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London open: Stocks little changed ahead of BoE, ECB announcements
London stocks were little changed in early trade on Thursday as investors eyed policy announcements from the Bank of England and European Central Bank.
At 0830 GMT, the FTSE 100 was up just 0.1% at 7,591.43.
Victoria Scholar, head of investment at Interactive Investor, said: “The Bank of England is widely expected to raise rates for the second time since the start of the pandemic. This is the first time since 2004 that the central bank has opted to lift interest rates at two consecutive monetary policy committee meetings, landing the base rate at 0.5%.
“Amid the backdrop of heightened inflation, the central bank has no choice but to tighten monetary policy in an attempt to curb rising price levels. The MPC has a difficult balance to strike, curtailing price pressures without inducing an economic recession. While higher interest rates will take some of the heat out of the economy, it will do little to curb the major supply side pressures which look set to push inflation to 6%, namely the surge in energy prices, supply chain bottlenecks and labour shortages.
“As the debate over transitory versus sustained inflation lands firmly in the hands of the latter camp, further interest rate hikes from the Bank of England should be expected in the year ahead as inflation looks set to push higher before falling back down towards year-end.”
In equity markets, Compass rallied after the catering group reported a 39% increase in first-quarter revenue and said revenues had reached 97% of their pre-Covid level.
Playtech surged as a fresh potential bid for the gambling software maker emerged, hours after a £2.7bn offer from Australia’s Aristocrat Leisure collapsed. TT Bond Partners, which advised on an earlier bid for Playtech from Gopher Investments, has been given consent by Playtech to release it from restrictions that would stop it from tabling a further offer.
Renishaw was also on the rise after it posted a jump in interim profit and revenue and said it had seen a “record” level of demand as key market sectors recover.
Miners were trading up as metals prices advanced, with Rio, Glencore, Anglo American and Antofagasta all firmer.
On the downside, BT fell after it said it was in talks with Discovery Inc about forming a sports joint venture and reported a 3% drop in profit for the first nine months of the year.
Media group Future lost ground even as it backed its full-year expectations and said trading in the four months to the end of January had been in line with expectations,.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Compass Group Plc | +6.80% | +112.50 | 1,766.00 |
| 2 |  |
Bhp Group Limited | +2.45% | +59.00 | 2,464.00 |
| 3 |  |
Carnival Plc | +1.79% | +24.80 | 1,410.40 |
| 4 |  |
Rio Tinto Plc | +1.49% | +80.00 | 5,435.00 |
| 5 |  |
Lloyds Banking Group Plc | +1.21% | +0.64 | 53.50 |
| 6 |  |
Barclays Plc | +1.16% | +2.35 | 205.40 |
| 7 |  |
Anglo American Plc | +1.13% | +37.50 | 3,359.00 |
| 8 |  |
Glencore Plc | +0.93% | +3.70 | 403.00 |
| 9 |  |
British American Tobacco Plc | +0.77% | +24.50 | 3,192.50 |
| 10 |  |
Unilever Plc | +0.69% | +26.00 | 3,808.50 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Bt Group Plc | -2.81% | -5.50 | 190.00 |
| 2 |  |
Bunzl Plc | -2.13% | -60.00 | 2,754.00 |
| 3 |  |
Scottish Mortgage Investment Trust Plc | -1.76% | -19.50 | 1,086.00 |
| 4 |  |
Croda International Plc | -1.49% | -122.00 | 8,074.00 |
| 5 |  |
Ashtead Group Plc | -1.41% | -76.00 | 5,314.00 |
| 6 |  |
Marks And Spencer Group Plc | -1.37% | -3.00 | 215.20 |
| 7 |  |
Sage Group Plc | -1.26% | -9.20 | 722.40 |
| 8 |  |
Ferguson Plc | -1.23% | -145.00 | 11,615.00 |
| 9 |  |
Tesco Plc | -1.13% | -3.40 | 298.60 |
| 10 |  |
Rightmove Plc | -1.11% | -7.40 | 660.00 |
Europe open: Shares lower ahead of ECB, BoE meetings
European shares opened lower on Thursday after a plunge in shares of Facebook owner Meta on a weaker-than-expected forecast and ahead of UK and European Central Bank meetings.
The pan-European Stoxx 600 index was down 0.34% in early deals with most major regional bourses following suit. Britain’s FTSE 100 outperformed with a 0.13% rise. US futures indicated a sharp fall for stocks on the tech-heavy Nasdaq.
In London, the Bank of England was expected to lift its key rate 25 basis points to 0.5% – the threshold at which it has said previously it would begin to unwind its £895bn quantitative easing programme.
Meanwhile the ECB was not expected to announce any policy changes, but investors will be looking for any sign that bank president Christine Lagarde will stop stimulus measures in response to the inflation surge that many central bankers dismissed as temporary.
