Major UK stocks finished the day marginally lower on Thursday after the Bank of England warned of a potential tightening in the face of rising inflation sending the pound higher.
At the close, the UK benchmark index was 3.43 points, or 0.05%, lower at 7,120.43, below the day’s peak of 7,130.35 but above the session low of 7,099.03.
The more domestically focused FTSE 250 enjoyed a strong day, rallying 0.7% to finish at 23,506.11.
MPC AS YOU WERE
The rate-setting monetary policy committee voted by a majority of 7-1 for the BoE to keep the stock of government bond purchases at £875 billion, with no new members calling for a reduction. It voted unanimously to keep bank rate at 0.1%, and to keep the stock of corporate bonds at £20 billion.
But the BoE sees inflation peaking at a higher level than previously anticipated, with the MPC now predicting CPI peaking at 4%.
With the pound gaining ground off the back of today’s BoE meeting, FTSE 100 lost traction due to the damaging impact a stronger pound has on international earnings.
Sterling gained around 0.3% versus both the dollar (at $1.3927) and the euro (€1,1765).
Earlier, news of the UK’s easing of travel restrictions for some destinations, including France, which will see less people being forced to quarantine on their return to the UK, was welcomed by travel firms and airlines, although car sales were reported to have lost momentum in July.
Private new car registrations of 59,800 was down on last year and the year before, with a combination of factory shutdowns caused by key component shortages and staff absences brought about by the ‘pingdemic’ largely believed to be behind the weakness.
Private registrations were 14% below their average level in the four Julys prior to the pandemic, worse than June’s equivalent 9.8% shortfall.
MOVING ON THE STOCK MARKET
In corporate news, mining giant Glencore (GLEN) reversed earlier modest gains to drift 1.5% lower to 324p after unveiling a plan to return a further $1.18 billion to shareholders via dividend and share buybacks following a jump in core earnings in the first half of the year thanks to rising commodity prices.
Advertising agency WPP (WPP) improved nearly 3% to 966.8p after it posted strong first half results with like-for-like sales growth of 16.1%, raised full year guidance with the global recovery gathering pace and announced a £350 million share buyback for the second half.
WPP now expects annual like-for-like revenue growth of 9-to-10%, up from previous guidance for mid-single digit growth, with headline operating margin towards the upper end of the range of 13.5%-to-14%.
Aero-engineer Rolls-Royce (RR.) lead the FTSE 100 leaderboard with a 5% rally to 110.68p after returning to profit for the first six months of 2021. The company swung from a £1.6 million loss to an underlying operating profit of £307 million, thanks largely by a good performance in its defence business and a recovery in order intake within the power systems division.
CEO Warren East said: ‘The benefits of our fundamental restructuring programme in civil aerospace are evident in our reduced cash outflow and improved operational efficiency. This leaner cost base together with a strong liquidity position gives us confidence in our ability to withstand uncertainties around the pace of recovery in international travel and benefit from the eventual rebound.’
HIGH STREETS & RETAIL PARKS
In the retail sector, Sports Direct owner Frasers (FRAS) dipped 0.2% to 613.5p on the news Mike Ashley is stepping down as CEO, with his future son-in-law Michael Murray to assume the role in May 2022.
This news somewhat overshadowed robust full year results from the Flannels-to-House of Fraser owner, with underlying EBITDA up 29% to £391 million despite revenue falling 8.4% as UK stores were shuttered for around six months due to Covid.
While Frasers’ UK stores have reopened ‘above expectations’ with the online business continuing to ‘significantly outperform pre-Covid-19 periods’, the retailer refrained from giving guidance for the current financial year due to ‘a high risk of future Covid-19 pandemic restrictions, likely to be over this winter and maybe beyond’.
Furniture and floorings seller ScS (SCS) soared after it reported a strong performance since reopening and upgraded expectations for full year 2021 and 2022.
Shares in the sofas seller had jumped more than 10% by lunchtime to 318p, reversing a sharp sell-off during the past months and a bit.
ELSEWHERE ON THE MARKET
Elsewhere, shopping centre owner Hammerson (HMSO) fell almost 5% to 35.7p despite narrowing half-yearly losses amid improved performance in its property portfolio.
Savills’ (SVS) share price surged 8% to £12.50 as it reported an 18% rise in revenue for the first half of 2021, up £141.2 million at £932.6 million versus the same period a year earlier.
Mining company Centamin (CEY) fell 3% to 102.65p as it reported a fall in profit as revenue was hurt by a decline in gold sales.
