20th Jun 2024 12:13
(Alliance News) - The FTSE 100 gathered some momentum heading into Thursday afternoon, after the Bank of England left interest rates unmoved in the wake of data showing the UK inflation rate returned to target.
The pound struggled, however. Sterling was quoted at USD1.2684 early Thursday afternoon, down from USD1.2723 at the London equities close Wednesday.
The FTSE 100 index traded 33.04 points higher, 0.4%, at 8,238.15. The FTSE 250 was up 82.07 points, 0.4%, at 20,463.12, though the AIM All-Share was down 2.31 points, 0.3%, at 775.19.
The Cboe UK 100 rose 0.2% to 817.64, the Cboe UK 250 added 0.3% at 17,766.16, and the Cboe Small Companies was 1.1% higher at 16,897.78.
In European equities on Thursday, both the CAC 40 in Paris shot up 0.9% and the DAX 40 in Frankfurt was up 0.7%.
The euro slipped to USD1.0730 midday London time, from USD1.0745 at the time of the European equities close Wednesday. Against the yen, the dollar rose to JPY158.42 from JPY157.92.
The BoE said seven members of its Monetary Policy Committee, Governor Andrew Bailey included, backed the decision to maintain bank rate at 5.25%. Swati Dhingra and Dave Ramsden were in favour of a 25 basis point cut.
For the first time since July 2021, inflation returned to target, numbers on Wednesday showed.
According to the Office for National Statistics, the rate of yearly consumer price growth faded to 2.0% in May, from 2.3% in April. The reading was in-line with the FXStreet cited consensus.
The BoE said: "Indicators of short-term inflation expectations have also continued to moderate, particularly for households. CPI inflation is expected to rise slightly in the second half of this year, as declines in energy prices last year fall out of the annual comparison."
The central bank also looked to play down the robust service inflation print outlined in Wednesday's ONS data.
"Services consumer price inflation was 5.7% in May, down from 6.0% in March, but somewhat higher than projected in the May report. This strength in part reflected prices that are index-linked or regulated, which are typically changed only annually, and volatile components," it said.
Eyes now turn to August, with some hoping the first rate cut of the cycle may come then. The BoE said Thursday that it "has judged since last autumn that monetary policy needs to be restrictive for an extended period of time until the risk of inflation becoming embedded above the 2% target dissipates".
Quilter Investors analyst Lindsay James commented: "Until recently, markets had been pricing in several BoE rate cuts this year, with the first previously expected in the summer. Given the hesitation around inflation, it is looking increasingly likely that the first cut will not materialise until November which means we could see just one or two cuts from the BoE this year after all. This would put the BoE roughly in alignment with the Federal Reserve, which now expects to make just one rate cut this year, and trailing behind the European Central Bank which has already fired the starting gun."
Still to come on Thursday's economic calendar is a US jobless claims reading at 1330 BST.
In London, DS Smith rose 1.3%. The London-based packaging firm reported weaker annual results, though it is the fate of suitor International Paper that hogged the spotlight.
DS Smith said revenue in the year to April 30 declined 17% to GBP6.82 billion from GBP8.22 billion, sending pretax profit down 24% to GBP503 million from GBP661 million.
"We are pleased to have delivered a robust performance, despite the challenging environment, driven by our focus on customers, quality, service and innovation together with the benefit from our self-help productivity initiatives," Chief Executive Officer Miles Roberts said.
DS Smith maintained its final dividend at 12 pence per share, giving a full-year payout of 18p, also unmoved on-year.
CEO Roberts told reporters that both sides are still "working very diligently on bringing the businesses together", PA reported.
Brazil's Suzano last month confirmed its interest in acquiring International Paper.
"However, it reiterates that, up to the moment, there is no agreement, binding or otherwise, nor any decision or deliberation by the company's management regarding a potential operation that meets the minimum materiality required to qualify as a material fact," Suzano said in a US filing in May.
Such a deal could threaten International Paper's acquisition of DS Smith.
Elsewhere in London, Speedy Hire shot up 8.1%. The Merseyside, England-based tool and equipment hire company won a long-term contract with Amey, which will generate up to GBP25 million revenue per year.
Amey is provider of engineering, operations, and decarbonisation solutions for UK infrastructure. The company opted for Speedy Hire in part due to the two firms' shared emphasis on sustainability, Speedy Hire said.
YouGov plunged 36%. Since half-year results for the six months to January 31, released in March, the market research and data analytics firm said it has seen lower sales bookings than anticipated.
As a result, YouGov now expects reported revenue for financial 2024 to be around GBP324 million to GBP327 million, up from GBP258.3 million in financial 2023.
YouGov said it had invested in the business to set up for an acceleration in growth in the second half of the financial year, but this growth was below expectations.
It now expects full-year group adjusted operating profit to be between GBP41 million to GBP44 million, down from GBP48.3 million in financial 2023.
AJ Bell analyst Russ Mould noted that during election campaigns, the assumption might be that YouGov shines as it becomes a ubiquitous name when it comes to polling.
"But its polling operation makes a relatively modest contribution to group revenue," Mould added. "The data analytics side is more important and this is where the company is struggling. The company invested for an expected acceleration of growth in the second half of its financial year which, in classic fashion, failed to materialise. This may reduce some of the clamour for the company to move its listing to the US in search of a higher rating. The one reassuring element of the announcement is the recently acquired consumer panel business is performing as expected."
A barrel of Brent oil fetched USD85.23 early Thursday afternoon, down from USD85.77 late Wednesday afternoon. Gold rose to USD2,338.04 an ounce, from USD2,325.80.
By Eric Cunha, Alliance News news editor
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