FTSE 100 as dust settles after BoE hold

(Alliance News) - London's FTSE 100 is called to open slightly higher on Friday, as investors digest Thursday's Bank of England decision.

IG says futures indicate the FTSE 100 to open 11.2 points higher, 0.1%,at 8,283.66 on Friday. The index of London large-caps closed up 67.35 points, 0.8%, at 8,272.46 on Thursday. So far this week, it has risen 1.5%.

The pound was quoted at USD1.2664 early Friday, down from USD1.2675 late Thursday. The euro stood at USD1.0719, rising from USD1.0713. Against the yen, the dollar was trading at JPY158.91, up from JPY158.71.

The Bank of England left the door ajar open for an August interest rate cut after saying June's decision to leave bank rate unchanged was "finely balanced".

At its June meeting, the BoE's Monetary Policy Committee voted 7-2 to keep bank rate at 5.25% for the seventh-successive meeting.

The decision comes after numbers on Wednesday showed that inflation returned to the BoE's target for the first time since July 2021.

According to the Office for National Statistics, the rate of yearly consumer price growth faded to 2.0% in May, from 2.3% in April. The reading was in-line with the FXStreet cited consensus.

"Yesterday's decision by the Bank of England came as little surprise. Both the decision itself (no rate cut) and the vote (7 votes for no change, 2 votes for a cut) were expected by us. The minutes of the meeting indicate that the policymakers are now divided into three groups: One in favour of a rate cut, one against and the third saying that monetary policy was now "finely balanced". The market subsequently focused on the latter group. After all, it is only a small step from "finely balanced" to the first rate cut. We share this view and therefore remain comfortable with our forecast that the BoE will probably cut interest rates for the first time in August - unless inflation surprises significantly on the upside," Commerzbank analyst Michael Pfister commented.

In Asia on Friday, shares were mixed. The Shanghai Composite was down 0.2% in afternoon dealings, while the Hang Seng in Hong Kong traded 1.6% lower. Tokyo's Nikkei 225 edged up marginally, and over in Sydney, the S&P/ASX 200 was 0.2% higher.

The pace of Japanese inflation accelerated in May partly due to higher energy bills, government data showed Friday, as analysts speculate on the timing of the Bank of Japan's next rate hike.

The core consumer price index – which excludes volatile fresh food prices – rose 2.5% year-on-year, compared with the 2.2% logged in April by the internal affairs ministry. It fell short of the 2.6% rise that was expected, however, according to FXStreet cited consensus.

The ministry said that "energy, including electricity and gas bills, contributed" to the acceleration.

The headline inflation rate picked up to 2.8% from 2.5%.

In New York, the Dow Jones Industrial Average rose 0.8% on Thursday. The S&P 500 lost 0.3% and the Nasdaq Composite fell 0.8%.

Brent oil was quoted at USD85.62 a barrel, climbing from USD85.57 late Thursday. Gold rose to USD2,363.44 an ounce from USD2,357.90.

In Friday's UK corporate calendar, there are full year results from JLEN Environmental Assets.

The economic calendar for Friday has a slew of flash composite PMI data from the eurozone, Germany and the UK. There is also UK retail sales data out at 0700 BST.

By Eric Cunha, Alliance News news editor

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