By Barbara Kollmeyer, MarketWatch
A dire economic forecast from the Bank of England didn’t get in the way of gains for London stocks on Thursday, with rising oil prices lifting big energy names and retailers also getting a lift.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.08% rose 1% to 5,912, while the British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.5528% erased earlier gains to trade flat at $1.2335. The pound rose initially after the Bank of England left key interest rates and its 200 billion pound ($247 billion) bond-buying program in place, but also delivered a grim economic assessment.
Analysts at Citi and elsewhere say the central bank’s pause may last as little as a month because two of the nine members of the Bank of England’s monetary policy committee wanted an extra 100 billion pounds of purchases. That’s as the central bank warned of a record recession.
“Any forecast is guesswork in these unprecedented times, but the Bank of England’s gloomy assessment concurs with my own view that forecasters are underestimating the depth of the recession in the UK and across the developed world,” said Steven Bell, chief economist at at BMO Global Asset Management.
London stocks stepped up with the rest of the world’s equities, brushing off news of another 3.2 million U.S. layoffs in weekly data, as investors cling to the hopes of a post-pandemic recovery. U.S. stocks /zigman2/quotes/210598065/realtime DJIA -0.24% rose 1% in early trading, while the Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.09% gained 0.9%.
Rising oil prices /zigman2/quotes/211629951/delayed CL.1 +0.14% lifted key heavyweights in London, with BP PLC /zigman2/quotes/207305210/composite BP +3.40% /zigman2/quotes/202286639/delayed UK:BP +3.01% up nearly 5% and Royal Dutch Shell Group PLC /zigman2/quotes/205095589/composite RDS.A +3.22% /zigman2/quotes/204253697/delayed UK:RDSB +2.80% gaining 4%. Other resource stocks also rose, with Anglo American PLC /zigman2/quotes/201381512/delayed UK:AAL +3.68% up nearly 6% after a surprising rise in Chinese exports.
Shares of BT Group /zigman2/quotes/209006687/delayed UK:BT.A -0.65% led decliners with a 7% fall after the telecom said it would suspend its dividend until 2022 to fund a restructuring plan and deal with the pandemic. But as well, deal news depressed shares.
Telefónica /zigman2/quotes/207034643/composite TEF +1.24% /zigman2/quotes/200416613/delayed ES:TEF +1.12% U.S. tycoon John Malone’s cable group Liberty Global /zigman2/quotes/205000522/composite LBTYA +0.77% announced a merger their U.K. operations — O2 and Virgin Media — in a 50-50 joint venture, which means competition for BT.
The retail side was also perking up with JD Sports Fashion /zigman2/quotes/207007202/delayed UK:JD +0.45% , Burberry Group /zigman2/quotes/205386705/delayed UK:BRBY +0.19% and Next PLC /zigman2/quotes/200704121/delayed UK:NXT +0.27% all up around 4%.