12th Sep 2019 12:01
(Alliance News) - More weak data from the eurozone increased the pressure on European Central Bank President Mario Draghi on Thursday to unveil measures that will pep up an ailing economy.
Trade in equities was cautious ahead of the ECB announcement just after midday, amid worries the expected stimulus package will be less dramatic than what's already priced in by markets.
In London, the FTSE 100 was just 1.09 points lower at 7,336.94 around Thursday midday. The FTSE 250 was down 29.74 points, or 0.2%, at 19,952.42, while the AIM All-Share was down 0.1% at 879.67.
The Cboe UK 100 index was flat at 12,442.46. The Cboe UK 250 was down 0.2% at 17,823.91, and the Cboe UK Small Companies also was down 0.2%, at 10,891.95.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were down 0.1% and up 0.1%, respectively.
In the US, stocks are called for a slightly higher open. The Dow Jones is called up 0.2%, the S&P 500 up 0.1% and the Nasdaq up 0.3%.
"ECB day finds markets on edge ahead of the most important meeting for the eurozone's central bank in over three years," said Chris Beauchamp, chief market analyst at IG.
He continued: "The timing of today's eurozone industrial data could not be better, for it underlines the growing malaise of the currency bloc, which is fighting the classic signs of a recession while trying to stave off a trade war with the US and manage the departure of the UK from the European Union."
Seasonally adjusted industrial production was down 0.4% in the euro area in July, and 0.1% lower in the wider EU28, month-on-month. On an annual basis, production was down 2.0% in the eurozone and 1.2% in the EU28.
In June, industrial production had fallen 1.4% month-on-month in both the eurozone and EU28. Year-on-year, production had fallen 2.4% in the euro area and 1.8% in the EU28.
The ECB announces its latest monetary policy decision at 1245 BST, with a press conference with ECB President Draghi at 1330 BST.
ECB interest rates on main refinancing operations, the marginal lending facility and the deposit facility are currently 0.00%, 0.25% and minus 0.40%, respectively.
"Markets have all but priced-in something impressive, so a failure to act today, or signal that more is coming, would see eurozone equities retrace much of the ground won in September, while a surge in EURUSD would be a very high probability," said IG's Beauchamp.
The euro was quoted at USD1.1029 at midday, up from USD1.0985 late Wednesday.
In other European data on Thursday, German inflation came bang in line with forecasts in August.
Germany's consumer price index rose 1.4% year-on-year, and fell 0.2% month-on-month. This was in line with consensus, according to FXStreet. In July, prices had risen 1.7% annually and 0.5% on a monthly basis.
To come in the economic calendar is US consumer price inflation at 1330 BST.
In London, rating downgrades for InterContinental Hotels Group and Lloyds Banking Group were weighing on the FTSE 100.
IHG was down 2.8% after JPMorgan cut the Holiday Inn owner to Underweight from Neutral, while Lloyds shares shed 2.0% after Goldman Sachs downgraded the lender to Sell from Neutral.
At the top of the blue-chips was Wm Morrison Supermarkets, rising 4.7% as it declared a special payout.
The grocer said like-for-like sales were up 0.2% in the half-year to August 4, versus a 4.9% rise a year ago. In the second quarter alone, like-for-like sales were down 1.9%, versus a 6.3% increase in 2018.
Total revenue was up 0.4% at GBP8.83 billion, with pretax profit rising 49% to GBP202 million. As well as the revenue rise, profit was helped as finance costs were reduced to GBP55 million from GBP94 million.
The supermarket declared a dividend of 1.93p, up 4.3%, and a special payout of 2.00p, taking the total interim dividend to 3.93p, up 2.1% year-on-year.
British American Tobacco was up 1.8% after announcing plans to cut 2,300 jobs.
The tobacco major has initiated a programme to simplify its business, in order to deliver savings to be reinvested in growing its product portfolio. Due to the removal of management layers, the London and Johannesburg-listed tobacco firm expects over 20% of senior roles in the group to be affected. A consultation process is underway with all staff that will be affected.
Gains for BAT came despite US President Donald Trump on Wednesday announcing his administration was considering a ban on flavoured vaping products.
"It's causing a lot of problems," the president told reporters at the White House, where he was accompanied by Health & Human Services Secretary Alex Azar and acting Food & Drug Administration head Norman Sharpless.
Shares in tobacco peer Imperial Brands were down 0.2% at midday.
In the FTSE 250, Babcock International was up 2.0% after being chosen by the UK Ministry of Defence as the preferred bidder to deliver its newest fleet of warships.
Following a "comprehensive competitive process", the UK government has picked Babcock's Arrowhead 140, which the FTSE 250-listed defence firm described as a "capable, adaptable and technology-enabled global frigate".
Soon-to-be FTSE 250 constituent Trainline rose 5.9% after raising its annual guidance.
For the six months to August 31, Trainline delivered revenue of GBP129 million, 29% higher than a year before, driven by 19% growth in net ticket sales to GBP1.84 billion.
Following this "strong start" to its financial year ending February 2020, Trainline upgraded its annual revenue growth guidance to the low-to-mid 20% range, driven once again by the UK consumer.
In its IPO prospectus, Trainline had said it was targeting net ticket sales growth in the "high teens" for both the year ending February 2020 and over the medium term.
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