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LONDON MARKET OPEN: Stocks tick down before Bank of England rate call

Stock prices in London edged down at the open on Thursday, while investors expect the Bank of England to keep its benchmark bank rate unchanged.

The FTSE 100 index opened down just 2.68 points at 8,351.37. The FTSE 250 was down 10.32 points, 0.1%, at 20,481.67, while the AIM All-Share was up 1.41 points, 0.2%, at 781.24.

The Cboe UK 100 was marginally up at 833.97, the Cboe UK 250 was up 0.1% at 17,770.89, and the Cboe Small Companies was marginally up at 16,004.35.

In European equities on Thursday, the CAC 40 in Paris was marginally up, while the DAX 40 in Frankfurt was up 0.2%.

The BoE is expected to leave the benchmark bank rate unchanged again on Thursday, but focus will be on whether the central bank lays the groundwork for a June cut.

The central bank announces its latest rate decision at 1200 BST, alongside the monetary policy report of economic projections. A press conference with Governor Andrew Bailey follows at 1230 BST.

The BoE’s 25 basis points hike in August meant it has lifted rates by 5.15% during the current hiking cycle. Threadneedle Street has left rates unmoved in each of the five meetings since, however.

‘Today’s Bank of England update is expected to keep policy interest rates on hold at 5.25% for a sixth meeting in a row. However, the key issue is what signals will be given on future policy changes, including the timing of a first rate cut and the number of cuts,’ said Lloyds Bank.

‘As is the case elsewhere, financial markets have pared back their expectations for a UK rate reduction. A June reduction is now seen as having a 50% probability, and while a first cut by August is pretty much fully discounted, the number of cuts expected in total this year is around two, down from six at the start of the year. That change is partly a response to the recalibration of expectations for US interest rates but it also reflects domestic uncertainties.

‘In particular, several Monetary Policy Committee members still seem concerned about the persistence of domestic inflationary pressures, including wage growth and service prices. Nevertheless, with headline inflation set to fall close to the 2% target in April and interest rates in restrictive territory, there is scope for a signal that current market pricing on rates may be too pessimistic.’

Sterling was quoted at $1.2474 early Thursday, lower than $1.2495 at the London equities close on Wednesday.

The euro traded at $1.0732 early Thursday, lower than $1.0749 late Wednesday. Against the yen, the dollar was quoted at JP¥155.82 versus JP¥155.55.

In the FTSE 100, 3i lost 4.1%. The infrastructure investment trust said net asset value per share on March 31 was 2,085 pence, up from 1,745p a year earlier.

Across financial 2024, it recorded a total return of 23%, down from 36% a year earlier. 3i said operating pretax profit fell to £3.83 billion from £4.58 billion, which it blamed on foreign exchange loss on investments versus gain.

It declared a dividend of 34.5p per share, up from 29.75p a year earlier, taking its total financial 2024 dividend to 61p from 53p a year earlier.

In the FTSE 250, Harbour Energy rose 6.0%.

The oil and gas company said first quarter production averaged 172,000 barrels of oil equivalent per day, down from 202,000 barrels a year earlier.

It proposed a final dividend of 13 US cents, up from 12 cents a year earlier, in line with its $200 million annual dividend policy and representing around 9% growth year-on-year.

Harbour Energy Chief Executive Officer Linda Cook commented: ‘During the first quarter, we continued to deliver safe and responsible operations, maximise the value of our UK production base and advance our organic growth projects. At the same time, we made significant progress towards completion of the Wintershall Dea acquisition which will transform our portfolio and capital structure and support enhanced and sustainable shareholder returns.’

Elsewhere in London, Metals Exploration lost 8.6%, after the AIM-listed, Philippines-focused gold producer said two of its lenders dispute a lower interest rate of 7%, as opposed to 15%, should apply to the company’s debt facilities.

It said Runruno Holdings Ltd and D&A Holdings Ltd claim several events of default have occurred under the debt facilities.

Metals Explorations noted the claims would result in $2.0 million being owed to both lenders, although it disputes these allegations.

In Asia on Thursday, the Nikkei 225 index in Tokyo ended down 0.3%. In China, the Shanghai Composite ended up 0.8%, while the Hang Seng index in Hong Kong was up 1.1% in late dealings. The S&P/ASX 200 in Sydney closed down 1.1%

In the US on Wednesday, Wall Street ended mixed, with the Dow Jones Industrial Average up 0.4%, the S&P 500 little changed and the Nasdaq Composite down 0.2%.

Brent oil was trading at $84.01 a barrel early Thursday, higher than $83.48 late Wednesday.

President Joe Biden said he would stop US weapons supplies to Israel if it attacks Rafah in southern Gaza, his most direct warning to date over the prosecution of the war against Hamas.

In an interview with CNN, Biden also deplored the fact that civilians had been killed by the dropping of US bombs on the Palestinian territory.

His fresh warning came after the US last week halted a shipment of huge American bombs to Israel as it appeared ready to proceed with a major attack on Rafah – a city packed with Palestinian civilians sheltering near the Egyptian border.

Gold was quoted at $2,308.07 an ounce early Thursday, lower than $2,317.69 on Wednesday.

Still to come on Thursday’s economic calendar, the latest US jobless claims figures are out at 1330 BST.

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