FTSE slumps as Bank of England holds interest rates

London’s top equity markets slid in value in the wake of the latest major central bank interest rate decisions, despite a strong session for water firms.

Sentiment was weak on Thursday across the global markets after traders digested a sell-off on Wall Street in the previous session.

US stocks has been hit by comment from Federal Reserve chairman Jerome Powell that tempered expectations for further cuts next year.

London stocks were largely in the red at the start of trading and remained weak despite the Bank of England holding interest rates at 4.75%.

The FTSE 100 finished 93.79 points, or 1.14%, lower to end the day at 8,105.32.

Elsewhere in Europe, German stocks recorded their fifth consecutive day of losses as the Fed decision offset any positivity around stronger-than-expected consumer confidence data.

The Cac 40 ended 1.22% lower for the day and the Dax index was down 1.2%.

Stateside, US stocks bounced back in attempt to end a 10-day streak of losses for the Dow Jones.

In currency, the pound spent much of the day in positive territory but slumped in afternoon trading despite the Bank of England holding interest rates.

Traders chose to focus their attention of predictions of weak GDP growth, with economists predicting the central bank could opt for a cut in February.

The pound was down 0.34% at 1.252 US dollars but down 0.45% at 1.208 euros.

In London’s equity markets, water firms Severn Trent and Pennon both made gains after industry regulator Ofwat said firms could increase customer bills by more previously expected.

Regulator Ofwat said it will allow companies to raise average bills by £31 a year, or £157 in total, over the next five years to £597 by 2030 to help finance a £104 billion upgrade for the sector.

The move helped Severn Trent shares increase by 0.9% to 2,574p, while Pennon was up 0.3% at 587.5p.

Outsourcing firm Serco lifted in value after it said it has seen strong momentum over the second half of 2024 on the back of rising orders.

Mark Irwin, group chief executive of Serco, said the group has a “positive” outlook for 2025, as growth in North America looks set to mitigate increased costs in the UK following rises in national insurance contributions and the minimum wage.

As a result, shares in the company moved 8.4% higher at 150.4p.

Diageo shares ticked slightly higher late on Thursday after reports the spirit giant is exploring a sale of its Ciroc vodka brand.

Shares were up 0.3% at 2,525.5p after Bloomberg reported the group had reached out to potential suitors for the brand once backed by music mogul Sean “Diddy” Combs.

The price of oil swung back lower after it had gained ground on Wednesday following the US interest rate cut.

A barrel of Brent crude oil was down by 0.89% to 72.35 dollars (£57.74) as markets were closing in London.

The biggest risers on the FTSE 100 were Severn Trent, up 24p to 2,574p, Imperial Brands, up 14p to 2,572p, Hikma Pharmaceuticals, up 7p to 1,935p, Diageo, up 7p to 2,525.5p, and Admiral Group, up 5p to 2,614p.

The biggest fallers on the FTSE 100 were Pershing Square, down 146p to 3,732p, Mondi, down 43.5p to 1,145.5p, Ashtead, down 176p to 4,990p, Marks & Spencer, down 13.3p to 378.2p, and British Land, down 12.2p to 351.6p.