20th Feb 2025 09:04
(Alliance News) - European stocks opened mixed on Thursday, with the FTSE 100 underperforming, as Russia-Ukraine uncertainty, tariff worries and the possibility of higher for longer interest rates cloud over stocks.
The FTSE 100 index fell 31.04 points, 0.4%, at 8,681.49. The FTSE 250 rose 33.24 points, 0.2%, at 20,741.03, and the AIM All-Share rose 3.43 points, 0.5%, at 722.86.
The Cboe UK 100 fell 0.3% to 870.80, the Cboe UK 250 rose 0.1% to 18,050.57, and the Cboe Small Companies added 0.2% at 15,956.16.
In Paris, the CAC 40 climbed 0.4%. Frankfurt's DAX 40 rose 0.3%. Strong earnings from Schneider Electric, one of the largest stocks in Paris, supported the CAC. The digital automation and energy management company rose 5.9%.
But among London's largest names, it was largely a sea of red. Drug makers AstraZeneca and GSK lost 2.0% and 1.6% as shares went ex-dividend, meaning new buyers will not qualify for the latest payout. BP fell 2.4% as it also went ex-dividend.
Against the dollar, the pound perked up to USD1.2608 early Thursday, from USD1.2572 at the time of the London equities close on Wednesday. The euro rose to USD1.0431 from USD1.0409. Against the yen, the dollar fell to JPY150.25 from JPY151.62.
The Nikkei 225 in Tokyo lost 1.2%, and the S&P/ASX 200 in Sydney also lost 1.2%. The Shanghai Composite in China closed down slightly, while the Hang Seng Index fell 1.6%.
The Dow Jones Industrial Average and S&P 500 each rose 0.2% in New York overnight, while the Nasdaq Composite edged up 0.1%.
On the advances in New York, SPI Asset Management analyst Stephen Innes commented: "This isn't a green light for risk-on euphoria. The market is still dancing between inflation inertia and tariff landmines. Whether this bounce sticks depends on how much traders are willing to ignore the tariff storm clouds gathering on the horizon.
"Yet somehow, maybe it's just my view, but it's hard to believe inflation can easily be stuffed back into the bottle once it makes an encore appearance—especially when you layer in the reality that peak tariffs could be far more severe than what the market is pricing. I can't shake the feeling that we're setting up for a classic Wile E. Coyote moment—where the market is sprinting full speed off the edge of a cliff, legs still churning, utterly oblivious to the fact that there's no ground left beneath it."
The theme of central bank pauses was a prevailing narrative on Wednesday. Hotter-than-forecast UK inflation data means the Bank of England could decide against a cut at its next meeting. Minutes from the Federal Reserve's most recent decision suggested the central bank will stand pat for a little longer.
The European Central Bank is approaching a point where it might pause too, board member Isabel Schnabel told the Financial Times on Wednesday.
Federal Reserve officials in January agreed they would need to see progress on inflation before cutting interest rates further, and expressed concern about the impact tariffs will have in making that happen, minutes released Wednesday showed.
"Participants indicated that, provided the economy remained near maximum employment, they would want to see further progress on inflation before making additional adjustments to the target range for the federal funds rate," the minutes from the Federal Open Market Committee's January meeting said.
FOMC officials observed that the committee was "well positioned" to "take time to assess the evolving outlook for economic activity, the labour market, and inflation, with the vast majority pointing to a still-restrictive policy stance."
Supporting its decision, FOMC officials highlighted reduced downside risks to the outlook for the labour market and economic activity, increased upside risks to the outlook for inflation, and uncertainties concerning the neutral rate of interest, the degree of restraint from higher longer-term interest rates, or the economic effects of potential government policies.
At its January meeting, the Federal Open Market Committee left the federal funds rate range at 4.25%-4.50%. The vote was unanimous.
