Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
London open: Stocks rally ahead of BoE policy announcement
London stocks rallied on Thursday as investors continued to digest the previous day’s UK Budget and UK jobs data and looked towards the Bank of England’s policy announcement.
Chancellor George Osborne revealed the details of the Budget 2016 on Wednesday which included plans to cut corporation tax to 17% by 2020 from 20% and to raise the individual tax free personal earnings allowance to £11,500.
Osborne also said Britain is on course to achieve a surplus of £10.4bn by 2019-20 as it cuts spending and reduces debt.
He said the Office for Budget Responsibility downgraded its forecast of UK economic growth in 2015 from 2.4% to 2.2% It revised GDP downwards for this and following years – from 2.4% to 2% in 2016, from 2.5% to 2.2% in 2017, from 2.4% to 2.1% in 2018 and from 2.3% to 2.1% in both 2019 and 2020.
A report on UK employment was also well received as it showed a fall in unemployment and greater-than-expected pick up in wage growth.
Meanwhile, the Federal Reserve decided to keep interest rates unchanged, as expected, and said it now expects to raise rates twice this year. In December, when the Fed raised rates for the first time in nearly a decade, it said it expected to increase rates four times this year.
“Proceeding cautiously will allow us to verify that the labour market is continue to strength given the economic risk from abroad,” said the Chair of the Federal Reserve, Janet Yellen, speaking at a press conference after the announcement.
The attention now turns to the Bank of England’s policy decision at 1200 GMT. The central bank is anticipated to hold interest rates steady amid signs of a global economic slowdown, low inflation and political uncertainty surrounding the outcome of Britain’s 23 June referendum on its membership in the European Union.
On the company front, mining stocks were the biggest risers as metal prices surged. Anglo American, Glencore, Antofagasta and BHP Billiton were topping the FTSE 100 in morning trade.
Rio Tinto was also higher after saying chief executive Sam Walsh will retire from the business on 1 July 2016 and will be succeeded by the chief executive of the copper and coal division Jean-Sébastien Jacques.
GlaxoSmithKline’s shares dipped on news chief executive Andrew Witty has decided to retire from the company at the end of March next year.
Crest Nicholson gained after saying the trading environment remains positive, with sales up to 11 March “correspondingly strong”.
Kier Group advanced as it posted a 27% increase in underlying profit and a 32% jump in revenue in the last six months of 2015.
