UK shares drop after BoE decision

US inflation data that came in slightly lower than expectations boosted sentiment yesterday, as it strengthened the case for a rate pause. Initially, indices rose but the FTSE 100 ended the day 0.3% lower as recession fears mounted, and because ASOS tumbled 23% after posting lower-than-expected revenues.

The blue-chip indexed bounced back to +0.4% this morning, as the lower pound boosted exporting companies. After the Bank of England's (BoE) released its interest rate decision at 11am, the FTSE 100 declined and was down 0.5% at 2pm. The Bank decided to increase rates by 25 bps, as expected. Governor Andrew Bailey said at a press conference that with energy prices falling and the economy and labour market improving, inflation is likely to fall sharply in the coming months. 

Among stocks, broadcaster ITV fell 5% after it unveiled a 10% drop in its total advertising revenue in the first quarter.

 

 

Things to read today:

US default would make Cyclone Roller Coaster ‘look like a kiddie ride’ (Financial Times)

We May Be Getting Used to High Inflation, and That’s Bad News (WSJ)

The Hole Where Britain's Ambition Used to Be (Bloomberg)