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(Alliance News) - Stock prices in London opened lower on Thursday, ahead of the Bank of England's interest rate decision at midday, which is expected to result in the central bank's 13th consecutive hike.
The FTSE 100 index slumped 97.01 points, 1.3%, at 7,462.17. The FTSE 250 was down 130.05 points, 0.7%, at 18,441.40, and the AIM All-Share lost 3.74 points, 0.5%, at 778.88.
The Cboe UK 100 was down 1.3% at 744.41, the Cboe UK 250 fell 0.8% to 16,165.04, and the Cboe Small Companies shed 0.1% to 13,795.56.
The BoE announces its interest rate decision at 1200 BST on Thursday. A hike by Threadneedle Street is a foregone conclusion. Wednesday's data means a half-point rate lift may be on the table, though a 25 basis point hike is still largely expected.
According to the Office for National Statistics on Wednesday, the UK annual inflation rate was unchanged at 8.7% in May. Inflation had been expected to cool to 8.4%, according to market consensus cited by FXStreet, so the latest figure was hotter than forecast.
The BoE was the first of the major central banks to lift interest rates, and Swissquote analyst Ipek Ozkardeskaya believes its so far unsuccessful efforts to bring down inflation mean it will be among the last to conclude the hiking cycle.
"The bank is expected to hike six more times, by 25bp, to reach a peak rate above the 6% by the end of this year, or the beginning of the next," Ozkardeskaya said.
"And I don't see how the UK will avoid recession in this morose macroeconomic setting."
The pound was quoted at USD1.2749 early on Thursday in London, up compared to USD1.2727 at the equities close on Wednesday.
Across the Atlantic, interest rate hikes are also on the horizon. The US Federal Reserve expects to keep raising rates, but at a slower pace, Fed Chair Jerome Powell told a congressional hearing.
"Given how far we've come, it may make sense to move rates higher but to do so at a more moderate pace," he told the House Committee on Financial Services.
The Federal Open Market Committee paused its aggressive campaign against inflation last week after 10 consecutive interest rate hikes, to give policymakers more time to assess the strength of the US economy.
"Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year," Powell said.
In the US on Wednesday, Wall Street shares ended lower, with the Dow Jones Industrial Average down 0.3%, the S&P 500 losing 0.5% and the Nasdaq Composite shedding 1.2%.
The euro stood at USD1.0989 early Thursday, higher against USD1.0949 at the European equities close on Wednesday. Against the yen, the dollar was trading at JPY141.82, up compared to JPY142.00.
In the FTSE 100, packaging firm DS Smith was down 0.7%, though it reported improved yearly earnings.
The company said that revenue in the year to April 30 rose 14% to GBP8.22 billion from GBP7.24 billion a year earlier. Pretax profit rose to GBP661 million, up from GBP378 million.
DS declared a final dividend of 12.0p per share for financial 2023, up from 10.2p, which takes the company's total dividend to 18.0p, up from 15.0p.
"While economic conditions have continued to be volatile and box volumes have remained lower than normal, trading for the year to date is in line with our expectations," DS Smith said.
"Our strong customer relationships in the resilient fast moving consumer goods sector, together with the investments we are making to drive cost efficiencies and growth, give us confidence in the future."
Premier Inn owner Whitbread lost 0.3%, after it said revenue in its first quarter, ended June 1, was up 19% from a year earlier.
In the UK division, sales growth in its Accommodation arm rose by 18% and sales growth in Food & Beverages was up 10%. It noted that demand was particularly strong in London.
Looking ahead, Whitbread said it remains confident in the full-year outlook of the company, on the back of "strong" trading momentum.
"Our business is in great shape and trading well. Given the lack of branded supply growth and permanent decline in the independent sector, I am confident that our business model will continue to deliver as we strengthen Premier Inn's position in the UK, unlock our potential in Germany and maximise long-term returns for our shareholders," CEO Dominic Paul added.
On London's AIM, Sound Energy jumped 10%.
The Morocco-focused upstream gas company said it has received court papers confirming the withdrawal of cases between Sound Energy and the Moroccan Tax authority.
Meanwhile, Oracle Power lost 19%.
The Pakistan-focused developer of energy projects said it has raised GBP363,000 through a placing of 323.0 million shares and a subscription of 40.0 million shares. The shares were priced at 0.1p each.
The proceeds from the fundraising will be used primarily to support the advancement of the company's green hydrogen project, through its joint venture with Sheikh Ahmed Dalmook Al Maktoum, and also go toward general working capital.
In European equities on Thursday, the CAC 40 in Paris was down 1.2%, while the DAX 40 in Frankfurt was down 1.0%.
In Asia on Thursday, financial markets in Shanghai and Hong Kong are closed Thursday for the Dragon Boat Festival holiday. They remain closed in Shanghai on Friday, but will re-open in Hong Kong.
The Nikkei 225 index in Tokyo ended down 0.9%. The S&P/ASX 200 in Sydney closed down 1.6%.
Brent oil was quoted at USD76.84 a barrel early in London on Thursday, down slightly from USD76.92 late Wednesday. Gold was quoted at USD1,929.93 an ounce, slightly lower against USD1,930.37.
The economic calendar has the latest US jobless claims report at 1330 BST.
By Sophie Rose, Alliance News reporter
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