London’s FTSE 100 dipped slightly following the Bank of England’s interest rate cut, while US markets surged on news of a UK-US trade deal. Trade policy dominated market attention on both sides of the Atlantic.
It lost 27.72 points, or 0.32%, to close at 8,531.61.
Aerospace giants Melrose Industries and Rolls-Royce were among those to make the biggest gains, thanks to tariffs on steel being scrapped under the new deal.
Energy and utilities stocks were among those pulling the FTSE 100 lower.
Meanwhile, gains were picking up pace for stock markets over in New York following Prime Minister Sir Keir Starmer and US President Donald Trump’s announcement.
The US’s S&P 500 and Dow Jones indexes were both climbing by 1.4% by the time European markets closed, with sentiment boosted by the two leaders declaring it a “historic day”.
Earlier on Thursday, the Bank of England cut interest rates to 4.25% and warned that an escalating global trade war will drag on growth over the next three years.
Governor Andrew Bailey stressed that the UK is an “open economy” and would therefore face a potential impact from changes to global trade.
He nonetheless welcomed the UK-US agreement, saying it would “help to reduce uncertainty” and that he hoped it would be the “first of many”.
Investors were in positive spirits elsewhere in Europe. In Paris, the Cac 40 index gained 0.89%, and in Frankfurt, the Dax closed 1.09% higher.
The pound had been strengthening against the US dollar earlier in the afternoon, but was down about 0.1% to 1.328 by the time European stock markets closed.
Sterling was rising about 0.4% against the euro, at 1.18.
The price of Brent crude oil soared by 3% on Thursday, to around 63 US dollars per barrel.
In company news, shares in Centrica slid after the British Gas owner said its profits would take a hit after warmer-than-usual spring weather.
Centrica said the residential energy arm of British Gas had been impacted, however it is still expected to be within its £150 million to £250 million sustainable profit margin. Shares in the company fell 7.6% at close.
Elsewhere, fashion retailer Next raised its full-year guidance again, having previously done so in March – with pre-tax profits expected to hit £1.08 billion.
Full-year sales are also now expected to lift by 6% to £5.4 billion, up from £5.3 billion previously pencilled in. Its share price edged up by 0.5% on Thursday.
The biggest risers on the FTSE 100 were Melrose Industries, up 23.3p to 470.7p, IMI, up 92p to 1,885p, Weir Group, up 94p to 2,404p, Rolls-Royce, up 28p to 794p, and Whitbread, up 83p to 2,823p.
The biggest fallers on the FTSE 100 were Airtel Africa, down 14.3p to 156p, Centrica, down 12.05p to 147.05p, AstraZeneca, down 370p to 1,0134p, Severn Trent, down 87p to 2,672p, and Land Securities, down 14.5p to 592p.
