6th Mar 2025 16:53
(Alliance News) - The FTSE 100 closed lower on Thursday, while the pound and euro jumped, amid a slew of earnings, renewed falls on Wall Street and a rate cut by the European Central Bank.
Ongoing fears of a trade war added to the cautious mood, with nonfarm payrolls looming on Friday another factor keeping investors sidelined.
Dan Coatsworth, investment analyst at AJ Bell said there wasn’t any bad news to cause a minor sell-off.
"It’s just one of those days where investors reassessed their portfolios given the uncertain economic and geopolitical backdrop," he noted.
The FTSE 100 index ended down 73.00 points, 0.8%, at 8,682.84. The FTSE 250 closed up 31.34 points, 0.2%, at 20,159.07, and the AIM All-Share gained 1.98 points, 0.3%, at 692.46.
The Cboe UK 100 ended down 0.8% at 870.38, the Cboe UK 250 rose 0.1% at 17,560.23, and the Cboe Small Companies ended up 0.2% at 15,560.32.
The mood was brighter across the Channel. In Paris, the CAC 40 rose 0.3%, while the DAX 40 in Frankfurt jumped 1.5%, hitting an all-time high of 23,460.54 during the day.
Markets on Wall Street opened lower. At the time of the London close, the Dow Jones Industrial Average was down 0.4%, the S&P 500 was 1.0% lower and the Nasdaq Composite fell 1.3%.
The pound advanced to USD1.2890 late on Thursday in London, compared to USD1.2863 at the equities close on Wednesday. The euro stood higher at USD1.0827, against USD1.0764. Against the yen, the dollar was trading lower at JPY148.10 compared to JPY148.58.
The euro's latest gains came after the European Central Bank cut interest rates as expected but hinted the path ahead for further reductions may not be so clear-cut.
The ECB's quarter point follows a similar reduction in January. It takes interest rates on the deposit facility, the main refinancing operations and the marginal lending facility to 2.50%, 2.65% and 2.90% respectively.
Economists focused on a change of language in the accompanying statement.
"Monetary policy is becoming meaningfully less restrictive, as the interest rate cuts are making new borrowing less expensive for firms and households and loan growth is picking up," the ECB said. It had previously said monetary policy remains "restrictive".
"The phrase 'monetary policy is becoming meaningfully less restrictive' indicates that the ECB’s direction of travel is no longer that clear," analysts at ING said, adding it indicates that policy rates are approaching neutral territory.
ING pointed out developments of the last days will have triggered an even more heated debate between doves and hawks on whether or not more rate cuts are needed.
"If eurozone governments do indeed take over the baton and big fiscal stimulus is coming, the ECB will no longer need to do the heavy work to support eurozone growth. Instead, a more optimistic growth outlook on the back of German infrastructure and European defence spending would allow the ECB to stop the current rate cut cycle earlier than we had previously anticipated," it said.
"At the same time, however, let’s not forget that rising bond yields are also more restrictive, increasing costs for private sector investments," ING cautioned.
The ECB pledged a "data-dependent and meeting-by-meeting approach" to determining the appropriate monetary policy stance ahead.
Speaking at a press conference, ECB President Christine Lagarde said the "landscape is clouded with uncertainty".
"Risks are all over the place," the ECB president said.
ING thinks a "pause at the next meeting to come to terms with the new macro reality now looks like a possibility. However, even if the need for further rate cuts is gradually fading away, the ECB won’t be off the hook. Rising bond yields on the back of higher government debt could bring another theme to the eurozone soon: yield curve control," ING added.
On Thursday, the yield on German 10-year bonds rose a further 9 basis points to 2.87%. But the UK 10-year bond yield eased a touch to 4.64%.
On the FTSE 100, Schroders rose 12% as it set out "a clear plan to return to profitable growth" with "ambitious" three-year targets, as it reported positive 2024 results.
The London-based wealth and asset manager reported pretax profit of GBP558.1 million in 2024, up 14% from GBP487.6 million in 2023.
Looking further ahead to the next three years, Schroders said it aims for GBP150 million in annualised net cost savings, GBP20 million of which have been achieved already in the first quarter of 2025.
Admiral rose 5.0% after it declared a nearly doubled payout for 2024, which it called "a remarkable year" after a several "rather challenging" ones.
The Cardiff, Wales-based general insurer said pretax profit increased by 90% to GBP839.2 million in 2024 from GBP442.8 million in 2023, as group turnover surged 28% to GBP6.15 billion from GBP4.81 billion.
Admiral declared a final dividend of 121.0p, up from 52.0p a year before. This lifted its total dividend by 86% to 192.0p from 103.0p.
But Melrose tumbled 15% after its numbers, seemingly punished for the lack of an earnings upgrade after delivering annual profit ahead of expectations, and upbeat mid-term targets.
Peel Hunt noted the stock "has been strong into the numbers, so there is a balance to play in the short term: unchanged guidance against this longer-term premium growth profile. We would ride with it and maintain our buy recommendation."
Analysts at Stifel agreed, stating the held guidance was the only "niggle".
"The stock has run hard into the results, and the lack of an immediate raise to 2025 may be the one aspect of the release to cause minor disappointment."
Pest control specialist Rentokil Initial fell 11% as it continues to be bugged by sluggish sales in North America.
The Crawley, England-based pest control company said pretax profit fell 19% to GBP405 million in 2024 from GBP493 million in 2023, or by 8.1% on an adjusted basis to GBP703 million from GBP766 million.
Revenue rose 1.1% to GBP5.44 billion from GBP5.38 billion with organic revenue growth of 2.8%, with the International business's revenue up 4.7%. But North America lagged behind with organic revenue growth of 1.5%.
Chief Executive Andy Ransom said: "2024 was a challenging year for the group, with lower profits and margins, delivered in line with our trading update in September. Good growth in the International business was held back by the performance in North America."
On the FTSE 250, Spire Healthcare plunged 20% as full-year earnings and guidance fell short of market expectations.
The private healthcare provider blamed a shift away from high-margin business and increased payroll costs for the weak outlook.
Reflecting this change in mix, and the impact of national insurance and national minimum wage changes, Spire expects a GBP30 million Ebitda impact in 2025.
As a result, Spire is guiding to 2025 adjusted Ebitda of GBP270 million to GBP285 million, 7.2% below at the mid-point compared with company compiled consensus of GBP297.8 million.
Brent oil was quoted higher at USD68.84 a barrel on Thursday from USD68.38 late Wednesday. Gold ebbed to USD2,916.75 an ounce against USD2,926.93.
Friday's economic calendar has US nonfarm payrolls and average hourly earnings data at 1330 GMT and Canadian unemployment figures, also at 1330 GMT.
Friday's local corporate calendar has full-year results from retirement product firm Just Group.
By Jeremy Cutler, Alliance News reporter
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