On the equity news front, shares in UK telecoms and broadcasting company BT Group fell as it said it was in talks with Discovery of the US about forming a sport broadcasting joint venture and reported a 3% drop in profit for the first nine months of the year.
Shares in UK government contractor Compass surged as it reported revenue growth of 38.6% in the first quarter, with sales reaching 97% of their pre-Covid levels.
Shell shares edged higher after the energy giant reported soaring fourth-quarter profit on the back of surging oil and gas prices.
Nordea shares fell, despite the Nordic region’s biggest lender posting better-than-expected fourth quarter profit and lifting its return-on-equity target to more than 13%.
Shares in Swedish ball bearing maker SKF fell more than 6% as it reported higher-than-expected fourth-quarter net profit but cautioned that it expects supply-chain constraints and higher costs to continue.
US close: Stocks book gains despite surprise fall in employment
Wall Street’s main indices booked their fourth consecutive day of gains on Wednesday, after a session which saw investors digesting a slew of corporate earnings.
At the close the Dow Jones Industrial Average was up 0.63% at 35,629.33, as the S&P 500 added 0.94% to 4,589.38 and the Nasdaq Composite was ahead 0.5% at 14,417.55.
The Dow closed 224.09 points higher on Wednesday, adding onto the gains recorded in the previous session, as major indices attempted to bounce back from a rollercoaster January.
“After leaping higher in previous sessions, gains are becoming a little harder to come by for equity markets,” said IG chief market analyst Chris Beauchamp.
“A sharp reverse in the ADP payrolls figure has not helped sentiment, but there will be those who are hoping for a resumption of ‘bad news equals good news’ for stocks, if a series of poor economic figures causes the Fed to rein in its tightening ambitions, even if they don’t get rid of them entirely.”
On the economic front, mortgage applications to purchase a home increased 4% last week, according to the Mortgage Bankers Association, but were 7% lower on a year-on-year basis.
Applications to refinance a home loan, meanwhile, jumped 18% week-on-week despite the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increasing to 3.78% from 3.72%.
Elsewhere, private sector employment in the US unexpectedly fell in January amid a surge in Covid-19 infections, according to the latest data from ADP.
Employment declined by 301,00 from December, versus expectations for a 207,000 jump, while the December total of jobs added was revised to 776,000 from 807,000.
In equities, Google owner Alphabet jumped 7.37% after the company beat on both the top and bottom lines, and announced a 20-for-one stock split.
Advanced Micro Devices was also ahead, rising 5.12% on solid earnings.
On the downside, General Motors lost 1.05% after the carmaker posted earnings that beat estimates and raised its 2022 forecast, despite seeing softer-than-expected revenues.
PayPal tumbled 24.59% after the payments processor issued disappointing guidance, and Redbox Entertainment plunged 52.16% after the DVD rental vending machine operator warned of a number of commercial pressures.
Thursday newspaper round-up: Furlough scheme, KP Snacks, London offices
The Treasury is scrambling to complete 11th-hour plans capable of softening a national cost of living crisis, including a £200 rebate on energy bills and more help for the poorest households. No 10 and the Treasury have been under pressure from Tory MPs to act as millions of households brace for a record hike in energy bills from April, and the prospect of rising mortgage rates and tax increases. – Guardian
Companies handed a combined £1.3bn in controversial fast-track Covid contracts with minimal scrutiny also claimed at least £1m in furlough grants, it can be revealed. Analysis of the accounts of companies that won lucrative emergency contracts to supply personal protective equipment (PPE) to the NHS during the height of the pandemic shows 12 also claimed funds to put staff on furlough at taxpayers’ expense. – Guardian
KP Snacks has warned there may be a shortage of some of its popular crisps and nuts following a ransomware attack. The company, which is behind brands such as Skips, Nik Naks, Hula Hoops, McCoy’s crisps and KP Nuts, told its retail customers to brace for delays and cancellations of deliveries. – Telegraph
Investors from around the world are expected to spend £60 billion on London offices over the next five years in a post-Brexit, post-pandemic vote of confidence in the capital. American property investors will be the most acquisitive, Knight Frank says in its latest London Report. They will pour £15 billion into London offices between now and 2027, the property agent estimates. Funds from Germany, China, Singapore and South Korea are also expected to be active. – The Times
Unsecured creditors have been left £30.4 million out of pocket from the pre-pack administration of TM Lewin that resulted in the closure of all of the shirt company’s shops. TM Lewin was bought in May 2020 for about £25 million by Torque Brands, an investment vehicle led by James Cox, founder of Simba Sleep, and backed by Allan Leighton, chairman of The Co-operative Group. Only seven weeks later the company was put into a pre-pack administration that shut all its 66 stores and resulted in 600 job losses. At the time, Cox said that lockdowns had meant the business was no longer viable in its present form and that it would focus on an online model instead. – The Times
