The Bank of England’s surprise decision to keep its powder dry and avoid raising interest rates helped propel London’s markets higher at the expense of the pound.
Banking stocks led the fallers amid disappointment that low interest rates will continue for at least one more month following the Monetary Policy Committee’s 7-2 vote to keep rates at 0.1%.
However, most other sectors welcomed the news gladly, pushing London’s main markets higher.
The FTSE 100 closed 31.02 points, or 0.43%, higher at 7,279.91 on Thursday.
The FTSE’s multinationals also benefited from the pound sliding to its lowest for a month, after the update went down badly with currency traders who had priced in a rise.
Bank of England extending the bearish move for $GBPUSD after keeping rates steady. The shift in perception around future rate hikes also notable here.
- Markets now see at least 3 rate hikes by August 22 (previously 4)
- First rate hike now expected in Feb (61%)#BoE pic.twitter.com/xHVramBg27
— Joshua Mahony (@JMahony_IG) November 4, 2021
Joshua Mahoney, senior market analyst at IG, said: “The pound has been hit hard today, after the Bank of England opted against the hotly anticipated first rate hike since 2017.
“While market expectations for a hike had come in from the lofty 82% seen almost three-weeks ago, the fact that markets had been pricing in a 62% chance of a rate rise today has resulted in a sharp move lower for the pound.
“Expectations for future rate movements have also shifted in turn, with markets now expecting a first hike in February.”
The pound was 1.3% lower versus the US dollar at 1.349, and down 0.9% against the euro at 1.169.
Across the Channel the other major European markets followed the positive wave from London as the German Dax increased by 0.44%, and the French Cac improved by 0.53%.
In the US, the markets picked up where they left off to reach new record highs after another strong fall in weekly jobless figures.
In company news, BT Group shares leapt higher after the telecoms firm reinstated its dividend and said the rollout of its Openreach full fibre broadband has seen higher demand and lower costs than expected.
The details came as bosses revealed revenues in the six months to the end of September fell 3% to £10.3 billion, with sales down in the Global division and the Enterprise wholesale business division.
Shares finished 15.65p higher at 157.8p.
Sainsbury’s shares slipped as it revealed faltering sales for the latest quarter after its Argos business was knocked by supply chain challenges and easing demand following the lifting of pandemic restrictions.
Like-for-like group sales, excluding fuel, rose 0.3% overall in the first half, but slipped 1.4% in the second quarter after general merchandise sales tumbled.
Sainsbury’s saw shares close 7.1p lower at 281.8p on Thursday.
Metro Bank investors cheered confirmation that private equity giant Carlyle has tabled an approach for the challenger bank.
Shares in the business soared by 30p to 133p after it confirmed reports by Bloomberg that it was in discussions over a possible deal.
The price of oil rose after Opec+ rejected calls for it to loosen the taps further and increase supply.
Brent crude increased by 0.21% to 82.16 dollars per barrel.
The biggest risers on the FTSE 100 were BT, up 15.65p at 157.8p, JD Sports, up 40.5p at 1,123.5p, Sage Group up 26.2p at 739.6p, and British Land, up 16.1p at 509.6p.
The biggest fallers of the day were Hargreaves Lansdown, down 115.5p at 1,482.5p, NatWest, down 12.6p at 212.3p, Lloyds Group, down 2.25p at 48.25pm and Barclays, down 8.02p at 191.5p.