- FTSE 100 falls 93 points to 10,309
- Bank of England holds rates with 5-4 vote split
- UK car sales growth slows, construction sector mood improves
- Gilt yields rise due to UK political worries
5.05pm: Global stocks slump
The FTSE 100 retreated from record territory, down 93 points at 10,309. Wall Street was also in the red, with the Nasdaq down 1%, the S&P 500 down 0.9% and the Dow Jones down 0.8%.
“The best selloffs start when no one is really expecting one, but it seems like, as many have feared, the contagion from a crypto selloff has spread to the rest of the financial universe,” IG’s Chris Beauchamp said.
3.45pm: Crypto sell-off
Shares of cryptocurrencies slumped after US Treasury Secretary Scott Bessent suggested the government would not bail out Bitcoin, which dropped to $67,000 on Thursday. This marked its lowest level since 2024. Ether was down almost 8% at about $1,970.
“The crypto bear market has morphed into a full-on market rout, with outflows gathering pace as key names drop to fresh multi-month lows,” IG chief market analyst Chris Beauchamp said.
“The week has seen Nouriel Roubini once again predict the total demise of bitcoin, and Michael Burry has added his voice to the chorus of warnings about cryptocurrencies, something that will have added fresh impetus to the selling.”
3pm: US stocks open sharply lower
Wall Street has opened lower again, with big tech marching at the head of the retreat.
The tech-laden Nasdaq is down 1.45%, while the blue-chip Dow Jones has fallen 0.8% and the broader S&P 500 has dropped 1.1%.
Alphabet is down over 4%, while the biggest faller on the Nasdaq 100 are bitcoin 'hodler' Strategy and chipmaker Qualcomm, both down over 7%.
Over five days, the Nasdaq Composite is down almost 1,000 points or 4.2% at just over 22,500.
2.41pm: Firms' hiring and inflation expectations fall
As well as the rates decision and new macro forecasts, the Bank of England’s Decision Maker Panel was also out this afternoon.
This showed firms plan to raise their prices by 3.4% over the year from January, down from 3.5% in December and down for the second month running.
The three-month average of firms’ own price expectations fell to 3.5% in January, from 3.6% in December, matching the consensus estimate.
Companies' one-year ahead CPI inflation expectations fell to 2.9% in January, from 3.2% in December, below the consensus forecast of 3.2%.
Data were collected from over 2,000 firms between 9 and 23 January.
Wage growth and inflation slowing, with inflation expectations dropped, "will be music to the MPC doves' ears", says econoist Rob Wood at Pantheon Macroeconomics.
"The MPC’s dovish vote and commentary today mean we have to shift our rate call to a cut in March, from April previously.
"But we are comfortable assuming only one more Bank Rate cut this year. Governor Bailey sounds like he wants to cut twice, but we think the data will prove too stubborn to allow that."
1.55pm: European shares down in general
After seeming to enjoy an initial BoE boost, FTSE 100 has dropped back below where it was before, despite the pound and gilt yields both falling.
But mainland European stocks are not doing much better.
While the FTSE 100 is down 0.7%, the more domestically exposed FTSE 250 is down almost 200 points or 0.8%, while over on the mainland the DAX is down 0.7% and the CAC 40 is 0.1% lower.
Both the Bank of England and the European Central Bank have both left rates unchanged.
"This is one of those occasions when central banks need a good sense of balance to weigh the negatives against the positives," says Mark Wall, chief European economist at Deutsche Bank.
"Leaving policy rates unchanged feels the right thing to do. There are external vulnerabilities, but there is also domestic resilience, helped in part by Germany’s defence and infrastructure spending."
On the BoE decision, Matt Swannell, chief economic advisor to the EY ITEM Club, said the decision was as expected, but the extent of the support amongst the MPC for an immediate rate cut "came as a surprise".
"From the data flow since the last meeting, it’s not immediately clear why the Committee has shifted in a dovish direction, but it appears that most members are slightly less worried about sticky pay and inflation and more concerned about the subdued growth outlook.
"There were no promises made on when the next rate cut will come, but today’s 5-4 vote clearly puts a March cut on the table. However, the MPC was keen to stress it is likely approaching the end of its cutting cycle."
12.57pm: Difficult trade-off for MPC
Alongside today's decision, the BoE also forecasts inflation will drop to 2% by spring, alongside a projected GDP growth of just 0.9% and an unemployment rate of 5.3%.
