London midday: London stocks a little lower as BoE boosts QE
London stocks were off earlier lows but still a little weaker by midday on Thursday as the Bank of England expanded its bond-buying programme.
The FTSE 100 was down 0.2% at 6,242.60, having pared losses before the BoE announced it was keeping interest rates unchanged at a record low of 0.1% and expanding quantitative easing by a further £100bn to help counter the economic fallout from the coronavirus pandemic. Sterling was off 0.2% against the dollar at 1.2533.
Laura Suter, personal finance analyst at investment platform AJ Bell, said: "While rumours of zero or even negative interest rates had been swirling ahead of today’s meeting, it seemed unlikely the Bank would choose now to make any move on rates.
"After slashing them twice in March to a record low it makes sense that the Bank wants to keep something in its back pocket as we see how the economic climate evolves when we emerge from lockdown and the crisis."
In equity markets, housebuilder Taylor Wimpey fell sharply after saying that its share placing had raised £515m to take advantage of coronavirus lockdown-related disruption to the market for development land. The placing, announced on Wednesday night, was completed at 145p a share. The shares were also hit by a downgrade to ‘hold’ at Jefferies.
Cruise operator Carnival tanked after its second-quarter results and as Berenberg downgraded its stance on the shares to ‘sell’ from ‘hold’ ‘and slashed the price target. It said Carnival’s capital structure was unsustainable and in need of a fresh injection of equity, the valuation highly unattractive and the shape and extent of the recovery of the industry far from certain.
Elsewhere, Helios Towers was under the cosh after Network i2i, a wholly-owned subsidiary of Bharti Airtel sold 23.1m shares - its entire stake - in the telecom tower infrastructure company. The shares were sold in a placing at 160p each, raising gross proceeds of £36.9m.
On the upside, Prudential was the standout gainer after saying it has reinsured $27.6bn (£22bn) of US liabilities with Athene Holding, which has made a $500m equity investment in the company's US Jackson business. The deal will strengthen the balance sheet of Jackson, Prudential's US division, and give Athene an 11.1% stake in the common equity of the business.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "The deal is particularly welcome since there were concerns the current market conditions would make a disposal difficult - the inherently unpredictable nature of Jackson’s large variable annuity portfolio isn’t exactly the reliable income model investors generally expect from a life insurer.
"The deal does raise some interesting questions though. In particular we wonder what Jackson plans to do with its now sizeable capital surplus (always assuming it’s not needed to offset recent market movements)."
Tesco was trading higher after saying it had sold its Polish business to Denmark’s Salling Group for £181m.
TP ICAP racked up strong gains as Barclays initiated coverage of the stock at ‘overweight’. It said the company is well positioned to capitalise on the structural growth of OTC derivatives and the growing importance of proprietary data.
Safestore rallied after it increased its dividend as the household storage company reported higher half-year earnings and predicted annual results in line with expectations.
Market Movers
FTSE 100 (UKX) 6,242.60 -0.17%
FTSE 250 (MCX) 17,578.72 -0.02%
techMARK (TASX) 3,780.94 0.03%
FTSE 100 - Risers
Prudential (PRU) 1,252.50p 6.28%
Flutter Entertainment (FLTR) 11,100.00p 3.16%
Smurfit Kappa Group (SKG) 2,652.00p 2.00%
Smiths Group (SMIN) 1,315.00p 1.78%
Bunzl (BNZL) 2,124.00p 1.72%
Severn Trent (SVT) 2,510.00p 1.41%
Ashtead Group (AHT) 2,711.00p 1.23%
Standard Life Aberdeen (SLA) 254.90p 1.23%
Rentokil Initial (RTO) 506.80p 1.20%
Ferguson (FERG) 6,636.00p 1.19%
FTSE 100 - Fallers
Carnival (CCL) 1,191.50p -6.55%
Taylor Wimpey (TW.) 143.30p -5.60%
Intermediate Capital Group (ICP) 1,248.00p -4.44%
Next (NXT) 5,126.00p -2.99%
Centrica (CNA) 41.70p -2.71%
Rolls-Royce Holdings (RR.) 325.80p -1.90%
AstraZeneca (AZN) 8,448.00p -1.65%
3i Group (III) 809.60p -1.63%
Schroders (SDR) 2,937.00p -1.58%
Royal Bank of Scotland Group (RBS) 120.95p -1.51%
FTSE 250 - Risers
TP ICAP (TCAP) 360.60p 6.75%
Safestore Holdings (SAFE) 756.00p 5.29%
Rank Group (RNK) 161.40p 4.13%
G4S (GFS) 112.15p 3.55%
Avon Rubber (AVON) 3,125.00p 3.48%
BlackRock Smaller Companies Trust (BRSC) 1,344.00p 3.38%
Stagecoach Group (SGC) 68.85p 3.38%
Bakkavor Group (BAKK) 78.20p 3.17%
Equiniti Group (EQN) 154.60p 3.07%
Domino's Pizza Group (DOM) 328.80p 3.01%
FTSE 250 - Fallers
Helios Towers (HTWS) 165.20p -8.22%
European Opportunities Trust (JEO) 736.00p -5.28%
TUI AG Reg Shs (DI) (TUI) 443.20p -4.44%
Tate & Lyle (TATE) 685.20p -4.09%
Hammerson (HMSO) 115.05p -4.09%
Ascential (ASCL) 289.60p -4.04%
Pets at Home Group (PETS) 227.00p -3.90%
BMO Commercial Property Trust Limited (BCPT) 71.00p -3.40%
Frasers Group (FRAS) 322.40p -3.36%
Aston Martin Lagonda Global Holdings (AML) 70.95p -3.34%