FTSE 100 closes higher
Trade war fears fade for now
Pound mixed as ECB statement drops asset purchase increase line
FTSE 100 closed higher as fears over trade wars eased and the Euro weakened after the European Central Bank meeting.
The premier UK blue-chip exchange added around 45 points at 7,203, while FTSE 250 also stormed higher, up 193 points at 19,968.
In the currency markets, the pound added 0.15% against the Euro, which fell 0.76% against the US dollar.
"Whilst the ECB kept rates unchanged and made no changes to the current quantitative easing programme, Draghi did drop the easing bias in the forward guidance," said Fiona Cincotta, senior market analyst at City Index.
"This effectively moves the ECB one step closer towards ending its stimulus programme, a hawkish move in no uncertain terms.
"As is common from Draghi, hawkish moves are often accompanied by a dovish press conference in order to keep a balanced approach and to prevent the euro getting carried away with itself."
On Trump and trade, Draghi made clear his opinion that unilateral trade decisions were dangerous which sucked more life out of the euro, the analyst noted.
3pm: Footie jumps as Dow bounces
The FTSE 100 index shot higher in late afternoon trading as New York shares managed strong early gains as trade war fears fade and bond yields fall after the European Central Bank tempered its easing bias language following Thursday’s policy meeting.
Around 3pm, the UK blue chip index was up 31 points at 7,188, just easing off the session peak of 7,194.74 hit after the US open.
On Wall Street, the Dow Jones was 111 points higher at 24,913 after half an hour of trading, recovering all and more of Wednesday’s falls, with the broader S&P 500 index and tech-laden Nasdaq composite also both around 0.4% higher.
Investors appeared less worried about the prospect of a trade war, expecting the recently announced tariffs to be watered down to exempt major trading partners such as Canada and Mexico, according to some reports.
President Donald Trump is expected to sign a decree that lays out his plan for levies on steel and aluminium imports this week later today.
On current markets, the pound was 0.3% lower against the US dollar at US$1.3863 but recovered earlier falls to be flat again versus the euro at €1.1221.
The European single currency was volatile as traders attempted to interpret ECB boss Mario Draghi’s latest pronouncements,
David Lamb, head of dealing at FEXCO Corporate Payments, commented: “How very European. Mario Draghi’s retort to Donald Trump’s swaggering trade war rhetoric was a rhetorical question – if you slap tariffs on your friends, who are your enemies?
“The short answer, of course, is everyone. And the ECB chief was keen to stress that starting a trade war is a zero sum game. With no winners, only losers.”
Lamb added: “Meanwhile Eurowatchers are struggling to translate the mixed messages of the ECB’s decision on QE.
“While the forward guidance suggested the Eurozone money presses could be stopped as soon as September, Mr Draghi made clear that he reserves the right to change his mind.”
2pm: Focus switches to US
The FTSE 100 remained pretty flat in afternoon trading with the focus switching to the US restart after the latest European Central Bank policy decision failed to excite much interest.
Around 2pm, the UK blue-chip index was just 3 points higher at 7,161, staying below the day’s modest peak of 7,174.85.
US stock index futures pointed to further falls by the Dow Jones on Thursday amid ongoing worries over a possible trade war sparked by President Trump’s tariff moves, while there will also be nervousness ahead of Friday’s always-crucial US jobs report.
Data today showed initial US jobless claims rose by 21,000 to 231,000 in the week ended March 3, the highest level in six weeks, just one week after dropping to the lowest level since 1969.
Among the blue-chips in London, GlaxoSmithKline was up 1.1% to 1,336.4p after it said its asthma and chronic obstructive pulmonary disease drug Relvar Ellipta has received a "positive" EU approval with regards its use and marketing.
The recommended label update will allow the use of Relvar Ellipta - an inhaled corticosteroid and long-acting Beta2-agonist - for patients whose asthma is already adequately controlled on both an inhaled corticosteroid and long-acting Beta2-agonist, Glaxo said.
On the second-line, Euromoney Institutional Investor was up 3.9% to 1,274p after it said it will acquire equities survey firm Extel from WeConvene for an undisclosed sum. Extel will be integrated into its Institutional Investor Research unit.