The Bank of England has a difficult trade-off, the British Chambers of Commerce acknowledges.
Its members, ie businsses, want more cuts, but its own research shows that a majority of firms still expect to raise their prices, with labour costs cited as the top cost pressure.
"Businesses tell us inflation risks are likely to persist in the short term, but a lower interest rate will be a key part of kickstarting the economy," says BCC head of research David Bharier.
"However, today’s more optimistic MPC forecast, predicting inflation returning to target by April, will be welcomed by the firms we represent.
"For businesses across the UK, greater policy certainty and a clear path to lower borrowing costs are essential to unlock investment, boost productivity and transform trade."
12.39pm: Cut rates, say both sides of political spectrum
Some more views on the Bank with political angles.
The free marketers of the IPPR unsurprisingly want more cuts. Economist William Ellis says: "The Bank of England missed an opportunity today to cut rates and stop active gilt sales. This decision adds unnecessary strain to the economy, borrowing costs and the taxpayer."
He says inflation in December "largely reflected statistical noise and temporary factors" and the "bigger picture is still one of easing price pressures, slower wage growth and rising unemployment".
Measures Rachel Reeves introduced in the last Budget "will help to reduce inflation and hit the 2% target a year earlier than originally expected. This should encourage the Bank to act more boldly and more quickly."
It is a rare agreement between left and right on the Westminster spectrum. TUC general secretary Paul Nowak says the BoE was "too cautious last year" and "should go further and faster with a rapid-fire sequence of rate cuts in the months to come".
This is becuase, he says, "working people in every corner of the country are still being hammered by the living standards crisis" and a cut would ease pressures for mortgage payers and boost confidence "across the economy so the UK can get back to stronger and sustainable growth".
12.21pm: 'Not if, but when' next interest rate cut comes
We have entered a "delicate stage" of the rate cycle, says economist George Brown at Schroders.
While today’s rate decision was seen as a foregone conclusion, the fact that the vote was 5-4 to hold rates "suggests cuts are not a matter of if, but when".
He adds: "The Bank's guidance had been cautious and non‑committal, reflecting unease about the persistence of underlying inflation.
"That had left Governor Bailey holding the deciding vote – an unusually fine balance that underlines just how delicate this stage of the rate cycle has become.
"But his messaging suggests there should be further easing, with Mann also now leaning towards easing rates. The temporary disinflationary window ahead should offer enough cover to justify one or two more cuts.
"However, the Bank will have to act soon if it intends to cut, before that window closes and the opportunity for further easing slams shut in the second half of the year."
12.11pm: Rates 'likely to be reduced further'
Sterling dropped on the BoE decision, down 0.5% at $1.3566, close to a two-week low.
In its statement, the MPC says that CPI inflation is expected to fall back to around its 2% the target from April, owing to a fall in energy prices.
This is alongside a projected GDP growth of just 0.9% and an unemployment rate of 5.3%.
"Reflecting the impact of monetary policy, and consistent with evidence of subdued economic growth and building slack in the labour market, pay growth and services price inflation have generally continued to ease.
"The risk from greater inflation persistence has continued to become less pronounced, while some risks to inflation from weaker demand and a loosening labour market remain."
With rates reduced by 150 basis points since August 2024, the BoE said: "On the basis of the current evidence, Bank Rate is likely to be reduced further.
"Judgements around further policy easing will become a closer call. The extent and timing of further easing in monetary policy will depend on the evolution of the outlook for inflation."
12.05pm: BoE holds but four vote for cut
The Bank of England's monetary policy committee has held rates steady at 3.75% at their meeting, but with another close 5-4 vote split.
The four dissenting policymakers were Breeden, Dhingra, Ramsden and Taylor, who all voted to cut rates by 0.25 percentage points to 3.5%.
The FTSE has quickly slashed its losses.
11.54am: Bond markets update
Gilt yields are back down, but several financial commentators are flagging the risks.
The unhappiness with the Labour ranks about the appointment of Peter Mandelson as US ambassador "could trigger UK bond market chaos if it forces Prime Minister Keir Starmer out of office", warns Nigel Green of deVere Group.
Reports suggest many MPs, even some allies of the PM, are now questioning his judgement and authority, raising the risk that a political scandal could rapidly morph into financial volatility.
