London midday: Stocks maintain gains as BoE stands pat on rates, cuts Q2 growth forecast

London stocks were still in the green by midday on Thursday after the Bank of England stood pat on interest rates as it highlighted the growing possibility of a no-deal Brexit and cut its forecast for second-quarter growth.

The FTSE 100 was up 0.4% at 7,429.93, while the pound was trading up 0.5% against the dollar at 1.2703, as the greenback took a hit after the Fed policy announcement on Wednesday. Against the euro, sterling was 0.1% lower at 1.1250.

The Bank of England's Monetary Policy Committee voted unanimously to keep rates on hold at 0.75%, as expected, and to maintain the stock of corporate bond purchases and UK government bond purchases. The BoE also lowered its growth forecast for the second quarter to zero from 0.2% growth.

Policymakers acknowledged a slowdown in economic growth and said the chances of a no-deal Brexit have increased.

"Since the Committee’s previous meeting, the near-term data have been broadly in line with the May Report, but downside risks to growth have increased. Globally, trade tensions have intensified. Domestically, the perceived likelihood of a no-deal Brexit has risen," the BoE said. "Trade concerns have contributed to volatility in global equity prices and corporate bond spreads, as well as falls in industrial metals prices."

David Cheetham, chief market analyst at XTB, said: "On the whole the message is following the theme set by the bank’s peers in recent days by turning more dovish and while Governor Carney and the MPC have stopped short of delivering as strong a signal as the ECB or the Fed, it does seem increasingly likely that the next move will be an interest rate cut rather than a hike."

Overnight, the Federal Reserve left interest rates unchanged but signalled that a rate cut could be on the cards as early as July.

Accendo Markets analyst Mike van Dulken said: "This marks a U-turn of its 2015-18 hiking cycle, and its patience since March 2019, and provides investors with more certainty about the outlook for the price of money."

Earlier, figures from the Office for National Statistics showed that retail sales eased in May as unseasonably cold weather saw shoppers delay buying summer clothes.

Monthly retail sales volumes fell by 0.5% overall, in line with consensus, with clothing and footwear sales slumping 4.5%. Year-on-year growth of 2.3%, compared to 5.1% in April, was below consensus, with most analysts looking for around 2.7%. It was also the smallest annual rise since October.

Across the three months to May, retail sales grew by 1.6%. All sectors reported growth except for department stores and household goods specialists. Department store sales fell 0.9% during the period, and household goods by 0.3%.

Rhian Murphy, head of retail sales at the ONS, said: "Retail sales continued to grow in the latest three months despite two consecutive monthly falls, with clothing sales declining considerably in May, due to unseasonably cold weather.

"We see quite a mixed picture across the rest of the sector as the decline in department stores sales continued, with no growth since September of last year."

In equity markets, shares in precious metals miner Fresnillo shone as gold prices rallied to a more than five-year high after the dovish Fed comments.

BCA Marketplace saw its share surge as it confirmed that it was in advanced discussions with private equity firm TDR Capital about a possible £1.9bn cash offer for the company.

Homewares group Dunelm rallied after saying it expects pre-tax profits for the year to 29 June 2019 to be ahead of expectations, driven by good weather and strong trading across its businesses.

On the downside, Dixons Carphone slumped as it reported a big drop in full-year profit and warned of further falls in the current trading year.

Carnival shares sank after the cruise operator cut its guidance for 2019 adjusted earnings per share to between $4.25 and $4.35 from between $4.35 and $4.55.

Evraz was under the cosh after the steel maker's chair and chief executive sold a 1.7% stake in the company.

Ex-dividends also weighed, with B&M European Value Retail, Big Yellow, Cineworld, Compass, ITE, Land Securities, Stobart, Tate & Lyle and United Utilities all in the frame.

In broker note action, Halma rallied on the back of an upgrade to 'neutral' at UBS, while Assura was lifted to 'overweight' at JPMorgan.

Whitbread was cut to 'reduce' at Oddo, while Paragon was downgraded to 'underperform' at RBC Capital Markets and CYBG was lifted to 'outperform' at RBC.

Market Movers

FTSE 100 (UKX) 7,429.93 0.36%
FTSE 250 (MCX) 19,397.76 0.79%
techMARK (TASX) 3,646.13 0.37%

FTSE 100 - Risers

Fresnillo (FRES) 868.40p 5.49%
Melrose Industries (MRO) 179.80p 2.95%
Just Eat (JE.) 629.20p 2.38%
Halma (HLMA) 2,029.00p 2.32%
BHP Group (BHP) 1,968.20p 2.29%
St James's Place (STJ) 1,085.00p 2.12%
Ashtead Group (AHT) 2,145.00p 2.09%
Johnson Matthey (JMAT) 3,188.00p 1.98%
Spirax-Sarco Engineering (SPX) 8,995.00p 1.93%
easyJet (EZJ) 883.40p 1.80%

FTSE 100 - Fallers

Carnival (CCL) 3,769.00p -6.55%
Evraz (EVR) 646.60p -4.32%
United Utilities Group (UU.) 790.00p -3.66%
Whitbread (WTB) 4,508.00p -2.53%
Reckitt Benckiser Group (RB.) 6,389.00p -1.74%
BT Group (BT.A) 203.40p -1.60%
Compass Group (CPG) 1,868.00p -1.58%
Royal Bank of Scotland Group (RBS) 219.40p -1.39%
Centrica (CNA) 89.58p -1.37%
Sainsbury (J) (SBRY) 193.65p -1.25%

FTSE 250 - Risers

BCA Marketplace (BCA) 236.57p 21.57%
Saga (SAGA) 36.04p 9.01%
Dunelm Group (DNLM) 962.09p 6.43%
Sirius Minerals (SXX) 14.22p 5.21%
Hochschild Mining (HOC) 184.70p 5.18%
Centamin (DI) (CEY) 110.05p 4.71%
Acacia Mining (ACA) 176.40p 4.32%
Premier Oil (PMO) 75.96p 3.97%
William Hill (WMH) 146.70p 3.97%
Tullow Oil (TLW) 211.20p 3.83%

FTSE 250 - Fallers

Dixons Carphone (DC.) 111.66p -10.35%
Cineworld Group (CINE) 266.00p -5.34%
Paragon Banking Group (PAG) 435.80p -2.90%
IWG (IWG) 340.70p -2.21%
B&M European Value Retail S.A. (DI) (BME) 328.10p -2.00%
Tate & Lyle (TATE) 735.00p -2.00%
Intu Properties (INTU) 80.92p -1.84%
NewRiver REIT (NRR) 188.00p -1.67%
Aston Martin Lagonda Global Holdings (AML) 1,042.60p -1.46%
Indivior (INDV) 44.35p -1.44%