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LONDON MARKET MIDDAY: Miners lift FTSE 100 ahead of ECB decision

14th Sep 2023 12:06

(Alliance News) - The FTSE 100 was higher at midday on Thursday, shrugging off any nerves ahead of the European Central Bank's incoming interest rate decision amid a rally among blue-chip mining stocks.

The FTSE 100 index was up 82.60 points, or 1.1%, at 7,608.59. The FTSE 250 was marginally higher, up just 5.10 points at 18,566.67 and the AIM All-Share was up 1.27 points, or 0.2%, at 742.02.

The Cboe UK 100 was up 1.0% at 758.18, the Cboe UK 250 was down 0.1% at 16,191.77, and the Cboe Small Companies was up 0.9% at 13,243.68.

The ECB will announce its latest interest rate decision at 1315 BST.

Analysts at Lloyds Bank said the outcome of the decision remains a "very close call" between a tenth consecutive hike or a pause.

"Markets now attach above-evens probability (about 65% at the time of writing) of a 25 basis point rise which would bring the deposit rate up to 4%. That higher conviction level followed a Reuters story on Tuesday stating that new ECB forecasts will show Eurozone inflation remaining above 3% in 2024, higher than previously predicted back in June, mostly reflecting higher oil prices," they said.

UBS expects the central bank to deliver a final 25 basis point hike but acknowledged that in light of weak economic data in recent weeks, the central bank may pause in order to leave the door open for a hike in October.

European equities remained upbeat despite investors remaining divided over the decision. The CAC 40 in Paris was 0.2% at midday London time and the DAX 40 in Frankfurt was up 0.1%.

In London, miners were the top performers in the FTSE 100 at midday on Thursday following some positive broker commentary on the sector.

Rio Tinto added 5.1% after JPMorgan raised the stock to 'neutral' from 'underweight'. Anglo American climbed 5.9% to 2,226.50 pence as the bank lifted its price target to 2,900p from 2,650p and said the stock remains its "top pick". Glencore rose 3.8% in a positive read across.

"China steel demand has proven more resilient as infrastructure demand offsets poor property sector demand and excess output is finding its way to the export market. With the iron ore market relatively more balanced medium term...we see the iron ore miners offering moderately more attractive valuations," JPMorgan explained.

In the FTSE 250, Trainline jumped 12% after the online rail ticket seller unveiled a GBP50 million share buyback and reported higher ticket sales and revenue in the first half of its financial year.

In six months that ended August 31, total net ticket sales jumped 23% year-on-year to GBP2.65 billion, driving revenue up 19% to GBP197 million from GBP165 million.

As a result, Trainline reconfirmed guidance for the financial year as a whole. It expects annual net ticket sales growth of between 13% and 22% in financial 2024, and revenue growth between 13% and 22%.

Hilton Foods climbed 6.6% after it announced it had signed a long-term agreement with Walmart to supply its Supercentres in Canada.

Elsewhere in London, Kier Group added 6.0% as it announced it plans to resume dividend payments in its current 2024 financial year, after reporting a jump in annual profit for financial 2023.

The company reported that pretax profit in the year ended June 30 leaped to GBP51.9 million from GBP15.9 million a year prior. Revenue rose 7.5% to GBP3.38 billion from GBP3.14 billion.

"The group is well positioned to continue benefiting from UK government infrastructure spending commitments and we are confident in sustaining the strong cash generation evidenced this year," said Chief Executive Andrew Davies.

On AIM, LoopUp surged 41% after it posted a substantially narrowed loss in the first half of 2023 as it recorded a sharp rise in revenue.

The cloud hybrid communication platform reported a pretax loss of GBP1.6 million in the first half of 2023, narrowed significantly from a loss of GBP7.1 million the year prior.

The improved loss came as LoopUp's half-year revenue jumped 85% to GBP12.2 million from GBP6.6 million the previous year.

As a result, LoopUp said it remains confident of "broadly meeting" current market expectations for 2023, particularly thanks to the accelerating growth of its Cloud Telephony business.

Stocks in New York were called higher as investors looked ahead to a busy day for US economic data. The Dow Jones Industrial Average was called up 0.3%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.4%.

The US weekly unemployment claims report will be published at 1330 BST alongside US retail sales data and the latest US producer price index print.

On Wednesday, US inflation accelerated slightly more than anticipated in August. The consumer price index picked up to 3.7% on an annual basis in August, from a 3.2% rise in July.

The headline inflation figure was expected to accelerate to 3.6%, according to FXStreet-cited market consensus.

Core inflation - which excludes items such as food and energy - cooled to 4.3% annually, from a 4.7% increase in July. This was in line with market expectations.

Capital Economics's Andrew Hunter said there was "little in the report to convince [US Federal Reserve] officials that they need to raise interest rates further."

"Overall, there is nothing here to change the Fed's plans to hold interest rates unchanged at next week's [Federal Open Market Committee] meeting, and we still expect weaker economic growth and a continued normalisation in the labour market to help drive a sharper fall in core inflation over the next 12 months than most others expect," Hunter said.

The Fed will announce its next interest rate decision on Wednesday next week. According to the CME Fed Watch Tool, markets currently see a 97% chance of the Fed holding rates steady next week.

The pound was quoted at USD1.2466 at midday on Thursday in London, up USD1.2496 at the close on Wednesday. The euro stood at USD1.0735, lower against USD1.0744. Against the yen, the dollar was trading at JPY147.31, lower compared to JPY147.42.

Brent oil was quoted at USD93.00 a barrel at midday in London on Thursday, up from USD92.15 late Wednesday. Gold was quoted at USD1,908.58 an ounce, lower against USD1,912.70.

By Heather Rydings, Alliance News senior economics reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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