London stocks nudged higher on Thursday after the Federal Reserve cut rates for the first time this year and Chair Jerome Powell gave a mixed read on the economic outlook.
The FTSE 100 rose 0.2% to 9,223.89, while the FTSE 250 dipped 0.1% at 21,606.73 and the AIM All-Share slipped 0.1% at 771.08.
In New York overnight, markets wrestled with Powell’s message. The S&P 500 initially sank during the press conference but later clawed back losses, finishing stronger. Futures in early Thursday trade pushed to new highs, pointing to further gains at the open.
The Fed trimmed its benchmark range to 4.00%–4.25%, a 25bp cut, with newly appointed board member Stephen Miran dissenting in favour of a bigger 50bp move. Powell described it as a “risk management cut”, acknowledging inflation risks remain tilted upwards while the labour market is clearly softening. “A challenging situation,” he said.
The Fed’s statement left the door open to further adjustments depending on data. Job gains have slowed and unemployment has edged up, while inflation remains “somewhat elevated”.
Attention now turns to Threadneedle Street, where the Bank of England is expected to hold rates at 4.00% at noon. The focus will be on how aggressively it plans to reduce its bond holdings. Markets expect no change in guidance, with the vote split likely the clearest signal of sentiment. Later, at 13:30 GMT, the latest US jobless claims data will be released, with consensus calling for a fall to 240,000 from last week’s 263,000.
In London, Next tumbled 5.9% despite an 18% jump in half-year profit to £509 million, as the company warned the UK economy faced “anaemic growth” ahead due to regulation, government spending pressures and rising taxes. Guidance for the full year was maintained.
Pets At Home plunged 15% after cutting its profit outlook to £90–100 million from £110–120 million, citing a subdued retail market. CEO Lyssa McGowan stepped down with immediate effect, replaced on an interim basis by Chair Ian Burke. While digital sales growth remained strong, in-store sales were down 5% year to date.
Capricorn Energy jumped 12% after progress on long-standing receivables in Egypt. The oil and gas group posted a first-half loss of $7.5 million on weaker revenues but highlighted a reduction in receivables to $160 million by the end of August, with further improvements expected before year end.
European peers were more upbeat, with the CAC 40 up 0.8% in Paris and Frankfurt’s DAX 40 rallying 1.1%.