8th May 2025 09:01
(Alliance News) - European stocks opened higher on Thursday, with the FTSE 100 registering only a minor gain, however, as investors digest Wednesday's Federal Reserve decision and look ahead to a probable Bank of England rate cut.
The FTSE 100 index edged up 8.20 points, 0.1%, at 8,567.53. The FTSE 250 rose 126.74 points, 0.6%, at 20,463.74, and the AIM All-Share added 3.40 points, 0.5% at 716.66.
The Cboe UK 100 was up 0.1% at 853.18, the Cboe UK 250 rose 0.3% at 17,901.63, and the Cboe Small Companies was flat at 15,673.95.
In Paris, the CAC 40 rose 0.5%, while the DAX 40 in Frankfurt added 0.6%.
Sterling faded to USD1.3284 early Thursday, from USD1.3342 at the time of the London equities close on Wednesday. The euro fell to USD1.1290 from USD1.1344. Against the yen, the dollar rose to JPY144.42 from JPY143.39.
The Fed can afford to be patient with monetary policy as it awaits to see the full impact of US trade policy on the economy, Fed Chair Jerome Powell said on Wednesday.
"We think we can be patient, we are going to be watching the data," Powell said, noting there is so much uncertainty about the scale, scope and timing of tariffs.
Speaking to reporters, Powell said the Fed can move quickly when "that's appropriate" but won't make progress on its goals this year if tariffs stay.
At the conclusion of its two-day meeting the Federal Open Market Committee voted unanimously to maintain the target range for the federal funds rate at 4.25-4.50%.
In New York on Wednesday, the Dow Jones Industrial Average rose 0.7%, the S&P 500 added 0.4% and the Nasdaq Composite ended up 0.3%.
In Tokyo on Thursday, the Nikkei 225 ended up 0.4%. In China, the Shanghai Composite added 0.3%, while the Hang Seng Index in Hong Kong was 0.3% higher. The S&P/ASX 200 in Sydney rose 0.2%.
The Bank of England decides on rates on Thursday, with an announcement just after midday. It is expected to cut.
"Today's Bank of England meeting should be a market mover. While a 25bp rate cut to 4.25% is widely expected, what is probably the single most important area today is what the BoE does with this following sentence: 'Based on the committee's evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate'. Those more dovish in the market are looking for this 'gradual and careful' phrase to be dropped/amended to signal a sharper set of BoE rate cuts," analysts at ING commented.
"Given that the market is now pricing four 25bp rate cuts this year and we expect three (May, August, November), if BoE easing remains 'gradual and careful', sterling could rally."
Prime Minister Keir Starmer will provide an update on trade talks with the US later on Thursday, Downing Street has said amid reports Donald Trump is set to announce a deal with the UK.
The US president teased the announcement of a "major trade deal" with a "big, highly respected country" in a post on his Truth Social platform overnight, with a press conference expected around 1500 BST.
American media, including the New York Times, has reported that the deal is with the UK, citing people familiar with the plans.
A Number 10 spokeswoman said talks with the US had been "continuing at pace and the prime minister will update later today".
The government has been pursuing a deal with the US to reduce the impact of sweeping tariffs imposed by Trump last month, which placed a 10% levy on all UK exports and a 25% charge on steel, aluminium and cars.
If Trump does announce a deal with the UK, it will be the first agreement since he announced the tariffs on April 2.
Reports have previously suggested a deal could see the UK reduce some tariffs on American products, as well as changing the digital services tax that currently affects mainly US tech companies.
But the government has ruled out lowering food standards to allow more US agricultural products into the country, or watering down the online safety act, which some in America regard as placing restrictions on freedom of speech.
In London, shares in Next rose 1.2%. The stock had earlier hit an all-time high. It nudged its annual profit outlook higher, for the second time this year, after a better-than-expected first quarter.
The Leicester-based retailer said full price sales jumped 11% year-on-year in the thirteen weeks to April 26, GBP55 million ahead of its forecast, which was to be up 6.5%.
Next said performance was helped by the warmer weather which saw "much stronger" than expected sales in its Retail shops.
Next upped its pretax profit guide to GBP1.08 billion from GBP1.07 billion. In March, Next had raised annual profit guidance by GBP20 million.
InterContinental Hotels Group rose 2.6%. It said it is on track to meet profit consensus for 2025, after a "strong trading performance" in the first-quarter.
Revenue per available room, a key metric in the hotel sector, increased 3.3% on-year in the first quarter. The Holiday Inn owner said its RevPAR rose 3.5% in the Americas, 5.0% in the Europe, Middle East, Asia & Africa region, but fell 3.5% in Greater China.
"We had strong trading performance and development activity for our world class brands in Q1, despite increased volatility in the macro environment. Global RevPAR grew 3.3%, reflecting the strength of our globally diverse footprint and increases across each of our three demand drivers of Business, Leisure and Groups," Chief Executive Officer Elie Maalouf said.
Putting pressure on the FTSE 100, drug makers declined. GSK fell 1.1% and AstraZeneca shed 2.3%. The duo had declined on Wednesday also amid tariff worries for the pharmaceutical sector.
Among FTSE 250s, lender Metro Bank added 3.3%. It said it was "profitable on both an underlying and statutory basis" in the first-quarter of 2025.
It said there was a "significant increase" in first-quarter underlying profit compared to the second half, helped by a "structurally higher net interest margin".
"During the first quarter of 2025, we have continued to deliver the strategic repositioning of Metro Bank's business, maintaining strong cost control while driving higher net interest margin by changing the mix of assets and remaining disciplined about deposits," CEO Daniel Frumkin said.
"We have seen further growth in our corporate and commercial lending, with Metro Bank's relationship banking and breadth of services creating differentiation for us in the market. Looking ahead, we will continue to play an important role in supporting our customers as the UK focuses on delivering economic growth. We remain firmly on track to meet our guidance given at full year."
Elsewhere, Flutter Entertainment fell 2.5%, as it set out mixed guidance for the whole of 2025. The Paddy Power owner upped its revenue guidance to a USD16.63 billion to USD17.53 billion range, from USD15.48 billion to USD16.38 billion.
However, it lowered its US total adjusted earnings before interest, tax, depreciation and amortisation forecast to a USD1.01 billion to USD1.25 billion range, from USD1.19 billion to USD1.43 billion.
It noted "adverse" results from March Madness, a university basketball tournament in the US.
Shares in Ladbrokes owner Entain fell 0.8% in a negative read across.
A barrel of Brent edged down to USD61.40 on Thursday morning, from USD61.45 late Wednesday. Gold traded at USD3,348.61 an ounce, fading from USD3,386.18.
By Eric Cunha, Alliance News news editor
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