London midday: Stocks touch higher as BoE cuts rates

(Sharecast News) - London stocks were still just a touch firmer by midday on Thursday as investors mulled the first rate cut from the Bank of England in four years and waded through a deluge of corporate news. At 1210 BST, the FTSE 100 was up 0.1% at 8,377.61, having nudged 0.1% lower before the announcement, while sterling was 0.7% weaker against the dollar at 1.2764.

The BoE cut interest rates by 25 basis points to 5%, as widely expected. They had been at a 16-year high of 5.25% since August 2023.

The Monetary Policy Committee voted five to four for the rate cut.

Chris Beauchamp, chief market analyst at online trading platform IG, said: "It looks like the MPC argued long and hard over today's decision. While three members switched their vote to a cut there remains a solid caucus in favour of holding rates unchanged, which means borrowers shouldn't hold out much hope for another rate cut at the next meeting.

"While this isn't 'one and done' from the Bank of England, there does seem to be a relatively high bar to another cut this year."

On Wednesday, the US Federal Reserve kept its benchmark rate at between 5.25% and 5.50% as expected. However, chair Jerome Powell signalled that the central bank would be prepared to loosen monetary policy at its next meeting if price pressures continue to ease.

"A reduction in the policy rate could be on the table as soon as the next meeting in September," he said. "We're getting closer to the point at which it'll be appropriate to reduce our policy rate, but we're not quite at that point."

Investors were also mulling the latest data from Nationwide, which showed that house prices rose in July at the fastest annual rate since December 2022.

Manufacturing data was also in focus as a survey showed the S&P Global manufacturing purchasing managers' index rose to a two-year high of 52.1 in July from 50.9 in June, up from an earlier flash estimate of 51.8.

The PMI has remained above the 50.0 mark that separates contraction from expansion for the last three months, which is the longest sequence signalling growth since mid-2022.

Rob Dobson, director at S&P Global Market Intelligence, said: "UK manufacturing has started the second half of 2024 on an encouragingly solid footing. July saw growth of production and new orders strengthen and staffing levels rise for the first time since September 2022. Hopes for an economic revival and reduced political uncertainty took confidence to one of its highest levels for two-and-a-half years, with 60% of companies surveyed now forecasting output will rise over the coming 12 months. There were also further signs that the trend in new export business is close to stabilising following a prolonged period of decline."

In equity markets, Schroders was under pressure after it missed half-year profit forecasts.

Wizz Air tanked as it reported a 44% drop in first-quarter operating profit and cut full-year profit forecasts. Other airlines were also in the red, with easyJet and BA and Iberia owner IAG both down.

Vesuvius slid as it said end markets were weaker than expected in the first half and that full-year headline trading profit was set to be "only slightly ahead" of last year on a constant currency basis.

On the upside, Rolls-Royce rallied as it lifted full-year profit guidance, hailing a strong first half, and said it was reinstating dividends.

Next gained as the retailer increased its full-year profit guidance by £20m to £980m after second-quarter sales exceeded its expectations.

Smith & Nephew rose as the medical equipment maker reported a jump in first-half operating profit and revenue.

Shell gushed higher as the oil giant reported better-than-expected earnings for the second quarter of $6.3bn and announced a $3.5bn share buyback.

Barclays was in the black as it posted a decline in half-year profit but lifted its outlook for full-year net interest income.

Coats Group and Elementis also gained ground after half-year results.

Market Movers

FTSE 100 (UKX) 8,377.61 0.12% FTSE 250 (MCX) 21,570.73 -0.14% techMARK (TASX) 4,850.69 0.33%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 499.60p 11.12% Next (NXT) 9,838.00p 8.42% Smith & Nephew (SN.) 1,181.50p 5.21% London Stock Exchange Group (LSEG) 9,842.00p 3.93% Mondi (MNDI) 1,561.00p 2.66% Marks & Spencer Group (MKS) 337.00p 2.65% Pershing Square Holdings Ltd NPV (PSH) 3,926.00p 1.92% Flutter Entertainment (DI) (FLTR) 15,660.00p 1.85% SEGRO (SGRO) 932.60p 1.83% British American Tobacco (BATS) 2,795.00p 1.82%

FTSE 100 - Fallers

Schroders (SDR) 358.00p -8.86% Melrose Industries (MRO) 549.60p -6.66% HSBC Holdings (HSBA) 669.50p -4.90% Lloyds Banking Group (LLOY) 58.22p -2.28% Antofagasta (ANTO) 1,975.00p -2.23% NATWEST GROUP (NWG) 360.30p -2.12% Standard Chartered (STAN) 751.00p -2.11% easyJet (EZJ) 441.70p -1.98% Reckitt Benckiser Group (RKT) 4,097.00p -1.94% Rentokil Initial (RTO) 467.00p -1.62%

FTSE 250 - Risers

Coats Group (COA) 95.50p 6.70% IP Group (IPO) 43.10p 3.36% TP Icap Group (TCAP) 227.00p 2.48% Me Group International (MEGP) 197.20p 2.07% Polar Capital Technology Trust (PCT) 3,140.00p 1.78% Allianz Technology Trust (ATT) 376.00p 1.76% Safestore Holdings (SAFE) 820.00p 1.67% Watches of Switzerland Group (WOSG) 413.00p 1.52% Jupiter Fund Management (JUP) 89.00p 1.48% Clarkson (CKN) 4,600.00p 1.43%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 1,648.00p -13.85% Vesuvius (VSVS) 441.50p -8.69% Serco Group (SRP) 181.80p -5.07% Telecom Plus (TEP) 1,816.00p -4.42% Baillie Gifford Japan Trust (BGFD) 736.00p -2.65% NCC Group (NCC) 144.00p -2.44% Harbour Energy (HBR) 306.00p -2.39% Mony Group (MONY) 232.60p -2.27% VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 484.00p -2.12% Barr (A.G.) (BAG) 631.00p -2.02%