Bank of England stimulus fails to inspire the market

LONDON’S FTSE 100 drifted on Thursday as some investors were disappointed by a Bank of England intervention designed to boost the economy.

The FTSE 100 closed the day down 29.18 points to 6,224.07, even amid a 1 per cent drop in the pound against the US currency, to 1.2425 dollars.

The Bank of England pledged to unleash another £100bn quantitative easing round to boost the economy - essentially the digital equivalent of printing money.

It also kept its interest rate stable at 0.1 per cent.

“Some traders felt the UK central bank would have backed more stimulus than what was delivered, as there was chatter of an extra £150-£200bn being announced,” said CMC Markets analyst David Madden.

“The BoE feel the economic contraction in the second quarter won’t be as severe as initially predicted, which is possibly why the increase in the quantitative easing scheme was a little measured.”

Traders are also keeping an eye on developments in Beijing, where authorities have implemented a partial lockdown to avoid a potential second wave of coronavirus.

“Stocks in Europe are in the red this afternoon as health concerns have chipped away at market confidence,” Mr Madden said.

The decline also hit stocks on the continent and in the US.

The S&P 500 was trading down about half a per cent, while the Dow Jones had lost a quarter of one per cent of its value by the end of play in Europe.

The Paris-based Cac 40 index dropped 0.75 per cent, while Germany’s Dax lost 0.8 per cent.

By the close of play the pound bought 1.2424 dollars, down 1 per cent, and 1.1076 euros, a reduction of 0.8 per cent.

In company news, housebuilder Taylor Wimpey whimpered at the bottom of the FTSE 100, notching up a 6 per cent drop after it raised £522m from investors to fund a land-buying spree.

Tesco shares edged into the red, down 0.3 per cent, as it found a buyer for its Polish supermarkets.

The company will sell the £181m division to Salling Group after 25 years in the country to focus on other nearby markets.

The Restaurant Group fell further into negative territory, nearly 4 per cent, as subsidiary Wagamama revealed that sales in its 151 restaurants had dropped 1.2 per cent in the 13 weeks to March, even before the worst of lockdown hit.

Distracted by a shiny new dividend increase, shareholders did not punish National Grid’s disclosure that it would take a £400 million hit from the coronavirus crisis.

They may also have been placated by boss John Pettigrew, who said the shortfall is likely to be clawed back in just a few years.

Bankers for Stagecoach have agreed to cancel some of the conditions attached to the loans they have given to the bus company, in a bit of good news the day after the firm racked up a loss in the High Court.

The price of Brent crude oil increased 1.8 per cent to 41.46 US dollars per barrel.

The biggest risers on the FTSE 100 were Flutter Entertainment, up 390p to 11,150p , Whitbread, up 70p to 2,433p , Prudential ,up 31.5p to 1,210p , Compass Group, up 23p to 1,144p , and Intercontinental Hotels, up 60p to 3,979p.

The biggest fallers on the FTSE 100 were Taylor Wimpey, down 9.05p to 142.75p, Intermediate Capital Group, down 74p to 1,232p, Aveva, down 100p to 3,984p, Burberry, down 351/2p to 1,563p, and AstraZeneca, down 190p to 8,400p.