London close: Markets finish weaker as BoE expands bond-buying

London stocks clawed back some earlier losses during the afternoon on Thursday, but still closed weaker as the Bank of England expanded its bond-buying programme.

The FTSE 100 ended the session down 0.47% at 6,224.07, and the FTSE 250 was 0.36% lower at 17,518.26.

Sterling was weaker against both of its major trading pairs, last falling 1.04% against the dollar to $1.2425, and sliding 0.8% on the euro to €1.1077.

Earlier, the BoE announced it was keeping interest rates unchanged at a record low of 0.1% and expanding quantitative easing by a further £100bn to help counter the economic fallout from the coronavirus pandemic.

“A combination of a sour outlook for the economy and the ongoing deterioration in Brexit negotiations has intensified the bearish outlook for the pound, while the elevated levels of US jobless claims has helped to boost the dollar in a ‘flight to safety’ trade,” said IG chief market analyst Chris Beauchamp.

Rabobank senior market economist Stefan Koopman noted the consensus was for an increase of £100bn in the asset purchase facility, as happened, although the risk was skewed to the upside.

“In light of these expectations, the Monetary Policy Committee’s decision actually turned out a bit hawkish … relatively speaking, of course.

“The committee promises to stand ready to do more if necessary, but the ‘improved market functioning’ - higher risky asset prices and lower volatility - drove its decision to materially slow down the pace of gilt purchases from £13.5bn per week to £7bn per week.

“Chief economist Haldane even voted against the increase in the asset purchase facility - he believes that a sooner and faster recovery in economic activity could lead to lower cumulative output losses than initially expected, which might boost inflation prospects in the medium term.”

In equity markets, housebuilder Taylor Wimpey fell 5.8% after saying that its share placing had raised £515m to take advantage of coronavirus lockdown-related disruption to the market for development land.

The placing, announced on Wednesday night, was completed at 145p a share, while the firm;s shares were also hit by a downgrade to ‘hold’ at Jefferies.

Cruise operator Carnival closed 1.1% weaker after its second-quarter results and as Berenberg downgraded its stance on the shares to ‘sell’ from ‘hold’ ‘and slashed the price target.

It said Carnival’s capital structure was unsustainable and in need of a fresh injection of equity, the valuation highly unattractive and the shape and extent of the recovery of the industry far from certain.

Elsewhere, Helios Towers was under the cosh by 10% after Network i2i, a wholly-owned subsidiary of Bharti Airtel sold 23.1m shares - its entire stake - in the telecom tower infrastructure company.

The shares were sold in a placing at 160p each, raising gross proceeds of £36.9m.

Tesco reversed earlier gains to close 0.26% weaker, after announcing the sale of its Polish business to Denmark’s Salling Group for £181m.

On the upside, Prudential rose 2.67% after saying it has reinsured $27.6bn (£22bn) of US liabilities with Athene Holding, which has made a $500m equity investment in the company's US Jackson business.

The deal will strengthen the balance sheet of Jackson, Prudential's US division, and give Athene an 11.1% stake in the common equity of the business.

“The deal is particularly welcome since there were concerns the current market conditions would make a disposal difficult - the inherently unpredictable nature of Jackson’s large variable annuity portfolio isn’t exactly the reliable income model investors generally expect from a life insurer,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

“The deal does raise some interesting questions though. In particular we wonder what Jackson plans to do with its now sizable capital surplus - always assuming it’s not needed to offset recent market movements.”

TP ICAP racked up gains of 8.29% as Barclays initiated coverage of the stock at ‘overweight’. It said the company is well positioned to capitalise on the structural growth of OTC derivatives and the growing importance of proprietary data.

Safestore rallied 6.2% after it increased its dividend as the household storage company reported higher half-year earnings and predicted annual results in line with expectations.

Market Movers

FTSE 100 (UKX) 6,224.07 -0.47%
FTSE 250 (MCX) 17,518.26 -0.36%
techMARK (TASX) 3,767.49 -0.33%

FTSE 100 - Risers

Flutter Entertainment (FLTR) 11,190.00p 3.62%
Whitbread (WTB) 2,413.00p 2.96%
Prudential (PRU) 1,210.00p 2.67%
Compass Group (CPG) 1,144.00p 2.05%
InterContinental Hotels Group (IHG) 3,972.00p 1.53%
M&G (MNG) 161.45p 1.48%
Scottish Mortgage Inv Trust (SMT) 781.00p 1.42%
easyJet (EZJ) 801.80p 1.39%
Standard Life Aberdeen (SLA) 254.70p 1.15%
Rentokil Initial (RTO) 505.00p 1.08%

FTSE 100 - Fallers

Taylor Wimpey (TW.) 142.65p -5.96%
Intermediate Capital Group (ICP) 1,232.00p -5.67%
Aveva Group (AVV) 3,984.00p -2.45%
Burberry Group (BRBY) 1,560.00p -2.22%
AstraZeneca (AZN) 8,398.00p -2.21%
Centrica (CNA) 41.90p -2.17%
Evraz (EVR) 290.70p -2.15%
Ocado Group (OCDO) 1,958.50p -1.92%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,718.00p -1.81%
Barratt Developments (BDEV) 503.80p -1.79%

FTSE 250 - Risers

TP ICAP (TCAP) 362.40p 8.29%
Safestore Holdings (SAFE) 762.50p 6.20%
C&C Group (CCR) 230.00p 4.77%
William Hill (WMH) 136.70p 4.15%
GVC Holdings (GVC) 764.80p 3.91%
Telecom Plus (TEP) 1,514.00p 3.84%
Domino's Pizza Group (DOM) 333.80p 3.82%
SSP Group (SSPG) 275.80p 3.67%
National Express Group (NEX) 242.20p 3.41%
G4S (GFS) 111.45p 2.91%

FTSE 250 - Fallers

European Opportunities Trust (JEO) 693.00p -11.58%
Helios Towers (HTWS) 166.00p -10.00%
Aston Martin Lagonda Global Holdings (AML) 70.00p -5.38%
Tate & Lyle (TATE) 676.00p -5.24%
Ferrexpo (FXPO) 190.10p -5.05%
Vivo Energy (VVO) 85.80p -4.92%
Hammerson (HMSO) 114.45p -4.59%
Energean (ENOG) 500.00p -4.58%
Provident Financial (PFG) 187.00p -4.58%
Biffa (BIFF) 211.50p -3.86%