Bank of England Threadneedle Street
The FTSE 100 index opened up 93.17 points, 1.2% / Image source: Adobe

Stock prices in London opened higher on Thursday, ahead of a flash UK PMI reading and the next interest rate decision by the Bank of England.

Stocks on Wall Street got a boost on Wednesday, after the US Federal Reserve was surprisingly dovish and left its three rate cuts unchanged from the December dot plot.

Eyes now turn onto the Bank of England which will announce its own interest rate decision at midday. Markets are expecting the central bank to keep rates unchanged, once again.

The FTSE 100 index opened up 93.17 points, 1.2%, at 7,830.55. The FTSE 250 was up 209.40 points, 1.1%, at 19,693.80, and the AIM All-Share was up 2.40 points, 0.3%, at 737.99.

The Cboe UK 100 was up 1.1% at 783.57, the Cboe UK 250 was up 0.9% at 17,099.45, and the Cboe Small Companies was down 0.2% at 14,744.52.

In European equities on Thursday, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was up 0.8%.

The Fed left interest rates unmoved, as expected, while its latest set of projections still suggest three cuts will be in the offing this year. The central bank’s federal funds rate range was unmoved at 5.25%-5.50%.

Fed Chair Jerome Powell refrained from giving a steer on when interest rates would be cut after projections showed three reductions are still on the cards in 2024.

‘I really don’t have anything for you’ on any specific meeting call, he said, stressing decisions would be made on a meeting-by-meeting basis.

On the back of the decision, gold rallied to a fresh record above $2,200 on Thursday as traders welcomed the Fed signal that it would cut interest rates three times this year. Gold was quoted at $2,197.22 an ounce, up against $2,157.96.

‘Yesterday‘s Fed decision was such a relief for the market, where the fear of seeing the Fed turn hawkish was reigning. The probability of a June rate cut spiked past 75% after the meeting from around 60% on Monday,’ said Ipek Ozkardeskaya at Swissquote Bank.

The relief was felt globally, with stocks rallying globally.

In Japan on Thursday, the Nikkei 225 index in Tokyo was up 2.0%. In China, the Shanghai Composite closed down 0.1%, while the Hang Seng index in Hong Kong was up 1.9% in late dealings. The S&P/ASX 200 in Sydney closed up 1.1%

Eyes now turn to the Bank of England.

The BoE will announce its latest interest rate decision at midday on Thursday. Markets are expecting the central bank to keep rates unchanged.

The decision follows some softer-than-expected inflation data, which was released Wednesday.

The consumer price index rose 3.4% in February from a year before, having increased 4.0% annually in January.

Inflation had been expected to decelerate to 3.6%, according to FXStreet-cited market consensus, meaning that the reading was below expectations.

Already on Thursday, markets got a surprise from the Swiss National Bank.

The SNB lowered its policy rate to 1.5% from 1.75%. In December, the bank had left rates unchanged.

The move was a surprise to markets. According to FXStreet, markets were expecting the SNB to keep rates unchanged.

‘The easing of monetary policy has been made possible because the fight against inflation over the past two and a half years has been effective. For some months now, inflation has been back below 2% and thus in the range the SNB equates with price stability. According to the new forecast, inflation is also likely to remain in this range over the next few years,’ the central bank said.

The pound was quoted at $1.2762 early on Thursday in London, higher compared to $1.2717 at the equities close on Wednesday. The euro stood at $1.0895, higher against $1.0856. Against the yen, the dollar was trading at JP¥151.42, lower compared to JP¥151.61.

In the FTSE 100, Next rose 3.8% in early trade.

The clothing and homewares seller reported that revenue in the 52 weeks ended January 27 rose by 9.1% to £5.49 billion from £5.03 billion a year earlier. Pretax profit jumped 17% to £1.02 billion from £869 million.

Next recommends a final dividend of 141p, bringing the total dividend to 207p, up from 206p.

‘In the context of the wider economic environment, the year to January 2024 was a very good year for Next and the business materially outperformed our initial expectations,’ commented Chair Michael Roney.

In the FTSE 250, Energean rose 4.6%.

In 2023, the hydrocarbon exploration and production company said revenue surged 93% to $1.42 billion from $737.1 million recorded a year earlier.

Pretax profit in the year climbed to $344.2 million from $107.0 million.

Virgin Money UK edged 2.5% higher.

Virgin Money UK and Nationwide said they have agreed a takeover offer, with the terms being the same as announced earlier this month.

Earlier in March, Nationwide said it had reached a ‘preliminary’ agreement to buy Virgin Money UK for £2.9 billion in a deal that would create the second largest provider of mortgages and savings in the UK.

The all-cash offer is worth 220 pence per Virgin Money share, comprising 218p cash plus a proposed 2p dividend to be paid by Virgin Money prior to completion.

Amongst London’s small-caps, Pollen Street shot up 15%.

The London-based asset manager reported that its assets under management climbed by 36% to £4.2 billion at December 31, up from £3.4 billion a year earlier. Pretax profit climbed to £43.1 million from £26.8 million.

Pollen Street also announced a £30 million share buyback.

Brent oil was quoted at $86.21 a barrel early in London on Thursday from $85.93 late Wednesday.

Still to come on Thursday’s economic calendar, as well as the BoE decision, there are a slew of flash composite purchasing managers’ index readings, including the UK at 0930 and the US at 1345.

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Issue Date: 21 Mar 2024