BoE Meeting Brings Fresh Rate Hike

Stock prices were lower at midday following another Bank of England rate hike

Alliance News 15 December, 2022 | 2:25PM
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Stock prices in London were lower at midday after the Bank of England raised UK interest rates by an expected half a percentage point.

The FTSE 100 index was down 31.67 points, or 0.4%, to 7,464.26. The FTSE 250 was down 84.20 points, or 0.4%, to 18,953.72, and the AIM All-Share was down 2.30 points, or 0.3%, to 834.25.

The Cboe UK 100 was down 0.5% at 746.60, the Cboe UK 250 was down 0.4 % at 16,392.07, and the Cboe Small Companies was down 0.5% at 16,392.07.

The UK central bank raised the key bank rate by 50 basis points to 3.50%.

Six members of the nine members of the Monetary Policy Committee (MPC) backed the half-a-percent hike, while Swati Dhingra and Silvana Tenryro backed no change and Catherine Mann favoured a larger 75 basis point hike. At its last meeting in November, the MPC increased the bank rate by 0.75 of a percentage point to 3.0% by a majority of seven to two.

The pound was quoted at USD1.2316 at midday on Thursday in London, lower compared to USD1.2410 at the close on Wednesday.

In London, Land Securities was the best blue-chip performer at midday, up 1.4% after Goldman Sachs raised the commercial property developer and investor to “neutral” from "sell".

International Consolidated Airlines was up 1.1%. JPMorgan placed the British Airways parent on "positive catalyst watch".

SSE was up 0.4%, while National Grid was down 0.3% as both firms welcomed the decision from regulator Ofgem that confirmed that increased electricity transmission investment is necessary.

The decision means National Grid is now responsible for the delivery of 17 major onshore electricity transmission projects in the UK.

In addition, SSE said Ofgem approved all projects put forward by its SSEN Transmission division to meet the UK government's offshore wind energy targets by 2030.

In the FTSE 250, Currys dropped 6.8%, after it reported a sharp swing to a loss in the six months that ended October 29, due to an impairment and increasing costs and as revenue declined.

The London-based electronics retailer posted a pre-tax loss of GBP548 million, swinging from a profit of £48 million in the previous year. Revenue fell 6.5% to £4.47 billion from £4.79 million.

Currys booked an impairment of goodwill of £511 million in the half-year, compared to no such impairment a year before. It said this arose at the time of the Dixons Carphone merger in 2014.

Currys also blamed lower international profits and margin for the swing to a loss.

Octopus Renewables was up 2.2% as it celebrated the completion of construction at Cerisou wind farm in France. The investment firm said that following the completion, the 24 mega-watt onshore wind farm project is now fully operational.

Octopus Renewables added that construction at the Cumberhead Wind Farm, its turbine project in Scotland, is also progressing well.

Elsewhere in London, Zotefoams climbed 6.5%. It said positive momentum seen in the first three quarters of its financial year had continued into the fourth, putting its full-year profit ahead of expectations.

In the nine months that ended September 30, the industrial plastics maker said revenue was around 24% ahead of the same period the previous. In addition, trading in October and November remains strong.

As a result, Zotefoams expects adjusted pretax profit in 2022 to be ahead of current market expectations, which it placed at GBP10.7 million.

On AIM, PetroTal jumped 8.6% after the removal of a river blockade allowed oil barge transportation access in and out of the company's operating area.

With the reopening of river access, the oil and gas firm's Brazilian export route is now available.

PetroTal said that production ramp up will now begin. It is expected to reach around 18,000 barrels of oil per day for the remained of 2022. Fourth quarter oil production levels are estimated to average between 8,500 and 9,500 bopd.

Brent oil was quoted at USD82.85 a barrel at midday in London on Thursday, up from USD82.51 late Wednesday. Gold was quoted at USD1,778,25 an ounce, down sharply against USD1,810.74.

Still to come on Thursday's economic calendar, beside the ECB announcement, there are US unemployment insurance claims at 1330 GMT.

By Heather Rydings, Alliance News senior economics reporter

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