- FTSE 100 flat
- Rolls-Royce, Sainsbury's, BT drop
- BoE cuts base rate to 4.75%
3.56pm: FTSE 100 struggles for direction late on
London’s blue chips were flat heading into late trading, as the FTSE 100 returned to the 8,166-point mark.
Antofagasta PLC (LSE:ANTO), Glencore PLC (LSE:GLEN), Anglo American PLC (LSE:AAL) and Rio Tinto PLC were among miners to buoy the index after backtracking on declines seen as commodity prices slipped in the wake of Donald Trump’s election win on Wednesday.
Auto Trader Group PLC (LSE:AUTO) continued to lead the day’s losers in the meantime following a cut to guidance in results earlier in the day, with shares dropping 6.6%.
BT Group PLC (LSE:BT.A) also remained among the fallers, down 4.3%, after disappointing with interim figures, followed by the likes of J Sainsbury PLC (LSE:SBRY) and Rolls-Royce Holdings PLC (LSE:RR.), which also reported earlier on.
News the Bank of England had opted to cut interest rates by 25 basis points to 4.75% did little to move the dial in London, with the move having been widely expected.
Analysts noted the central bank had its work cut out in managing the impact of last month’s Budget, which the likes of M&S, Sainsbury’s and Wetherspoons have warned will push up prices ahead.
Thursday also saw the pound rise at its fastest pace against the dollar in over four months following the Bank’s rate decision, as sterling climbed 0.96% to US$1.3003.
This followed a slump on Wednesday after expectations for inflationary policies under Trump in the US saw the dollar surge.
3.39pm: Bond yields fall back as BoE governor signals post-Budget turmoil over
Bond yields fell back on Thursday following the Bank of England’s decision to cut interest rates and comments from governor Andrew Bailey that turmoil in the bond market after last month’s Budget was over.
The yield on benchmark 10-year gilts dropped seven basis points to 4.48% during the day.
Bailey said in a press conference on Thursday afternoon that a run on the market had been led by investors selling shorter term bonds following the Budget but that this was “probably finished now”.
2.54pm: Wall Street mixed ahead of Fed rate call
Wall Street enjoyed a calmer but albeit mixed start on Thursday as attention turned away from Donald Trump’s election victory and towards the Federal Reserve’s latest rate call.
The Nasdaq jumped 0.9% as trading got underway, alongside the S&P 500 by 0.4%, while the Dow Jones dipped just into the red after surging by 3.6% on Wednesday.
News of Trump’s win had spurred stocks on as investors speculated over the likes of tax cuts under the president-elect, though Thursday saw the Fed’s interest rate decision later in the day come into focus.
“Today’s Federal Open Market Committee meeting will shed light on the central bank’s next steps,” City Index analyst Fawad Razaqzada commented.
“Markets are betting on a rate cut, with most expecting a 25-basis-point reduction.
“Chair Powell may steer clear of any commitment to a rapid easing cycle, especially if he believes Trump’s policies could drive inflation.
“Any indication of hawkishness could boost bond yields further, which would likely weigh on growth stocks.”
Bond yields had surged on Wednesday as investors sold off government debt in response to Trump’s win, with the rate on ten-year treasuries scaling back below the 4.40% mark to 4.38% as New York opened.
2.30pm: Gold in recovery mode after post-election slump
Gold rebounded almost a percent on Thursday after coming under pressure following news Donald Trump had won the US election.
The yellow metal gained 0.92% over the course of the day to sit at US$2,688 an ounce, having dropped as low as US$2,644 on Wednesday.
This comes after gold surged to a new all time high of US$2,790 just last week following a run of repeatedly breaking records.
“It was always a concern that gold had managed to rally steadily from early June without any of the sharp, deep pullbacks” Trade Nation analyst David Morrison said.
“Well now there’s been one, with Trump providing the catalyst.
“The question now is whether there’s more downside to come, and if so, will that mark the end of the bull run, or once again provide an opportunity for the bulls to load up and go again?”
2.15pm: Pound continues to retake ground from the dollar
Sterling continued to regain against the dollar despite the Bank of England’s interest rate cut on Thursday.
