FTSE 100 shares closed higher on Thursday, buoyed by news that the euro zone will curb its quantitative easing programme next April.
The blue-chip FTSE 100 closed up 0.4% at 6,931, led by a 4.6% rise to 1723p for WPP (LON:WPP) after shares in the advertising giant were upgraded to a 'buy' by broker Jefferies.
London’s gains were paler than those of European bourses, however, following the European Central Bank’s decision to scale back its quantitative easing programme to monthly buy-ups back to 60bn euros rather than the recent enhanced rate of 80bn euros – even as it surprised investors by extending the period of activity to December next year.
Michael Hewson, chief market analyst at CMC Markets was among those warning to avoid calling the ECB’s move a tapering of QE.
“In essence all they’ve done is reduced the monthly asset purchase amount back to the levels it was in March this year, when deflation was still a worry, and now that rates are rising again have pulled it back down again in a move akin to dabbing the brakes on a speeding motor car,” he said.
“More importantly the ECB changed the limits to their bond buying program by saying that they would buy bonds below the -0.4% deposit rate if the situation warranted, as well as widening the pool of available assets to include 1 year to 30 year bonds, while keeping their options open with respect to adjusting the pace of the monthly program.”
The stand-out faller in the FTSE 100 was laggard leader Capita (LON:CPI), sinking 14% to 485.3p after the outsourcing group issued a profit warning.
Brexiteers landed a morale boost when US fast food chain McDonalds said it would move its tax base to the UK from the Eurozone’s Luxembourg.
The mid-cap FTSE 250 ended up 0.3% at 17,681 and led by Evraz plc (LON:EVR), the steel and vanadium miner, up 9.7% to 262.3p. Its only news of the day was that the miner was considering a convertible bond issue, according to reports.
The FTSE AIM 100 Index closed down 0.1% at 3879 while the FTSE AIM All-Share Index ended flat at 813.
Gainers in London outweighed losers. A total of 35% of stocks across the bourse rose while 29% fell.
1620 GMT - FTSE 100 heads higher as Draghi introduces slow 'taper'
QE boost for the FTSE 100
Plexus and Active Energy in demand
Liberum makes about turn
The extension to Europe’s quantitative easing programme put a little pep in the step of the FTSE 100, which rose 24 points to 6,925.93. Away from the markets, the City broker Liberum provided some comedy gold by upgrading its price target for Mike Ashley’s Sports Direct, before quickly returning back to the initial valuation.
Liberum made the move after the retailer said it was suspending its share buyback programme.
Among the tiddlers, oil services firm Plexus received an AGM boost as it rose 11%, while Active Energy jumped 8% as the political backdrop improved for its Canadian forestry joint-venture. 3pm....Banks rally
FTSE 100 up 25 at 6,926
ECB reduces bond purchases from April next year
Banks rally led by RBS
London’s blue chips pushed on despite the unexpected European Central Bank decision to scale back its monetary stimulus.
FTSE 100 rose 25 to 6,926 even though ECB president Mario Draghi indicated that from April next bond purchases by the bank would reduce by €20bn to €60bn per month.
It was not tapering US-style, Draghi was keen to make clear.
Holger Schmieding, at Berenberg, noted the ECB president made a point of indicating there will be no further reduction in asset purchases next year to give clarity to markets.
The rumoured Italian bank sector rescue never emerged, but there was enough money still being pumped into it to keep investors happy.
Banks were making modest headway on the news with Barclays (LON:BARC), Lloyds Banking Group PLC (LON:LLOY) and Royal Bank of Scotland PLC (LON:RBS) all posting gains of around 1%.
1145 am...FTSE 100 marks time and waits for Draghi
London’s blue chips were in wait and see mode ahead of the European Central Bank meeting at lunchtime.
A surge in the market yesterday stemmed from speculation that a rescue of the troubled Italian bank sector might on the cards.
FTSE 100 was up three points at 6,905 and this relative lack of macro action gave companies a chance to shine, or not.
Another profit warning and the announcement of a fire sale of assets did for shares in the outsourcing giant Capita (LON:CPI), which fell 9% to 512p.
Among the mid-caps online delivery firm Ocado (LON:OCDO) was off 3% after its trading update, which hinted at pressure on profit margins.
Sports Direct PLC’s (LON:SPD) interims meanwhile contained enough knockabout stuff to keep mainstream and financial reporters happy.
Profits fell by 57%, more or less as expected, but hard-pressed staff do now have the chance to hire the retailer’s new corporate plane to jet away from the stress of working for the controversial company.
Sports Direct’s share price has more than halved in the last 12 months and this morning was down another 8% to 290.4p.
Elsewhere, Royal Mail Group PLC (LON:RMC) was a faller as Goldman Sachs trimmed its price target to 550p from 600p.
William Hill PLC (LON:WMH) was also under pressure on a report in the Times that MPs want to cut the stake maximum on fixed odds betting machines, which have been called the crack cocaine of gambling, to £2 from £100.
