By Emma Curzon

Copyright independent

Stock prices in London closed higher on Thursday, in light of the widely anticipated rate hold by the Bank of England and cut on Wednesday by the US Federal Reserve.

“To precisely no-one’s surprise, the Bank of England has chosen to keep rates on hold at 4% (with a 7-2 majority),” said AJ Bell’s Laith Khalaf.

“This was entirely anticipated by the market, and means we shouldn’t expect any substantial movements in the mortgage or cash savings markets.

“It’s significant that two members of the rate-setting committee wanted to reduce the base rate to 3.75%, which perhaps provides some crumbs of comfort for those who want the bank to loosen its stance on monetary policy.

“Inflation is still elevated and the bank expects it to remain around current levels for the rest of the year. That means we should watch out for any big changes in the inflation number, as well as keeping an eye on the labour market to estimate where the bank is likely to go.”

The FTSE 100 index closed up 19.74 points, 0.2%, at 9,228.11. The FTSE 250 ended up 106.14 points, 0.5%, at 21,725.95, and the AIM All-Share closed up 0.48 points, 0.1%, at 772.34.

On the FTSE 250, Renishaw gained 10%.

The Gloucestershire-based provider of manufacturing technologies, analytical instruments and medical devices said statutory pre-tax profit fell 3.7% annually to £118 million in the financial year ended June 30.

However, adjusted pre-tax profit climbed 3.8% to £127.2 million and revenue grew 3.1% to £713 million, with Renishaw noting “strong” demand for laser encoders for semiconductor wafer inspection, and the firm proposed a final dividend of 61.3 pence per share, up 3.2%. This brings the year’s total payout up 2.5% to 78.1p.

On London markets going forward, Mr Khalaf said: “Markets now think it’s an outside chance we’ll get a rate cut by the end of this year… There is now just one more interest rate decision before the November budget, and (Chancellor) Rachel Reeves would dearly love to see some more dovish vibes coming from the Bank of England to relieve some pressure on the public finances.”

Small-cap Amigo Holdings ended up 18%.

The firm said a scheme of arrangement has now been completed and it plans to appoint Grant Thornton as liquidators of its operating units and holding companies later this month, after which it will become a cash shell with no further liability under the scheme.

Chief executive Nick Beal said he believes the scheme of arrangement can help it “draw a line under the past”, adding: “We remain hopeful that we can find a future for Amigo Holdings Plc, so that it can support the needs of a different business.”

In European equities on Thursday, the CAC 40 in Paris closed up 0.9%, while the DAX 40 in Frankfurt ended up 1.2%.

German politicians have voted to approve the country’s 2025 budget, signing off on 502.5 billion euros in total expenditure including far-reaching new debt.

The core budget includes net borrowing of almost 82 billion euros, plus billions in investment for defence and infrastructure, bringing total new debt to more than 140 billion euros.

This comes after discord over how to plug a massive spending gap brought down the previous government in November.

The pound was quoted lower at 1.3556 dollars at the time of the London equities close on Thursday, compared with 1.3661 dollars on Wednesday. The euro stood lower at 1.1786 dollars, against 1.1847 dollars.

Stocks in New York were higher. The Dow Jones Industrial Average was up 0.3%, the S&P 500 index up 0.7%, and the Nasdaq Composite up 1.2%.

On Wednesday, the Federal Reserve announced a 25 basis point interest rate cut, accompanied by a downwards revision to its projected rate path through the end of the year.

During the press conference, Fed chair Jerome Powell revealed signs of division within the FOMC, explicitly referring to a “wide dispersion of views” among committee members. Another key message was his acknowledgement that the labour market is “showing signs of softening”, though not indicating any imminent collapse.

“The Fed has been watching inflation like a hawk amid a sharp rise in tariffs,” said AJ Bell’s Russ Mould. “So far, inflation hasn’t been too problematic, and its attention has shifted to the jobs market which is looking weaker.

“Financial markets had widely expected a quarter point rate cut, and investors got what they wanted. That’s lifted spirits and led to a decent showing across European equity markets, and futures prices imply the US will follow suit later today. Wall Street initially wobbled when the rate cut news was announced yesterday but quickly found its feet.”

Brent oil was quoted at 67.46 dollars a barrel at the time of the London equities close on Thursday, down from 68.04 dollars late Wednesday.

Gold was quoted at 3,639.64 dollars an ounce against 3,685.67 dollars.

The biggest risers on the FTSE 100 were Croda International, up 121.00p at 2,701.00p, Polar Capital Technology Trust, up 14.50p at 435.50p, Halma, up 110.00p at 3,382.00p, ICG, up 70.00p at 2,332.00p, and Scottish Mortgage Investment Trust, up 29.50p at 1,141.00p.

The biggest fallers on the FTSE 100 were Next, down 425.00p at 11,575.00p, Endeavour Mining, down 90.05p at 2,711.95p, WPP, down 9.50p at 380.40p, Fresnillo, down 38.37p at 2,147.63p, and Associated British Foods, down 31.00p at 1,971.00p.

On Friday’s economic calendar, the schedule includes German producer inflation, UK public sector net borrowing and retail sales, and Japan’s interest rate decision.

On Friday’s UK corporate calendar, Investec issues a trading update and several firms, including BP, Informa and St James’s Place, are scheduled to pay dividends.

Contributed by Alliance News