25th Sep 2014 09:42
LONDON (Alliance News) - A mixed equity session Thursday has seen the FTSE 100 give up slim early gains, while major European markets are holding on to early strength, supported by comments from European Central Bank President Mario Draghi, which have simultaneously pushed the euro to a 22-month low against the dollar.
UK stock prices started modestly higher following strong gains in the US and Asia, but by mid-morning Thursday the leading index trades in the red. The FTSE 100 is down 0.2% at 6,695.58, the FTSE 250 is down 0.2% at 15,511.63, while the AIM All-Share is up 0.1% at 754.48.
The mining sector is providing the main drag on the London market, after having provided the main support in recent sessions. The FTSE 350 mining sector is down 1.9%.
"It has been a choppy few days for the natural resource sector, which has seen some large swings," says market analyst at IG David Madden.
Within major European markets, the French CAC 40 is up 0.2%, and the German DAX is up 0.4%.
Speaking in Lithuania, Draghi said that eurozone membership could provide the country stability and increased economic protection from Russia. Lithuania is due to begin using the euro in January. The ECB president also reiterated his commitment to use all measures at his disposal to support growth in the eurozone.
"We stand ready to use additional unconventional instruments within our mandate, and alter the size or composition of our unconventional interventions should it become necessary to further address risks of a too prolonged period of low inflation," Draghi said.
Draghi's words have been taken as another clue that further stimulus is on the way from the central bank and is serving to support equity levels across Europe Thursday. The same comments have pushed the euro down to its lowest level against the dollar for 22 months, breaking briefly below USD1.27 for the first time since November 2012.
The pound remains relatively unchanged ahead of an appearance by Bank of England Governor Mark Carney later in the session. In his first public address since last week's "No" vote in Scotland, Carney will talk at 1340 BST from the Institute and Faculty of Actuaries General Insurance Conference in Wales.
Tesco received a vote of confidence from Sports Direct Thursday, as the sportswear retailer said it has taken out an option agreement with Goldman Sachs that gives it the right to buy 23 million Tesco shares, or a 0.28% stake in the supermarket chain. The exercise price and expiry of the option has not been revealed, but Sports Direct said the investment "reflects Sports Direct's growing relationship with Tesco and belief in Tesco's long-term future".
Tesco shares very briefly pushed higher at the open, but any positive boost appears to have been short-lived, with the stock down 0.7% by mid-morning.
Royal Mail is the heaviest blue-chip faller Thursday, down 3.5%. On Wednesday Dutch postal business TNT Express issued a profit warning, and on Thursday small-cap peer UK Mail Group warned that its parcel volumes have been below expectations for the three months to September. Both announcements have had a negative read-across to Royal Mail. UK Mail shares are down 13% Thursday.
On top of the peer group updates, the Guardian reported Wednesday that UK politicians have launched an inquiry into claims that Royal Mail will struggle to fulfil its obligation to deliver to every address in the country six days a week for the same price, due to intense competition in profitable areas.
Ryanair raised its profit guidance for the current year Thursday, saying that the recent launch of new higher-end services and revamped website is paying off. The low-cost Irish carrier said it now expects to fly 87 million customers in the year to March 31, 2015, up from its previous forecast of 26 million, which will take profits to the upper-end of previous guidance. The announcement has boosted the shares 2.4%, while fellow low-cost airline easyJet has also seen a boost and is the best performing stock in the FTSE 100, up 2.5%.
CSR is the top FTSE 250 gainer, up 6.2% after the group said the Takeover Panel has granted an extension to the deadline for Microchip Technology Inc to make bid for the company.
Mitchells & Butlers is the worst FTSE 250 performer, down 5.0% after the owner of pub and restaurant chains announced a slump in its final quarter sales, after seeing a small boost in the summer at the time of the football World Cup.
While there was very little UK or European data Thursday, there's still plenty to come from the US. Durable goods orders data for August is due for release at 1330 BST, and is expected to show an 18% drop over the month from a 22.6% rise in September.
US initial jobless claims data is also due at 1330 BST, followed the US Markit services PMI and composite PMI for September.
Ahead of the data, US stock markets look set to open a little lower following their strong gains on Wednesday. Apple shares may be in focus following the news that the US technology giant has been forced to pull its latest operating system in light of numerous complaints, just days after launching its two new iPhone models
Futures markets currently show the DJIA flat, while the S&P 500 points 0.1% lower, and the Nasdaq Composite also points 0.1% lower.
By Jon Darby; [email protected]; @jondarby100
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