FTSE 100 rises slightly after Bank of England decision
The FTSE 100 rose slightly this afternoon after the Bank of England monetary policy committee decided to hold interest rates at 0.1 per cent.
Across the Atlantic, trading was also stagnant, with Wall Street’s main markets flat at the open.
By the early afternoon, London’s premier index was up 0.1 per cent down at 7,047.31, with trading subdued.
The FTSE 250 of midcap firms fared better, rising 0.4 per cent also up by the same margin at 22,473.19 points.
Along with holding interest rates at basement levels, the Old Lady’s policymakers decided not to make any adjustments to its quantitive easing programme.
However, the Bank did sharply raise its existing forecasts of 5.0 per cent growth this year to 7.25 per cent due the rapid progress of the UK’s vaccine rollout programme.
But it lowered its projection for growth in 2022 to 5.75 per cent from its previous estimate of 7.25 per cent.
Jon Hudson, fund manager of Premier Miton UK Growth Fund, commented: “The MPC is now expecting a faster economic recovery than previously expected, led by households spending their forced savings accumulated over lockdowns.
“High demand and rising commodity prices will cause inflation to rise in the near term but medium term expectations remain unchanged, allowing the MPC to keep financial conditions loose.
“This inevitably increases the risk that the economy may overheat further down the line but for the time being it bodes well for domestically focused UK businesses.”
Expectations of a boost to forecasts was likewise heightened by new data showing that the UK services sector grew at its fastest rate since 2013 in April amid the reopening on hospitality and retail facilities.
Despite the steady start, the FTSE 100 is currently trading behind its continental rivals, with the German DAX up 0.4 per cent and the CAC up 0.3 per cent.
Market movers
After a strong trading update in which it raised its profit outlook, fashion firm Next led the FTSE 100’s risers this morning, up 2.9 per cent.
Next on the list were Pearson, up 2.8 per cent, and then developer Barratt, up 2.1 per cent.
A clutch of other heavyweights, including Fresnillo, British American Tobacco, Imperial Brands and BA owner IAG, were all also up over 1.0 per cent this morning.
On the other hand, insurer Admiral was the biggest faller, sliding 3.5 per cent in the first hour of trading.
On Wall Street
The FTSE’s meanderings meanwhile were also in evidence on Wall Street, with the S&P 500 and Dow Jones both treading water at the open.
Only the tech-heavy Nasdaq showed any real movement, slipping 0.3 per cent to 13,544.48 points.
The slow open came after data showed weekly jobless claims fell more than expected.
Initial claims for state unemployment benefits totalled a seasonally adjusted 498,000 for the week ended May 1 compared to 590,000 in the prior week.