ING analysts commented: "When it comes to the dollar, we largely see it staying supported. Even though short-dated US yields fell 2bp on last night's release of the January FOMC minutes, the release did not look particularly dovish. The clear message was that the Fed needed to see additional evidence or progress before cutting rates again. At the same time, the Fed released a very interesting speech from Vice Chair Philip Jefferson. He noted that those from the entire income spectrum had been enjoying the benefits of wealth effects and seemed to suggest that US household balance sheets were in relatively healthy shape."
In London, Centrica jumped 10%. The British Gas owner reported a profit decline but lifted its dividend and announced a share buyback. It also reported an "expansion in the Irish power market" as well as a deal with Petrobras in Brazil.
Centrica announced an additional GBP500 million buyback, taking its total programme to GBP2.0 billion. It upped its annual dividend by 13% to 4.5 pence per share, and plans a further increase to 5.5p in 2025.
Revenue last year fell by a quarter to GBP19.91 billion from GBP26.46 billion. Pretax profit slumped 74% to GBP1.68 billion from GBP6.47 billion.
"2024 was a good year for Centrica as we made further operational improvements and ramped up our
investment programme. This has resulted in happier customers and more innovative propositions, but there is so much more we can do. Looking ahead, I want to see Centrica continue to focus on the areas that make the biggest difference. We are investing in the energy transition, ensuring our customers have the energy they need, when they need it at a price they can afford. Everything we do must deliver an appropriate return, and our investments during 2024 demonstrate our ability to invest responsibly and profitably," Chief Executive Chris O'Shea said.
"Centrica has been transformed in recent years, and most of our businesses delivered against our medium-term expectations two years ahead of schedule. We now have greater resilience and financial flexibility supporting the capital returns, dividend increases and new investments in Ireland
announced today. Our confidence in the future is as strong as it's been for a long time and I look
forward to continuing to deliver for our colleagues, our customers and our shareholders."
In Ireland, the firm reported the next stage of an investment programme, upping its flexible electricity generation capacity by 50%. The deal with Petrobras will see the Brazilian oil and gas company purchase 800,000 tonnes per year of liquefied natural gas for 15 years, commencing in 2027.
"The agreement comprises approximately 30% of Centrica's US portfolio and will be sourced from Centrica's Sabine Pass and Delfin supply agreements," Centrica added.
Lloyds Banking Group rose 2.4%. It announced a new share buyback but reported a decline in profit as it set aside another GBP700 million for motor finance provisions.
Elsewhere in London, Indivior slumped 21%. It said it rounded off 2024 with a better-than-expected final quarter, but warned of competitive pressures to come in 2025.
For 2025, it predicts net revenue between USD955 million and USD1.03 billion, a decline of 17% at the mid-point.
CEO Mark Crossley said: "Total company NR is expected to decline 17% at the midpoint due primarily to an expected decrease in Suboxone film NR of greater than 50% from intensified generic pricing activity along with the potential for a fifth generic entrant. Our FY 2025 guidance reflects these dynamics."
Ceres Power plunged 41%. Robert Bosch plans to discontinue some work in the solid oxide fuel cells space and exit its holding in the London listing. Clean energy technology developer Ceres said Bosch's move is due to a "broader revised strategic decision" at group level.
"The result of this is that Bosch will discontinue its operations relating to the industrialisation and preparation for production of decentralised power-supply systems based on solid oxide fuel cells," Ceres said. "Bosch has informed Ceres that it will seek to end its partnership with Ceres in an orderly way, while continuing to meet its contractual obligations."
Bosch plans to sell its just over 17% stake in Ceres "in an orderly manner". Uwe Glock, a Bosch representative who sat on the Ceres board as a non-executive, is stepping down from the position immediately.
CEO Phil Caldwell added: "Whilst Ceres is disappointed that Bosch will discontinue its operations relating to the industrialisation and preparation for production of decentralised power-supply systems using Ceres' solid oxide technology, we recognise that this decision is part of a broader revised strategic direction from Bosch and does not reflect its confidence around Ceres or our technology."
An ounce of gold rose to USD2,954.13 early Thursday, from USD2,925.48 at the time of the closing bell in London on Wednesday. A barrel of Brent faded to USD75.81 from USD76.41.
By Eric Cunha, Alliance News news editor
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