London close: Footsie lower as traders test Sterling upside

London stocks finished lower on Thursday as the Bank of England stood pat on monetary policy, as widely expected, but amid dovishness across the Pond and on the other side of the Channel which resulted in a stronger Sterling.

The FTSE 100 was down 0.65% or 48.39 points to 7,448.12 by the close, while the pound was higher against the euro at 1.1404 and up by 0.15% versus the US dollar to 1.3436.

Threadneedle Street's Monetary Policy Committee voted unanimously to hold rates at 0.5% after its first rate hike in 10 years last month.

David Morrison, senior market strategist at GKFX, said: "This came as no surprise after last month’s 0.25% rate hike which was accompanied by the quarterly Inflation Report. Back then, the Bank made it clear that they were in no hurry to raise rates further, signalling that the market’s forecast of two more 25 basis-point rate hikes before the end of 2020 was in line with the BoE’s thinking.

"Since then we've seen a pick-up in inflation as measured by CPI. The latest update came in at 3.1% annualised, well above the Bank’s 2% target. But concerns over Brexit should stay the Bank’s hand even if inflation should tick higher from here."

Investors were also digesting an expected 25 basis points rate hike by the Fed overnight. The US central bank stuck to its projection of three more rate hikes in each of 2018 and 2019. However, two rate-setters, Chicago Fed president Charles Evans and Minneapolis Fed boss Neel Kashkari both dissented, preferring instead to keep rates as they were.

Later, in Frankfurt, the European Central Bank's latest set of macroeconomic projections revealed policymakers saw CPI rising at just a 1.7% year-on-year clip in 2020, on average, below its stated goal of under but close to 2.0%.

Earlier, data from the Office for National Statistics showed UK retail sales increased much more than expected last month due to seasonal statistical difficulties caused by Black Friday.

Sales volumes rallied 1.1% month-to-month in November, which was much higher than the consensus 0.4% forecast.

The year-on-year growth rate increased to 1.6%, with the previous month's growth revised to flat from the 0.3% fall originally estimated. The consensus was for a 0.3% rise on the year.

ONS admitted that its seasonal adjustment may not fully account for a longer Black Friday sales period, with this set of data covering the period up to 25 November, while Cyber Monday sales from 27 November will be included in the next set of figures.

Politics were also in focus on Thursday after the government was narrowly defeated in a key vote on its Brexit bill a day earlier. Lawmakers dealt a blow to PM Theresa May as they voted to give a legal guarantee of a vote on the final Brexit deal with Brussels.

In corporate news, distribution and outsourcing group Bunzl fell saying it has been trading in line and expects full-year revenues to rise around 15% at actual exchange rates.

Oilfield services group Petrofac was weaker despite saying in a pre-close update that trading was in line with expectations and that it has seen a recovery in new order intake in 2017.

888 Holdings lost ground after it said earnings before interest, taxes, depreciation and amortisation for the year to the end of December should be in line with market expectations.

Sports Direct shares slumped after the company posted a 67% drop in first-half profit, with investors seemingly unconvinced by chief executive Mike Ashley's claims that the group's elevation strategy is delivering a "spectacular trading performance".

Imperial Leather and Original Source owner PZ Cussons retreated as it warned that first-half operating profits will be around 10% lower than the previous period due to reduced margins in some business units in Europe and Africa.

Outsourcer Capita tumbled after saying trading for the year to date was in line with expectations, but highlighting a challenging outlook for 2018, while Standard Chartered was hit by a downgrade to 'sell' at Investec.

On the upside, Ocado rallied from early losses after it reported strong but slightly slower sales growth in the fourth quarter as a lack of delivery drivers put the brakes on capacity, though previous falls in the online grocer's average basket size were arrested.

BT Group was also higher following an upgrade to 'buy' at UBS, while IMI advanced after agreeing to acquire Bimba, a manufacturer of pneumatic, hydraulic and electric motion solutions with an extensive distributor network principally servicing the North American industrial automation market.

Lonmin shares surged after the platinum miner agreed to be taken over by South Africa's Sibanye-Stillwater in an all-share deal that values the group at around £285m.

Market Movers

FTSE 100 (UKX) 7,448.12 -0.65%
FTSE 250 (MCX) 20,006.27 -0.27%
techMARK (TASX) 3,467.75 -0.33%

FTSE 100 - Risers

Land Securities Group (LAND) 978.50p 3.22%
Mondi (MNDI) 1,775.00p 2.96%
Mediclinic International (MDC) 621.50p 2.56%
BT Group (BT.A) 273.85p 2.18%
Smurfit Kappa Group (SKG) 2,380.00p 1.84%
Randgold Resources Ltd. (RRS) 6,920.00p 1.84%
TUI AG Reg Shs (DI) (TUI) 1,433.00p 1.42%
ITV (ITV) 166.30p 1.34%
SEGRO (SGRO) 568.00p 1.34%
Hammerson (HMSO) 531.50p 1.24%

FTSE 100 - Fallers

Standard Life Aberdeen (SLA) 413.80p -3.20%
Convatec Group (CTEC) 203.20p -2.91%
British American Tobacco (BATS) 4,924.50p -2.08%
CRH (CRH) 2,530.00p -2.05%
Standard Chartered (STAN) 759.40p -1.89%
Sky (SKY) 990.00p -1.88%
GlaxoSmithKline (GSK) 1,290.50p -1.79%
Intertek Group (ITRK) 5,020.00p -1.76%
Rolls-Royce Holdings (RR.) 823.00p -1.73%
Whitbread (WTB) 3,825.00p -1.62%

FTSE 250 - Risers

Vectura Group (VEC) 112.00p 7.80%
Domino's Pizza Group (DOM) 338.70p 5.09%
Dixons Carphone (DC.) 190.00p 4.63%
Euromoney Institutional Investor (ERM) 1,214.00p 3.23%
Derwent London (DLN) 3,007.00p 3.16%
IG Group Holdings (IGG) 715.00p 3.03%
Acacia Mining (ACA) 175.00p 2.63%
NewRiver REIT (NRR) 330.50p 2.23%
Great Portland Estates (GPOR) 662.00p 2.16%
Vedanta Resources (VED) 690.00p 2.07%

FTSE 250 - Fallers

Capita (CPI) 407.10p -12.62%
PZ Cussons (PZC) 310.50p -5.28%
Marston's (MARS) 114.10p -3.81%
Serco Group (SRP) 97.70p -3.65%
Provident Financial (PFG) 810.00p -3.63%
Nostrum Oil & Gas (NOG) 305.70p -3.55%
Go-Ahead Group (GOG) 1,490.00p -2.93%
Travis Perkins (TPK) 1,520.00p -2.88%
Mitchells & Butlers (MAB) 260.20p -2.81%
Meggitt (MGGT) 474.30p -2.61%