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London open: FTSE rallies ahead of expected BoE rate cut
London stocks rallied in early trade on Thursday following a positive session on Wall Street, as investors eyed an expected rate cut by the Bank of England.
At 0835 GMT, the FTSE 100 was up 0.8% at 8,691.63, having hit a new intraday high 8,695.
Kathleen Brooks, research director at XTB, said: “The Bank of England is due to cut interest rates for the first time since November on Thursday. Interest rates are expected to be cut by 25 basis points to 4.5% from 4.75%. This move is widely expected, and we do not expect a shock decision from the BOE. This meeting will also include the BOE’s latest forecasts for growth and inflation, and the BOE Governor’s press conference.
“The market is fully priced for a rate cut from the BOE, with a 98% chance of a cut currently priced in by the GBP overnight index swaps market. What the BOE’s updated forecasts tell us will determine if the OIS market is right to expect a further two cuts later this year, or if the market is underpricing the prospect of further cuts from the BOE.”
The BoE announcement is due at midday.
Brooks added: “UK growth has weakened in recent months and the outlook looks poor. The OBR is expected to slash its growth forecasts next month, which will be included in the Chancellor’s spring statement.
“The Bank of England is likely to do the same this Thursday. The BOE had expected GDP to expand by 1.5% this year, that looks lofty after a spate of weak economic data, and it could be revised down to 1%. The risk is that growth could undershoot downwardly revised forecasts, as the Citi economic surprise index is close to its lowest level for a year, as you can see below. This suggests that UK economic data has surprised to the downside by a wide margin.”
In equity markets, Anglo American gained after a fourth-quarter production report, while AstraZeneca was up as the pharma giant posted a jump in full-year profits.
BBGI Global Infrastructure surged after agreeing to be bought by Canadian pension fund manager British Columbia Investment Management in a £1.06bn deal.
Defence contractor Babcock rose as it upgraded full-year expectations on the back of double-digit organic growth in its nuclear operations and strong growth in the marine division.
The company said it now expects revenue in the year to 31 March to come in at £4.9bn compared with forecasts of £4.51bn – £4.78bn and underlying operating profit to beat the top end of a £327.1m – £339.7m range.
On the downside, engineering firm IMI fell after saying it had been hit by a cyber attack on its computer systems.
Catering giant Compass lost ground as it reported a 9.2% increase in organic revenues in the first quarter but warned that, if current foreign exchange rates persist for the remainder of the year, they would have a $558m negative impact on revenues, compared with a hit of just $69m last year.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Astrazeneca Plc | +4.91% | +546.00 | 11,672.00 |
| 2 |  |
Anglo American Plc | +4.22% | +98.50 | 2,430.50 |
| 3 |  |
Antofagasta Plc | +3.45% | +58.50 | 1,753.50 |
| 4 |  |
Prudential Plc | +2.35% | +15.40 | 670.40 |
| 5 |  |
Bhp Group Limited | +2.30% | +46.00 | 2,046.00 |
| 6 |  |
Crh Plc | +2.21% | +176.00 | 8,122.00 |
| 7 |  |
Rio Tinto Plc | +2.20% | +108.00 | 5,008.00 |
| 8 |  |
Glencore Plc | +1.90% | +6.60 | 354.80 |
| 9 |  |
Barclays | +1.63% | +4.80 | 300.10 |
| 10 |  |
Diageo Plc | +1.50% | +33.50 | 2,268.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Weir Group Plc | -1.61% | -38.00 | 2,320.00 |
| 2 |  |
Halma Plc | -1.56% | -46.00 | 2,894.00 |
| 3 |  |
Wise Plc | -1.16% | -13.00 | 1,112.00 |
| 4 |  |
Segro Plc | -0.92% | -6.60 | 714.20 |
| 5 |  |
Compass Group Plc | -0.86% | -24.00 | 2,766.00 |
| 6 |  |
Banco Santander S.a. | -0.66% | -3.00 | 454.50 |
| 7 |  |
Rolls-royce | -0.30% | -1.80 | 600.00 |
| 8 |  |
Associated British Foods Plc | -0.21% | -4.00 | 1,858.50 |
| 9 |  |
Marks And Spencer Group Plc | -0.17% | -0.60 | 357.00 |
| 10 |  |
Sse Plc | -0.06% | -1.00 | 1,620.50 |
US close: Stocks higher as traders shrug off tariff concerns
Major indices closed higher on Wednesday as market participants seemed to look past tariff concerns that rocked markets earlier in the week.
