UK Shares Fall as Central Bank Keeps Policy Status Quo; Informa Gains
British equities retreated on Thursday, with the FTSE 100 down 1.04% in closing trade, as investors evaluated the latest labor data and the Bank of England's interest rate decision.The central bank left its key interest rate unchanged at 3.75%, as widely expected. The Monetary Policy Committee voted 7-2 to keep rates unchanged, with two members favoring a 25-basis-point increase to 4%.Meanwhile, Britain's unemployment rate was 4.9% in the three months to April, below the 5% consensus estimate and the 5% reading for the quarter to March, according to data from the Office for National Statistics. Average weekly earnings including bonuses rose 4.4% year over year, matching the revised increase in the previous period and exceeding expectations for 4% growth. Excluding bonuses, earnings growth held steady at 3.4%, above the 3.2% consensus forecast."While half of the big drop in payroll employment in April was revised away, the big picture is that payrolls continue to trend down. The three measures of employment that the Office for National Statistics publishes agree that employment is stagnant at best. Do not take the decline in the unemployment rate to 4.9% in the three months to April from 5.2% in the prior three months as a sign the labour market is improving either," Berenberg said.In corporate news, Informa (INF.L) rose 2.76% after affirming its 2026 guidance for double-digit underlying growth in adjusted EPS. The events, digital services, and academic research group's underlying revenue for the five months ended May 31 climbed 6.4% year over year."While we expect little change to consensus forecasts ahead of [interim results], the solid YTD performance should offer encouragement," BofA Global Research said. "We expect investors to continue to look through short-term disruption and remain confident in the long-term growth outlook as 2027 offers reacceleration in earnings growth into the biennial 'up year' (BofAe EPS +3% ahead of consensus)."Melrose Industries (MRO.L) gained 2.01% after BofA affirmed its buy rating for the aerospace company. "While there have been investor concerns around [free cash flow] and earnings quality, we feel these are well understood and the underlying drivers of cash earnings remain intact. Against this backdrop, we see Melrose as attractive, with a broadly in-line 1H26 print likely to provide incremental confidence in a valuation floor," analysts wrote.In geopolitical news, US President Donald Trump and his Iranian counterpart, Masoud Pezeshkian, digitally signed a memorandum of understanding to end the conflict and reopen the Strait of Hormuz. The focus now shifts to a 60-day negotiating period over Tehran's nuclear program.
