UK stocks fall as BoE joins hold and higher for longer chorus

By Siddarth S and Shubham Batra

(Reuters) -London stocks ended lower on Thursday but trimmed losses earlier in the day after the Bank of England held interest rates steady, indicating an end to its rate-hike cycle but signalled that rates will remain higher for longer.

The blue-chip FTSE 100 index was down 0.7% and the midcap index slipped 0.4%.

The Bank of England halted its long run of interest rate increases as the British economy slowed, but it said it was not taking a recent fall in inflation for granted.

The central bank’s move followed the U.S. Federal Reserve holding its interest rates steady on Wednesday.

“After the Fed alarmed markets yesterday with a hawkish pause in rates, the Bank of England today followed suit and didn’t deliver a dovish hike…,” said Charles Hepworth, Investment Director, GAM Investments.

“…one could argue it’s all just semantics, both of the central bank’s policies are aimed at dampening aggregate demand mostly through the language used that rates will need to stay higher for longer.”

J.P.Morgan now expects the BoE to hold rates in November and throughout 2024.

Sterling fell to its lowest since March against the U.S. dollar, having traded around 0.4% lower at $1.23 before the BoE decision.

Retailers gained the most among sectors, rising 2.4% after the BoE halted the interest rate hikes.

Leading losses, the industrial metal miners dropped 2.6% after copper prices hit their lowest in almost four months in London. [MET/L]

Among individual stocks, JD Sports Fashion jumped nearly 9.0% after the sportswear retailer forecast a higher annual profit.

Next rose 3.4% after the clothing retailer raised its full-year profit outlook for the third time in four months.

Ocado Group had its worst day in 11 years as the stock tumbled 20.0% after Exane BNP cut the British online supermarket’s rating to “underperform” from “neutral” citing concerns over subdued growth in retail business.

(Reporting by Siddarth S and Shubham Batra in Bengaluru; Editing by Sherry Jacob-Phillips, Janane Venkatraman, Nivedita Bhattacharjee, Alexandra Hudson)