At the close, the Dow Jones Industrial Average was up 0.71% at 44,873.28, while the S&P 500 saw out the session 0.39% firmer at 6,061.48 and the Nasdaq Composite picked up 0.19% to 19,692.33.
The Dow closed 317.24 points higher on Wednesday, extending gains recorded in the previous session even as tensions between China and the US heated up after Donald Trump slapped a 10% levy on Chinese imports.
Google parent company Alphabet was in the red after posting a quarterly earnings miss due to weaker-than-expected cloud sales, while shares in AMD fell sharply after quarterly numbers from the chipmaker disappointed.
Elsewhere in the corporate space, Disney posted Q1 earnings that came in ahead of expectations but revealed it expected to see another “modest decline” in streaming subscribers in Q2, while shares in Harley-Davidson came under pressure after soft consumer confidence hit revenues at the US motorcycle manufacturer
On the macro front, mortgage applications rose by 2.2% week-on-week, according to the Mortgage Bankers Association of America, reversing the prior week’s 2% drop. Applications to refinance a mortgage jumped 12%, while applications to purchase a home sank by 4%.
On another note, private sector employment in the US rose more than expected in January, according to ADP. Employment increased by 183,000 from December, versus expectations for a 150,000 jump. The total number of jobs gained for December was revised from 122,000 to 176,000.
Still on data, S&P Global‘s composite PMI fell to 52.7 in January, slightly beating expectations for a reading of 52.4 but down from 55.4 in December to mark the lowest reading since April 2024. S&P’s services PMI fell to 52.9, down from 56.8 a month earlier but slightly ahead of preliminary estimates of 52.8.
Finally, the Institute for Supply Management’s services PMI declined to 52.8 in January from a downwardly revised reading of 54 in December and well and truly short of estimates of 54.3.
“Poor weather conditions were highlighted by many respondents as impacting business levels and production. Like last month, many panellists also mentioned preparations or concerns related to potential U.S. government tariff actions; however, there was little mention of current business impacts as a result”, said the ISM’s Steve Miller.
Thursday newspaper round-up: CMA, Riverford, Lloyds, Arm Holdings
The appointment of the former boss of Amazon UK to lead the competition watchdog poses a threat to its independence and pledge to hold big tech to account, according to a group including tech companies and the former business secretary Vince Cable. The group – which includes the News Media Association, the Firefox developer Mozilla, the consumer group Which? and the Future of Technology Institute – has written to the chancellor, Rachel Reeves, to raise concerns about the appointment of Doug Gurr as the interim chair of the Competition and Markets Authority (CMA). – Guardian
Employees of Riverford will share in a payout of £1.3m after the organic vegetable box company more than doubled profits last year. More than 1,000 staff at the Devon-based group, which began making deliveries from an old Citroën in 1993, will receive about £1,000 each as the employee-owned company nearly tripled its annual payout to workers. – Guardian
Lloyds Banking Group has been hit with a £1bn tax bill after it lost a key legal battle against HMRC. A tribunal in London ruled against Lloyds after the bank attempted to claw back losses related to property loans from its business in Ireland in the wake of the financial crisis. – Telegraph
Ed Miliband risks destroying the UK’s reputation if he blocks Britain’s two biggest offshore oil and gas developments, the boss of energy giant Equinor has warned. Anders Opedal, chief executive, said the Energy Secretary had to issue new permits for the Rosebank and Jackdaw oil and gas fields to ensure the UK is a “predictable country for investors”. – Telegraph
Arm Holdings, one of Britain’s most successful technology companies, beat Wall Street sales expectations after reporting strong demand for its chip designs. The Cambridge company, which floated on the Nasdaq exchange in New York in September 2023, reported a 19 per cent rise in revenue to $983 million for the third fiscal quarter, well ahead of analyst estimates of $949.3 million. Net income rose to $252 million, from $87 million a year earlier. – The Times
Some of Britain’s biggest retailers are urging the government to follow Donald Trump’s lead and close a tax loophole being exploited by China’s Shein and Temu. Bosses behind Ryman, Robert Dyas, Superdry and Gieves & Hawkes have called for the UK to scrap the “unfair” clause that has allowed Chinese ecommerce giants to avoid paying customs duties by shipping small orders directly to customers. – The Times
