The FTSE 100 closed up 165.71 points, or 1.6%, at 10,378.82 on Thursday, as investors weighed a barrage of earnings, interest rate decisions, and the latest developments in the Middle East. The FTSE 250 ended up 264.28 points, or 1.2%, at 22,465.15, while the AIM All-Share rose 5.66 points, or 0.7%, to 794.09.
Bank of England Holds Rates Steady
In London, the Bank of England's Monetary Policy Committee voted eight to one to leave the bank rate unchanged at 3.75%. Bank chief economist Huw Pill dissented, arguing for a quarter-point increase to 4.0%. The Bank outlined three scenarios for the UK's economic outlook, assessing options for monetary policy amid the Middle East crisis and energy price shock. In its April monetary policy report, the Bank noted that inflation is higher in the near term than the central projection in its February report. Governor Andrew Bailey stated, "Where we go from here will depend on the size and duration of the shock to energy prices."
Deutsche Bank economist Sanjay Raja commented, "Big picture, the MPC has bought itself time today. The MPC is preaching patience – but at the same time, the Bank has signalled that its patience may be wearing thin."
Oil Prices Ease
Brent crude for June delivery traded at $114.38 per barrel on Thursday, down from $117.20 at the close of equities in London on Wednesday. News site Axios reported that US Central Command has prepared a plan for a wave of "short and powerful" strikes on Iran, potentially breaking the deadlock in negotiations with Tehran. David Morrison at Trade Nation noted this could signal an "end to the current, fragile ceasefire, suggesting prolonged supply disruptions."
European Markets Higher
In Europe, the CAC 40 in Paris ended up 0.5%, and the DAX 40 in Frankfurt jumped 1.4%. European Central Bank President Christine Lagarde said officials discussed increasing interest rates before deciding to leave policy unchanged. She declined to comment on whether a June rate increase was likely but noted, "Directionally I know where we're heading." Referring to the next meeting in June, she added, "Given our position, six weeks is the right time to evaluate progress." ING said Lagarde's comments suggest a June hike has come closer.
US Markets and Currency Moves
In New York, markets were higher with significant moves among technology stocks. The Dow Jones Industrial Average rose 1.3%, the S&P 500 gained 0.4%, and the Nasdaq Composite was up 0.1%. Meta Platforms fell 9.0% after another increase in capital expenditure unsettled investors, while Google-owner Alphabet soared 6.7% on better-than-expected results driven by its cloud business. The yield on the US 10-year Treasury edged down to 4.38% from 4.39%, while the 30-year yield held at 4.98%.
The pound firmed to $1.3588 on Thursday afternoon from $1.3491 on Wednesday. Against the euro, sterling strengthened to €1.1578 from €1.1530. The euro rose to $1.1731 from $1.1695, while the dollar weakened against the yen, trading at ¥156.65 compared to ¥160.24.
Corporate Updates Boost Some Stocks
United Utilities led the FTSE 100 gainers, up 11%, after reporting sharply higher annual results, expanding its investment programme, and launching a £800 million equity raise to fund a £2.5 billion increase in its AMP8 investment programme. The plan, submitted to Ofwat, raises the company's total AMP8 capital investment to £11.5 billion. Industry peer Severn Trent rose 7.3% on hopes it will follow suit. Rolls-Royce climbed 7.6% after reporting a good start to the year and stating it will mitigate any impacts from the Middle East crisis.
However, DCC fell 5.8% after rejecting a takeover approach from a consortium led by Kohlberg Kravis Roberts, calling it undervalued. Premier Inn owner Whitbread dropped 6.3% after announcing plans to cut 3,800 jobs as part of a strategic review. Gold traded higher at $4,616.72 per ounce, up from $4,551.30.
FTSE 100 Risers and Fallers
The biggest risers were United Utilities (up 145.0p to 1,457.0p), Rolls-Royce (up 83.4p to 1,182.0p), Severn Trent (up 222.0p to 3,269.0p), Endeavour Mining (up 271.0p to 4,414.0p), and Standard Chartered (up 72.8p to 1,862.8p). The biggest fallers were Whitbread (down 151.0p to 2,234.0p), DCC (down 340.0p to 5,540.0p), Weir Group (down 110.0p to 2,654.0p), Autotrader (down 12.4p to 496.0p), and Entain (down 12.8p to 543.6p).
Looking Ahead
Friday's global economic calendar includes a batch of manufacturing PMI reports and UK mortgage approval data. Financial markets in Europe are closed for Labour Day. The local corporate calendar features first-quarter results from NatWest and a trading statement from Pearson.
