24th Oct 2019 12:04
(Alliance News) - Stocks in London were higher at midday on Thursday as European leaders decide on whether to grant the UK a Brexit extension, while attention turns to the European Central Bank's interest rate decision in the afternoon.
The FTSE 100 stock index was 62.32 points higher, up 0.9%, at 7,323.06. The FTSE 250 was up 31.64 points, or 0.2%, at 20,212.58 and the AIM All-Share up 0.3% at 888.88.
The Cboe UK 100 index was up 0.8% at 12,418.81. The Cboe UK 250 was up 0.1% at 12,149.81 and the Cboe UK Small Companies up 0.4% at 11,185.70.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both up 0.6%.
"Equity markets in Europe are higher this morning as speculation the UK will be granted an extension in relation to exiting the EU has boosted the mood. An extension should assist sentiment in the near-term as traders prefer almost any option to a no-deal Brexit. Dealers are also looking ahead to the European Central Bank meeting, which will be followed by the press conference," said CMC Markets analyst David Madden.
"The central bank is expected to keep monetary policy unchanged. It will be the last meeting where Mario Draghi is head of the bank, and traders are expecting him to make another plea to expand fiscal policy in the currency bloc in the hope of spurring economic activity," Madden added.
On the London Stock Exchange, AstraZeneca was the best blue chip performer, up 4.0% after the Anglo-Swedish drugmaker posted a dip in third-quarter profit as a result of research & development expenses, but did upgrade annual sales guidance.
For the three months ended September, pretax profit was USD409 million, down 14%. This reduction was the result of a 32% rise in selling, general & administrative costs, on top of a 5.5% jump in research & development expense. Total revenue rose 20%, reaching USD6.41 billion thanks both to a 16% rise in product sales and to a more than trebling of collaboration revenue.
Astra has upgraded product sales guidance for 2019 and is now expecting a low to mid-teens percentage rise, having previously expected a low double-digit percentage increase. Astra also reiterated guidance for core earnings per share of between USD3.50 and USD3.70 for 2019 as a whole.
RELX was up 3.6% after the publishing and analytics firm reaffirmed 2019 guidance after a solid first nine months of the year. RELX delivered 4% underlying revenue growth for the first nine months of 2019, with all four business areas delivering an improvement year-on-year.
"The full-year outlook is unchanged. As we enter the final quarter of 2019 key business trends are in line with the full year 2018. We remain confident that, by continuing to execute on our strategy, we will deliver another year of underlying growth in revenue and in adjusted operating profit, together with growth in adjusted earnings per share on a constant currency basis in 2019," said RELX.
AVEVA Group was up 2.2% after the engineering and industrial software firm said strong sales execution has led to solid revenue growth.
AVEVA achieved low double-digit revenue growth on a proforma constant-currency basis in the financial first half ended September. On a reported basis, revenue benefited from foreign exchange movements, the company said.
The revenue mix was "positive", said AVEVA, with every region delivering growth. Rental & Subscription was "very strong", partly offset by expected lower revenue in the Initial & Perpetual Licences and Services units.
At the other end of the large cap index, Royal Bank of Scotland Group was down 2.6% after the state-backed lender reported a third-quarter loss on a large payment protection insurance provision.
In the three months to September 30, RBS recorded an operating pretax loss of GBP8 million compared to a GBP961 million profit a year before.
The loss was attributed to a GBP900 million PPI provision. In September, the lender warned of a "spike" in PPI claims in the days leading up to the Financial Conduct Authority's deadline of August 29.
As a result of the PPI spike, RBS's loss attributable to shareholders totalled GBP315 million, compared to a GBP448 million profit in the third quarter last year and a GBP1.33 billion profit in the second quarter of this year.
The pound was quoted at 1.2882 at midday, flat against USD1.2887 at the London equities close Wednesday, as investors await the European Union's decision on whether to grant the UK a Brexit extension.
"The Brexit ball is now in the EU's court and the EU has to decide whether to grant Britain an extension of the October deadline and if so for how long. Late Wednesday French President Emanuel Macron broke ranks with his EU colleagues hinting that two weeks may be long enough of a delay. At home, the government remains divided on whether to push for a general election or not," said City Index analyst Fiona Cincotta.
EU leaders are continuing to consider whether to grant a further extension to Brexit against the objections of UK Prime Minister Boris Johnson.
The PM has warned he will push for a snap general election if he is forced to accept a lengthy delay to the UK's departure, potentially into the new year.
However there are signs of divisions among ministers and senior No 10 advisers over whether to press for a December poll.
Dominic Cummings, Johnson's chief adviser, is reportedly leading calls to abandon attempts to get the PM's Brexit deal through Parliament and go for an election.
The euro stood at USD1.1128, higher than USD1.1114 at the European equities close Wednesday, as investors await the European Central Bank's interest rate decision at 1245 BST.
Analysts do not expect the ECB to announce any new measures at the meeting. The ECB is expected to leave its benchmark refinancing rate on hold at a historic low of 0%.
The decision will be followed by a press conference with ECB President Marion Draghi, which will be his last at the helm of the Frankfurt-based central bank.
Should the ECB leave interest rates unchanged - as widely expected - Draghi will have completed his whole eight year tenure in charge of the central bank without ever having raised interest rates. This would make him one of only a handful of major central bank heads not to lift rates in the modern era.
Further, Draghi presides over his final meeting amid growing pressure on his successor, former International Monetary Fund head Christine Lagarde, to pull back from his new ultra-loose monetary policy.
In September, Draghi unveiled a multi-prolonged package of steps aimed at firing up growth and inflation in the eurozone, including reactivating the bank's bond-buying programme and lowering a key interest rate deeper into negative territory.
Several members of the ECB's 25-head governing council have taken the rare step of publicly condemning the package, which included an open-ended EUR20 billion monthly bond-buying scheme.
"We expect Draghi to come up with a strong - emotional - plea in support of the September package, probably combined with a broader attempt to safeguard the legacy of all measures taken under his leadership," said ING economist Carsten Brzeski.
In economic news from the continent, the eurozone economy is mired close to stagnation in October, according to survey results from IHS Markit, with demand for goods and services falling once again.
The eurozone flash composite output index read 50.2 for October, up slightly from 50.1 in September.
The flash services purchasing managers' index was 51.8, up from 51.6, and the manufacturing PMI was unchanged at 45.7. Any reading below 50 represents contraction, and above expansion.
Stocks in New York were set for a higher open as earnings season continues, with Post-it note maker 3M and UK pay-TV firm Sky's parent company Comcast set to report earnings before the opening bell on Wall Street.
The DJIA was called up 0.2%, the S&P 500 index up 0.4% and the Nasdaq Composite up 0.1%.
In addition, e-commerce giant Amazon.com will report earnings after the market close in New York on Thursday.
By Arvind Bhunjun; [email protected]
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