Source: Sharecast
The FTSE 100 fell 76.98 points, or 1.01%, to 7,575.93, earlier sinking to a five-week low of 7,550, while the FTSE 250 was off 252.50 points, or 1.21%, at 20,548.97.
Sterling was down against the dollar, but picked up after the BoE decision and was last at 1.3038.
As predicted by markets, the Bank's monetary policy committee voted 9-0 in favour of a quarter-point rise in borrowing costs to 0.75%.
The committee reiterated its guidance that any future rate rises “are likely to be at a gradual pace and to a limited extent”.
Also publishing its quarterly inflation report, the MPC said the economy would grow at about 1.75% a year over its three-year forecast period – slightly faster than the 1.5% the BoE thinks is the “speed limit” for growth without stoking inflation, with the estimate for 2019 slightly upgraded from 1.7% to 1.8%.
Inflation, which currently stands at 2.4%, will be above the MPC’s 2% target for most of the forecast period, settling down at target in the third year, the BoE said.
“Absolutely no surprise in the BoE decision to hike rates today, if there was a surprise it was in the 9-0 vote - compared to the 7-2 split when they first raised rates in this cycle last August - and the clear guidance that, everything being equal, rates have further to rise,” said David Owen, economist at Jefferies.
Economist Ben Brettell at Hargreaves Lansdown added to that, saying that although at first glance, raising rates now looked something of a strange decision, the main argument for doing so was that it gave the central bank more room for manoeuvre when the next downturn hit.
“If interest rates are 1% or more by the time the economy sails into stormier seas, policymakers will at least be able to cut rates a couple of times before cranking up the printing presses for more quantitative easing.
“So on balance the Bank’s decision looks sensible. 0.5% was supposed to be an ‘emergency’ level, and that was almost 10 years ago.”
Looking forward, Brettell said the hike should not change things "all that much", with the market pricing in another hike around this time next year.
“A deal on Brexit clouds the issue, and unless the uncertainty is lifted I’d be shocked if rates rose again in the short term.”
Earlier, the Footsie had been dragged down by a widespread retreat across the mining sector as investors fretted about the potential effect on demand from China from the White House's renewed trade tariff threats, including considering hiking import tariffs on $200bn of Chinese goods from 10% to a more confrontational 25%.
Beijing was not standing for the “carrot-and-stick” tactic, however.
“China is fully prepared and will have to retaliate to defend the nation’s dignity and the interests of the people, defend free trade and the multilateral system, and defend the common interests of all countries,” China’s Ministry of Commerce said in a statement on Thursday.
Overnight, the trade spat had depressed the Dow Jones and S&P 500, though Apple's tasty results helped inspire a higher finish for the tech-heavy Nasdaq.
The US Federal Reserve made no immediate policy changes but gave bullish signals that another hike was imminent, which boosted the dollar and supported 10 year US treasury yields at around 3%.
Wall Street was expecting to have another down day later, with Dow Jones futures pointing to a 190 point collapse when the opening bell rings.
In company news, Glencore, Antofagasta, Rio Tinto, Anglo American, Evraz, Fresnillo and BHP Billiton were among the biggest losers, but iron ore producer Ferrexpo was the leader of the pack as it reported stronger revenue but falling profits.
It fell 19.8%.
Despite the BoE rate rise, financials stocks were not quick to make any gains.
Interim results from Barclays saw its shares dip 4.86% lower despite its underlying performance beating market forecasts.
First-half profits at the bank dropped due to £2bn paid out in litigation and conduct charges.
Life insurer Aviva was also in the red by 1.57%, as first-half profit fell, but the firm said conditions would improve and stuck to its target for a 5% rise in full year annual earnings per share.
Merlin Entertainments, the operator of attractions including Legoland, Alton Towers and Madame Tussauds, dropped 3.64% as profits declined 14% due to currency swings, as revenues grew 4.5%.
