(Sharecast News) - London's FTSE 100 finished above the 9,800 level for the first time in five weeks on Thursday after the Bank of England moved to lower interest rates and US inflation unexpectedly eased.
The BoE cut Bank Rate from 4.00% to 3.75% - the lowest level since February 2023 - in line with expectations. The Monetary Policy Committee was split 5-4 to lower rates, with governor Andrew Bailey voting to cut, having opted to keep rates on hold last month.
The FTSE 100 finished up 0.7% at 9,841.55, its highest close since 12 November, with decent gains in the retail and hospitality sectors.
"Whilst today's rate cut had been almost entirely priced in by markets, there was still a degree of jeopardy and plenty for investors to gnaw over in the all-important post-cut debrief," said Danni Hewson, head of financial analysis at AJ Bell.
"Giving people an extra incentive to splurge rather than save will be heartening to both the retail and hospitality sectors which have seen their 'golden quarter' tarnished by all the pre-Budget caution."
Also supporting sentiment was a strong start on Wall Street, with the S&P 500 and Nasdaq up 1.2% and 1.9% respectively, after an unexpected drop in US consumer price inflation from 3% in September to 2.7% in November - with October's figures not reported given the government shutdown. The consensus forecast was 3.1%.
Over in Europe, the European Central Bank left its benchmark interest rate unchanged on Thursday at 2%, as widely expected. This marked the fourth consecutive meeting in a row that the Bank held rates.
Retailers, hospitality stocks rise
Retail and hospitality stocks were the standout performers of the day after the BoE rate cut, with Whitbread and JD Sports Fashion among the biggest gainers on the FTSE 100, with Currys, Ocado, WH Smith, AO World and JD Wetherspoons rising on the FTSE 250.
Currys, in particular, impressed after a forecast-beating first-half performance. First-half results from the electrical retailer revealed adjusted EBIT of 54m, up 32% year-on-year and ahead of consensus forecasts, helped by an 8% increase in revenues, ongoing profit recovery in the Nordic region and tight cost control in the UK and Ireland.
"Currys continues to set itself apart from wider retail peers as it delivers yet more upgrades and enters 2026 with encouraging momentum," Berenberg said in a research note.
Meanwhile, Whitbread was also being supported by news that activist investor Corvex Management has called for a strategic review, having accumulated a 6.05% holding in the Premier Inn owner. It also said it would now seek representation on the board.
Rentokil Initial was also higher after an upgrade to 'buy' from 'neutral' at Bank of America, which lifted its price target to 510p 425p, citing recent share price underperformance.
Industrial and manufacturing stocks were also performing well, including Rolls-Royce, Melrose, Smiths Group, Ashtead and BAE Systems.
Mining stocks were higher as most commodity prices rose, with Fresnillo and Glencore among the top performers on the FTSE 100.
Market Movers
FTSE 100 (UKX) 9,841.55 0.69%
FTSE 250 (MCX) 22,314.34 0.67%
techMARK (TASX) 5,588.58 0.43%
FTSE 100 - Risers
Whitbread (WTB) 2,599.00p 6.30%
Fresnillo (FRES) 3,082.00p 4.40%
Rentokil Initial (RTO) 449.40p 3.86%
Rolls-Royce Holdings (RR.) 1,144.00p 3.81%
CRH (CDI) (CRH) 9,464.00p 3.05%
Smiths Group (SMIN) 2,394.00p 2.66%
JD Sports Fashion (JD.) 86.88p 2.65%
Melrose Industries (MRO) 565.00p 2.62%
Ashtead Group (AHT) 5,404.00p 2.12%
Glencore (GLEN) 386.80p 2.07%
FTSE 100 - Fallers
Bunzl (BNZL) 2,122.00p -2.48%
United Utilities Group (UU.) 1,183.50p -1.62%
BP (BP.) 420.45p -1.20%
GSK (GSK) 1,812.50p -1.15%
Pershing Square Holdings Ltd NPV (PSH) 4,932.00p -0.72%
Coca-Cola Europacific Partners (DI) (CCEP) 6,880.00p -0.72%
Flutter Entertainment (DI) (FLTR) 16,380.00p -0.67%
Auto Trader Group (AUTO) 610.40p -0.46%
InterContinental Hotels Group (IHG) 10,470.00p -0.33%
Hikma Pharmaceuticals (HIK) 1,510.00p -0.26%
FTSE 250 - Risers
Currys (CURY) 136.00p 7.42%
Ocado Group (OCDO) 252.70p 5.25%
SSP Group (SSPG) 208.60p 4.35%
CMC Markets (CMCX) 299.00p 3.64%
International Workplace Group (IWG) 232.40p 3.01%
WH Smith (SMWH) 686.00p 2.93%
Trustpilot Group (TRST) 167.20p 2.83%
Frasers Group (FRAS) 700.00p 2.64%
Raspberry PI Holdings (RPI) 310.40p 2.58%
Wetherspoon (J.D.) (JDW) 749.00p 2.53%
FTSE 250 - Fallers
SDCL Efficiency Income Trust (SEIT) 50.00p -4.40%
B&M European Value Retail S.A. (DI) (BME) 167.70p -2.24%
Savills (SVS) 1,006.00p -1.76%
Baltic Classifieds Group (BCG) 198.20p -1.64%
Oakley Capital Investments Limited (DI) (OCI) 558.00p -1.42%
Law Debenture Corp. (LWDB) 1,046.00p -1.13%
Target Healthcare Reit Ltd (THRL) 95.90p -1.13%
Utilico Emerging Markets Ltd (DI) (UEM) 267.00p -1.11%
W.A.G Payment Solutions (EWG) 95.80p -1.03%
The Renewables Infrastructure Group Limited (TRIG) 67.90p -1.02%
63.45 (0.65%)
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