Stock prices in European were firmly in the green on Thursday morning, as investors await an interest rate decision by the European Central Bank early in the afternoon.
Though the FTSE 100 struggled on Wednesday, a US consumer price inflation reading was eventually well-received in New York. Tech shares soared, helping to turn sentiment in global equities positive on Thursday morning.
The FTSE 100 index jumped 94.89 points, 1.2%, at 8,288.83. The FTSE 250 was up 233.79 points, 1.1%, at 20,771.04, and the AIM All-Share rose 4.01 points, 0.5%, at 742.10.
The Cboe UK 100 was up 1.1% at 829.03, the Cboe UK 250 also rose 1.1% to 18,279.12, and the Cboe Small Companies was up 0.3% at 16,663.75.
In European equities on Thursday, the CAC 40 in Paris was up 0.8%, while the DAX 40 in Frankfurt added 1.4%.
In New York, the Dow Jones Industrial Average traded 0.3% higher, the S&P 500 shot up 1.1%, while the Nasdaq Composite jumped 2.2%.
According to the US Bureau of Labor Statistics, annual consumer price inflation faded to 2.5% in August, from 2.9% in July.
A less tame reading of 2.6% was expected for August, according to consensus cited by FXStreet.
The BLS said it was the softest inflation reading since February 2021.
Excluding food and energy, the annual core inflation rate remained at 3.2% in August, where it stood in July. The reading met the FXStreet cited consensus.
On a monthly basis, consumer prices increased 0.2% in August, in line with consensus, and matching the pace of growth seen in July from June. Core consumer prices rose 0.3% on-month, picking up speed from 0.2%. The latest reading topped consensus, which predicted another month of 0.2% growth.
‘After an initial big decline in US stocks, markets rallied, as a slightly stronger CPI print was considered a sign that the Federal Reserve was not behind the curve when it comes to cutting rates. Tech led the rally, the Nasdaq closed up more than 2% and Nvidia rallied by more than 8%, after Jensen Huang, the founder and CEO of Nvidia, made a bullish speech about the benefits of GPUs and AI. He said that cloud providers make $5 for every $1 they spend on GPUs, and that users of AI technology can get tasks done 20 times faster than they otherwise would,’ XTB analyst Kathleen Brooks commented.
The surge in tech shares boosted London-listed Scottish Mortgage Investment Trust. The firm, which has a who’s who of major US tech shares in its portfolio, rose 3.2%.
In Tokyo, the Nikkei 225 jumped 3.4%. In China, the Shanghai Composite ended 0.2% lower, while the Hang Seng in Hong Kong was up 0.9%. In Sydney, the S&P/ASX 200 added 1.1%.
The pound was quoted at $1.3045 early Thursday, from $1.3026 at the time of the London equities close on Wednesday. The euro stood at $1.1013, flat from late Wednesday. Against the yen, the dollar was trading at JP¥142.88, up from JP¥141.58.
The European Central Bank is expected to announce a second interest rate cut of the cycle, but analysts expect forward guidance to be scarce.
The Frankfurt-based official lender is expected to trim its key deposit rate by 25 basis points to 3.50%, from 3.75% currently.
The ECB in July kept rates unchanged. The interest rate on the main refinancing operations, the marginal lending facility, and the deposit facility still stand at 4.25%, 4.50% and 3.75%, respectively.
Analysts at Lloyds Bank commented: ‘On balance the evidence looks sufficient to expect the ECB’s Governing Council to deliver a 25bp cut in the deposit rate, to 3.5%, when it meets today. With the exception of the French service sector’s Olympics-driven boost and Spain, activity indicators in the rest of the ’big four’ economies have been weak, especially German manufacturing. When it comes to the inflation outlook, the easing in the ECB’s negotiated wage indicator has been notable and, more broadly, developments since June point to the prospect of at least near-term inflation projections being revised slightly lower in the new September ECB staff macroeconomic projections.
