London close: Markets finish lower as Bank of England holds on interest rates
London stocks finished below the waterline on Thursday, spending much of the afternoon on a downward trajectory with weakness in the mining sector offsetting well-received updates from Smith & Nephew, Coca-Cola and Shell, and the Bank of England standing pat on interest rates as expected.
The FTSE 100 finished the day down 0.46% at 7,351.31, and the FTSE 250 was off 0.64% at 19,686.66.
On the currency front, sterling was down 0.03% against the euro at 1.1652 and 0.18% lower versus the dollar at 1.3026 after the BoE voted unanimously to leave rates unchanged at 0.75%, and to keep the asset purchase programme unchanged.
The Bank also hinted at slow rate hikes going forward and lifted its UK growth forecast for this year, partly due to a slightly brighter outlook for the global economy.
It now expects 1.5% growth this year, up from a 1.2% forecast in February.
“The vote to keep bank rate at 0.75% was unanimous and the minutes didn't note any members pushing a hawkish line,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
“But the MPC signalled, via its forecasts, that markets are complacent to price-in only 30 basis points of tightening over the next three years.”
Tombs said Pantheon was still forecasting that the Monetary Policy Committee would raise the bank rate to 1.00% before the end of the year.
Overnight, the Federal Reserve left interest rates unchanged at between 2.25% and 2.5% as expected, while chair Jerome Powell stuck to a neutral stance, suggesting that recent softer inflation could be due to transitory factors.
Back on home turf, data released earlier showed that UK construction output rose for the first time since January last month, as the booming house building market helped overcome ongoing weakness elsewhere in the sector.
The IHS Markit/CIPS UK construction total activity index came in at 50.5 in April, up from 49.7 in March and marginally above consensus expectations of 50.3.
It was also the first time the index has posted above the 50 mark that separates contraction from expansion since January.
The improvement was driven by the fastest rise in house building so far this year.
Commercial work and civil engineering activity both continued to decline, however, though at a slower rate than in March.
“The strongest rise in residential building since December 2018 was the only saviour of a sector otherwise heading for contraction again this month as deferred client decisions continued to impact on larger commercial and infrastructure projects, throwing the industry off balance,” said Duncan Brock, group director at the Chartered Institute of Procurement & Supply.
The fall in total new work was the fastest since March 2018, with anecdotal evidence indicating that political uncertainty, softer economic growth projections for the UK and subdued demand for commercial projects meant there had been fewer tender opportunities.
Meanwhile, Sino-US trade relations were in focus again amid news that an agreement between the two nations could be announced as soon as next Friday.
In equity markets, miners were under pressure as copper prices slid, with Anglo American, Antofagasta and BHP all lower, by 1.91%, 1.98% and 1.92% respectively.
The sector was also hit after Citi downgraded BHP to 'neutral'.
Paddy Power Betfair dropped 5.41% even as it said first-quarter revenue grew 17% year-on-year.
Lloyds Banking Group was in the red by 1.26% after it said first-quarter profit was unchanged as market swings and other items offset rising income and lower costs, and that it has set aside a further £100m to cover payment protection insurance mis-selling.
Consumer goods group Reckitt Benckiser retreated 0.72% as it posted a smaller-than-expected uptick in first-quarter like-for-like revenue after what it called a "slow" start to the year, which was hit by a weak cold and flu season.
Metro Bank shares tumbled 16.02% after it said late on Wednesday that first-quarter profit halved and total deposits fell 3.6% as it lost several large customers following the discovery of a major accounting error earlier this year.
On the upside, however, Smith & Nephew gained 2.98% as it bumped up its full-year outlook after the medical products maker posted a rise in first-quarter revenue.
Coca-Cola HBC fizzed 1.25% higher as it reported a 4.4% jump in first-quarter revenue, with a solid performance across all segments and a particularly pleasing contribution from emerging markets.
Royal Dutch Shell was also on the front foot, rising 1.66% as its first-quarter profit fell but easily outstripped expectations as stronger trading and higher gas prices helped make up for lower oil prices.
Barclays was in the green by 0.61% after investor Edward Bramson - who has been urging the bank to scale back its investment division - was not given a seat on the board.
Market Movers
FTSE 100 (UKX) 7,351.31 -0.46%
FTSE 250 (MCX) 19,686.66 -0.64%
techMARK (TASX) 3,576.79 -0.94%
FTSE 100 - Risers
Smith & Nephew (SN.) 1,519.00p 2.98%
Smurfit Kappa Group (SKG) 2,322.00p 2.74%
Royal Dutch Shell 'B' (RDSB) 2,475.00p 1.89%
Royal Dutch Shell 'A' (RDSA) 2,453.50p 1.66%
Just Eat (JE.) 688.60p 1.26%
Coca-Cola HBC AG (CDI) (CCH) 2,758.00p 1.25%
Mondi (MNDI) 1,687.00p 1.07%
Standard Life Aberdeen (SLA) 280.90p 1.01%
British Land Company (BLND) 603.00p 0.90%
Melrose Industries (MRO) 202.00p 0.90%
FTSE 100 - Fallers
Paddy Power Betfair (PPB) 6,400.00p -5.41%
Micro Focus International (MCRO) 1,758.20p -4.42%
Marks & Spencer Group (MKS) 278.10p -4.14%
Sainsbury (J) (SBRY) 222.50p -3.76%
NMC Health (NMC) 2,780.00p -3.17%
Evraz (EVR) 605.60p -3.10%
Relx plc (REL) 1,705.50p -3.04%
easyJet (EZJ) 1,141.00p -3.02%
Ocado Group (OCDO) 1,345.50p -2.36%
International Consolidated Airlines Group SA (CDI) (IAG) 536.00p -2.26%
FTSE 250 - Risers
Intu Properties (INTU) 100.20p 9.75%
Indivior (INDV) 40.65p 5.17%
AJ Bell (AJB) 435.00p 3.82%
Howden Joinery Group (HWDN) 520.00p 3.46%
Wizz Air Holdings (WIZZ) 3,524.00p 2.71%
Pets at Home Group (PETS) 154.90p 2.58%
Equiniti Group (EQN) 220.40p 2.51%
FirstGroup (FGP) 112.10p 2.19%
Euromoney Institutional Investor (ERM) 1,248.00p 1.96%
Bank of Georgia Group (BGEO) 1,755.00p 1.80%
FTSE 250 - Fallers
Metro Bank (MTRO) 652.50p -16.02%
Aston Martin Lagonda Global Holdings (AML) 899.60p -7.16%
Lancashire Holdings Limited (LRE) 654.00p -6.33%
Premier Oil (PMO) 91.44p -5.73%
Hochschild Mining (HOC) 175.40p -5.19%
Bakkavor Group (BAKK) 123.60p -5.08%
Amigo Holdings (AMGO) 241.50p -4.80%
Hunting (HTG) 554.50p -4.56%
Drax Group (DRX) 327.20p -4.22%
Renishaw (RSW) 4,388.00p -3.45%