"For investors, the issue is no longer just the scandal itself, but what it reveals about leadership judgement and control," says Green, with market risk becoming acute if the crisis escalates into a leadership collapse.
Due to the issue potentially bringing down the PM, UK government bonds (aka gilts) were being sold, pushing up yields.
With Starmer and Rachel Reeves seen as "a single framework" by markets, with the Chancellor having built up credibility with bond markets due to her efforts to tighten fiscal discipline, if the PM falls that raises prospects of both going.
"In the event of a sudden leadership change, it would be extremely difficult for a successor to keep the Chancellor in place without appearing constrained by the previous leadership," Green says.
Following the spike in gilt yields this morning, Chris Beauchamp at IG says investors are "clearly wary of the consequences of what will follow from Kier’s possible defenestration".
Bond markets will have extra worries given "the wide field of leadership candidates from the various sections of the Labour Party".
He adds: "A rerun of the disastrous Truss premiership is unlikely, but a more left-wing leader devoted to higher spending might upset the delicate balance in UK government borrowing markets, leading to higher borrowing costs."
11.19am: ECB and BoE meetings may provide some market direction
The FTSE is down 0.3% in London and benchmarks in Frankfurt and othe rEuropean financial centrea are mostly lower as traders lock in some gains ahead of central bank policy announvements later.
Commentary from the ECB and BoE "could provide some direction later on," says market analyst Derren Nathan at Hargreaves Lansdown, though no rate changes are expected to be announced in either meeting.
"The ECB’s followed a steeper easing slope with rates now stable at 2.0% since June last year. With yesterday’s Eurozone inflation figure of 1.7% coming in way below target, there may be some growing calls for a further drop in borrowing rates.
"That could go some way towards halting the euro’s ascendancy against the dollar, providing some much-needed relief for exporters."
As for the BoE, with votes having been far more on a knife edge, today’s vote split "will provide vital clues around the likely direction of travel", says Nathan.
"A surprise uptick in December’s inflation to 3.4% was a timely reminder of the tightrope being walked by UK policymakers.
"With unemployment of 5.1% at the highest level since April 2021, both equity investors and job seekers will be hoping for more than just one quarter-point cut this year. But with inflation not yet slain, that’s far from a done deal."
Kathleen Brooks at XTB points out that there are currently 1.4 rate cuts priced in by the overnight index swaps market for 2026.
"The next rate cut is not expected until June, it was previously April, however, stronger than expected inflation data for December has pushed rate cut expectations further into the future," she says.
"Interest rates are expected to end this year at approximately 3.35%, which suggests that, for now, the neutral interest rate for the UK is above 3%.
"Investors want to see how the BOE balances a noticeably weaker jobs market with signs that the growth outlook is improving for the UK."
She notes that business activity is "notably stronger" in the last two months, with the January composite PMI rising to its highest level since August 2024, making a strong recovery since a period of weakness pre-Budget.
"There is still room for improvement and we expect the BOE to flag this.
"Consumer confidence has picked up but remains at a low level and business confidence is showing some signs of improvement.
"However, we think that growth prospects for the UK are not strong enough for the BOE to rule out further rate cuts."
10.52am: Critical metals agreements
The US-led critical minerals summit that started overnight has seen the EU and the US announce agreements to work closer, committing to a memorandum of understanding within a month's time.
The US state department, which is hosting the 'ministerial', has boasted of 11 bilateral deals on critical minerals signed at the summit.
Representatives from the UK, Germany, France, Canada, Japan, India and South Korea are among those attending, with 54 countries and the EU in attendance.
Patrick Schroeder, senior research fellow at Chatham House’s Environment and Society Centre, said the opening speeches from the US government were "framed as ‘America needs your help’."
JD Vance said: "We want to eliminate that problem of people flooding into our markets with cheap critical minerals to undercut our domestic manufacturers."
He called on allies to agree trade rules to would offer price guarantees for new sources of critical minerals in an attempt to break China’s dominance of the sector.
Australia's foreign affairs minister Penny Wong said: “As middle powers, we want to contribute to a world where no country dominates and no country is dominated."
German foreign minister Johann Wadephul said: "We must diversify our supply chains, and we must cooperate as closely as possible."
10.23am: Markets summary
The FTSE 100 has dipped due to rising gilt yields and ahead of decision day for the Bank of England.
