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CORRECT: Stocks lower as BoE holds rate in 6-3 vote

(Corrects the pound sterling quote in light of the BoE rate call.)

Stocks in London were mostly in the red at Thursday midday, as the Bank of England left its key rates unchanged at 4.25%.

Quilter analyst Lindsay James said: ‘Events of recent weeks means all hopes of the Bank of England moving faster to cut interest rates have been extinguished. As such, it comes as very little surprise that the Monetary Policy Committee has chosen to hold rates at 4.25%. Although we had three votes for a cut, ultimately inflation continues to drive decision making, and with the headline figure remaining elevated earlier this week, there is very little movement just now for the committee, and that is before global events are factored in.

‘We are still awaiting the full impact of Donald Trump‘s tariffs to show up in the prices of goods. We are approaching the end of the 90-day pause on reciprocal tariffs, and what happens from there is really anyone’s guess. Even with the US-UK trade deal, the raft of tariffs on other nations would likely be felt in some form here too. In particular, Europe looks the least likely to cave to Donald Trump, and given it is the UK‘s biggest trading partner, there will be knock-on effects.’

The FTSE 100 index was down 18.56 points, 0.2%, at 8,824.91. The FTSE 250 was down 121.26 points, 0.6%, at 21,169.00, and the AIM All-Share was down 1.90 points, 0.3%, at 761.46.

The Cboe UK 100 was down 0.3% at 879.17, and the Cboe UK 250 was down 0.6% at 18,694.69. But the Cboe Small Companies was up 0.6% at 17,024.47.

‘Central banks are in a ’wait and see’ mood with regards to interest rates, despite broad concerns about a weaker economic outlook,’ AJ Bell’s Russ Mould said ahead of the BoE rate call and noting that no change was widely expected. ‘This [hold] won’t be a shock to markets as it’s too early to assess the true impact of tariffs and their economic impact...Markets have plenty of other things to focus on, namely the Middle East conflict which shows no sign of easing.’

On the FTSE 100, Whitbread lost 1.0%.

The Bedfordshire, England-based Premier Inn and Brewers Fayre owner reported that total UK sales were down 5.4% to £648.2 million and revenue per available room fell 2.4% to £62. In Germany, total sales rose 16% to £62.7 million.

‘’How much does it matter if you’re doing better than the wider market and still struggling? That’s the question in front of the market as Whitbread updates on its first-quarter trading,‘ Mould said, noting ’the weak backdrop for the UK hotels market as a whole amid an uncertain economic backdrop‘.

Mould continued: ’With visibility limited, all the company can do is control what it can and hope that it comes out of this difficult period with its competitive position enhanced thanks to weaker players and independent operators falling by the wayside...Investors will be pleased about the progress being made in Germany, where its operations are enjoying strong growth, albeit from a lower base than in the UK, and where it remains on track to achieve a maiden profit in 2026.‘

On the FTSE 250 Syncona continued to lead, up 4.0%, while NCC was the worst performer with a 12% fall.

The Manchester, England-based cybersecurity company reported pretax profit of £16.6 million for the six months that ended March 31, up from £8.4 million a year earlier.

However, revenue fell 6.0% to £156.8 million, led by its Cyber Security division, where revenue fell 7.8% to £123.5 million. NCC noted a decline in higher-volume, lower-value testing and compliance engagement, owing to client reactions to economic uncertainties in autumn and spring.

On AIM, Quantum Blockchain soared 60%.

The London-based, blockchain sector-focused investor said it is in talks with two unnamed firms over the potential use of its Bitcoin mining technology, and is in talks with two chip manufacturers to use its Method C software.

Speaking of AIM, the head of London’s junior stock market has called on the government to help halt an exodus of companies listed in the City, PA reported.

Marcus Stuttard, head of AIM and UK primary markets at the London Stock Exchange, urged the government to reinstate ’financial incentives‘ for AIM investors after last autumn’s budget revealed plans to slash inheritance tax relief on AIM-listed stock from 100% to 50% from April next year.

AIM has suffered a raft of firms quitting the market in recent years as part of a wider shift away from London towards overseas rivals and as firms are bought out by foreign competitors or taken private.

On AQSE, Smarter Web jumped 16%.

The Surrey, England-based web design provider has purchased an additional 104.28 Bitcoin at an average price of £77,751 for a total of £8.1 million each as part of its ongoing treasury policy of acquiring Bitcoin under its 10-year plan.

Smarter Web now holds 346.63 Bitcoin in total, worth £27.2 million.

In European equities on Thursday the CAC 40 in Paris was down 0.6%, while the DAX 40 in Frankfurt was down 0.3%.

The eurozone returned to both monthly and annual construction output growth as Spain’s construction industry booms, Eurostat data showed.

Construction output climbed 3.0% on-year in April, after a fall of 1.3% in March. The sharpest annual growth was in Spain with 15%, followed by Belgium with 6.6%.

On a monthly basis, construction output rose 1.7% in April, following a decline of 0.2% in March.

Meanwhile, Norway’s central bank announced a surprise interest rate cut.

Norges Bank lowered its policy rate by a quarter point to 4.25% and said it could make another cut this year ’if the economy evolves broadly as currently projected‘.

‘The inflation outlook for the coming year indicates lower inflation than previously expected,’ said Governor Ida Wolden Bache. ‘A cautious normalisation of the policy rate will pave the way for inflation to return to target without restricting the economy more than necessary.’

The pound was quoted at $1.3417 at midday on Thursday in London, lower compared to $1.3472 at the equities close on Wednesday. The euro stood at $1.1474, lower against $1.1526. Against the yen, the dollar was trading higher at JP¥145.52 compared to JP¥144.65.

In the US, financial markets are closed on Thursday to mark Juneteenth National Independence Day.

Brent oil was quoted higher at $77.16 a barrel at midday in London on Thursday from $75.06 late on Wednesday.

‘Oil prices have shot up in recent days and any disruptions to Middle East supplies could put them even higher and stoke inflation,’ AJ Bell’s Mould said. ‘Remember that central banks fight inflation by putting up interest rates, not cutting them, which muddies the water in terms of trying to second guess what will happen next to borrowing costs.

‘Rates staying higher for longer is bad news for investors and so the more intense the Middle East conflict gets, the greater the potential for increased market volatility.’

Gold was quoted lower at $3,376.42 an ounce against $3,387.84.

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