Market report

Pound strengthens as Bank hints at stimulus change


5pm: FTSE 100 snaps winning streak

Bank of England

A stronger pound weighed on the export-heavy FTSE 100 as the Bank of England said it could see a modest reduction ahead in its massive stimulus.

This sent the pound higher against the dollar, although it later gave up some gains.

The Bank of England also increased its inflation forecast for the UK economy to 4%, twice the bank’s target rate.

Mining companies broke the FTSE 100’s three-day winning streak on as the price of iron ore dropped. The blue chip index ended the day down 0.1% or 3.43 points at 7,120.43.

Mining and consumer stocks logged the biggest declines.

However, Rolls-Royce leapt 5.9% after the engine maker said it was on track to meet its forecasts for this year following steep cost cuts and asset sales.

Other big risers were Whitbread, up 144p to 3,234p, IAG, up 7.42p to 178p, Informa, up 18.9p to 518.2p, and Just Eat, up 209p to 6,451p.

The biggest fallers on the FTSE 100 were Anglo American, down 173.5p to 3,270.5p, Rio Tinto, down 265p to 6,027p, BHP, down 90p to 2,280p, Lloyds, down 1.4p to 45.905p, and Glencore, down 5.3p to 324p.

Noon: Interest rate unchanged

The Bank of England’s monetary policy committee voted for no change to interest rates.

8am: FTSE 100 lower

The FTSE 100 slid into negative territory at the open, down 16.5 points at 7,107.35 ahead of the Bank of England statement at mid-day.

7am: Ashley steps aside

Mike Ashley

Retail group Frasers has confirmed speculation that CEO Mike Ashley, pictured, intends to pass on the job to his future son-in-law Michael Murray over the course of the next year.

It is currently proposed that Mr Murray will assume the role on 1 May 2022. A reward and remuneration package, subject to shareholder approval, is being thrashed out.

Full story here

7am: FirstGroup board changes

Martha Poulter and Steve Gunning have notified FirstGroup that they will stand down as non-executive directors at the conclusion of the Company’s AGM on 13 September.

7am: Rolls-Royce recovers

Aero engine maker Rolls-Royce returned to profit in the first half of 2021, but warned that the pandemic-hit international aviation industry is not set to recover until after 2022.

The Derby-based group posted bottom-line profits of £393 million for the first six months of the year in a marked improvement from losses of £5.4 billion a year ago, helped by swingeing cost-cutting.

On an underlying basis, it reported pre-tax profits of £133 million compared with losses of £3.2 billion a year earlier.

It said international travel will bounce back once border restrictions are lifted, but warned that the recovery will take longer than first forecast.

Global markets

Attention will be focused on the Bank of England’s interest rate setting meeting and any announcement on continued stimulus.

On Wall Street, the Dow Jones Industrial Average fell 0.9%, while the S&P 500 slipped 0.46% and the Nasdaq ended the session in positive territory, up 0.13%.

Japan’s Nikkei 225 climbed 0.4% whilst Hong Kong’s Hang Seng was marked 0.36% lower. The Shanghai Composite was down 0.1%.

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