Markets are pricing in a 96% chance of no change to interest rates when the MPC sits down today, with the next cut not expected until April, says market analyst Dan Coatsworth at AJ Bell.
“Barring a huge turn up for the books, attention will be centred on the balance of votes and whether this shifts the calculus on the timing and trajectory of rate cuts through the remainder of 2026."
After heavy selling in data and software firms seen as vulnerable to AI, this has ceased for now, with share prices in the likes of London Stock Exchange Group, RELX and Experian starting to recover.
“However, the impact continues to be felt as the mooted London IPO of software outfit Visma is reportedly pushed back thanks to the turmoil.
"This would be a blow for a UK market starved both of tech representation and new listings of any scale.”
9.54am: Construction mood improves from December low
The UK construction PMI rose to 46.4 in January, better than the consensus forecast of 42.0.
This is a seven-month high for the S&P Global index, with the mood among builders recovering but still broadly negative, bouncing back from the sharp drop in December to 40.1, which was its second-lowest since the pandemic.
9.45am: UK car sales growth dips
Private new car registrations were up 4.5% year-on-year in January, down from a 16.0% gain in December.
Total registrations, including business and fleet sales, climed 3.4%, down from 3.9%, according to the latest numbers from the industry's Society of Motor Manufacturers and Traders (SMMT) body.
Battery electric vehicle (BEV) volumes hummed slightly higher but market share was down compared with last year.
The industry's new outlook anticipates market growth of 1.4% in 2026, with EV share expected to rise to 28.5%. This is a more optimistic outlook than the last one, published in October.
An increasing choice of car models and the reintroduction of government support through the Electric Car Grant has helped strengthen the outlook for BEV uptake.
"Britain’s new car market is building back momentum after a challenging start to the decade," says Mike Hawes, SMMT chief executive.
Despite a January dip in EV market share, the signs point to growth by the end of the year, he adds.
"The pace of the transition, however, may be slowing and is certainly behind mandated targets. With sales of new pure petrol and diesel cars planned to end in less than four years, there needs to be a comprehensive review of the transition now, to ensure ambition can match reality."
9.23am: Gilts shifted by UK politics
UK politics (amidst headlines such as 'Labour MPs say Starmer’s days as PM are numbered amid fury over Mandelson') are having an effect on financial markets.
There has been a "modest bump" in recent UK gilt pricing, notes Simon French at Panmure Liberum, equivalent to 10-15 basis points in the spread to the G7 max/median.
"These spreads are the simplest measures to track perceived market risk from a change in Labour leadership to a more inflationary, higher-issuance economic model.
"This suggests some growing unease around political developments in Westminster, but not yet a clear signal of expecting a successful leadership challenge before the local elections, and a pivot, economically, to the left.
"This is probably the right conclusion as the various potential alternatives - at least those with shadow campaigns underway - are focused on the May elections, so breaking cover ahead of that would not fit with the Gantt chart (Labour advisers tend to be better with those than with gilt pricing)."
8.56am: Future backs outlook despite AI pressure
Shares in Future PLC are down over 5% in early trading after the website and magazine publisher reaffirmed it is on course to meet full-year expectations, amidst continued pressure across parts of its digital and comparison businesses.
The FTSE 250-listed company reported broadly in-line performance for the four months to 31 January, with revenue trends expected to improve in the second half.
Direct digital advertising revenue rose year-on-year in both the UK and the US, but programmatic advertising and e-commerce revenue remain challenged due to lower audience numbers. Print magazine sales continued to show resilience.
Analyst Johnathan Barrett at Panmure Liberum says audience softness, partly attributed to AI absorbing a chunk of search volumes, was weighing on programmatic advertising, with total first-half digital advertising expected to decline by “at least a couple of points”.
8.29am: Shell down but 'still on front foot'
Shell shares are down 1.5% this morning.
The latest quarter "wasn’t spotless", says Mark Crouch, market analyst for eToro, with income down by 22% on the previous quarter and adjusted earnings down 40%.
He feels the oil giant "remains firmly on the front foot," as shown by another $3.5 billion share buyback being loaded up to highlight the strength of underlying cash flows (though these were not enough to stop debt from rising).
Crouch says the energy sector is the best-performing of 2026 so far, with capital rotating into the space even as oil and gas prices remain historically on the low side.
