FTSE 100 close: London markets finish higher but investors cautious before BoE rate hike
London’s FTSE 100 closed slightly higher this afternoon, after a tempered start to a week in which the Bank of England is expected to hike interest rates to their highest level since 2008.
The capital’s premier index kicked off down 0.26 per cent, before bouncing back by close to 0.17 per cent on stronger than expected Eurozone GDP figures.
The domestically-focused mid-cap FTSE 250 index followed a similar trajectory, sliding 0.23 per cent on the open before a recovery before close to finish up 0.2 per cent.
The Bank of England’s monetary policy committee (MPC) is expected to raise rates on Thursday by 25 basis points to 5.25 per cent, a 14th consecutive hike and marking the highest levels seen since 2008.
That rise would mark a slowdown from June’s 50 basis point jump. However, investors were still cautious on Monday, with a 50 basis point hike later in the week not entirely off the cards as the BoE continues its struggle to tame soaring inflation.
The biggest faller was Rolls Royce, despite the firm doubling its profit guidance last week.
Ocado Group closed down 3.99 per cent after languishing in the red for much of the day, continuing last weeks struggles prompted by the resignation of the CEO of its vital technology solutions division.
BT Group shares were down 1.65 per cent after the appointment of new CEO Allison Kirby this morning.
On the other side, airline conglomerate the IAG started the week as the FTSE’s biggest riser, continuing a share price boost on the back of a record £1.1bn profit reported in its half year results last week amid booming consumer spending on travel.
Over on the FTSE-250, manufacturing group Marshalls plc tumbled downwards nearly 8 per cent in early trading after announcing plans to slash 250 jobs and warning that its second-half performance would be below expectations. It closed down 2.24 per cent.
A major pledge from Prime Minister Rishi Sunak to expand oil drilling in the North Sea this morning sent shares in Ithaca Energy and Harbour Energy – who both operate a number of sites off the Scottish coast – up 8.03 and 5.81 per cent respectively.
Bootmaker Dr Martens was also up strongly after a Sky News report yesterday that activist fund manager Sparta Capital had acquired stock worth tens of millions of pounds in the firm.
It comes ahead of a series of significant global announcements this week, which began with Eurozone figure showing that the European economy had outperformed on second quarter GDP and inflation.
“The outlook for economic growth is front and centre for markets this week as we get a series of data releases which should have a major influence on central bank monetary policy,” Laith Khalaf, head of investment analysis at AJ Bell, said.
“Markets are waiting for both central banks to take their foot off the accelerator pedal when it comes to interest rates, yet most investors seem to accept that we could still see more hikes in the coming months, particularly if labour markets and the economy remain resilient and inflation stays stubbornly high.”
Khalaf noted that the appointment of Kirkby as BT boss had done “nothing to excite investors,” while Marshalls is “getting into the nasty habit of issuing profit warnings,” as a “toxic cocktail” of interest rate rises and weaker consumer confidence have combined to pummel companies in the maintenance and improvement sector.