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London open: Stocks rise as traders eye BoE announcement
London stocks rose in early trade on Thursday as investors eyed the latest policy announcement form the Bank of England.
At 0830 BST, the FTSE 100 was up 0.4% to 7,658.78, while the pound was down 0.1% against the euro at 1.1376 and 0.2% lower versus the dollar at 1.3144 ahead of the BoE rate announcement at 1200 BST. The bank is expected to keep interest rates at 0.5%, with a 7-2 split just like in May, but it could start to guide the market towards a move later in the year.
Lee Wild, head of equity strategy at Interactive Investor, said the BoE meeting is a “non-event”.
“There’s no way the MPC will raise interest rates at lunchtime, and even August is looking doubtful now. Hot money’s shifting to a November hike, or even later. Alongside receding inflation concerns, political mismanagement of the Brexit process and dollar buying, it’s no wonder sterling remains glued to a seven-month low.
“That may change if Donald Trump continues his game of brinkmanship with the Chinese over trade tariffs. It’s a dangerous policy not just for China and the US, but for Europe, Canada and America’s other trading partners. There’s still a good chance this is just more Trump chest-beating and not a situation that will spiral out of control, which explains why we’re seeing buying on any dips in equity markets.”
Meanwhile, Oanda analyst Craig Erlam argued that there hasn’t been sufficient evidence yet that the downturn in the first quarter was a blip.
“The recent retail sales data was encouraging and there has been some improvement in the PMI surveys which provides hope but I’m not convinced that will be enough.”
Erlam added that with Brexit negotiations at such a critical stage, it would be an odd time to be hiking interest rates. “Later in the year when we have more clarity would surely be more suitable.”
Miners were the standout gainers, with Rio Tinto, Glencore, Antofagasta and Anglo American all higher.
Dixons Carphone was on the front foot as its final results filled in the gaps after it announced the key points of a disappointing year in a recent profit warning. For the 12 months to 28 April, revenue increased of £10.5bn was up 3% on the previous year, with like-for-like sales up 4%, but profit before tax falling 24% to £382m.
Over-50s specialist Saga was also higher after saying it traded in line with expectations in the first four months of its financial year as it wrote more motor and home insurance policies.
Shire gained after saying it has secured approval from the US Food & Drug Administration to expand the offering of Cinryze to children aged six years and older with hereditary angioedema.
HICL Infrastructure ticked up as it announced that it was part of a consortium with a subsidiary of Mitsubishi Corporation that has been selected by Ofgem as the preferred bidder to own and operate the offshore transmission link to the Race Bank offshore wind farm project.
As is usual on a Thursday, ex-dividend stocks were shaving some points off the FTSE 350, with United Utilities, Big Yellow, Tate & Lyle, Compass, Experian and NewRiver REIT in the frame.
On the broker note front, Crest Nicholson was initiated at ‘buy’ at Liberum, while Rio Tinto was lifted to ‘buy’ by HSBC and Virgin Money was cut to ‘neutral’ at JPMorgan.
