Source: Sharecast
The FTSE 100 closed down 0.7% at 9,100.77, with sterling up 0.5% against the dollar at 1.3418.
The BoE cut interest rates by 25 basis points to 4.0%, as expected. This marked the fifth cut this year, leaving Bank Rate at its lowest level since March 2023.
With the decision as expected, it was the voting split that really got investors’ attention.
The Monetary Policy Committee voted 5-4 to cut the rate. Andrew Bailey, Sarah Breeden, Swati Dhingra and Dave Ramsden voted in favour of the 25 basis point rate cut, while Megan Greene, Clare Lombardelli, Catherine L Mann and Huw Pill opted for the rate to remain unchanged.
Alan Taylor initially voted for a cut to 3.75% but in order to secure a majority decision, a second round of voting was held and the Committee was asked to vote on either a 25bps cut or for the rate to remain at 4.25%. Taylor then voted for the quarter-point cut.
"A gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate," the Bank said.
"The restrictiveness of monetary policy has fallen as Bank Rate has been reduced. The timing and pace of future reductions in the restrictiveness of policy will depend on the extent to which underlying disinflationary pressures continue to ease. Monetary policy is not on a pre-set path, and the Committee will remain responsive to the accumulation of evidence."
The Bank also revised up its forecast for inflation, saying it now expects consumer price inflation to peak at 4.0% in September - having previously forecast a peak of 3.7% - before falling back thereafter towards the 2% target.
Kathleen Brooks, research director at XTB, said: "The tight vote split, with 5 members voting for a cut, while 4 members voted to remain on hold, is the most noteworthy part of today’s decision. The Governor said that the decision was finely balanced and the hawkish camp at the BOE seems to have gained a new member. Claire Lombardelli, who in the past was in the dovish camp, voted to keep rates on hold.
"This suggests that far from opening the door to more rate cuts as the economy stalls and the labour market weakens; the power balance has shifted to the hawks. The immediate aftermath of this meeting has seen a repricing of interest rate expectations for the UK.
"There is now less conviction that a second rate cut will come later this year. Currently there is 21 bps of cuts priced in by year end, which just shy of another cut. Looking ahead, interest rates are expected to be 3.5% in a year’s time, which is slightly higher than before the meeting."
Earlier in the day, figures released by Halifax showed that house prices rose in July at the fastest monthly pace since the start of the year.
In equity markets, Hikma Pharmaceuticals tumbled after reporting a 7% drop in first-half core operating profit and cutting the outlook for the operating margin in its injectables segment.
Defence stocks Babcock and BAE Systems slumped after German defence firm Rheinmetall’s second-quarter results fell short of estimates.
WPP fell sharply as the advertising agency reported a slump in half-year earnings as clients spent less and the use of artificial intelligence hit the bottom line. Operating profit fell 48% to £221m on the back of a 7.8% decline in revenue to £6.6bn.
Morgan Advanced Materials fell as it warned that full-year adjusted operating profit was set to be around the bottom of the consensus range due to weak market conditions, mix effects and foreign exchange headwinds.
BT and AstraZeneca lost ground as they traded without entitlement to the dividend.
On the upside, CRH was the standout gainer on the FTSE 100 as it lifted its financial guidance for 2025, noting that underlying demand in its key end-use markets remains positive.
InterContinental Hotels rallied as it posted a 34.1% jump in first-half pre-tax profit and said it remains on track to meet full-year consensus profit and earnings expectations.
Halma got a boost after Goldman Sachs initiated coverage on the stock with a ‘buy’ rating and 3,740p price target as it said its analysis demonstrates the sustainability of the company’s high-growth, high-returns model.
Harbour Energy surged as it narrowed upwards production guidance, unveiled a $100m share buyback and reported a jump in half-year adjusted earnings.
Serco pushed higher as the government contractor held updated guidance, posted a rise in half-year earnings and unveiled a £50m share buyback.
Market Movers
FTSE 100 (UKX) 9,100.77 -0.69%
FTSE 250 (MCX) 21,940.77 0.07%
techMARK (TASX) 5,251.50 -0.73%
FTSE 100 - Risers
CRH (CDI) (CRH) 7,930.00p 7.80%
InterContinental Hotels Group (IHG) 9,182.00p 5.78%
Coca-Cola HBC AG (CDI) (CCH) 3,800.00p 4.05%
Rentokil Initial (RTO) 371.20p 2.74%
Halma (HLMA) 3,318.00p 2.66%
Coca-Cola Europacific Partners (DI) (CCEP) 6,870.00p 2.38%
Diageo (DGE) 2,026.00p 2.14%
easyJet (EZJ) 503.20p 1.90%
Convatec Group (CTEC) 229.60p 1.77%
Haleon (HLN) 353.00p 1.41%
FTSE 100 - Fallers
Hikma Pharmaceuticals (HIK) 1,750.00p -7.11%
Babcock International Group (BAB) 947.50p -5.82%
BAE Systems (BA.) 1,758.50p -5.36%
BT Group (BT.A) 205.50p -3.11%
St James's Place (STJ) 1,308.00p -3.11%
Shell (SHEL) 2,651.00p -2.77%
Next (NXT) 11,790.00p -2.76%
Tesco (TSCO) 409.70p -2.68%
WPP (WPP) 391.80p -2.56%
Hiscox Limited (DI) (HSX) 1,344.00p -2.54%
FTSE 250 - Risers
Ocado Group (OCDO) 380.00p 8.45%
Harbour Energy (HBR) 221.00p 8.23%
Raspberry PI Holdings (RPI) 422.00p 4.71%
Wizz Air Holdings (WIZZ) 1,386.00p 4.13%
TBC Bank Group (TBCG) 5,070.00p 4.00%
Future (FUTR) 738.00p 3.80%
Serco Group (SRP) 216.00p 3.15%
Travis Perkins (TPK) 598.50p 2.92%
RS Group (RS1) 565.50p 2.91%
Wetherspoon (J.D.) (JDW) 744.00p 2.83%
FTSE 250 - Fallers
Morgan Advanced Materials (MGAM) 196.00p -13.08%
Man Group (EMG) 159.30p -3.98%
Chemring Group (CHG) 535.00p -2.90%
Ithaca Energy (ITH) 170.20p -2.74%
Worldwide Healthcare Trust (WWH) 308.50p -2.37%
Avon Technologies (AVON) 2,130.00p -2.29%
Safestore Holdings (SAFE) 663.00p -2.21%
QinetiQ Group (QQ.) 492.40p -2.20%
Drax Group (DRX) 690.50p -2.20%
Burberry Group (BRBY) 1,236.00p -2.02%