17th Apr 2025 11:47
(Alliance News) - Stock prices in London were lower at midday on Thursday, with US Federal Reserve Chair Jerome Powell's "pretty gloomy assessment" of the inflation outlook still hanging over markets.
Also, investors are waiting for the fast-approaching European Central Bank interest rate call in the afternoon, followed by a press conference.
The FTSE 100 index was down 62.02 points, 0.8%, at 8,213.58. The FTSE 250 was down 83.60 points, 0.4%, at 19,182.21, and the AIM All-Share was down 0.82 points, 0.1%, at 669.06.
The Cboe UK 100 was down 0.8% at 817.18, the Cboe UK 250 was down 0.5% at 16,745.70, and the Cboe Small Companies was up 0.6% at 15,133.80.
AJ Bell's Russ Mould noted that "precious metal miner Fresnillo saw its shares fall in London as they traded without the rights to its latest dividend". Fresnillo was the worst large-cap performer, down 5.5%.
He continued: "Other drags on the UK's flagship stock index included industrial names as concern around the unpredictable trade policy in the US continues to bubble away under the surface."
Rentokil led the FTSE 100, up 4.3%.
The Crawley, England-based pest control company said total revenue grew 1.5% to USD1.64 billion in the first quarter, while North America revenue rose by 0.5% to USD951 million and International revenue increased by a more robust 2.9% to USD680 million.
"Despite increased macro-economic uncertainties, we remain confident about the longer-term based on the resilience of our markets, our global reach, our diverse customer base and our recurring revenues," Chief Executive Officer Andy Ransom commented.
J Sainsbury was close behind, up 3.1%.
The London-based food retailer forecast that profits will flatline in the current financial year, after reporting a 39% pretax profit jump to GBP384 million in the year to March 1 and underlying pretax profit beating consensus by increasing 8.6% to GBP761 million.
Sainsbury will pay a final dividend of 9.7 pence per share, up from 9.2p a year ago. Looking ahead, it plans to buy back at least GBP200 million worth of shares and expects to return GBP250 million via a special dividend.
"When Asda fired the opening salvos in a UK supermarket price war in mid-March the markets immediately sat up and took notice and the latest updates from Tesco and now Sainsbury's suggest this was the right call," Mould commented. "The main winners in a price war would ultimately be shoppers, however, there were enough positive takeaways in the results to provide some cheer.
"The 'food first' strategy under [CEO] Simon Roberts is clearly yielding real benefits with a healthy increase in the dividend providing shareholders with real sustenance."
Hargreaves Lansdown's Aarin Chiekrie, meanwhile, said: "Sainsbury’s delivered a sweet set of full-year results, with both revenue and profits moving higher. The group has transformed itself in recent years...But keep in mind that Sainsbury’s is more exposed to general merchandise than its peers through its ownership of Argos, an area where sales have been weak.
"If US-led tariffs cause a global economic slowdown, this area is likely to come under more pressure."
However, he added that "shy of an all-out price war, there could be room for positive surprises as the year progresses".
Dunelm continued to lead the FTSE 250, up 7.4%.
The home furnishings retailer expects full-year pretax profit to rise in line with a company-compiled consensus of GBP208 million. It said it is on track to achieve its milestone of 10% market share in the medium term.
Sales in the three months that ended March 29 rose 6.3% to GBP461.9 million, and year-to-date sales were up 3.7% to GBP1.36 billion.
"Given the uncertain backdrop, investors will be thrilled with soft furnishings firm Dunelm's third-quarter trading," Mould said, adding that "stocking products which people want at a price they're willing to pay...seems to be cushioning Dunelm from the impact of escalating macro-economic uncertainty, which could be an obstacle to households loosening the purse strings".
Deliveroo was in third place, up 3.2%.
The London-based online food delivery company said revenue in the first quarter grew 6.8% on-year to GBP518 million, with a 7.1% increase in orders. Gross transaction value rose 8.3% to GBP1.87 billion.
Chief Executive Officer Will Shu described the results as a "strong start" to the year.
In European equities on Thursday, the CAC 40 in Paris was down 0.9%, while the DAX 40 in Frankfurt was down 0.6%.
ECB policymakers look increasingly likely to cut interest rates again, as the uncertainty around Trump's next move, and the negative impact it could have on growth within the bloc, has intensified calls for borrowing costs to be eased.
Going into the meeting, eurozone policymakers cannot be sure which US tariff rates will eventually apply to transatlantic trade.
Observers will listen carefully to ECB President Christine Lagarde's remarks after the rates announcement to get a hint of how the ECB may respond going forward.
The pound was quoted at USD1.3232 at midday on Thursday in London, rising slightly compared to USD1.3228 at the equities close on Wednesday. The euro stood at USD1.1366, slightly higher against USD1.1363. Against the yen, the dollar was trading lower at JPY142.57 compared to JPY142.75.
Stocks in New York were called mixed. The Dow Jones Industrial Average was called down 1.0%, the S&P 500 index up 0.6%, and the Nasdaq Composite up 1.0%.
Mould said: "Federal Reserve Chair Jerome Powell gave a pretty gloomy assessment at an event in Chicago – warning of rising prices and unemployment which sounds very much like a warning of the dreaded stagflation."
At the event, Powell said: "Avoiding [persistent inflation] will depend on the size of the effects [of tariffs], on how long it takes for them to pass through fully to prices, and, ultimately, on keeping longer-term inflation expectations well anchored."
Powell said that the Fed could find itself in the "challenging scenario in which our dual-mandate goals are in tension," noting that price stability is a necessary precondition for "strong labour market conditions".
In Asia on Thursday, the Nikkei 225 index in Tokyo closed up 1.4%. In China, the Shanghai Composite ended up 0.1%, while the Hang Seng index in Hong Kong ended up 1.4%. The S&P/ASX 200 in Sydney closed up 0.8%.
"Discussions between the US and Japan on trade and noises that China might be open to its own negotiations on trade helped improve the mood music in Asia," Mould noted.
Brent oil was quoted higher at USD66.47 a barrel at midday in London on Thursday from USD65.73 late Wednesday.
Gold was quoted higher at USD3,328.10 an ounce against USD3,324.19.
Still to come on Thursday's economic calendar, the biggest items are the ECB rate call and US jobless data.
By Emma Curzon, Alliance News reporter
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