London midday: Stocks drop as pound pops on BoE's extra rate dissenter
London stocks fell into the red just after midday on Thursday as the pound gained ground following a more hawkish than expected policy announcement from the Bank of England.
The FTSE 100 was down 0.4% to 7,596.89 as sterling popped higher, trading up 0.2% against the dollar at 1.3197 and 0.5% higher versus the euro at 1.1434 after it emerged that the Bank of England voted 6-3 to keep interest rates at 0.5%, and left its asset-purchase programme unchanged.
Andy Haldane joined dissenters Ian McCafferty and Michael Saunders in voting for a 25 basis points hike, in a move that was not expected and marked the first time a BoE chief economist has dissented since 2011.
David Cheetham, chief market analyst at XTB, said: "Today’s meeting was seen by many as having very little chance of delivering a material change in policy with the focus on any signals for the next meeting and there’s been several strong hints towards an August hike.
"As well as the change in voting pattern, a key line from the accompanying statement which read that all members are more confident that the Q1 slowdown is temporary have caused a pretty strong hawkish reaction in the markets with the pound bouncing strongly from its lowest level in seven months against the US dollar while the FTSE has dropped lower."
Earlier, figures from the Office for National Statistics showed that public borrowing in the first two months of the financial year fell to the lowest level since 2007 as the government received more in tax revenue. Britain borrowed £11.8bn in April and May - £.41bn less than a year earlier and the best start to a financial year since shortly before the financial crisis started.
The government borrowed £5bn in May - about £2bn less than a year ago and the lowest figure in May since 2005. Economists on average had expected borrowing of £6.3bn. In April and May the government spent £123.6bn, roughly the same as a year earlier. The government’s income increased 3% to £112.9bn including £82.6bn in taxes.
In corporate news, 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 Diamond Transmission Partners, a consortium comprising the firm and Diamond Transmission Corporation - a subsidiary of Mitsubishi Corporation - 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 riding high after an initiation at ‘buy’ at Liberum, while Rio Tinto was boosted by an upgrade to ‘buy’ by HSBC and Pagegroup was up after Citi lifted its price target and reiterated its ‘buy’ recommendation.
Virgin Money was cut to ‘neutral’ at JPMorgan.
Market Movers
FTSE 100 (UKX) 7,630.29 0.04%
FTSE 250 (MCX) 20,849.75 -0.37%
techMARK (TASX) 3,554.52 0.06%
FTSE 100 - Risers
Ocado Group (OCDO) 1,026.00p 2.45%
Shire Plc (SHP) 4,100.00p 2.24%
British American Tobacco (BATS) 3,847.00p 1.80%
Sky (SKY) 1,401.00p 1.52%
Next (NXT) 5,940.00p 1.33%
Micro Focus International (MCRO) 1,392.50p 1.24%
Centrica (CNA) 156.90p 1.13%
Smith & Nephew (SN.) 1,390.50p 1.05%
Unilever (ULVR) 4,111.00p 0.85%
Scottish Mortgage Inv Trust (SMT) 552.81p 0.79%
FTSE 100 - Fallers
United Utilities Group (UU.) 749.80p -4.82%
Berkeley Group Holdings (The) (BKG) 3,803.00p -2.31%
Melrose Industries (MRO) 226.40p -2.29%
Land Securities Group (LAND) 948.80p -1.69%
Johnson Matthey (JMAT) 3,695.00p -1.65%
Smith (DS) (SMDS) 518.80p -1.59%
Evraz (EVR) 516.60p -1.56%
Sage Group (SGE) 634.60p -1.49%
Barratt Developments (BDEV) 530.27p -1.44%
Smurfit Kappa Group (SKG) 3,048.00p -1.42%
FTSE 250 - Risers
Pagegroup (PAGE) 567.00p 3.85%
Dixons Carphone (DC.) 198.05p 3.83%
CYBG (CYBG) 316.00p 3.07%
Euromoney Institutional Investor (ERM) 1,398.00p 2.34%
Virgin Money Holdings (UK) (VM.) 364.20p 2.16%
RPC Group (RPC) 674.80p 2.09%
SIG (SHI) 136.20p 1.72%
Card Factory (CARD) 196.10p 1.66%
Inmarsat (ISAT) 551.80p 1.47%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 329.00p 1.23%
FTSE 250 - Fallers
Energean Oil & Gas (ENOG) 474.00p -5.20%
Ferrexpo (FXPO) 192.30p -5.08%
Premier Oil (PMO) 108.00p -4.09%
NewRiver REIT (NRR) 272.05p -4.04%
Stobart Group Ltd. (STOB) 248.35p -3.74%
TalkTalk Telecom Group (TALK) 110.20p -3.08%
Millennium & Copthorne Hotels (MLC) 512.00p -2.66%
FDM Group (Holdings) (FDM) 1,068.00p -2.55%
Games Workshop Group (GAW) 2,935.00p -2.49%
Big Yellow Group (BYG) 927.00p -2.42%