Mackenzie, who was fired as the roadside assistance firm's chairman last August after a fight with a fellow executive, claims he is being denied bonus payments because he should not have been dismissed.
The fall also comes a day after AA shares soared nearly 15% higher on the back of vague talk of possible bid interest from private equity and with the stock having dropped sharply over the past few weeks after it announced plans to reduce its future dividend plans as a result of a new investment programme.
1.15pm: Only language changes from ECB
The Footsie slipped back slightly but remained fairly subdued after the as expected news that the European Central Bank is changing nothing after its latest policy meeting, although it did drop a line saying it would increase asset purchases if the outlook deteriorates.
In its post-meeting statement. the ECB said it would continue its program of asset purchases through September, "or beyond, if necessary”, and left its refinancing rate unchanged at 0%, with the rate on its deposit facility unchanged at 0.25%.
The central bank said again that it expects rates to remain at present levels "for an extended period of time, and well past the horizon of the net asset purchases."
Full change comparison in ECB monetary policy language pic.twitter.com/btH5wwBuiJ— Mike Bird (@Birdyword) 8 March 2018
ECB President Mario Draghi will hold a news conference at 1:30 pm London time, so investors will remain subdued waiting for that.
Dennis de Jong, managing director at UFX.com, commented: “Mario Draghi has warned against raising interest rates for some time now, and the ECB’s decision to hold will have been an easy one, especially given the recent surge in concerns around economic uncertainty.”
He added: “While Draghi is likely to display a dovish tone in his follow up speech this afternoon, investors will be eager to find out when there will be an end to the ECB's quantitative easing programme.
“Expected to continue until September, any conclusion to the QE programme sooner than then will likely spark a resurgence in the euro – and if it does the job of stimulating the eurozone economy and bringing inflation back up to target, it will tick a number of boxes for Draghi and the ECB.”
Around 1.10pm, the FTSE 100 index was 5 points lower at 7,162, below the session peak of 7,174.85.
On currency markets, sterling fell back 0.2% versus the euro to €1.1184, and was 0.1% lower against the dollar at US$1.3883.
12.15pm: ECB news nervously awaited
The FTSE 100 index was modestly higher in very subdued lunchtime trading, with US stock futures looking mixed as investors awaited the latest policy decision from the European Central Bank, due in half an hour.
Around 12.15pm, the UK blue chip index was about 10 points higher at 7,167, stuck in a tight trading range between a session high of 7,174.85 and a low of 7,145.70.
With ongoing trade war concerns following President Trump’s tariff moves, which earlier this week led to the departure of a key White House economic adviser, the Dow Jones is currently seen falling by around 40 points, having lost 82 points on Wednesday.
The broader S&P 500 index is also expected to fall, but the tech-laden Nasdaq composite is forecast to push higher again, although much will depend on the ECB meeting outcome.
Economists at ING commented: “At today's ECB meeting, we expect no hint of when QE could end, but we'll be watching the language closely.”
They added: “The subtle change in words should give a good indication of who is currently on top in the ECB’s in-house bird fight. However, ECB members shouldn't forget when real bird fights, everyone loses some feathers.”
On currency markets, sterling remained flat against the euro at €1.1201, and was 0.3% lower versus the dollar at US$1.38.68.
11.45am: Fund outflows large
UK equity funds are still seeing large outflows, while fixed interest and global equity funds continue to attract investors, according to Investment Association data for January released today.
The IA report said UK equity funds saw net outflows of £532mln in January, while fixed income saw £1.6bn of net retail inflows in the month, with global the best-selling equity sector with inflows of £675mln.
Laith Khalaf, senior analyst at Hargreaves Lansdown said: ‘Investors have started the new year in much the same vein as they ended the last. UK funds continue to leak assets, while money is still pouring into global equities and fixed income.
“The bond paradox is still alive and well, as fixed interest funds once again attracted the most money, despite global monetary policy tightening. The lion’s share of this money is going into strategic and global bond funds which at least have the flexibility to move around the fixed income universe in search of opportunities, and protection if necessary.
