Monday 15 July 2019

Dovish sentiment from central bankers helps FTSE rise

The Bank of England held rates and the US Fed hinted at future cuts, encouraging investors to pile into shares

Bank of England Governor Mark Carney announced that interest rates will stay at 0.75% (PA)
Bank of England Governor Mark Carney announced that interest rates will stay at 0.75% (PA)

By Press Association City Staff

Investors piled into stock markets on Thursday following more dovish statements from central banks across the world.

The FTSE 100 closed up 20.9 points at 7,414.44 as the Bank of England held interest rates and the tipped votes by some members of the Monetary Policy Committee for a rates rise failed to materialise – with all voting unanimously to hold them at 0.75%.

Stock pickers were also buoyed by the announcement on Wednesday from the US Fed, where rates were held and the US central bank hinted at rate cuts.

It followed similar sentiments from the European Central Bank on Tuesday.

But Fawad Razaqzada, market analyst at Forex.com, explained that the rally could be short lived.

He said: “Some investors clearly like the idea of holding stocks as interest rates are now likely to remain low for longer than was previously the case.

“But I wonder if growth concerns will ultimately outweigh the boost stocks have received from renewed dovish stance by central banks, and therefore prevent an even bigger rally. So this could be a short-lived rally for equities.”

The pound ticked up against the dollar – which tempered growth on the FTSE 100 – up 0.41% to 1.2694 dollars. Against the euro, a pound was worth 1.1257 – a fall of just 0.03%.

A weaker dollar also helped gold and silver miners on the FTSE 100, as investors piled into the safe havens of precious metals.

It meant Mexican silver miner Fresnillo was the biggest riser on the blue chip index, closing up 5.54% at 868.8p.

The biggest faller on the FTSE 100 was cruise ship operator Carnival, which closed down 12 at 3,549p after cutting its earnings for the year.

Rising tensions in the Middle East – as Iran shot down a US military drone – helped oil prices to grow as investors predicted the flow of the black gold could reduce.

A barrel of Brent Crude rose 4.09% to 64.35 dollars a barrel.

In companies news, a second profit warning at Dixons Carphone since new boss Alex Baldock joined last year sent shares down 5.1% to 118.2p. The Currys PC World owner warned that its mobile division will remain significantly loss-making in the coming year.

Pre-tax losses came to £259 million for the 12 months to April 27 compared to a profit of £289 million last year.

At homewares chain Dunelm shares closed up 8.5% at 981p as bosses said profits will be better than expected, saying the weather has helped.

The group now expects full-year pre-tax profits of between £124 million and £126 million, compared with £93.1 million a year ago.

BCA, the owner of WeBuyAnyCar.com, has confirmed it is the subject of a £1.9 billion takeover bid from a UK private equity giant TDR Capital, which owns David Lloyd leisure centres.

Shares jumped 22.3% to close at 238p – still below the 243p a share offer. BCA rejected a £1.6 billion takeover bid from former Auto Trader owner Apax Partners a year ago.

Fashion retailer N Brown said total revenue dropped 3.8% in the 13 weeks to June 1, dragged lower by a 5.4% fall in product sales from the managed decline of its traditional mail order business. But investors appeared unmoved, with shares closing up 3% at 135.1p.

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