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London open: FTSE nudges up ahead of ECB announcement
London stocks nudged up in early trade on Thursday as investors eyed the latest policy announcement from the European Central Bank.
At 0850 GMT, the FTSE 100 was up 0.1% at 8,311.2.
The ECB is widely expected to cut rates by 25 basis points when it makes its announcement at 1315 GMT.
Patrick Munnelly at Tickmill Group said: “At today’s ECB meeting, expectations for a rate cut may clash with Lagarde’s reluctance to make firm commitments. A 25 basis point reduction in the ECB’s deposit rate, bringing it down to 3%, is the most probable outcome from the Governing Council’s meeting today. Therefore, the market’s attention will be on hints regarding future actions. If a 25 basis point cut occurs today, the market anticipates over 60 basis points of cumulative easing spread across the January and March meetings.
“In other words, market expectations suggest a significant likelihood that one of the first two meetings in 2025 will see a 50 basis point cut, alongside a 25 basis point reduction at the other meeting. Since October, expectations had initially leaned towards a larger cut in December before tapering off.
“The immediate concern is that the forecasts for January and March may need to be adjusted downwards at this point. Historical patterns indicate that Lagarde tends to use press conferences to avoid making firm commitments and emphasise a’meeting by meeting’ decision-making process. A continued trend of poor PMI data, for instance, could further bolster expectations for rate cuts in early 2025, but that will be addressed next week. At this moment, it may be overly optimistic to expect Lagarde to completely endorse the market’s dovish outlook.”
Investors were also eyeing the release of the US producer price index for November, due at 1330 GMT.
Munnelly said: “This announcement comes just a day after the market received a consumer inflation report that was in line with expectations and not excessively high. This particular reading of consumer inflation has significantly influenced market sentiment, leading many to believe that the Federal Reserve is likely to implement a rate cut during their upcoming meeting on December 18.”
Earlier, the Swiss National Bank surprised markets with its biggest interest rate cut in nearly a decade. The SNB cut rates from 1% to 0.5% – the lowest level since November 2022. Economists were expecting a 25 basis points rate cut.
In equity markets, Diageo fizzed higher after an upgrade to ‘buy’ at UBS, while Pennon gained after an upgrade to ‘overweight’ at Barclays.
Currys rallied after saying it swung back into the black in the first half, with a solid performance in UK and Ireland helping to offset weakness in the Nordics. The electricals retailer reported a group adjusted pre-tax profit of £9m, versus a loss of £10m in the same period a year earlier, as revenue ticked up 1% to £3.9bn.
Auction Technology was also firmer after private equity firm TA Associates said it had agreed to sell its entire 12.6% stake in the company for £85.3m.
Recruiter SThree plunged after it posted a slide in net fees and warned that the ongoing challenging market conditions would hit profits. Updating on full-year trading, FTSE 250 firm – a specialist in the science, technology, engineering and maths sectors – said group net fees were down 9% year-on-year.
Contract fell 7%, representing 84% of fees. The contractor order book, meanwhile, was down 10% year-on-year, at £161m.
Hays was also sharply lower.
Investec was hit by a downgrade to ‘neutral’ at JPMorgan.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Diageo Plc | +3.64% | +90.50 | 2,580.00 |
| 2 |  |
Centrica Plc | +2.69% | +3.50 | 133.65 |
| 3 |  |
Lloyds Banking Group Plc | +1.51% | +0.82 | 55.04 |
| 4 |  |
International Consolidated Airlines Group S.a. | +1.46% | +4.20 | 292.20 |
| 5 |  |
Smith & Nephew Plc | +1.20% | +11.80 | 995.20 |
| 6 |  |
Severn Trent Plc | +1.18% | +30.00 | 2,579.00 |
| 7 |  |
Barclays | +1.14% | +3.05 | 269.70 |
| 8 |  |
Bp Plc | +1.00% | +3.95 | 398.00 |
| 9 |  |
Shell Plc | +0.88% | +22.00 | 2,514.50 |
| 10 |  |
United Utilities Group Plc | +0.84% | +9.00 | 1,079.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Associated British Foods Plc | -2.69% | -59.00 | 2,133.00 |
| 2 |  |
Rentokil Initial Plc | -2.55% | -10.60 | 404.80 |
| 3 |  |
British American Tobacco Plc | -1.70% | -51.00 | 2,948.00 |
| 4 |  |
Smith (ds) Plc | -1.21% | -6.50 | 532.50 |
| 5 |  |
Diploma Plc | -1.19% | -54.00 | 4,490.00 |
| 6 |  |
Melrose Industries Plc | -0.99% | -5.60 | 561.20 |
| 7 |  |
Unilever Plc | -0.97% | -45.00 | 4,576.00 |
| 8 |  |
Coca-cola Europacific Partners Plc | -0.96% | -60.00 | 6,200.00 |
| 9 |  |
Auto Trader Group Plc | -0.92% | -7.60 | 816.40 |
| 10 |  |
Spirax Group Plc | -0.81% | -60.00 | 7,390.00 |
US close: Nasdaq jumps to new high as tech stocks surge
US stocks mostly rose on Wednesday with the Nasdaq jumping to another all-time high on the back of strong gains in the tech sector, though the Dow continued its recent downward path.