‘Even if there is consensus around the September decision, the outlook beyond that is murkier. Although key wage growth indicators have come down, it is from elevated levels which haven’t yet fully normalised. This means President Lagarde’s press conference is set to see her having to balance competing views between the hawks and doves.’
The decision is at 1315 BST. A US producer price index reading, as well as the latest weekly jobless claims data, are released at 1330 BST.
In London, Trainline shares jumped 11%. It said it is performing ahead of expectations and the rail ticketing platform upped its outlook.
Revenue in the half-year ended August 31 climbed 16% to £229 million from £197 million. Net ticket sales amounted to £3.00 billion, a rise of 13% on-year from £2.65 billion.
‘As Europe’s number one rail app, our strong performance shows how our relentless focus on innovation is helping more customers to choose digital ticketing. Competition between rail carriers is growing across Europe and as the aggregator of choice we deliver the value and convenience customers want. This is most clearly demonstrated in Spain, where we have tripled net ticket sales in the last two years, with over one million customers transacting in the last 12 months alone,’ Chief Executive Officer Jody Ford said.
In May, the firm forecast full-year net ticket sales growth between 8% and 12% and a revenue rise between 7% and 11%. It predicted adjusted earnings before interest, tax, depreciation, and amortisation of between 2.4% and 2.5% of net ticket sales. Now, Trainline expects net ticket sales and revenue to be at the top end of the forecast, and the adjusted Ebitda to exceed it.
Cyber security company NCC raised its profit outlook. For the four months to September 30, it now expects adjusted operating profit of around £6 million, on revenue of £104 million.
It had previously predicted profit of £3.5 million on revenue of around £100 million. It had suffered a $1 million loss a year prior.
‘Following our August close process, we are pleased to have experienced better-than-expected performance in our Cyber Security division during this historically quieter trading period of the calendar year,’ NCC said.
Brent oil was quoted at $71.27 a barrel, rising from $70.32. The price of gold climbed to $2,518.83 an ounce, from $2,512.09.
Gulf Marine added 8.7% as it won a deal and lifted the bottom end of its profit outlook.
The Abu Dhabi-based provider of self-propelled and self-elevating support vessels for offshore oil, gas and renewable energy projects said the deal spans five years. It takes its backlog to $464 million.
Gulf Marine revised its adjusted earnings before interest, tax, depreciation, and amortisation outlook to a range of $95 million to $100 million, lifting the bottom end of the guidance from $92 million.
Executive Chair Mansour Al Alami said: ‘We are pleased to secure this new long-term contract with one of our key regional clients. This award reinforces the continued high demand for our vessels and reflects the strong utilization of our fleet in the region. We remain committed to supporting our client’s projects and delivering high-quality services across the GCC. The revised Ebitda guidance for 2024 reflects the favourable market conditions.’
Fevertree dropped 7.5%. It reported weaker half-year revenue, as the mixers maker was hurt by a ‘subdued consumer backdrop and poor weather in the second quarter across the UK and Europe’. Revenue in the half-year to June 30 fell 1.5% to £172.9 million from £175.6 million.
Pretax profit, however, jumped to £13.2 million from £1.4 million. Cost of sales were 8.9% lower at £110.9 million from £121.8 million.
‘The Fever-Tree brand performed well against a tough market backdrop. We continued to deliver double digit revenue growth in the US at constant currency, as well as a strong performance in our ROW region. The first half performance in the UK and Europe was impacted by unseasonable weather at the start of summer alongside distributor order phasing in Europe, but we have seen a strong improvement in these regions as the summer belatedly arrived,’ CEO Tim Warrillow said.
The firm explained it has made a ‘strong start to the second half of the year across all of our regions’. It expects to deliver Fever-Tree brand revenue growth of 7% to 10% on-year in the half, giving it growth of 4% to 5% for the whole of 2024.
Fevertree upped its interim dividend by 1.9% to 5.85p per share from 5.74p.
Brent oil was quoted at $71.62 a barrel early Thursday, rising from $70.32 at the time of the London equities close Wednesday. The price of gold climbed to $2,516.53 an ounce, from $2,512.09.
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