4th Jun 2020 08:29
(Alliance News) -Â London stocks started Thursday's session cautiously lower, putting a break on the week's rally as markets await an expected boost to the European Central Bank's pandemic bond-buying programme.
The FTSE 100 index was down 9.45 points, or 0.2%, at 6,372.96 early Thursday. The mid-cap FTSE 250 index was down 42.90 points, or again 0.2%, at 17,854.18. The AIM All-Share index was flat at 894.92.
The Cboe UK 100 index was down 0.2% at 10,776.43. The Cboe 250 was down 0.3% at 15,323.91, and the Cboe Small Companies up 0.1% at 9,627.80.
In mainland Europe, the CAC 40 in Paris was down 0.6% while the DAX 30 in Frankfurt was down 0.8% early Thursday.
Risk sentiment was "more guarded" on Thursday, said Lloyds Bank, after a good week thus far for equity markets.
The main event today is the European Central Bank's latest policy decision at 1245 BST, Lloyds noted. This will be followed by a press conference with President Christine Lagarde.
"The ECB is expected to announce a EUR500bn increase to its PEPP, while interest rates are forecast to be unchanged. Markets will be looking for more detail from Lagarde about how purchases are conducted under the scheme. She may also be asked, among other things, about the German Constitutional Court ruling which questioned the legality of the ECB's asset purchases under its Asset Purchase Programme launched in 2015," said Lloyds.
The euro traded at USD1.1205 ahead of the meeting, down against USD1.1223 late Wednesday.
Germany's governing parties have agreed to a stimulus package worth EUR130 billion to help the country's economy recover from the coronavirus pandemic, Chancellor Angela Merkel said late Wednesday after two days of marathon talks.
The raft of measures include billions in aid for struggling industries; additional funding for municipalities as they deal with growing unemployment and lost tax revenue; and a one-time EUR300 per child bonus, to be paid out along with other child benefits.
Merkel said drastic spending was needed in order to "to give the next generations a future".
The total value agreed in the 21 hours of talks exceeded expectations. Previous reporting said the parties were looking at measures totalling around EUR80 billion.
In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.3%. In China, the Shanghai Composite ended down 0.1%, while the Hang Seng index in Hong Kong is also down 0.3% in late trade.
Against the yen, the dollar was quoted at JPY109.09, firm versus JPY108.95 on Wednesday.
Gold was priced at USD1,701.45 an ounce early Thursday, higher than USD1,697.55 on Wednesday. Brent oil was trading at USD39.21 a barrel, down on USD39.52 late Wednesday.
In London's FTSE 100, Pennon Group fell 2.2% as it reported a mixed full-year profit performance.
Revenue edged up 0.6% to GBP636.7 million for the year to March 31 from GBP632.6 million the year before, but pretax profit declined 4.1% to GBP193.1 million from GBP201.4 million.
Lower earnings reflected the mix of margin on retail and wholesale revenue, with South West Water's wholesale margin reducing as a result of lower customer consumption. In addition, the utility recorded increased depreciation on asset growth and higher absolute interest.
For the continuing group and waste business Viridor, which Pennon agreed to sell in March, profit was up 16% to GBP301.5 million.
Pennon raised its dividend by 6.6% to 43.77 pence.
"We are pleased with the solid operational and financial performance delivered this year. Viridor has continued to drive growth while South West Water has maintained its sector leading returns," said Chief Executive Chris Loughlin.
IG Group was the top performer in the FTSE 250, up 4.0% in early trade as it reported a surge in fourth quarter net trading revenue.
IG released a trading update in April which noted that quarter to date net trading revenue was estimated to be around GBP173 million.
Financial market volatility has remained elevated, and high levels of client trading activity has continued, IG said, with net trading revenue for the fourth quarter to May 31 now estimated to be GBP259 million - more than double to GBP117.9 million achieved a year ago.
Full-year net trading revenue is expected at GBP649 million, sharply higher than GBP476.9 million the year before.
Aston Martin was down 2.7% amid plans to cut up to 500 jobs as part of a "fundamental reset" of the business.
The luxury car maker said it is planning a reduction in front-engined sports car production to rebalance supply to demand, but noted that its first sports utility vehicle, the DBX, remains on track for deliveries in the summer and has a strong order book.
Aston Martin will launch a consultation process of proposals to reduce the workforce by up to 500, reflecting lower than originally planned production volumes and improved productivity across the business.
"Aston Martin continues to take decisive action in other areas to reduce cost and remove non-critical expenditure from the business at every level including in areas such as contractor numbers, site footprint, marketing and travel," the company said.
On AIM, Fevertree shares were up 2.4% after saying the Covid-19 lockdown is hitting its on-trade segment, but its performance across off-trade is "very encouraging".
On-trade sales typically represent half of UK revenue, the premium tonic water maker said, and have been "severely impacted" by the lockdown.
However, off-trade performance has been strong. Sales in the first full month of lockdown were up 24% year-on-year and positive momentum has been seen since, reflecting increased consumption at home.
US off-trade sales have grown "extremely strongly".
"As highlighted at the group's preliminary results in April, Covid-19 will have a material impact on FY20 trading, with headwinds on gross margin due to changes in channel and territory mix. However, we remain committed to continuing to invest through this period of uncertainty as opportunities arise, particularly in marketing, enabled by the group's strong balance sheet and conviction in our ability to deliver long-term sustainable growth," Fevertree said.
Sterling was quoted at USD1.2527 early Thursday, lower than USD1.2604 at the London equities close on Wednesday.
UK Prime Minister Boris Johnson braced the nation dealing with a coronavirus death toll of more than 50,000 for "many job losses" as further details of the economic impact of the pandemic were set to emerge.
He said the government would take an "interventionist" approach to support the economy as it emerges from the lockdown.
On Thursday, the Commons business committee will hear more on the impact of coronavirus on businesses and workers, while the Bank of England will publish a list of companies which receive funding through its Covid Corporate Financing Facility lending scheme.
Meanwhile, ministers are likely to face further questions over their decision to end virtual voting in the Commons after Business Secretary Alok Sharma, who appeared visibly ill while in the chamber on Wednesday, was tested for Covid-19.
In the economic calendar on Thursday, there are eurozone retail sales at 1000 BST. US initial jobless claims are at 1330 BST with the trade balance due at the same time.
By Lucy Heming;Â [email protected]
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