Sliding pound supports FTSE 100 after BoE flags recession risk



(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)

* Bank of England raises rate to 1%, flags recession risk

* Shell up after oil major posts record quarterly profit

* FTSE 100 up 0.1%, FTSE 250 off 0.6%

By Bansari Mayur Kamdar and Sruthi Shankar

May 5 (Reuters) - Britain's blue-chip index closed slightly higher on Thursday, supported by strong earnings from energy major Shell and a slump in sterling after the Bank of England (BoE) warned the UK economy was at risk of a recession.

The FTSE 100 index .FTSE rose 0.1%, while the domestically focussed mid-cap index .FTMC slipped 0.6%.

Meanwhile, U.S. stocks tumbled as Federal Reserve Chair Jerome Powell's less hawkish tone failed to ease investor expectations of bigger interest rate hikes this year.

The BoE sent a stark warning that Britain risked the double-whammy of a recession and inflation above 10% as it raised interest rates to their highest since 2009, hiking by quarter of a percentage point to 1%.

The central bank also slashed its GDP forecast for 2023 to show a contraction of 0.25% from a previous estimate of 1.25% growth.

"The market reaction clearly is not looking at the slightly less dovish split vote, while clearly putting more focus on those much higher inflation forecasts and also the somewhat surprising forecast of the UK economy contracting in 2023," said Max Kettner, chief multi-asset strategist at HSBC, referring to a minority of BoE rate-setters calling for a larger rate rise.

"If we get closer to the point, with the Bank of England really over tightening to the degree that the UK economy is actually starting to look recessionary, the cyclical sectors in the FTSE 100 will be increasingly at risk."

Rate-sensitive bank FTNMX301010 and insurance .FTNMX303010 stocks dropped about 0.6% each as government bond yields GB2YT=RR fell.

On the other hand, shares of dollar earners such as Diageo DGE.L and British American Tobacco BATS.L were supported as sterling tumbled more than 2% against the dollar to its lowest since July 2020.

Shell SHEL.L jumped 3.1% after the oil major posted a record quarterly profit, underpinned by higher oil and gas prices and a strong performance of its trading division.

Reach RCH.L slumped 20.9% after the news publisher flagged tepid advertiser demand, with the Ukraine conflict reducing the amount of content that brands want to be linked with.



BOE Link



Reporting by Bansari Mayur Kamdar and Sruthi Shankar in
Bengaluru and graphic by Saikat Chatterjee
Editing by Sherry Jacob-Phillips and Mark Potter



Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.

Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.

Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.

Gumagamit kami ng cookies para mabigyan ka ng mahusay na karanasan sa aming website. Magbasa pa o palitan ang iyong cookie settings.

Babala sa Risk: Maaaring malugi ang iyong kapital. Maaaring hindi nababagay sa lahat ang mga produktong naka-leverage. Mangyaring isaalang-alang ang aming Pahayag sa Risk.