London stocks were still just a touch firmer by midday on Thursday as the Bank of England stood pat on interest rates, as expected, after the first rate cut this year from the Federal Reserve.
At 0840 BST, the FTSE 100 was up 0.1% at 9,221.58, while sterling was 0.1% higher versus the dollar at 1.3645.
The BoE left the cost of borrowing unchanged on the back of persistent inflation.
The rate-setting Monetary Policy Committee voted by a majority of seven-to-two to leave interest rates at 4%. Swati Dhingra and Alan Taylor both voted to cut by 25 basis points.
The MPC has reduced rates three times this year, including a 25bps trim in August. But it continues to juggle conflicting economic headwinds.
Growth is sluggish at best, with GDP slowing to 0.2% in three months to July, from 0.3% in the second quarter. There are also signs of a weakening jobs market.
But at 3.8% inflation remains well above the central bank’s long-term target of 2%.
On Wednesday, the Federal Reserve cut rates by a quarter point, its first reduction this year, and signalled more to come. It said the softening labour market was more of a concern than a potential rise in inflation on the back of Donald Trump’s tariff regime.
Steve Clayton, head of equity funds at Hargreaves Lansdown, said: “Markets were pricing in a 98% likelihood that rates would stay at 4.0%, because so far, we are not seeing enough progress in bringing inflation down to give room for manoeuvre on rates.
“Service prices remain far above the overall 2% target and goods price inflation edged up toward 3% last month. The Bank will be watching employment and growth data closely for now, because it will worry about choking off growth if interest rates stay too high for too long, but for now, its hands look tied.”
In equity markets, Next tumbled as a cautious outlook for the second half outweighed a surge in first-half sales and earnings, as the high street retailer was boosted by bumper international sales, sunny weather and disruption at Marks & Spencer.
Pets at Home tanked as it announced the immediate departure of chief executive Lyssa McGowan and downgraded its full-year profit guidance.
C&C Group fell as it said chief financial officer Andrew Andrea was leaving to take up the same role at Domino’s Pizza and held full-year earnings guidance despite a “challenging” macroeconomic environment.
Associated British Foods dipped after the Competition and Markets Authority said it was seeking views on the Kingsmill owner’s planned acquisition of Hovis.
Centrica and Unite both lost ground as they traded without entitlement to the dividend.
On the upside, Jupiter Fund Management surged as Peel Hunt upgraded the shares to ‘buy’ from ‘add’ and hiked the price target to 156p from 90p.
Renishaw gained as the engineering company reported record full-year revenues, with adjusted profits rising despite ongoing macroeconomic pressures and restructuring costs.
Inchcape advanced as UBS initiated coverage of the shares with a ‘buy’ rating and 920p price target, saying it sees 40% upside potential.
Market Movers
FTSE 100 (UKX) 9,221.58 0.14%
FTSE 250 (MCX) 21,679.14 0.27%
techMARK (TASX) 5,400.48 0.30%
FTSE 100 – Risers
Relx plc (REL) 3,560.00p 3.19%
Halma (HLMA) 3,356.00p 2.57%
Experian (EXPN) 3,845.00p 1.80%
Glencore (GLEN) 311.20p 1.63%
Spirax Group (SPX) 7,060.00p 1.58%
The Sage Group (SGE) 1,102.50p 1.57%
Anglo American (AAL) 2,555.00p 1.47%
Rolls-Royce Holdings (RR.) 1,131.50p 1.39%
Barratt Redrow (BTRW) 377.80p 1.29%
Prudential (PRU) 1,033.00p 1.27%
FTSE 100 – Fallers
Next (NXT) 11,530.00p -3.92%
Centrica (CNA) 165.30p -2.30%
Fresnillo (FRES) 2,148.00p -1.74%
Admiral Group (ADM) 3,300.00p -1.61%
Vodafone Group (VOD) 84.68p -1.60%
Tesco (TSCO) 433.30p -1.46%
WPP (WPP) 384.30p -1.44%
Sainsbury (J) (SBRY) 319.20p -1.42%
Unite Group (UTG) 702.00p -1.27%
Mondi (MNDI) 999.80p -1.01%
FTSE 250 – Risers
Jupiter Fund Management (JUP) 142.60p 14.08%
Renishaw (RSW) 3,405.00p 6.57%
Inchcape (INCH) 688.50p 3.92%
Raspberry PI Holdings (RPI) 408.00p 3.55%
Kier Group (KIE) 212.50p 3.41%
Burberry Group (BRBY) 1,146.00p 2.96%
Spire Healthcare Group (SPI) 213.50p 2.64%
Man Group (EMG) 165.60p 2.29%
Future (FUTR) 731.00p 2.24%
Bloomsbury Publishing (BMY) 494.00p 2.17%
FTSE 250 – Fallers
Pets at Home Group (PETS) 198.20p -13.22%
C&C Group (CDI) (CCR) 150.60p -6.81%
Hochschild Mining (HOC) 300.00p -4.03%
Watches of Switzerland Group (WOSG) 353.20p -3.81%
Energean (ENOG) 841.00p -2.61%
IG Group Holdings (IGG) 1,098.00p -2.49%
WH Smith (SMWH) 676.00p -2.38%
Foresight Group Holdings Limited NPV (FSG) 457.00p -2.25%
Mitie Group (MTO) 141.20p -1.94%
Diversified Energy Company (DEC) 1,033.00p -1.90%