East European-focused miner KAZ Minerals crashed 28.30% after agreeing to acquire the Baimskaya copper project in Russia for $900m (£687m) in cash and shares, with an initial 22.3 million new KAZ shares to be issued hitting the shares.#
Satellite operator Inmarsat also fell back to earth by 4.9% as it reported a swing to an interim pre-tax loss of $119m, but maintained its medium-term year guidance.
Corporate services provider Sanne was 3.47% lower, despite reporting that its core business lines had continued to see both good growth in revenues on a constant currency basis, as well as further momentum in securing new business.
Outside the FTSE 350, estate agent Countrywide was another big faller, crashing 62.8% as it announced plans to raise £140m from shareholders to strengthen its finances after losing more than £200m in the first half.
On the upside, Rolls-Royce surged 4.45% on the back of improved guidance for full year profits and cash flow, though a £554m exceptional charge was taken due to problems with its Trent 1000 aeroplane engine.
London Stock Exchange Group rose 3.21% as it hiked its interim dividend by 19%, after growth across all business areas led to first half earnings per share increasing 25%.
Business software provider Sage was 3.42% higher as it said group organic revenue increased by 6.8% in the third quarter, delivering growth of 6.5% in the first nine months of the year as recurring revenue growth accelerated.
Egyptian gold miner Centamin gave its shares some extra glister, rising 0.48% as EBITDA swelled 16% and full-year production guidance reiterated as revenues came in lower, as expected.
Market Movers
FTSE 100 (UKX) 7,575.93 -1.01%
FTSE 250 (MCX) 20,565.59 -1.13%
techMARK (TASX) 3,551.40 -0.48%
FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 1,058.00p 7.11%
Sage Group (SGE) 646.80p 3.42%
London Stock Exchange Group (LSE) 4,500.00p 3.28%
Just Eat (JE.) 786.20p 1.45%
Smith & Nephew (SN.) 1,338.50p 1.32%
National Grid (NG.) 798.90p 1.06%
Rightmove (RMV) 4,838.00p 1.00%
Imperial Brands (IMB) 2,911.50p 0.76%
Coca-Cola HBC AG (CDI) (CCH) 2,740.00p 0.48%
Reckitt Benckiser Group (RB.) 6,800.00p 0.47%
FTSE 100 - Fallers
easyJet (EZJ) 1,530.00p -3.74%
Rio Tinto (RIO) 3,916.00p -3.40%
Anglo American (AAL) 1,655.40p -3.08%
Prudential (PRU) 1,730.50p -3.05%
Antofagasta (ANTO) 950.80p -3.02%
Fresnillo (FRES) 993.60p -3.02%
Glencore (GLEN) 312.95p -2.77%
Barclays (BARC) 186.54p -2.69%
Evraz (EVR) 536.20p -2.58%
GlaxoSmithKline (GSK) 1,534.00p -2.44%
FTSE 250 - Risers
Contour Global (GLO) 228.00p 3.64%
Sophos Group (SOPH) 490.80p 2.46%
Elementis (ELM) 264.20p 2.40%
Games Workshop Group (GAW) 3,030.00p 2.36%
Millennium & Copthorne Hotels (MLC) 524.00p 1.55%
Renewi (RWI) 72.00p 1.41%
Centamin (DI) (CEY) 115.05p 1.37%
Softcat (SCT) 820.00p 1.36%
Foreign and Colonial Inv Trust (FRCL) 725.00p 1.26%
Electrocomponents (ECM) 728.80p 1.22%
FTSE 250 - Fallers
Kaz Minerals (KAZ) 587.80p -28.30%
Ferrexpo (FXPO) 165.70p -17.97%
Capita (CPI) 133.60p -9.76%
Inmarsat (ISAT) 539.00p -7.29%
Mitchells & Butlers (MAB) 240.40p -6.60%
Thomas Cook Group (TCG) 87.95p -5.07%
Man Group (EMG) 175.60p -5.00%
Greene King (GNK) 486.10p -4.69%
IMI (IMI) 1,177.00p -4.15%
Metro Bank (MTRO) 3,024.00p -4.06%
