend by 2.4% to 8.5p per share from 8.3p the previous year.
But John Wood plunged 60% as the firm said it has turned to Deloitte to perform an independent review after exceptional contract write-offs.
The oilfield and engineering services firm said the probe will be focused on "reported positions on contracts in projects, accounting, governance and controls". The review will also look to determine whether any prior results need to be restated.
In results for the first half of 2024, Wood Group reported an impairment of goodwill of USD815 million and USD140 million of charges related to the exit of lump sum turnkey and large-scale engineering, procurement & construction work.
The firm has rebuffed two takeover approaches in the past two years.
ITV also suffered, down 12%. It revealed plans for an additional GBP20 million of cost savings in 2024 after warning that its programme-making arm continued to be hit by the aftermath of the Hollywood writers' and actors' strike.
The UK broadcaster said revenue at its studios arm would be down by a fifth in the third quarter, taking full-year revenues lower by "mid-single digits" and marginally down against last year when excluding the impact of the strikes.
Brent oil was quoted at USD74.91 a barrel at the London equities close on Thursday, down from USD75.18 late Wednesday.
The price of gold rallied to USD2,697.24 an ounce at the London equities close on Thursday against USD2,665.82 at the close on Wednesday.
Friday's local corporate calendar sees a trading statement from online property portal Rightmove and housebuilder Vistry.
By Jeremy Cutler, Alliance News reporter
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