FTSE 100 and sterling rebound after central bank action

19 March 2020, 17:44

City of London stock
City of London stock. Picture: PA

The FTSE 100 closed 71.03 points higher at 5,151.61 at the end of trading on Thursday.

The FTSE 100 rebounded after another volatile day finished with improving sentiment as the Bank of England announced another rate cut.

The central bank cut interest rates to 0.1% from 0.25% and increased its holding of UK government and corporate bonds by £200 billion in a bid to shore up the economy following the coronavirus outbreak.

Markets were also buoyed by the European Central Bank’s (ECB) stimulus deal, which saw Christine Lagarde announce a 750 billion euro (£687 billion) economic package for the Eurozone.

The FTSE 100 closed 71.03 points higher at 5,151.61 at the end of trading on Thursday.

Connor Campbell, financial analyst at Spreadex, said: “In one of the comparatively more stable sessions we’ve seen of late, a double-hit of ECB and Bank of England stimulus produced something calm-adjacent on Thursday.

“The main beneficiary of this was the pound – which, to be clear, was in desperate need of this temporary escape rope. The pound’s surge limited the FTSE’s own rebound.”

Sterling was jolted into a slight recovery from Wednesday’s dreadful session, with traders settled by the Bank’s intervention.

The value of the pound rose 0.75% versus the US dollar at 1.167 and was up 2.86% against the euro at 1.091.

Europe’s major markets were bolstered after the ECB stepped up with its latest package.

The German Dax increased by 2%, while the French Cac moved 2.68% higher.

Across the Atlantic, the Dow Jones made slight progress after its major fall on Wednesday, edging higher after the bell.

In company news, Next shares moved higher, even after the fashion retailer said it was preparing for a “significant” trading downturn as it braces for a potential £1 billion in lost sales due to the pandemic.

The group said the outbreak could see full-year sales plunge by 25% in a worst case scenario and completely decimate sales over some weeks, but assured the firm could “comfortably sustain” the hit. Nevertheless, shares improved by 204p to 4,054p on Thursday.

Ocado slipped despite the online retailer reporting that sales growth has doubled as people remain indoors due to coronavirus.

The retailer revealed on Thursday that it has seen a massive increase in trading since the three-month period ending March 1. Shares fell by 44.5p at 1,435p.

Hygiene specialists have continued their purple patch as consumers buy cleaning products, moving Unilever and Reckitt Benckiser into the green.

Elsewhere, National Express jumped higher after it said it still expects a small but positive cashflow for the coming months, despite lower passenger number. It rose 14.6p to 105p.

The price of oil made major gains as it attempted to claw back lost ground, as bargain hunting helped to push prices up.

The price of a barrel of Brent crude oil increased 12.53% to 28.51 US dollars.

The biggest risers on the FTSE 100 were M&G, up 32.25p at 125.9p, Carnival, up 117.2p at 737.2p, Tui, up 53.5p at 338.1p, and Auto Trader, up 58.5p at 427.5p.

The biggest fallers of the day were IAG, down 19.4p at 195p, Glencore, down 11.6p at 117.3p, Evraz, down 20.7p at 209.8p, and Intercontinental Hotel Group, down 220p at 2,385.5p.

By Press Association

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