Come the afternoon, the pound was up 0.73% versus the greenback at £1.2973, following a slump on Wednesday in the wake of Donald Trump’s election win.
“His promise to sharply increase US tariffs raises the risk of higher inflation and could push up interest rates - a dynamic likely to strengthen the dollar and pressure the pound,” eToro analyst Max Wienke commented.
“Next week’s third-quarter gross domestic product data could set the tone for future rate decisions.
“If UK economic growth continues to lose momentum, inflationary pressures may ease, paving the way for further rate cuts - a scenario that could place additional pressure on the pound.”
2.05pm: BT slumps into afternoon as FTSE 100 drops
BT Group PLC (LSE:BT.A) shares had fallen almost 6% come Thursday afternoon after news of a drop in profit was followed by a warning from boss Allison Kirkby over growing costs.
Kirkby said higher employee national insurance contributions from next year, announced in last month’s Budget, would drive the telecoms firm’s costs higher ahead after it has looked to save, including by shedding a further 2,000 jobs as part of a long term plan recently.
Combined with higher minimum wages, she signalled BT was facing a £100 million increase in costs which would in turn likely drive prices up, echoing similar warnings from the likes of Sainsbury’s, M&S and Wetherspoons this week... Read more
Auto Trader Group PLC (LSE:AUTO) led the fallers on the FTSE 100 in the meantime, ahead of Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF), having dropped by 7.7%.
The automotive platform had cut guidance in results and signalled growth would be led by “lower yielding retailers” over the rest of the year.
Panmure Liberum analysts noted focus was also on Auto Trader’s exposure to a Financial Conduct Authority’s probe into historic motor finance commissions after the company said it had adjusted its disclosures over such deals.
Elsewhere, J Sainsbury PLC (LSE:SBRY) and Rolls-Royce Holdings PLC (LSE:RR.) remained under pressure, while miners continued to lead risers in a reverse on Wednesday’s declines.
1.42pm: Markets reduce rate cut expectations as governor signals gradual easing
Markets have dialled back expectations for another cut to interest this year after the Bank of England opted to reduce the base rate by 25 basis points to 4.74% on Thursday.
There is now a 22% chance of another cut in December following today’s reduction, according to money markets, against 33% previously.
The Bank of England had signalled last month’s Budget would add to inflation over the coming year, after chancellor Rachel Reeves a £40 billion uplift in taxes and roughly £70 billion increase in annual spending.
Governor Andrew Bailey signalled in a press conference on Thursday that a gradual approach would be taken to cutting interest as the Bank assessed the Budget’s impact.
“We need to see how the Budget measures pass through in terms of their economic effects”.
He also said said focus was on the US after Donald Trump’s election victory and the risks of “fragmentation” in the global economy in response to the president-elect’s proposed wide sweeping tariffs.
“It is important so we have to consider those consequences for us both in our monetary policy and our financial stability context and objectives,” Bailey said.
“Frankly, there are a lot of risks attached to the fragmentation of the world economy. Let’s see what happens. It’s too early to judge.”
12.52pm: Wall Street seen higher but calmer ahead of Federal Reserve rate call
Wall Street looked set for a calmer day following Wednesday’s rally in the wake of Donald Trump’s election victory.
Futures had the Nasdaq up 0.4% ahead of Thursday’s opening bell, while the S&P 500 and Dow Jones were seen 0.3% and 0.2% higher respectively.
Each had rallied on Wednesday after Trump was confirmed as the US president-elect, with the Dow Jones having surged 3.6%, or by 1,508 points.
“Financials provided the brightest spot, with the combination of higher rates, a strong economy and favourable regulations expected to boost stocks in the sector,” Scope Markets analyst Joshua Mahony noted.
“Big tech managed to finish strongly, with Nvidia hitting record highs and overtaking Apple as the world’s largest company.”
As attention turned to the Federal Reserve’s base rate call on Thursday, caution appeared to have brought an end to the initial excitement following Trump’s win, he said.
Markets are expecting the central bank to cut US interest by 25 basis points, following a 50 basis point cut last time around in September.
