London close: ECB policy announcement gives stocks a boost
Stocks in London finished above the waterline on Thursday, as investors digested the latest decision from the European Central Bank, which left the door open for a so-called “recalibration” to its Pandemic Emergency Purchase Programme (PEPP).
The FTSE 100 ended the session up 0.62% at 6,938.24, and the FTSE 250 was 1.26% firmer at 22,364.87.
Sterling was weaker, meanwhile, last falling 0.59% against the dollar to $1.3849, and losing 0.41% on the euro to €1.1527.
“European markets have been cheered by the continued dovish stance of the ECB and their decision to ‘significantly’ increase the pace of bond purchases for the second quarter,” said IG chief market analyst Chris Beauchamp.
“This has, unsurprisingly, put pressure on the euro, which has edged back against the US dollar, but overall the continued support for the eurozone economy has bolstered investor enthusiasm for eurozone assets.”
Beauchamp quipped that it would be “nice to have” a “full-blown fiscal stimulus effort” to go with it, but investors would be content with a supportive ECB for the time being.
“The positive atmosphere has flowed over to the FTSE 350, with UK mid-caps enjoying a particularly good day on expectations that a rebounding eurozone economy will lift UK small and medium-size firms thanks to a solid recovery in demand.”
Earlier in the afternoon, ECB policymakers announced that they were standing pat on policy, reiterating their intention to up the ante on bond purchases and, apparently, while leaving all their options open.
The interest rate on the central bank’s main refinancing operations, its marginal lending facility and the deposit facility were kept at 0%, 0.25% and -0.50%, respectively.
Those decisions were as expected by the markets, with the ECB reiterating its intention to purchase assets under the PEPP at a "significantly" higher pace during the second quarter than in the first months of 2021.
It also repeated that the programme was tied specifically to the "crisis phase" of the pandemic.
The bank said it would continue making net purchases under its Asset Purchase Programme at a pace of €20bn per month, and keep providing liquidity through its targeted longer-term refinancing operations for lenders.
On home shores, UK manufacturing optimism improved at its fastest pace for almost 50 years and investment intentions rebounded as economies began to reopen from Covid-19 lockdowns, according to the Confederation of British Industry (CBI).
Business sentiment in the three months to April jumped to +38% from -22% in January, the business group's survey of 288 manufacturers found.
The improvement was the greatest since April 1973 when Edward Heath was prime minister and Slade ruled the pop charts.
Investment intentions improved across the sector, with firms expecting to spend more on buildings, plant and machinery, innovation and training compared with a year earlier.
Plans for plant and machinery were the strongest since July 1997.
“Manufacturers have reported the biggest increase in optimism in nearly 50 years in this month’s quarterly survey,” said the CBI’s chief economist Rain Newton-Smith.
“Phased reopening has lifted the mood among firms, notably driving orders, employment, and investment plans.”
Newton-Smith said continuing to support firms as they get on a steadier footing as restrictions ease would be “crucial” to recovery.
“The government should continue to work closely with business to ensure reopening is a success, while boosting competitiveness over the long-term.”
In equity markets, Rentokil Initial closed down 0.98% even after reporting a good start to the year, growing group ongoing revenue by 15.4% at constant currency to £711.3m in its first quarter.
The pest control and hygiene company said 9.4% of that was organic and 6% was from acquisitions.
It said that despite the uncertain Covid-19 outlook in some parts of the world, it still expected 2021 to be a “year of transition” with its core services building momentum, and disinfection volumes and prices reducing materially from the start of the second quarter.
Informa was off 2.06% after it swung to a £1.14bn pretax loss in the year to the end of December from a £319m profit a year earlier, as revenue fell 42.5% to £1.66bn and the group wrote down £593m of assets because of Covid-19.
Adjusted operating profit fell to £267.8m from £933.1m.
The events and information group predicted revenue in 2021 would be at least £1.7bn.
On the upside, house builder Taylor Wimpey was ahead 0.79% after maintaining annual guidance and reported an increased order book despite the latest Covid lockdown, as strong demand and government support schemes drove sales.
The company said its sales rate for the year to April 18 was 1.00 against 0.90 in the equivalent period last year.
Its order book stood at around £2.8bn, representing 10,995 homes against £2.66bn a year ago.
Centamin advanced 2.44% after it maintained full year production, and reported higher quarter-on-quarter gold output driven by improved mining grades.
The company said gold production rose 53% to 104,047 ounces in the three months to 31 March.
Anglo American rose 0.83% after it reported higher first quarter copper production despite capacity constraints caused by Covid-19 restrictions, as it continued to shift its focus towards “future enabling” metals and minerals.
The mining giant on Thursday said copper production for the three months to 31 March increased by 9% to 160,300 tonnes, due to strong operational performance at its Los Bronces and Collahuasi operations in Chile.
FTSE 100 - Risers
Scottish Mortgage Inv Trust (SMT) 1,251.50p 3.69%
Polymetal International (POLY) 1,637.00p 3.67%
International Consolidated Airlines Group SA (CDI) (IAG) 200.50p 3.38%
Rightmove (RMV) 619.40p 3.27%
SSE (SSE) 1,506.00p 3.26%
Experian (EXPN) 2,771.00p 3.05%
JD Sports Fashion (JD.) 923.00p 2.97%
Rolls-Royce Holdings (RR.) 102.82p 2.95%
Auto Trader Group (AUTO) 577.60p 2.92%
Diageo (DGE) 3,316.50p 2.74%
FTSE 100 - Fallers
BAE Systems (BA.) 500.20p -4.98%
Fresnillo (FRES) 909.60p -2.11%
Antofagasta (ANTO) 1,803.00p -2.06%
Informa (INF) 552.60p -2.06%
Phoenix Group Holdings (PHNX) 720.80p -1.40%
Imperial Brands (IMB) 1,482.00p -1.07%
Rentokil Initial (RTO) 507.60p -0.86%
Aviva (AV.) 396.80p -0.75%
Admiral Group (ADM) 3,189.00p -0.47%
Tesco (TSCO) 226.20p -0.44%
FTSE 250 - Risers
Morgan Sindall Group (MGNS) 2,225.00p 19.11%
SSP Group (SSPG) 328.10p 5.33%
WH Smith (SMWH) 1,895.00p 5.28%
TI Fluid Systems (TIFS) 312.00p 5.05%
National Express Group (NEX) 318.00p 4.88%
Carnival (CCL) 1,675.40p 4.74%
Coats Group (COA) 59.50p 4.39%
easyJet (EZJ) 1,007.50p 4.27%
Cineworld Group (CINE) 98.38p 4.26%
Watches of Switzerland Group (WOSG) 729.00p 4.14%
FTSE 250 - Fallers
AJ Bell (AJB) 448.40p -3.90%
Sabre Insurance Group (SBRE) 259.00p -3.72%
Rathbone Brothers (RAT) 1,730.00p -3.46%
Hochschild Mining (HOC) 199.10p -3.35%
TBC Bank Group (TBCG) 1,094.00p -2.32%
Syncona Limited NPV (SYNC) 229.50p -1.92%
Aggreko (AGK) 854.00p -1.90%
Bodycote (BOY) 796.50p -1.79%
QinetiQ Group (QQ.) 335.00p -1.70%
Drax Group (DRX) 415.20p -1.61%
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