The Nasdaq surged 1.8% to a new high of 20,034.90, surpassing the current record of 19,859.77 reached last Friday.
The S&P 500 rose 0.8% to 6,084.19, bouncing back strongly after two days of losses to sit just marginally below last week’s all-time high of 6,090.27.
However, the Dow fell 0.2% to 44,148.56. Since setting a new record closing high of 45,014.04 on 4 December, the Dow has fallen for the past five sessions, shedding nearly 2%.
The focus of the session was on November’s inflation report from the Bureau of Labor Statistics, which cemented expectations that the Federal Reserve will cut interest rates again next week. As expected, the consumer price index rose at an annual rate of 2.7% last month, up from 2.6% the previous month, while core inflation held steady at 3.3%.
“It didn’t matter that inflation crept up a bit in the US, it mattered that markets were expecting it, and that the temperature is comfortable enough that a US rate cut next week looks pretty nailed on,” said Danni Hewson, AJ Bell’s head of financial analysis.
Hewson said that, despite the prospect of a Trump presidency – and specifically his proposed trade tariffs – raising the likelihood of inflation creeping higher, the market mood right now is one of optimism.
“That’s tomorrow’s problem and, though markets are forward looking, there’s a turkey feast and a glitter ball between now and then which gives plenty of time for portfolio repositioning once the tinsel has been packed away,” Hewson said.
Elsewhere on the macro front, US mortgage applications rose by 5.4% in the week ended 6 December, according to the Mortgage Bankers Association of America, up from the prior week’s 2.8% increase. Applications to refinance a mortgage surged 30% week-on-week, while applications to purchase a home fell by 4%.
Market movers
Tech stocks were in demand with semiconductor group Broadcom leading the way on the back of reports that it was working on an AI chip for Apple.
Others in the sector like Alphabet, Micron Technology, Nvidia and Intuit were also putting in decent gains.
Walgreens was falling sharply on the back of rumours that it is in talks with private equity firm Sycamore Partners about a possible takeover. However, according to Sky News, Sycamore will likely spin off its UK division Boots if it succeeds in taking Walgreens private.
Unitedhealth shares continued to drop following the shock killing of the CEO of its insurance arm, Brian Thompson, in New York last week. Since his death on 4 December, shares have fallen nearly 13%.
Thursday newspaper round-up: Post Office, Vestas, McLaren
The police criminal inquiry into the Post Office has identified dozens of persons of interest so far, as a team bolstered to 100 officers investigates the actions of executives, legal teams and civil servants connected to the Horizon IT scandal. The investigation, which the police describe as unprecedented in size and scale, is in the first instance examining potential offences of perjury and perverting the course of justice by those involved in making “key decisions” on Post Office investigations and supporting prosecutions of branch owner-operators. – Guardian
The wind turbine maker Vestas has said it will cut 300 jobs at its Isle of Wight factory. Staff at the plant in Newport have been told at least half of its manufacturing operation, which employs 600 people, will be cut amid changing demand for turbine blades. Vestas, a Danish manufacturer with operations in 88 countries, is switching from making offshore blades to smaller, onshore blades, which will only sustain 300 jobs at the site, it said. – Guardian
Labour has been accused of seeking to bulldoze through the Home Counties as Angela Rayner prepares to unveil the biggest overhaul of planning rules in a generation. The Housing Secretary will on Thursday unveil a new National Planning Policy Framework (NPPF) intended to pave the way for thousands of estates across the South East. – Telegraph
British supercar maker McLaren has been sold to an Abu Dhabi sovereign wealth fund, in a deal presided over by the Emirate’s crown prince. The Woking-based company has until now been owned by state-owned Bahraini investment outfit Mumtalakat. But the firm has now sealed an agreement to sell McLaren’s automotive business to CYVN Holdings, which is managed by the trillion-dollar Abu Dhabi Investment Authority. – Telegraph
One of America’s largest car manufacturers is set to abandon its plans to develop a driverless taxi after the programme was marred by an accident last year. General Motors (GM) had made the new technology a priority, pouring more than $10 billion into its Cruise robotaxi vehicle since 2016. The company announced on Tuesday that it plans to shift the focus of the Cruise programme to concentrate on developing advanced driver assistance systems for personal vehicles instead. – The Times