12.34pm: BoE facing ‘tough job’ after Budget - analysts
Following the Bank of England’s decision to cut interest to 4.75%, analysts have noted policymakers face a difficult task ahead in managing the impact of last month’s Budget.
Fidelity International portfolio manager Shamil Gohil noted the Monetary Policy Committee had "a tough job balancing” the impact as cost increases through higher taxes would “likely be at least partially passed on to consumers via price hikes next year”.
“The sensible path continues to be for a gradual and cautious easing process as these effects are slowly realised over time.”
Charles Stanley analyst Rob Morgan highlighted the Bank’s signalling of “greater uncertainty around inflation going forwards” in its statement.
“Base rates below 4% by the end of next year now appear less likely and this will add to borrowing pressures over this timeframe,” he said.
“The impact for the consumer is mixed, largely dependent on whether a household is a net saver or net borrower.
“Those with significant mortgages are likely to feel some extra pain from interest rates remaining a bit higher over the next year, which is now implied by the greater uncertainty around inflation.”
12.08pm: Bank of England cuts interest by 25 basis points
The Bank of England has confirmed a 25 basis point cut to base interest as expected, bringing the rate down to 4.75%.
The Bank’s monetary Policy Committee voted eight to one to cut the rate, following a drop in the rate of inflation to 1.7% in September, a press release said.
“There has been continued progress in disinflation, particularly as previous external shocks have abated, although remaining domestic inflationary pressures are resolving more slowly,” it added, with inflation predicted to climb to 2.5% by the year-end.
The Bank also forecast last month’s Autumn Budget would boost UK gross domestic product by around 0.75% at its peak in a year’s time relative to previous projections.
Consumer price inflation was expected to climb by “just under” 0.5% at its peak as a result of the Budget.
“The impact of the Budget announcements on inflation will depend on the degree to and speed with which these higher costs pass through into prices, profit margins, wages and employment,” the Bank added.
11.56am: FTSE 100 muted ahead of BoE call
London’s blue chip index was up just 1 point at 8,167 ahead of the Bank of England’s interest rate decision at midday.
Markets overwhelmingly expect base interest to be reduced by 25 basis points to 4.75%, after the central bank held the rate in September’s meeting following a cut in August.
“While the rate cuts appear to be largely a foregone conclusion, the focus will instead centre around any shift in tone following the UK budget and US election,” Scope Market’s analyst Joshua Mahony said.
11.51am: Sainsbury’s latest to signal higher prices on tax hit
J Sainsbury PLC (LSE:SBRY) has joined M&S and Wetherspoons in warning of higher prices on the back of increased tax costs following the Budget.
Chief executive Simon Roberts said higher employer national insurance contributions (NIC) after last month’s Budget were set to cost Sainsbury’s roughly £140 million.
“I don't think you can shy away from the fact that, because of the changes in everyone's cost base, it is going to feed through into higher inflation,” he said on Thursday.
Marks and Spencer Group PLC (LSE:MKS) and JD Wetherspoon PLC (LSE:JDW) issued similar warnings on Wednesday after chancellor Rachel Reeves announced employer NIC would rise to 15% on salaries above £5,000, against 13.8% on those over £9,100 currently, in the Budget.
M&S boss Stuart Machin refused to rule out price rises following the supermarket’s result on the back of what he dubbed a “double whammy” of a higher rate and lower threshold.
He warned the tax increase was set to land M&S with a £60 million increase in costs. Combined with higher minimum wages, these were set to grow by £120 million.
Tim Martin, chief executive of Wetherspoons, forecast a £60 million increase in bills on the tax increase in the meantime... Read more
11.14am: DAX gains as German government crisis deepens
Germany’s blue-chip DAX index ticked up 1.3% on Thursday as a political crisis surrounding the country’s coalition government deepened.
Chancellor Olaf Scholz unexpectedly sacked his finance minister Christian Linder on Wednesday and called a confidence vote for January.
Opposition leader Friedrich Merz then called on Thursday morning for the vote to be held immediately.
“The end last night is the end of the traffic light,” he said, referencing Germany’s three-way coalition government.
