London close: Stocks finish weaker as BoE stands pat
London stocks closed weaker on Thursday, after the Bank of England left interest rates and its bond-buying target unchanged but said it was ready to take further action amid economic uncertainty.
The FTSE 100 ended the day down 0.47% at 6,049.92, and the FTSE 250 lost 0.32% to 17,737.72.
Sterling was also weaker at the end of the trading day, last falling 0.06% against the dollar to $1.2959, and losing 0.12% on the euro to €1.0961.
“Markets in Europe have come under pressure today, though they are off their lows, as concerns about the economic outlook, and the timing of a vaccine contribute to a prevailing sense of renewed uncertainty, as the World Health Organization warns about an alarming rise in coronavirus cases across Europe,” said CMC Markets chief market analyst Michael Hewson.
“The WHO’s regional director for Europe expressed concern that weekly cases are now exceeding those when the pandemic peaked in March, and that the increase is a wake-up call for governments all over.
“Targeted lockdowns and localised curfews appear to be becoming more commonplace, with the attendant risks they are likely to have on the resilience of the recovery we’ve seen in the wake of the recent easing of lockdown restrictions.”
Earlier in the day, the BoE voted unanimously to keep interest rates at a record low of 0.1% and leave the asset purchase programme at £745bn.
Economists had expected the Old Lady to leave policy unchanged, to give the Monetary Policy Committee time to take account of Brexit talks and a potential surge in unemployment as the government withdraws its support for jobs.
Many economists were now expecting the BoE to make its next move in November, with an expansion of quantitative easing.
"Recent domestic economic data have been a little stronger than the committee expected at the time of the August [inflation] Report, although, given the risks, it is unclear how informative they are about how the economy will perform further out," the committee’s minutes said.
"The committee will continue to monitor the situation closely and stands ready to adjust monetary policy accordingly to meet its remit."
Investors were also mulling over the latest policy announcement from the US Federal Reserve overnight.
Matthew Luzzetti, senior economist at Deutsche Bank, said the broad messaging from the September FOMC meeting was close to expectations, with the most resounding signal being that the fed funds rate is expected to remain at zero for a long period.
“The committee updated their forward guidance to reinforce this message, bringing it in line with their recent shift toward an average inflation targeting strategy,” he said.
“The 2023 median dot co-signed this message, with the fed funds rate expected to remain at zero over that horizon.”
Luzzetti said chair Jerome Powell's press conference also “hammered home” the importance of the “powerful” update to its language.
“With these revisions, the signal was that no further revisions are expected to forward guidance for some time.”
In equity markets, Informa fell 1.6% after a downgrade to ‘neutral’ at JPMorgan Cazenove, which said it was waiting for business travel to return.
Miners were also in the red as copper prices declined, with BHP down 2.22%, Rio Tinto off 1.4%, Antofagasta falling 1.71%, and Anglo American 0.72% weaker.
Playtech shares tumbled 6.39% after the gambling software company reported a slump in first-half profit following retail closures and the cancellation or postponement of sporting events due to the Covid-19 pandemic.
On the upside, retailer Next rose 4.15% as it posted a drop in half-year pre-tax profit to £9m from £320m but upgraded its profit guidance after sales in the first half and beyond held up better than it had expected.
Next increased its central guidance for annual pre-tax profit to £300m from £195m.
Online trading platform IG Group gained 6.02% after it reported a 62% jump in first-quarter revenue as it continued to benefit from high levels of trading activity and new client acquisition.
LXI REIT was ahead 2.51%, after it bumped up its quarterly dividend guidance following "robust" rent collection for the quarter ending September.
FTSE 100 - Risers
Next (NXT) 6,426.00p 4.15%
Sainsbury (J) (SBRY) 191.15p 3.32%
Ocado Group (OCDO) 2,712.00p 2.69%
SEGRO (SGRO) 964.80p 2.29%
Rentokil Initial (RTO) 556.80p 2.13%
British Land Company (BLND) 369.50p 2.04%
Melrose Industries (MRO) 124.25p 1.84%
Admiral Group (ADM) 2,798.00p 1.52%
ITV (ITV) 67.30p 1.37%
AstraZeneca (AZN) 8,648.00p 1.24%
FTSE 100 - Fallers
Polymetal International (POLY) 1,881.00p -3.54%
WPP (WPP) 628.00p -3.06%
NATWEST GROUP PLC ORD 100P (NWG) 100.05p -2.96%
Taylor Wimpey (TW.) 110.10p -2.82%
Standard Chartered (STAN) 372.60p -2.36%
Barclays (BARC) 100.54p -2.35%
BHP Group (BHP) 1,759.00p -2.22%
Standard Life Aberdeen (SLA) 227.60p -2.19%
Associated British Foods (ABF) 1,969.00p -2.09%
International Consolidated Airlines Group SA (CDI) (IAG) 129.45p -2.08%
FTSE 250 - Risers
IG Group Holdings (IGG) 837.00p 6.02%
Trainline (TRN) 406.80p 5.66%
G4S (GFS) 190.90p 4.32%
Wood Group (John) (WG.) 232.30p 2.88%
Ibstock (IBST) 158.50p 2.86%
GCP Student Living (DIGS) 139.80p 2.79%
Law Debenture Corp. (LWDB) 513.00p 2.78%
AJ Bell (AJB) 450.50p 2.74%
Morgan Sindall Group (MGNS) 1,256.00p 2.61%
LXI Reit (LXI) 114.20p 2.51%
FTSE 250 - Fallers
Rank Group (RNK) 100.00p -10.23%
Network International Holdings (NETW) 339.40p -9.78%
Playtech (PTEC) 366.50p -6.39%
TI Fluid Systems (TIFS) 148.06p -4.11%
Redrow (RDW) 430.00p -4.06%
Cineworld Group (CINE) 48.38p -3.97%
Biffa (BIFF) 215.00p -3.80%
Mitchells & Butlers (MAB) 139.00p -3.74%
Equiniti Group (EQN) 111.40p -3.47%
4Imprint Group (FOUR) 2,005.00p -3.37%