London midday: Stocks stay up as BoE hikes rates to 4%

London stocks remained in the black by midday on Thursday, while sterling fell further after the Bank of England hiked rates for the tenth month in a row.

The FTSE 100 was up 0.4% at 7,793.22, while the pound was down 0.7% against the dollar at 1.2292, extending earlier losses

The BoE lifted interest rates by 50 basis points as expected, but also hinted that inflation may have peaked. Rates were increased to 4% - the highest level since October 2008 - as the Bank looks to tackle inflation.

The Monetary Policy Committee voted 7–2 to hike rates by 0.5 percentage points, with Swati Dhingra and Silvana Tenreyro opting to keep rates at 3.5%. They had also voted for no change in December.

The BoE said in a statement: "Global consumer price inflation remains high, although it is likely to have peaked across many advanced economies, including in the United Kingdom.

"Wholesale gas prices have fallen recently and global supply chain disruption appears to have eased amid a slowing in global demand.

"Many central banks have continued to tighten monetary policy, although market pricing indicates reductions in policy rates further ahead."

Looking ahead, the bank said further tightening in monetary policy would be required "if there were to be evidence of more persistent pressures".

This appeared to mark a softening from its earlier stance, as the Bank had previously said it would "respond forcefully, as necessary" to signs of further inflation and "further increases in Bank Rate may be required".

On Wednesday, the US Federal Reserve lifted interest rates by 25 basis points, as expected, but markets rallied after Chair Jerome Powell warned that more interest rate hikes were coming and said it would be "very premature to declare victory" on inflation but acknowledged that "the disinflationary process has started".

The European Central Bank, which is due to make its latest policy announcement at 1315 GMT, is also expected to hike rates by 50 basis points. This is despite data earlier this week showing that eurozone consumer price inflation fell in January to 8.5% from 9.2% in December. This was ahead of expectations of 9% and the lowest level since last May.

In equity markets, fashion retailer JD Sports Fashion surged to the top of the FTSE 100 as the company revealed it is aiming to grow revenues and margins by double digits over the next five years alongside a rapid store expansion under a strategy outlined by new chief executive Regis Schultz.

Advertising giant WPP rallied as French peer Publicis surged on the back of its full-year results.

Oil and gas giant Shell gained after it posted a record fourth-quarter profit of $9.8bn, driven by higher trading from its liquefied natural gas (LNG) operations. Annual earnings doubled to $39.87bn, also a record, as the company cashed in on soaring energy prices inflamed by Russia's invasion of Ukraine a year ago. The full-year dividend was lifted 16% to $1.03 a share.

Shell also announced a new share buyback programme of $4bn, which is expected to be completed by the first quarter 2023 results announcement.

BT Group reversed earlier losses to trade sharply higher as the telecoms company reiterated its full-year outlook despite seeing third-quarter revenues slip.

On the downside, Standard Chartered was knocked lower by a downgrade to ‘neutral’ at Goldman Sachs.

Centrica shares slid as the British Gas owner suspended the forced instalment of prepayment meters, after an investigation showed the homes of vulnerable customers were being broken into.

Cyber security firm NCC tumbled after it warned on profits, saying that market headwinds were impacting current trading and that it expects to cut jobs.

Market Movers

FTSE 100 (UKX) 7,793.22 0.41%
FTSE 250 (MCX) 20,275.99 1.90%
techMARK (TASX) 4,471.89 1.03%

FTSE 100 - Risers

JD Sports Fashion (JD.) 176.85p 8.30%
Ocado Group (OCDO) 693.80p 5.09%
Admiral Group (ADM) 2,292.00p 3.95%
Scottish Mortgage Inv Trust (SMT) 774.40p 3.64%
WPP (WPP) 993.00p 3.59%
SEGRO (SGRO) 877.00p 3.18%
RS Group (RS1) 987.00p 3.08%
Melrose Industries (MRO) 147.05p 2.87%
B&M European Value Retail S.A. (DI) (BME) 465.20p 2.81%
Ashtead Group (AHT) 5,508.00p 2.76%

FTSE 100 - Fallers

Airtel Africa (AAF) 106.60p -8.34%
Centrica (CNA) 96.72p -4.57%
Standard Chartered (STAN) 672.60p -2.15%
BAE Systems (BA.) 839.80p -1.66%
Compass Group (CPG) 1,864.50p -1.58%
HSBC Holdings (HSBA) 593.20p -1.35%
Unilever (ULVR) 4,082.00p -1.23%
Coca-Cola HBC AG (CDI) (CCH) 1,956.00p -1.06%
Imperial Brands (IMB) 2,029.00p -1.02%
Diageo (DGE) 3,512.50p -0.93%

FTSE 250 - Risers

Future (FUTR) 1,690.00p 10.97%
Molten Ventures (GROW) 384.00p 9.15%
Essentra (ESNT) 235.50p 7.53%
Carnival (CCL) 829.00p 7.24%
Hammerson (HMSO) 28.53p 7.13%
ASOS (ASC) 952.50p 6.84%
Bytes Technology Group (BYIT) 416.40p 6.71%
Currys (CURY) 74.45p 6.66%
Watches of Switzerland Group (WOSG) 1,016.00p 6.28%
Moonpig Group (MOON) 132.60p 6.08%

FTSE 250 - Fallers

NCC Group (NCC) 170.40p -7.59%
Paragon Banking Group (PAG) 583.50p -4.03%
Balfour Beatty (BBY) 358.60p -2.66%
Virgin Money UK (VMUK) 186.85p -1.89%
Hunting (HTG) 346.50p -1.42%
Inchcape (INCH) 908.00p -0.98%
RHI Magnesita N.V. (DI) (RHIM) 2,722.00p -0.66%
Drax Group (DRX) 645.50p -0.54%
Senior (SNR) 158.80p -0.50%
Jlen Environmental Assets Group Limited NPV (JLEN) 120.40p -0.50%