This includes the Social Democrats, Greens and liberal Free Democrats, with Linder heading up the latter.
Under Scholz’s plan, a snap election would take place around March, with this likely being brought forward to January were the confidence vote held next week in line with Merz’s calls.
Germany’s far-right Alternative für Deutschland party has also pushed for an election, in which it would stand to benefit alongside Merz’s party.
Scholz has repeatedly warned of decisions ahead as budget talks have loomed against the backdrop of Germany’s stagnating economy.
“With chancellor Scholz pushing back against their coalition partners insistence that spending should be limited in the face of rampant military outgoings, there is a hope that this move would see the government push forward with measures that will also prioritise getting the economy back on its feet,” Scope Markets analyst Joshua Mahony said.
10.47am: Rolls-Royce remains under pressure
Rolls-Royce Holdings PLC (LSE:RR.) has remained under pressure on Thursday after the engine maker’s move to double down on guidance underwhelmed given a backdrop of heightened expectation.
Shares fell 4.4% to 548p on the back of the third quarter update, where Rolls said it was on course for to meet guidance over the year and that engine flying times were at 102% of pre-pandemic levels so far this year.
Shares in the manufacturer have climbed over 85% so far this year, having surged since chief executive Tufan Erginbilgic took the helm in early 2023.
This “excellent run the stock has had over the last couple of years” left the door open for Rolls to face a negative reaction, analysts said.
“Whilst we expect to moderate our numbers ahead of full year results, we do not believe a material change will be required, but will revert in due course”... Read more
9.44am: Budget set to cloud path of future BoE rate cuts - analysts
While the Bank of England is widely expected to cut base interest on Thursday, focus will be on its outlook after last month's Autumn Budget according to analysts.
Though the Budget, which raised spending by £70 billion annually, will not affect near-term inflation forecasts, "it does complicate the future rate path for the BoE," XTB analyst Kathleen Brooks noted.
"While traders and investors are desperate to hear what the BoE has to say about the neutral rate and where UK interest rates will eventually settle, we think that the BoE will avoid these questions."
Expectations for 97 basis points worth of cuts by September 2025 have been scaled back to price in 63 basis points in reductions since the Budget, she highlighted.
"The Budget won’t change the Bank’s decision to cut rates again this week. But it does question our long-held view that rate cuts will speed up from now on," ING Economics added.
"The risk is that this happens later, and the Bank decides to keep rates on hold again in December"... Read more
9.21am: Pound regains ahead of Bank of England rate call
Sterling regained some ground on Thursday ahead of the Bank of England’s decision on interest rates, due at midday.
The pound climbed 0.36% against the dollar to reach US$1.2926, having slumped on Wednesday as Donald Trump’s election victory prompted the greenback to rally on speculation over his inflationary policies.
Markets are expecting the Bank of England to cut base interest by 0.25% to 4.75% on Thursday, following its decision to hold the rate in September’s meeting.
“Most expect the vote count to prove 8-1 in favour of a cut,” ING Economics analysts said, “although sterling could quite easily receive a temporary boost if the vote is 7-2 or 6-3”.
Attention will likely be on governor Andrew Bailey’s press conference following the decision though, ING said.
“He's likely to be asked how stimulative he finds last week's UK budget,” analysts added.
8.58am: House prices hit record in October - Halifax
House prices climbed to a record high last month, Halifax has reported, despite a slowdown in growth against September.
Average prices hit £293,999 in October, having climbed by 0.2% month on month and 3.9% over the year.
The saw the average surpass the previous record set in June 2022, “towards the end of the pandemic-era ‘race for space,’” Halifax mortgage head Amanda Bryden commented.
Price growth slowed against the 4.6% recorded over the year to September though, with softer increases expected over the coming months, according to Bryden.
“Looking ahead, borrowing constraints remain a challenge for many buyers,” she added, as fewer base rate cuts were expected following the Budget and higher stamp duty threatened to dampen demand... Read more
8.33am: Rolls-Royce drops early on
Rolls-Royce Holdings PLC (LSE:RR.) was among the early fallers on the FTSE 100 after backing full-year guidance in its third-quarter update.