“The antipathy towards the UK is now so long in the tooth one has to question whether sentiment is truly reflecting prospects for the UK stock market compared to its global peers. The UK fund sectors are home to many talented managers and UK companies have diversified international income streams, so investors should make sure they’re not just following the herd if they’re thinking about ditching their UK holdings, and have considered reasons for doing so.”
10.45am: Retail woes continue
The John Lewis Partnership saw its annual profits plunge by 77% in annual profits, leading the owner of the eponymous department stores chain and posh supermarkets Waitrose to cut the annual bonus given to its staff.
In a statement, Charlie Mayfield, chairman of the mutually-owned group, pointed to "subdued" consumer demand during a challenging year, which also saw a shake-up which saw 1,440 redundancies.
The firm’s pre-tax profit for the year to 27 January dropped to £103.9mln, while the employee-owned partnership's bonus scheme fell to 5% of salary - down from 6% in 2016/17 and 10% the year before.
Waitrose saw like-for-like sales grow by 0.9% but at the expense of a 42% dive in operating profits while department store John Lewis saw 0.4% sales growth and a slight uptick in profits.
Mayfield said further pressure on profits was expected in the coming months amid continuing economic uncertainty and fierce competition.
And he added that sales at John Lewis had been "significantly impacted" by last week's snow.
The news weighed on stock market-listed retailers such as blue-chip Marks & Spencer PLC (LON:MKS), which lost 1.6% at 283.4p in mid-morning trading.
Overall the FTSE 100 index remained subdued, down about 2.5 points at 7,155.
9.45am: More bad news on UK house prices
The Royal Institution of Chartered Surveyors (RICS) said on Thursday that its house price index fell to zero in February from a downwardly revised +7 the month before.
That was a bigger drop than forecast by any economist and matched November’s reading, the lowest since March 2013.
Here's why I think Britain's shaky housing market will prevent the MPC raising interest rates twice this year (as markets currently expect):https://t.co/bjPi6xTaIV— Samuel Tombs (@samueltombs) 8 March 2018
RICS said the headline figure continued to mask wide regional variations, with prices falling in London, southeastern and eastern England, but up solidly in most of the rest of the United Kingdom.
On Wednesday, major mortgage lender Halifax said UK prices in the three months to February were 1.8% higher than a year before, the smallest rise in nearly five years.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics commented: “The downturn in housing market activity accelerated in February, indicating that the stimulus to demand from the Chancellor’s stamp duty reforms has been outweighed by the prospect of further increases in interest rates.
He added: “The new buyer enquiries balance fell to -16, from -11 in January, remaining below zero for the 11th consecutive month. Demand hasn’t fallen for such a protracted period since the 2008/09 financial crisis. We fear that demand will continue to fall rapidly over the coming months, as new mortgage rates pick up.“
On currency markets, the pound was barely moving, flat against the dollar at US$1.3883, and just ticking up 0.1% versus the euro at €1.1211 ahead of the latest European Central Bank policy decision.
The FTSE 100 index also remained fairly subdued but managed to rally 9 points higher to 7,167.
8.45am: Footsie cautious
The FTSE 100 index was flat in early trading, weighed by a batch of ex-dividend stocks, with investors happy to keep to the sidelines ahead of the outcome of the latest European Central Bank meeting today, and with the February US jobs data tomorrow.
Around 8.45am, the UK blue chip index was about 0.5 points higher at 7,157, having gained 11 points on Wednesday.
However, stocks trading without the attraction of their latest dividend payout knocked 8.3 points off the FTSE 100 index, including BHP Billiton PLC (LON:BLT), CRH PLC (LON CRH), Persimmon PLC (LON:PSN), and Standard Chartered PLC (LON:STAN).
On currency markets, the pound was also pretty flat, down 0.1% versus the dollar at US$1.3894 and unchanged against the euro at €1.2101 as the ECB news was awaited.
Lee Wild, Head of Equity Strategy at interactive investor: There’s little in terms of economic catalysts Thursday, so it will be the European Central Bank’s interest rate decision at lunchtime, then ECB president Mario Draghi’s speech soon after that traders will watch.
“Don’t expect a change in borrowing costs, but investors should listen for any subtle shift in rhetoric from policymakers which hints at a winding down of its bond purchase programme.”
