UK stock markets moved lower on Thursday as mining and financial shares came under pressure following the Bank of England’s decision to keep interest rates unchanged, while a hawkish signal from the U.S. Federal Reserve also weighed on investor sentiment.
The Bank of England left interest rates on hold at 3.75%, in line with market expectations, with only two members of the nine-person Monetary Policy Committee voting in favour of an increase despite ongoing concerns about inflation.
Investor caution was further reinforced after the U.S. Federal Reserve kept rates unchanged on Wednesday, although nine policymakers indicated they still expect at least one interest rate hike later this year.
Analysts said economic conditions do not currently point to sustained inflationary pressures, supporting expectations that the Bank of England may avoid the more aggressive monetary tightening already seen from the European Central Bank and signalled by the Federal Reserve.
The FTSE 100 fell 0.87% to 10,416.89 points, while the mid-cap FTSE 250 declined 0.8% as broad-based weakness spread across the market.
Precious metal mining stocks were among the biggest fallers after gold and silver prices retreated. Fresnillo dropped 6%, while Hochschild Mining fell 8% as commodity prices eased.
London Stock Exchange Group declined 5.8% after Rothschild Redburn downgraded the stock to a “neutral” rating, while investment company 3i Group lost 4%.
Interest rate-sensitive housebuilding stocks also came under pressure, with the sector falling 2.4%. Persimmon was among the weakest performers on the FTSE 100, dropping 6.2%.
Major banking stocks proved more resilient, with HSBC and Barclays each slipping just 0.2%, making them among the least affected financial shares during the session.
Tesco shares fell 1.6% after the supermarket giant reported a slowdown in first-quarter sales growth, raising concerns about consumer spending momentum.
Testing and certification specialist Intertek gained 1.5% after agreeing to a takeover by Swedish private equity group EQT.
Informa was the strongest performer on the FTSE 100, rising 2.5% after the exhibitions and events group forecast stronger business growth in 2027.
Meanwhile, energy giants BP and Shell both fell 1.6% as oil prices dropped to their lowest levels since the start of the Iran conflict, reducing support for the sector.