Shares tumbled 4.4% as trading got underway, with Shore Cap analysts highlighting engine flying times at the low end of guidance in the update.
“We may need to moderate our forecasts slightly as we assume 105% of 2019 levels is achieved in 2024,” analysts said, after Rolls reported flight times at 102% of pre-pandemic levels over the first ten months of the year.
Elsewhere on the FTSE 100, Auto Trader Group PLC (LSE:AUTO) led fallers, down 5.3%, after guiding growth was set to continue to be led by “lower yielding retailers” over the rest of the year.
BT Group PLC (LSE:BT.A) dipped 3.8% following news of a dip in revenue and profit over the first half and lowered guidance as a result.
J Sainsbury PLC (LSE:SBRY) also dropped 2.6% as first-half figures showed strong grocery volumes but lower sales at the likes of Argos... Read more
ITV PLC (LSE:ITV) was among losers on the FTSE 250 with an 8.9% decline after announcing further cost cuts and a slowdown in advertising revenue... Read more
Miners Glencore PLC (LSE:GLEN), Antofagasta PLC (LSE:ANTO) and Rio Tinto PLC were among risers in the meantime, following declines on Wednesday as commodity prices fell in response to Donald Trump’s election win.
Overall, the FTSE 100 ticked up 12 points to 8,179.
8.19am: Wizz Air profits hit by P&W-related groundings
Wizz Air Holdings PLC faced a drop in profit over the first half as aircraft groundings due to Pratt & Whitney engine inspections hit.
Adjusted pre-tax earnings fell 5.9% to €826 million (£687 million) over the six months to September, the airline reported on Thursday, while operating profit tumbled 33.2% to €349.2 million.
This reflected cost inefficiencies as aircraft were grounded due to suspected Pratt & Whitney geared turbofan (GTF) engine issues.
Some 41 Wizz aircraft were said to have been grounded as of September, with an average of 40 to 45 expected to be out of service over the coming 18 months.
Wizz added profitability had also been hit as the leasing of one jet over the summer was not covered by compensation from Pratt & Whitney... Read more
8.00am: BT revenue takes a hit
BT Group PLC (LSE:BT.A) has said revenue fell over the first half of the year, prompting a drop in profit and lowered guidance.
BT’s revenues dipped by 3% year on year in the first half due to “our non-UK operations and a competitive retail environment,” the company said on Thursday.
This led to a 10% year-on-year fall in profit before tax and a 1-2% downward revision in full-year revenue guidance, “primarily reflecting weaker non-UK trading including reduced low-margin kit sales, along with a softer environment in Corporate and Public Sector”... Read more
7.56am: Rolls-Royce backs full-year guidance
Rolls-Royce Holdings PLC (LSE:RR.) has reiterated guidance for the year in spite of ongoing supply chain issues.
Full-year guidance for operating profit of £2.1 billion to £2.3 billion and free cash flow between £2.1 billion and £2.2 billion was reiterated in a third quarter update on Thursday.
This was despite ongoing challenges in the aerospace supply chain, the company said, after efforts to concentrate on 15 suppliers have “driven performance improvements”.
“Our transformation of Rolls-Royce into a high-performing, competitive, resilient and growing business continues with pace and intensity,” chief executive Tufan Erginbilgic said... Read more
7.13am: Stocks seen lower
Futures had the FTSE 100 falling nine points to 8,198 on Thursday as investors awaited the Bank of England’s latest decision on base interest at midday.
London’s blue chips had shed five points on Wednesday, having given up a 100-point gain initially in the wake of Donald Trump’s US presidential election victory.
Analysts expect the bank to cut interest by 25 basis points to 4.75% on Thursday, after the rate was held in September and initially cut in August.
Overnight, Asian markets had a mixed showing, with the Shanghai composite adding 2.6% but India’s Nifty Fifty falling 1.1%.
Back in London, attention was on updates from the likes of BT Group PLC (LSE:BT.A), J Sainsbury PLC (LSE:SBRY), Rolls-Royce Holdings PLC (LSE:RR.), alongside house price figures from Halifax.