Stock prices in London opened lower on Friday, after the Bank of England decision, with British Airways owner IAG falling as Heathrow airport closes for the day amid a nearby fire.
After decisions from the Bank of Japan, Federal Reserve and Bank of England, who all left rates unmoved, the next focus for markets is a looming tariff d-day.
The FTSE 100 index was down 49.25 points, 0.6%, at 8,652.74. The FTSE 250 was down 157.94 points, 0.8%, at 19,940.04, and the AIM All-Share was down 3.12 points, 0.5%, at 692.72.
The Cboe UK 100 was down 0.7% at 864.53, the Cboe UK 250 was 0.9% lower at 17,366.22, and the Cboe Small Companies fell 0.5% to 15,597.45.
In Paris, the CAC 40 was down 0.8%. The DAX 40 in Frankfurt shed 0.5%.
The pound faded to $1.2925 on Friday morning from $1.2964 at the time of the London equities close on Thursday. The euro slipped to $1.0828 from $1.0847. Against the yen, the dollar rose to JP¥149.31 from JP¥148.78.
‘There is no clear catalyst for dollar strength towards the end of this week, but the pause in rotation from US to European equities and some caution ahead of the 2 April tariff event are probably playing a role. Data may get in the way of the dollar’s recovery from next week but for now, there is a good case to chase the rebound,’ analysts at ING commented.
‘The Federal Reserve’s blackout period is also officially over, and the cautious tone struck by the FOMC and Chair Jerome Powell this week likely leaves decent room for post-meeting tweaks in communication. Those should mostly come after new data has been released, but we’ll still keep a close eye on the dovish-leaning Austan Goolsbee’s interview with CNBC today.’
In New York, the Dow Jones Industrial Average ended slightly lower, the S&P 500 lost 0.2% and the Nasdaq Composite gave back 0.3%.
In China, the Shanghai Composite shed 1.3%, while the Hang Seng Index in Hong Kong slumped 2.2%. Tokyo’s Nikkei 225 lost 0.2%. The S&P/ASX 200 rose 0.2%.
At the conclusion of its two-day meeting, the BoE’s Monetary Policy Committee voted by a majority of 8 to 1 to maintain bank rate at 4.50%. Swati Dhingra preferred a quarter point cut to 4.25%. A 7-2 vote split had been expected.
The MPC said a ‘gradual and careful’ approach to the further withdrawal of monetary policy restraint is appropriate.
‘Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further,’ it added.
The MPC noted business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions, while domestic price and wage pressures remain somewhat elevated.
Analysts at Lloyds Bank believe the vote split suggests a more hawkish than thought Monetary Policy Committee.
‘Most of what you need to know about the March MPC meeting is the vote split. An 8-1 outcome to leave Bank Rate at 4.5% with just Dhingra dissenting in favour of a 25bp cut was less dovish than market expectations. Last time it was the off-month in the every-other-meeting rhythm for easing the vote was 6-3. Whilst Ramsden’s return to the pack had been flagged, it was a bit of a surprise that neither Taylor nor Mann, after her switch in February, joined Dhingra. In a nutshell then the news on the vote split simply reflects a shift in the fulcrum and the Committee is less dovish than previously. To support that view further, note the warning in the minutes that ’there was no presumption that monetary policy was on a pre-set path over the next few meetings’. That will spark doubt in many who had understandably assumed that use of the word ’gradual’ in the guidance is code for rate cuts at alternate meetings,’ Lloyds analysts said.
In London, travel stocks were in focus. International Consolidated Airlines Group fell 3.4%. IAG’s British Airways warned on Friday that the closure of Heathrow airport, its main hub, would significantly affect operations.
Europe’s busiest airport shut down early on Friday after a fire at a nearby substation supplying power to the sprawling facility west of London. ‘This will clearly have a significant impact on our operation and our customers and we’re working as quickly as possible to update them on their travel options for the next 24 hours and beyond,’ British Airways said in a statement.
Asos jumped 19%. It expects half-year earnings to beat expectations. In its results for the year ended September 1, published back in November, the online fashion retailer predicted a ‘significant improvement in profitability’ this year.
For the half-year, it expects revenue growth in line with consensus, and adjusted earnings before interest, tax, depreciation and amortisation to be ahead. It puts adjusted Ebitda consensus at £34 million.
Shares in boohoo advanced 2.8% in a positive read-across.
JD Wetherspoon fell 8.2%. It said a rise in national insurance contributions and pay will lift annual costs by around £60 million, and the pub firm reported a rise in half-year revenue.
Pretax profit in the 26 weeks to January 26 spiked 58% to £41.3 million from £26.1 million a year earlier. Revenue improved 3.9% to £1.03 billion from £991.0 million.
Wetherspoon got a £8.5 million boost to profit from ‘separately disclosed items’, compared to a £9.9 million hit a year prior. Included in these items this time around was a £11.1 million boost from the positive movement in the value of interest rate swaps. Last year, it had suffered property losses totalling £15.2 million, hurting its bottom line. Before separately disclosed items, pretax profit for the half-year just gone fell 8.6% to £32.9 million from £36.0 million.
Like-for-like sales rose 4.8% on-year during the 26 weeks. In the seven weeks to March 16, growth picked up slightly to 5.0%, Chair Tim Martin said.
Martin added: ‘Increases in national insurance and labour rates will result in company cost increases of approximately £60 million per annum, which amount to approximately £1,500 per pub, per week. Since labour costs are around 35% of the pub industry’s sales, compared to around 11% for supermarkets, increases of this nature inevitably have a disproportionate impact on pubs, exacerbating the already-wide price differential for customers between the on and off-trade. The combination of much higher VAT rates for pubs than supermarkets, combined with increased labour costs will weigh heavily on the pub industry.’
The company expects a ‘reasonable outcome for the financial year, subject to our future sales performance’. Wetherspoon declared a 4.0 pence per share half-year dividend. It did not pay an interim dividend a year prior.
In New York overnight, Nike warned sales and margins would fall sharply in the fourth quarter and despite making some headway a recovery would take ‘multiple seasons’.
Chief Executive Elliott Hill, who rejoined Nike in September, told an earnings call that it had been a tough couple of years but that ‘we’ve reclaimed our identity’.
The Beaverton, Oregon-based sports apparel manufacturer said net income slumped 32% to $794 million in the three months to February 28 from $1.17 billion a year prior. Sales fell 9.3%, or 7% at constant currency, to $11.27 billion from $12.43 billion.
Nike was down 4.5% in pre-market dealings in New York.
JD Sports shed 5.7% in London in a negative read across.
A barrel of Brent rose to $72.10 early Friday, from $71.89 late Thursday. Gold traded at $3,028.91 an ounce, down from $3,035.20.
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