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LONDON MARKET CLOSE: Pound boosted after BoE's Bailey talks rate cuts

Tue, 20th Feb 2024 16:52

(Alliance News) - Stock prices in London closed lower on Tuesday, whilst the pound bounced back, after the Bank of England's Andrew Bailey talked interest rate cuts.

The FTSE 100 index closed down 9.29 points, 0.1%, at 7,719.21. The FTSE 250 ended down 107.27 points, 0.6%, at 19,109.63, and the AIM All-Share closed down 3.28 points, 0.4%, at 753.05.

The Cboe UK 100 ended down 0.1% at 772.61, the Cboe UK 250 closed down 0.7% at 16,524.61, and the Cboe Small Companies ended down 0.2% at 14,488.85.

In European equities on Tuesday, the CAC 40 in Paris ended up 0.4%, while the DAX 40 in Frankfurt ended down 0.1%.

Bank of England governor Andrew Bailey at a Treasury Select Committee meeting said that the UK's recession is "very weak". Bailey said that compared to recessions dating back to the 1970s, the 0.5% cumulative reduction in gross domestic product in the third and fourth quarter was "the weakest by a long way".

Bailey also signalled that inflation does not need to reach 2% before the bank starts cutting interest rates.

"This gave some clarity on how the central bank might behave and gave a spark to bond markets, but it wasn't enough to put stocks and shares into overdrive," said AJ Bell's Russ Mould.

"Normally any encouraging comments about interest rates cuts would fire up equities. In this situation, Bailey was only setting the scene about how things might work in the future, rather than laying his cards on the table and revealing the precise moment when the Bank would start to cut."

The pound was quoted at USD1.2649 at the London equities close Tuesday, higher compared to USD1.2589 at the close on Monday.

The euro stood at USD1.0818 at the European equities close Tuesday, up against USD1.0764 at the same time on Monday. Against the yen, the dollar was trading at JPY149.84, down compared to JPY150.17 late Monday.

Barclays led the FTSE 100 charge on Tuesday, closing up 8.6%.

Barclays said its total income in 2023 rose 1.7% year-on-year to GBP25.38 billion from GBP24.96 billion, with growth in Barclays UK of 4.5% to GBP7.59 billion. However, pretax profit fell 6.5% to GBP6.56 billion from GBP7.01 billion, as its credit impairment charge widened to GBP1.88 billion from GBP1.22 billion. In the fourth quarter, total income fell 3.5% to GBP5.60 billion, while pretax profit plunged 92% to GBP110 million, after restructuring costs of GBP927 million.

For 2023, the total dividend rose to 8.0 pence from 7.25p the year before. The bank plans to begin another share buyback worth GBP1.0 billion, bringing total capital distributions for the year to GBP3.0 billion, which is up around 37% on 2022. It is also planning at least GBP10 billion in capital returns to shareholders between 2024 and 2025.

NatWest, Lloyds and HSBC were up 1.7%, 1.8% and 0.9% respectively, in a positive read across.

At the bottom of the index were miners Rio Tinto and Anglo American, down 3.7% and 3.3%, respectively.

In the FTSE 250, Mobico lost 9.6%.

The Birmingham-based public transport provider, formerly known as National Express, said it would delay the publication of its annual results, as the company warned that increased provisions needed to be made relating to its German rail business.

The annual results are now expected to be published before the end of March, with an exact date to be confirmed in due course. They were due for release on February 29.

Ferrexpo lost 6.3%, after it said it is withdrawing its interim dividend.

Ferrexpo is a Baar, Switzerland-based iron ore pellet producer in Ukraine, supplying the pellets to steel makers globally.

The company said it is not proceeding with the interim dividend of 3.3 US cents it had proposed in January due to a claim against one of its Ukrainian subsidiaries, Ferrexpo Poltava Mining.

Amongst London's small-caps, Superdry shot up 17%.

Shares in the Cheltenham, England-based clothes retailer jumped, after a report suggested that a US investment firm is in talks to buy the embattled retailer.

Sky News said Davidson Kempner, the New York-based investment management firm, is in discussions with co-founder and Chief Executive Julian Dunkerton about backing an offer for Superdry.

Earlier this month, Dunkerton confirmed that he is in discussions with potential financing partners.

On AIM, shares in Horizonte Minerals shares plummeted 59%.

This drop came after Horizonte's late-Monday announcement of a preliminary cost-to-complete estimate and schedule for its 100% owned Araguaia nickel project in northern Brazil.

The review indicated that the project would require an additional USD454 million in capital before delivery of first metal. This brings the estimate-at-completion figure to just over USD1.00 billion, around 87% higher than Horizonte's originally disclosed budget of USD537 million.

Stocks in New York were lower at the London equities close, with the DJIA down 0.1%, the S&P 500 index down 0.6%, and the Nasdaq Composite down 1.2%.

Brent oil was quoted at USD82.09 a barrel at the London equities close Tuesday, down from USD83.53 late Monday. Gold was quoted at USD2,027.87 an ounce at the London equities close Tuesday, up against USD2,013.67 at the close on Monday.

In Wednesday's UK corporate calendar, there are full year results from BAE Systems, Glencore, HSBC, and Rio Tinto.

The economic calendar for Wednesday has UK public sector net borrowing data at 0700 GMT.

There will also be eyes on speeches from some key central bank members. In the UK, Bank of England committee member Swati Dhingra will speak. In the US, Fed Governor Michelle Bowman will also do a talk.

By Sophie Rose, Alliance News senior reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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