London midday: Stocks little changed as BoE stands pat

London stocks were little changed just after midday on Thursday as the Bank of England stood pat on monetary policy.

The FTSE 100 was up just 0.1% at 7,048.20 after the BoE voted to leave interest rates on hold at their current record low of 0.1% and kept its bond-buying programme at £895bn. Outgoing chief economist Andy Haldane voted to reduce the size of the bond purchase, however and the Bank said the pace of bond purchases can be "slowed somewhat".

Capital Economics said: "But this is not a signal about the strength of the economy. The MPC has always said that it aimed to finish the £150bn of QE announced last November ‘around the end of 2021’, so the pace of asset purchases was always going to slow at some point.

"That said, the new, more optimistic, economic forecasts support our view that the MPC won’t announce any further QE. Indeed, Andy Haldane, the most hawkish member of the MPC who is leaving the MPC after June’s meeting, even voted to reduce the QE target by £50bn! The MPC’s annual GDP growth forecast for 2021 was revised up from 5.0% in February to 7.25% now, but growth was revised down in 2022.

"The result was that the Bank now expects GDP to return to the pre-crisis peak in Q4 2021 rather than in Q1 2022."

Earlier, a survey showed the service sector surged in April, buoyed by the loosening of lockdown restrictions and growing consumer confidence.

The IHS Markit/CIPS UK services PMI business activity index reached 61.0 in April, up from 56.3 in March and the highest since October 2013. It was also ahead of both consensus and the flash estimate of 60.1.

The composite PMI output index - a weighted average of the comparable manufacturing and services indices - also rose, to 60.7 from 56.4 a month earlier. The April figure was above both analyst forecasts and the flash reading of 60.0.

In the services sector, order volumes increased for the second consecutive month and was the fastest rate of expansion since December 2013. Job creation also improved, with the sector recording the fastest increase in employment for five and half years.

Tim Moore, economics director at IHS Markit, said: "A surge of pent-up demand has started to flow through the UK economy following the loosening of pandemic restrictions.

"The roadmap for reopening leisure, hospitality and other customer-facing activities resulted in a sharp increase in forward bookings and new project starts. If the rebound in order books continues along its recent trajectory during the rest of the second quarter, then output growth looks very likely to surpass the survey record high seen back in April 1997."

In equity markets, education publisher Pearson was the top performer on the FTSE 100 after an upgrade to ‘outperform’ at Exane, which also hiked its price target to 950p from 700p.

Next was a high riser after upgrading its guidance for annual pre-tax profit by £20m to £720m after sales beat expectations in the first quarter.

Housebuilder Barratt Developments gained after saying it expects full year results to be "modestly above" prior expectations following a strong start to the new year.

Melrose Industries was up after saying it was trading modestly above expectations, while Morgan Advanced Materials was in the black after it lifted its guidance for full-year organic constant currency sales growth.

Wealth manager Rathbone Brothers advanced after it posted a rise in first-quarter funds under management and income as it hailed a strong performance from its funds business.

On the downside, Admiral and Croda were both weaker as they traded without entitlement to the dividend.

Trainline slumped as the online ticket platform said annual losses had widened as passenger demand plunged during the Covid-19 pandemic.

Mondi was weaker even as it reported strong demand for its packaging as online shopping surged and customers looked for more eco-friendly products in the first quarter.

Market Movers

FTSE 100 (UKX) 7,048.20 0.13%
FTSE 250 (MCX) 22,500.18 0.51%
techMARK (TASX) 4,336.96 0.19%

FTSE 100 - Risers

Pearson (PSON) 832.00p 3.05%
Next (NXT) 8,316.00p 2.34%
Imperial Brands (IMB) 1,572.00p 2.21%
International Consolidated Airlines Group SA (CDI) (IAG) 207.45p 2.04%
British American Tobacco (BATS) 2,768.50p 1.93%
Barratt Developments (BDEV) 779.20p 1.78%
Rolls-Royce Holdings (RR.) 103.48p 1.69%
Standard Chartered (STAN) 523.60p 1.67%
Phoenix Group Holdings (PHNX) 731.40p 1.47%
Berkeley Group Holdings (The) (BKG) 4,741.00p 1.43%

FTSE 100 - Fallers

Admiral Group (ADM) 2,974.00p -4.37%
Mondi (MNDI) 1,910.00p -3.95%
Polymetal International (POLY) 1,532.50p -2.42%
Ocado Group (OCDO) 1,917.50p -2.27%
Renishaw (RSW) 6,125.00p -2.16%
Reckitt Benckiser Group (RKT) 6,368.00p -1.45%
Croda International (CRDA) 6,770.00p -1.43%
BP (BP.) 314.30p -1.32%
London Stock Exchange Group (LSEG) 7,138.00p -1.30%
Weir Group (WEIR) 1,878.00p -1.26%

FTSE 250 - Risers

Morgan Advanced Materials (MGAM) 334.50p 10.40%
Vesuvius (VSVS) 581.50p 5.73%
Vectura Group (VEC) 118.00p 3.69%
Wickes Group (WIX) 245.50p 3.37%
Workspace Group (WKP) 867.50p 3.27%
Domino's Pizza Group (DOM) 391.40p 3.00%
Crest Nicholson Holdings (CRST) 418.60p 2.80%
Ferrexpo (FXPO) 464.60p 2.70%
Brewin Dolphin Holdings (BRW) 349.00p 2.65%
Savills (SVS) 1,211.00p 2.63%

FTSE 250 - Fallers

Trainline (TRN) 425.20p -5.64%
AO World (AO.) 246.00p -2.54%
Greggs (GRG) 2,330.00p -2.02%
Cairn Energy (CNE) 174.10p -1.80%
Hochschild Mining (HOC) 185.20p -1.80%
Edinburgh Worldwide Inv Trust (EWI) 329.50p -1.79%
Shaftesbury (SHB) 628.50p -1.72%
WH Smith (SMWH) 1,837.00p -1.69%
Baillie Gifford US Growth Trust (USA) 308.00p -1.60%
GCP Infrastructure Investments Ltd (GCP) 99.60p -1.39%