He added: “Equity markets remain out of favour as traders use the resignation of Donald Trump’s respected economic advisor Gary Cohn to sell stocks.”
“Once again, it’s the actions of the President that are driving financial markets, and speculation around tariffs and Cohn’s replacement will likely dominate, at least until Friday’s monthly US jobs report.
“Policymakers will almost certainly raise interest rates at the Federal Reserve’s next policy meeting in two weeks’ time unless tomorrow’s number is shockingly bad.”
⚡️ “Aviva 2017 full year results”https://t.co/qTcyo2lVVN— Aviva plc (@avivaplc) 8 March 2018
The group also unveiled plans for a £500mln share buy-back and said it would spend £600mln on bolt-on acquisitions.
Proactive news headlines:
Wind farm investor Greencoat UK Wind PLC (LON:UKW) has acquired the newly built Brockaghboy wind farm from Italian firm ERG for about £163mln in cash. Brockaghboy, near Londonderry in Northern Ireland, was only commissioned last month and has a capacity of 47.5Mw.
OptiBiotix Health PLC (LON:OPTI) has announced that its SlimBiome weight management technology will be used in US partner Cereal Ingredients' (CII) Nutri-Bites range of cereal products. The AIM-listed obesity and cholesterol management firm said that the partnership will extend the application of SlimBiome® into products such as breakfast cereals and cookies, cakes as well as a range of healthy snacks, yoghurts, and cereal bars.
Concepta PLC (LON:CPT) announced that it has received Ethics Committee approval to commence the user trial for its myLotus fertility product in the UK. The AIM-listed firm said the trial is expected to commence in the next months and will take approximately four months, with 120 women testing the device for ease of use and clarity of instructions.
Action Hotels PLC (LON:AHCG) said trading for the first two months of 2018 was encouraging, with like-for-like revenues well ahead of 2017. Excluding the recently opened ibis Styles Bahrain hotel, revenues this year have been 6.4% ahead of 2017 on a like-for-like basis, while trading at the recently opened hotels in Sohar Oman and Brisbane Australia are showing revenue growth year-on-year and good customer feedback as they mature into their relative markets, Action Hotels said.
ATTRAQT Group PLC (LON:ATQT) said its strategy remains the same after a “milestone year”: to become the eCommerce acceleration platform of choice for online retailers. In its full-year results, the company highlighted the impact of the Fredhopper business it acquired last year, which contributed to a 278% increase in revenue to £13.6mln from £3.6mln the year before.
Caribbean oil firm Touchstone Exploration Inc (LON:TXP, TSE:TXP) has revealed a 20% increase in proved reserves over the course of 2017, and has given notice of its full year results.
Cabot Energy PLC (LON:CAB) told investors that its winter drill programme, in Alberta, Canada, is ahead of schedule. Three of four well side-tracks have now been drilled and tested successfully, and the drilling of the final well is due to be completed shortly.
88 Energy Ltd (LON:88E, ASX:88E) told investors that 98% of its listed (A$0.02 series) options were exercised before the March 2 expiry, resulting in an A$8.1mln injection of capital into the company.
Diversified Gas & Oil PLC’s (LON:DGOC) daily gas production has doubled following the acquisition of Appalachian Basin gas producer Alliance Petroleum. The deal has now completed for a total consideration of US$95mln (£66.9mln) comprising the purchase price of US$70mln plus US$25mln of debts..
Amur Minerals Corporation (LON:AMC) has appointed road design group Cevi Construzioni for the 350km road from Ulak, on the Baikal-Amur rail line, to its Kun-Manie project in Far East Russia. The AIM-listed firm said this step is the first in a three component process to earn long term grant of access rights to the site of the huge nickel/copper project.
Scotgold Resources Limited (LON:SGZ) has announced the appointment of SP Angel Corporate Finance LLP as the company's nominated adviser and joint broker, working alongside Smaller Company Capital Ltd, with immediate effect.
6.50am: Quiet start seen
The FTSE 100 is expected to start Thursday higher, but only slightly, as international affairs continue to steer market sentiments.
In London, CFD and spreadbetting group IG Markets sees the FTSE 100 starting in positive territory. With just over an hour until Thursday’s open, it is calling the blue chip benchmark up 6 points, at 7,155 to 7,159.
