London open: Stocks fall ahead of BoE, ECB rate announcements

(Sharecast News) - London stocks fell in early trade on Thursday as investors mulled a hawkish policy announcement form the US Federal Reserve and looked ahead to rate decisions from the Bank of England and European Central Bank. At 0830 GMT, the FTSE 100 was down 0.5% at 7,455.43.

Overnight, the Fed hiked rates by 50 basis points, as expected, in a bid to tackle surging inflation. Although this marked a slowdown in hikes, with the Fed having lifted rates by 75 basis points at each of its last four policy meetings, the central bank also adjusted up its expectations for rate rises next year.

Chair Jerome Powell said: "Over the course of the year, we have taken forceful actions to tighten the stance of monetary policy.

"We have covered a lot of ground, and the full effects of our rapid tightening so far are yet to be felt. Even so, we have more work to do."

Oanda market analyst Craig Erlam said: "Safe to say, investors simply didn't see that coming. Two months of better-than-expected inflation data were enough to convince them that the Fed would not only ease off the brake but signal it would do so more in the coming months."

Closer to home, rate announcements are due from the BoE at midday and from the ECB at 1215 GMT. Both are expected to lift rates by 50 basis points.

Erlam said: "The question now becomes whether other central banks will take a similarly hawkish position against the markets and ruin any hope of a Santa rally this year. Of course, that very much depends on the individual circumstances. Take the BoE for example, it has already been pushing back against market expectations but in a very different way, with the message from the MPC being that it doesn't expect to tighten as aggressively as the economy falters.

"The ECB faces other challenges, most notably the fact that inflation is still 10% and it was very late to the party when it comes to raising interest rates. At the same time, the bloc faces a period of huge economic and energy uncertainty and probably recession. The central bank is expected to slow the pace of tightening today following two consecutive 75 basis point hikes but the economic projections are what will likely get the most attention as traders try to determine just how far the central bank plans to push rates."

In equity markets, DS Smith, AB Foods and Burberry all fell as they traded without entitlement to the dividend.

Electricals retailer Currys tumbled as it cut its full-year profit outlook and said it swung to a loss in the first half after its international business took a hit due to heavy discounting from competitors.

In an update for the half to 29 October, the company said it now expects 2023 adjusted pre-tax profit of between £100m and £125m, down from previous guidance of £125m to £145m on a like-for-like basis.

Government outsourcer Serco was in the red even as it lifted 2022 revenue guidance slightly, adding that revenue the following year would increase.

On the upside, Great Portland, Land Securities and Big Yellow all gained after rating upgrades at Goldman Sachs.

Market Movers

FTSE 100 (UKX) 7,455.43 -0.54% FTSE 250 (MCX) 18,914.39 -0.65% techMARK (TASX) 4,418.67 -0.29%

FTSE 100 - Risers

Land Securities Group (LAND) 640.40p 0.76% British American Tobacco (BATS) 3,287.00p 0.58% Imperial Brands (IMB) 2,043.00p 0.44% BT Group (BT.A) 116.75p 0.43% Tesco (TSCO) 226.30p 0.27% Berkeley Group Holdings (The) (BKG) 3,819.00p 0.13% GSK (GSK) 1,445.60p 0.12% Aveva Group (AVV) 3,210.00p 0.03% Sage Group (SGE) 794.00p 0.03% Centrica (CNA) 91.98p 0.00%

FTSE 100 - Fallers

Associated British Foods (ABF) 1,585.00p -2.70% Burberry Group (BRBY) 2,079.00p -2.67% Smith (DS) (SMDS) 317.70p -2.64% Spirax-Sarco Engineering (SPX) 11,195.00p -1.76% Intermediate Capital Group (ICP) 1,205.50p -1.63% HSBC Holdings (HSBA) 490.00p -1.55% Croda International (CRDA) 6,912.00p -1.48% Hargreaves Lansdown (HL.) 873.20p -1.38% JD Sports Fashion (JD.) 119.95p -1.36% Smurfit Kappa Group (CDI) (SKG) 3,059.00p -1.32%

FTSE 250 - Risers

CMC Markets (CMCX) 236.00p 2.61% Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 315.50p 2.60% Big Yellow Group (BYG) 1,182.00p 2.43% TI Fluid Systems (TIFS) 131.40p 2.34% Clarkson (CKN) 2,915.00p 1.75% FirstGroup (FGP) 99.45p 1.12% Warehouse Reit (WHR) 113.00p 0.89% Drax Group (DRX) 632.00p 0.88% Great Portland Estates (GPE) 514.50p 0.68% Greencoat UK Wind (UKW) 151.70p 0.46%

FTSE 250 - Fallers

Currys (CURY) 62.00p -5.05% Trainline (TRN) 292.50p -3.40% TR Property Inv Trust (TRY) 311.00p -2.81% Watches of Switzerland Group (WOSG) 883.00p -2.75% Bridgepoint Group (Reg S) (BPT) 194.90p -2.50% Shaftesbury (SHB) 354.40p -2.42% IP Group (IPO) 58.60p -2.25% Genus (GNS) 2,958.00p -2.25% Morgan Advanced Materials (MGAM) 306.00p -2.24% Ferrexpo (FXPO) 156.30p -2.19%