London close: The Fed watched as stocks dropped after the BoE lowered rates

As investors navigated through a barrage of corporate news, considered a rate decrease by the Bank of England, and anticipated the Federal Reserve’s most recent policy decision, London equities concluded Thursday’s trading day lower. Sterling was up 0.6% vs the dollar at 1.2964, while the FTSE 100 ended the day down 0.3% at 8,140.74.

For the second time this year, the BoE reduced interest rates. By a vote of eight to one, the Monetary Policy Committee, which sets interest rates, decided to lower borrowing costs by 25 basis points, to 4.75%.

In September, during its most recent meeting, the MPC maintained rates at 5%.

The FTSE was pulled down by the spike in sterling and a negative response in some consumer-focused stocks, according to Chris Beauchamp, chief market analyst at IG.The Fed’s most recent policy announcement, which was scheduled for 1900 GMT, after the UK markets closed, was another item that investors were anticipating.

As rates peaked, Jerome Powell is also anticipated to announce a quarter-point decrease, which is equivalent to a whole-point cut, according to Derren Nathan, head of equity research at Hargreaves Lansdown. Following a 0.3% gain in September, home prices increased by 0.2% this month. Prices increased 3.9% year-over-year in October after rising 4.6% in the previous month.

The Bank of England lowered its benchmark interest rate by 25 basis points on Thursday, citing “continued progress” in the fight against inflation.

The BoE’s Monetary Policy Committee, which had lowered borrowing costs for the first time in four years in August before holding them unchanged in September, voted decisively by 8 to 1 to drop rates to 4.75% in a move that was widely anticipated. According to the BoE, the budget is anticipated to increase GDP by approximately 75 basis points at its highest point within a year, in comparison to the August predictions. It was estimated that the impact on inflation was just about 50 basis points.

ITV was down 12% as well. After warning that the fallout of the Hollywood writers’ and actors’ strike was still having a negative impact on its program-making arm, it announced plans to save an extra £20 million in 2024.

When subtracting the impact of the strikes, the UK broadcaster reported that income at its studios arm would be down a fifth in the third quarter, bringing full-year revenues down by “mid-single digits” and somewhat lower than the previous year.

At the London stock market closing on Thursday, Brent oil was trading at $74.91 a barrel, down from $75.18 late on Wednesday.

After closing at $2,665.82 on Wednesday, the price of gold rose to $2,697.24 an ounce at the London Stock Exchange’s closing on Thursday.

Europe closes: Stocks climb as interest rates are lowered in Sweden and the UK

As traders assessed a flurry of economic data and central bank meetings from the UK, Sweden, and Norway, European stock ended Thursday squarely higher. The markets had recovered from a steep decline linked to the US election. By Thursday’s closing, the Stoxx had risen 0.6% at 509.92 after plunging precipitously on Wednesday. 

A modest decline in London and a robust performance in Frankfurt (+1.7%) had outpaced more modest advances elsewhere. In Frankfurt, the news that German chancellor Olaf Scholz had dismissed his finance minister and asked for a confidence vote to prepare for early elections was boosting the market mood.

Focus on central banks

The Riksbank of Sweden suggested that additional monetary easing may take place in December and the first half of 2025 after lowering its key policy rate by 50 basis points to 2.75% on Thursday morning. 

At its most recent meeting, the central bank stated that it may be necessary to lower interest rates sooner than expected to boost economic growth. As anticipated, the Bank of England reduced borrowing costs by 25 basis points to 4.75% after the Monetary Policy Committee voted eight to one in favor of the drop. With all eyes on Chair Jerome Powell’s remarks, the Federal Open Market Committee is set to announce its policy decision at 2000 CET, lowering the Federal Funds Rate by 25 basis points to 4.75%.

Market participants

Following a string of disappointing reports from industry titans Auto Trader, BT Group, Sainsbury’s, and Rolls-Royce, London’s FTSE 100 was declining.

The engineering services company Wood Group, listed on the FTSE 250, was the day’s biggest mover, with shares more than halving in value following the announcement of an independent examination that may lead to restatements from previous years. ITV, which is also on the second-tier index, fell 13% after its Studios division suffered an 8% decline in income during the first nine months of the year due to the US actors’ and writers’ strike.