"Shell’s shares are trading close to all-time highs regardless, reflecting balance sheet strength, reliable cash generation and renewed upside potential in the share price. Progress on major projects in Australia and Brazil adds further visibility to medium-term growth," he says.
Richard Hunter at Interactive Investor notes that cash flow from operating activities for the whole year fell 22% to $42.9 billion, while net debt increased to $45.69 billion from a previous $38.8 billion.
Despite heightened geopolitical tensions, he says Shell is "now undergoing more conservative capital expenditure, guiding for a range of between $20 billion and $22 billion for this year, thus underpinning shareholder returns".
"In addition, its diversity of operations across oil, gas, chemicals, and retailing regularly allows one area of strength to counter another of weakness.
"Management’s previous estimate that the dividend could be sustained even with the oil price as low as $40 per barrel - currently around $68 - is noteworthy, while a focus on reducing costs continues."
Hunter says the shares have done well to increase 8% over the last year, compared to a gain of 21% for the wider FTSE 100, amidst a dip of around 9% in the oil price over that time.
"Some investors are unwilling or unable to invest in oil stocks on ethical grounds, but the company remains a core constituent in many traditional portfolios alongside the old adage of 'never sell Shell'. Investor enthusiasm for prospects on the immediate outlook may have cooled, but the market consensus of Shell as a cautious buy remains in place, with the group still preferred over major rival BP."
8.15am: FTSE opens lower as Compass and Vodafone disappoint
The FTSE 100 has opened down 35 points at 10,367, led by Compass and Vodafone.
Compass shares have tumbled 7.7% despite posting what it called a strong start to its new financial year.
Vodafone, as noted below, reported organic service revenues below forecasts for the UK and Germany, with the shares falling 5.5% after a strong run in the past year.
8am: Vodafone sticks to guidance despite weaker Q3 revenues
Vodafone Group PLC said it expects to deliver at the upper end of its profit and cash flow targets for the year, even as service revenue in key markets missed expectations for the third quarter.
The telecoms group reported service revenue up 5.4% on an organic basis in the past quarter, down from 5.8% in the second quarter and below the City’s forecast of 6.0%.
In the UK, revenue slipped 0.5%, which it said was expected, but Germany, the group’s largest market, growth was well short of forecasts at just 0.1%.
7.50am: Shell launches another buyback, debt rises
Shell PLC reported its lowest quarterly profit since the start of 2021 as oil prices fell, but announced a 4% dividend increase and launched another $3.5 billion share buyback.
Adjusted earnings came in at $3.26 billion for the fourth quarter of 2025, down 40% and below analyst expectations of $3.5 billion.
Net debt rose to $45.7 billion at year-end, up from $41.2 billion at the end of the third quarter.
7.32am: BT results in line
BT Group PLC reported lower revenue and profit for the past quarter but said it is making progress on its turnaround strategy and is on track to meet its financial outlook for the year.
In a trading update for its third quarter to end-December, the telecoms group reported revenue of £4.98 billion, down 4% compared to the previous year and slightly below City forecasts of £5.1 billion.
Adjusted EBITDA of £2.1 billion was down 1%, but in line with expectations. Earnings were broadly flat if excluding the impact of one-off factors, with lower revenue offset by continued strong cost transformation.
7.15am: FTSE 100 to start lower ahead of BoE meeting
The FTSE 100 has been predicted to start lower on Thursday, retreating from its new record highs ahead of the Bank of England meeting later.
Futures have indicated an 18-point decline for the London index, a day after it gained almost 88 points to finish at a closing high of 10,402.34, though below its intraday highs.
Wall Street played out a mixed session overnight, with Nasdaq leading the laggards as it slid 1.5%, weighed down by a continued selloff in software and tech stocks, which also saw the S&P 500 dip 0.5%. The Dow Jones climbed 0.5%, buoyed by defensive and industrial shares.
Asian stocks are mixed this morning, led by the Kospi in Seoul, with Japan's Nikkei and India's Sensex both lower but the Shanghai Composite higher.
Notable last night was the start of the US-led critical minerals summit in Washington, where officials from 50 countries are looking to sign various agreements aimed at diversifying production of more than 25 metals and other elements.
Earlier this week, President Donald Trump announced the launch of a US strategic minerals stockpile, called Project Vault, with with a $10 billion government loan and $2 billion of private capital.
A proposal for a minimum price for critical minerals is being pushed by many countries, but the US is said to be backing away from this suggestion.