Wednesday provided another choppy session of trading for the equity indices, as Trump’s trade policies continued to evolve.
“The Dow recovered after opening some 300 points lower, as investors were rattled by the resignation of Trump’s economic advisor, Gary Cohn, a calming influence on the President and a fierce opponent to Trump’s tariffs,” London Capital Group analyst Jasper Lawler said in a note.
“Trading lower to a backdrop of Cohn’s resignation, Wall Street managed to pick itself off session lows, on signs of an unexpected softening of stance by Trump.
“Suggestions that Mexico and Canada and potentially other countries, on a case by case basis, may be excluded from Trump’s trade tariff was a nod to congressional Republicans and administration officials who feared that the tariffs could hurt allies rather than the intended target, China.”
The Dow Jones ended Wednesday on the back foot, down 82 points or 0.33%, closing the session at 24,801. The S&P 500 was all but flat, losing just 1 point, at 2,726 whereas the Nasdaq moved positively, adding 24 points or 0.33% to finish the day at 7,396.
In Asia, equity benchmarks were strengthening. Japan’s Nikkei rose 115 points or 0.54% to trade at 21,368 while Hong Kong’s Hang Seng added 430 points or 1.43% to 30,629. The Shanghai Composite edged 0.34% higher to 3,282. Australia’s ASX 200, meanwhile, gained 40 points or 0.69% to trade at 5,942.
Later today, the focus will turn to the European Central Bank which makes its monthly policy decision. Although no changes are anticipated, the market will be keenly eyeing the commentary for any hints of what may come and when.
“We don’t expect any hints at when QE could end, but as always, will be looking for a subtle change in language that signals it is already en route to the exit,” said ING analyst Carsten Brzeski.
Significant events on Thursday:
European Central Bank policy meeting outcome.
Finals: G4S PLC (LON:GFS), Domino's Pizza Group PLC (LON:DOM), Aviva PLC (LON.AV.), Countrywide PLC (LON:CWD), Equiniti Group PLC (LON:EQN), Premier Oil PLC (LON:PMO), Spirent Communications PLC (LON:SPT), Alfa Financial Software Holdings PLC (LON:ALFA), ATTRAQT Group PLC (LON:ATQT), Capital & Regional PLC (LON:CAL), Communisis PLC (LON:CMS), Frontier Smart Technologies Group Limited (LON:FST), John Laing PLC (LON:LNGO)
Ex-dividends: To knock 8.3 points off FTSE 100 index - BHP Billiton PLC (LON:BLT), CRH PLC (LON:CRH), Evraz PLC (LON:EVR), Land Securities PLC (LON:LAND), Persimmon PLC (LON:PSN), Shire PLC (LON:SHP), Standard Chartered PLC (LON:STAN)
Economic data: RICS UK housing market report; US weekly jobless claims; US Challenger job cuts.
Around the markets
- Sterling: US$1.3895, down 0.01%
- Gold: US$1,328 per ounce, up 0.18%
- Brent crude: US$64.43 per barrel, down 2%
- Bitcoin: US$9,765, down 1.43%
- IoD chief Barbara Judge steps aside over staff allegations - Financial Times
- Chancellor's spring statement to reveal £11bn boost - The Guardian
- Airbus warns of 500 job losses in UK - The Times
- Demand for houses has fallen for the 11th month in a row - City A.M.
- High street retailer New Look has announced plans to close 60 stores and slash 1000 jobs - Daily Mail
- Ryanair reiterates risk of Brexit flight cancellations - Financial Times
- Government owes £5.3trn in pensions - Sky News
- Big Tesla Shareholders Back Musk's $2.6 Billion Pay Package - Bloomberg
- Reports of Problems at Crypto Exchange Send Bitcoin Tumbling - Wall Street Journal
- The SEC just made it clearer that securities laws apply to most cryptocurrencies and exchanges trading them - CNBC
- Wynn Resorts: Board shakeup as legal woes drag on - CNNMoney
- Snap is reportedly laying off around 100 employees – TechCrunch
- Carl Icahn denies knowing Trump tariff plans before selling Manitowoc stake - MarketWatch