London stocks outperformed its European peers on Thursday morning, as investors await a key interest rate decision by the European Central Bank.
The FTSE 100 index opened 78.02, or 1.0%, at 8,266.64. The FTSE 250 was up 54.31 points, or 0.3%, at 21,147.65, and the AIM All-Share was up 1.63 points, or 0.2%, at 788.43.
The Cboe UK 100 was up 0.8% at 824.37, the Cboe UK 250 was up 0.3% at 18,435.38, and the Cboe Small Companies was marginally higher at 17,289.68.
According to the Office for National Statistics, average regular earnings growth in the UK dropped to 5.7% in the three months to May – down from 6% in the previous three months and the lowest level since the quarter to September 2022.
The ONS estimated that the rate of unemployment remained unchanged at 4.4% in the three months to May. But it flagged further signals that the employment sector is cooling, with 30,000 fewer vacancies at 889,000 in the quarter to June.
In European equities on Thursday, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was down 0.4%.
Stocks suffered in what looks to be a busy day for the eurozone.
In political news, the European Parliament will vote on Thursday on a second term for Ursula von der Leyen. A German member of the centre-right European People’s Party, the current president of the European Commission needs to get a majority of at least 361 votes in the 720-seat chamber to be re-elected.
While theoretically possible, given that on paper, she holds a majority with a 401 seat coalition from three groups, defections are always possible under the vote’s secret ballot.
Also on Thursday, the European Central Bank will deliver its announcement on the eurozone’s key interest rates, with most economists expecting no change. Currently, the main refinancing rate stands at 4.25%.
The consensus among economists is that the ECB will keep rates stable and then reduce them at the next decision in September.
Meanwhile, in the UK, Prime Minister Keir Starmer is due to host dozens of European leaders on Thursday, as he gets to work repairing relationships strained by the Conservatives’ tumultuous Brexit years.
Ukraine, illegal migration, and energy security are on the agenda at the European Political Community meeting at Blenheim Palace. Ukrainian President Volodymyr Zelensky is expected to be among the more than 45 leaders attending the summit.
Starmer, who led Labour to a landslide election win over the Tories two weeks ago, has pledged to ‘reset’ Britain’s relationship with European allies as they grapple with challenges ranging from supporting Kyiv after Russia’s invasion to breaking up people-smuggling gangs.
The pound was quoted at $1.2998 early on Thursday, lower than $1.3008 at the London equities close. The euro traded at $1.0933, lower than $1.0934 late Wednesday. Against the yen, the dollar was quoted at JP¥156.14, down versus JP¥156.60.
In the FTSE 100, Frasers gained 9.1%.
The retailer celebrated a ‘break-out year’ for building future growth, after posting adjusted pretax profit of £544.8 million for the twelve months ended April 28, up 13% from £481.8 million a year prior. This result, Frasers reflected, was at the top of its guidance range.
Meanwhile, pretax profit from continuing operations fell 21% to £507.0 million from £638.0 million, while revenue fell 0.9% to £5.54 billion from £5.59 billion. Looking ahead, the retailer expects adjusted pretax profit for financial 2025 of between £575 million and £625 million.
In the FTSE 250, International Distribution Services lost 0.1%, despite posting total revenue of £3.26 billion for the three months to June 3, up 8.2% from £3.01 billion a year prior.
It also noted an improved performance for Royal Mail, with the postal service’s volume of total parcels up 11% to 315 million from 283 million a year prior, following a 50% jump in the deliveries of postal vote returns for the 2024 general election compared to the 2019 election. Looking ahead, the group is now eyeing a return to adjusted operating profit between 2024 and 2025.
On Thursday, EP Corporate noted 30.9% valid acceptances so far for its planned takeover of IDS, and said it expects its takeover of IDS to be declared unconditional in the first quarter of next year. EP Corporate, led by Czech billionaire businessman Daniel Kretinsky, aims to buy IDS in a deal valuing it at around £5.28 billion.
In Asia on Thursday, the Nikkei 225 index in Tokyo was down 2.4%. In China, the Shanghai Composite was up 0.5%, while the Hang Seng index in Hong Kong was up 0.6%. The S&P/ASX 200 in Sydney closed down 0.3%.
Japanese exports rose 5.4% in June from a year earlier, according to data from the Ministry of Finance, compared with a 14% increase in May and consensus estimates of a 7.2% increase. Meanwhile, imports rose 3.2% in June from the year before, compared with a 9.6% gain estimated by analysts.
Accordingly, the trade surplus came to JP¥244.04 billion, about $1.44 billion, in June, marking Japan’s first time in the black for three months and swung from a deficit of JP¥1.22 trillion in May.
In the US on Wednesday, Wall Street ended primarily lower, with the Dow Jones Industrial Average up 0.6%, but the S&P 500 down 1.4% and the Nasdaq Composite down 2.8%.
US President Joe Biden tested positive for Covid with mild symptoms Wednesday, shortly after conceding he would consider dropping his re-election bid if doctors diagnosed him with a serious medical condition, reported AFP.
The infection comes at a critical moment for Biden’s campaign, with the president seeking to show he is up to the job after a debate against rival Donald Trump sparked concerns about his health, and calls from some Democrats for him to step aside.
Biden was forced to cancel a speech to a union representing Latino workers who will be crucial for his election bid, having attended a campaign event earlier in the day and given a radio interview.
On the other side of the metaphorical aisle, Trump’s running mate, JD Vance, delved into his personal history for a speech at the Republican convention on Wednesday.
Vance, who famously chronicled his difficult upbringing in best-selling memoir ’Hillbilly Elegy’, reflected on how his Ohio hometown had been blighted by closed factories and addiction.
Of his grandmother, he said: ‘When we went through her things we found 19 loaded handguns...They were stashed all over her house – under her bed, in her closet, in the silverware drawer...this frail old woman made sure that no matter where she was, she was within arm’s length of whatever she needed to protect her family.’
Gold was quoted at $2,473.30 an ounce early on Thursday, higher than $2,464.08 on Wednesday.
Brent oil was trading at $85.68 a barrel early on Thursday, higher than $84.80 late Wednesday.
Still to come on Thursday’s economic calendar, there is construction output data from the eurozone at 1000 BST, followed by an interest rate decision from the European Central Bank at 1315 BST.
Later in the day, there is a handful of data from the US, including initial jobless claims, the Philadelphia Fed manufacturing index, and the Conference Board leading index. Federal Reserve Governor Michelle Bowman is also due to make a speech.
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