The Bank of England’s (BoE) decision to keep interest rates at record lows for the 80th month wasn’t able to prevent the FTSE closing down last night, finishing with a loss of 0.8 per cent at 6,364.9 points.
The FTSE had been trading in negative territory throughout the morning ahead the BoE’s announcement but rallied following eight of the nine of the voting members of the Monetary Policy Committee opting to keep interest rates on hold.
The Bank of England forecast only a small rise in inflation and the Bank downgraded its forecast for economic growth for this year and 2016.
“Today’s Bank of England interest rate announcement was more dovish than markets were expecting,” Darren Ruane, head of fixed income at Investec Wealth & Investment, said in a note.
“Indeed there was some speculation that [policymaker] Ian MacCafferty would be joined by at least one further dissenter, but this did not occur and the inflation profile has been reduced.”
Resource companies dragged the index down as oil giants BP and Royal Dutch Shell lost ground on a stronger dollar, losing 2.9 per cent and 2.2 per cent respectively.
Mining companies also took big hits, with Anglo American tumbling 7.7 per cent, Antofagasta down four per cent and Glencore down 3.5 per cent.
The FTSE 350 mining index fell 3.7 per cent, its biggest daily setback since the end of September.
“The problem with the FTSE is that it is a blue-chip index which is predominated by mining companies and petroleum companies,” said Ken Odeluga, market analyst at City Index.
Retailer Morrisons also fell, shedding 5.6 per cent after reporting another drop in quarterly underlying sales.
At the top of the index was the RSA Insurance, which gained 3.4 per cent after reporting a rise in third-quarter net asset value.
Drugmaker AstraZeneca also advanced, up 2.9 per cent after lifting its 2015 forecasts.
Thomas Cook fell 7.3 per cent after Britain suspended flights to and from the Egyptian Red Sea holiday resort of Sharm al-Sheikh. Authorities are investigating the possibility that a bomb planted by Islamic State militants caused last weekend’s crash of a Russian airliner over the Sinai Peninsula.
The FTSE 100 is down by around 2.8 percent since the start of 2015, and some 10 percent below a record high of 7,122.74 points reached in April.