The FTSE 100 was flat on Thursday afternoon, treading water after the Bank of England reduced rates, and suggested a more gradual cutting path than some expected.
The pound moved higher immediately following the decision, which was accompanied by the BoE’s latest economic projections. The central bank suggested last week’s UK budget was inflationary.
The budget is expected to boost the level of gross domestic product by around 0.8% compared to August projections.
‘The budget is provisionally expected to boost CPI inflation by just under 0.5 of a percentage point at the peak, reflecting both the indirect effects of the smaller margin of excess supply and direct impacts from the budget measures,’ the central bank added.
The FTSE 100 index was down just 1.63 points at 8,165.05. The FTSE 250 was up 123.55 points, 0.6%, at 20,570.25, and the AIM All-Share was down 2.85 points, 0.4%, at 736.19.
The Cboe UK 100 was up 0.1% at 819.57, the Cboe UK 250 was up 0.4% at 18,074.79, and the Cboe Small Companies was down 0.2% at 16,380.37.
The pound was quoted at $1.2936 after the BoE decision, rising from $1.2877 at the time of the London equities close on Wednesday and around $1.2905 before the call.
The BoE cut rates to 4.75% from 5.00%. Eight members of the Monetary Policy Committee supported the move, with only Catherine Mann preferring to maintain bank rate at 5.00%.
The BoE also said it will ‘will not cut interest rates too quickly or too much’.
Still to come on Thursday is a Federal Reserve US interest rate decision at 1900 GMT.
‘From Rachel Reeves’ first budget, drama involving the US election and now interest rate decisions from both the Bank of England and Federal Reserve – it’s a lot to take in over such a short period,’ AJ Bell analyst Russ Mould commented.
Miners were among the FTSE 100’s best performers, with Antofagasta leading the pack on a 3.8% gain. Engineering firm IMI came second with a 3.7% rise.
IMI rose despite saying revenue fell in the third quarter of its most recent financial year, and warning that exchange rate headwinds may hurt full-year profit.
The Birmingham, England-based firm said revenue in its third quarter that ended September 30 was 3% lower year-on-year due to foreign currency movements.
IT said third-quarter revenue in its Automation division, which represented 63% of 2023 sales, grew 4% organically during the three-month period compared to last year, and rose 7% in the first nine months of the year to date.
However, IMI said revenue in its Life Technology division, which represented 38% of sales in 2023, fell 5% organically year-on-year, and was 2% lower in the year to date.
Auto Trader remained at the bottom of the index, down 7.6% despite increasing first-half profit, revenue and dividend.
However, Auto Trader said its 8% retailer revenue growth was from smaller lower-yielding retailers, which diluted its average revenue per retailer despite this still rising by £169 or 6.3% on-year to £2,852.
BT Group slumped 7.4%.
The firm reported decreased half-year revenue while pretax profit fell 10% on-year to £967 million from £1.08 billion.
Revenue guidance for the full-year was revised. It now expects a fall between 1% and 2%, reflecting a softer public sector and corporate environment as well as weaker non-UK trading.
Elsewhere, Mobico rose 5.2% on a positive third-quarter trading update.
Revenue growth was 12% for the quarter, driven by passenger demand growth for the bus operator, and Mobico expects to achieve full-year adjusted operating profit guidance.
CAB Payments lost 20%, after StoneX pulled back from October’s takeover approach and announced it no longer intended to make an offer for the payments and foreign exchange processor.
In European equities on Thursday, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was up 1.3%.
Retail sales in the eurozone rose by 0.5% in September, slowed from August’s climb of 1.1 and better than the FXStreet-cited market consensus of 0.4%. On-year, the growth in retail sales accelerated to 2.9% in September, and outperformed the consensus for 1.3% growth.
The euro stood at $1.0758 midday Thursday, rising against $1.0728 late Wednesday afternoon. Against the yen, the dollar was trading at JP¥154.08 down compared to JP¥154.48.
Stocks in New York were called slightly higher. The Dow Jones Industrial Average was called up 0.2%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.2%.
Brent oil was quoted at $74.06 a barrel at midday in London on Thursday, down from $75.18 late Wednesday.
Gold was quoted lower at $2,664.29 an ounce against $2,665.82.
Still to come on Thursday’s economic calendar, the US Fed’s rate decision is at 1900 GMT.
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