High street bookmakers make big money from fixed odds machines and Hill shares fell 8% to 287.7p while the newly-merged Ladbrokes Coral shed 7% to 118p.
Samples from historic drill holes at Sula Iron & Gold PLC’s (LON:SULA) Ferensola have indicated more potential high grades of gold at the site in Sierra Leone.
Roger Murphy, Sula's chief executive, said that what was planned largely as a confirmatory exercise had yielded some exceptionally positive results pointing towards good gold grades within the project's weathered oxide zone.
The shares surged 6.8% to 0.235p on the news, and are up 83% over the last three months.
Watch Sula boss Roger Murphy hails 'very encouraging' Ferensola samples
redT energy PLC, the energy storage technology company, saw its shares marked down 2.8p to 8.57p as it conditionally raised gross proceeds of £12 million from institutional and other investors through a proposed issue of 150mln shares at 8p a pop.
Shareholders might be a bit miffed at the share price plunge, but at least they will get the chance to buy shares at the 8p knock-down price themselves through an open offer.
8.48am ...FTSE 100 off to a muted start ahead of ECB decision
The FTSE 100 got off to a muted start as traders effectively sat on their hands ahead of the European Central Bank announcement later Thursday.
The smart money is on Mario Draghi extending the stimulus programme, but nobody was betting the farm on such a move as the index of blue-chip shares advanced just 12 points to 6,914.60 in opening deals.
While the US appears to be defying gravity, this side of the Atlantic analysts have half an eye on Italy, which appears to need more time to conclude the rescue of one of its smaller banks.
A cut to full-year guidance and the announcement of a fire sale of assets did for shares in the outsourcing giant Capita (LON:CP), which fell 7%.
Among the mid-caps online delivery firm Ocado (LON:OCDO) was off 3% after its trading update, which hinted at pressure on profit margins.
6.45am...London traders expected to be on the front foot
London’s FTSE 100 is predicted to start Thursday on the front foot, but, most attentions are likely to be on Europe.
It is anticipated that more Eurozone stimulation is on way, when the European Central Bank meets later today, albeit those hopes may not be realised.
Equity strength continues to be supported by rallying US equities also, with the S&P 500 again marking new highs on Wednesday.
In New York yesterday the Dow Jones tacked on almost 300 points, 1.55%, while the S&P 500 gained 1.3% closing at 2,241 and the Nasdaq rose 1.14% to 5,393.
In Asia, Japan’s Nikkei this morning gained 1.45% to 18,765, while Hong Kong’s Hang Seng added just 0.3% to 22,882.
The Shanghai Composite meanwhile notched 0.17% lower to 3,216.
In Australia, the ASX 200 climbed 1.2% to 5,543.
Meanwhile, back to the UK, London’s FTSE 100 is seen around 20 points better ahead of Thursday’s open with spreadbetting and CFD group IG Markets calling the blue-chip benchmark at 6,914 to 6,918 about an hour before the start of trading.
Headlines
Revealed: Rio Tinto's plan to use drones to monitor workers' private lives – The Guardian
Glencore buys stake in Russian state oil firm Rosneft – The Guardian
Ikea Group plans €1bn investment in recycling companies and forests – The Guardian
British craft beer maker Camden Town Brewery unleashes Hells in New York bars – Daily Mail
Arcadia sales kept firmly under wraps by ‘Sir Shifty’ as billionaire tycoon breaks with years of tradition in face of backlash – Daily Mail
Demand for wellies and winter warmers sees fashion brand Joules' sales jump 16% - Daily Mail
Goldman Sachs has cut its target valuation for CMC Markets to almost half the level at which it floated this year after the City watchdog announced a crackdown on spread betters, the Times reports.
The UK investigation into October’s “flash crash” in sterling has focused heavily on the Japanese trading operations of Citigroup, which fired off repeated sell orders that exacerbated the pound’s fall reports the FT.
Thousands of steel jobs were secured last night when Tata Steel agreed to keep Port Talbot’s blast furnaces running without cutting the workforce for another five years, the Times and others.
The Government attempted to parachute a vocal advocate of Channel 4 privatisation onto the broadcaster’s board as part of a battle over its future that has triggered a row over diversity in television and political interference, reports the Telegraph.
Promoting unhealthy food to children on Twitter or Facebook will be banned under new UK advertising rules that will extend restrictions from television to social media, cinema and print, writes the FT.
Consultancy companies earning billions of pounds from overseas aid will be forced to reveal their salaries and fees after an investigation by The Times exposed overcharging across the sector.
The head of HMRC has called for a review into footballers shielding their image rights earnings from tax by transferring them to offshore accounts, describing it as “the most significant risk in football” reports the Times.
Commodities/currencies
$/£ - pound rises to 1.2646
Oil (WTI) - down slightly to US$49.75 per barrel
Gold - flat at US$1,173 per ounce