Key UK indices were broadly flat at Thursday’s close as the ECB decided to ‘play it safe’ with interest rate cuts.
Also, the UK prime minister has said providing homes for people must be the ‘top priority’ over nature and the environment as government reforms are set to allow more building on the green belt.
A shake-up of planning rules means councils have been given mandatory targets to deliver a total of 370,000 homes a year in England. Keir Starmer said local plans to reach targets were the starting point, but that the government would ‘absolutely’ push development through if the plans do not work.
Meanwhile, the European Central Bank announced a 25-basis-point reduction in its key interest rates, as was widely anticipated.
ING said the ECB had decided to ‘play it safe’.
‘Today’s decision reflects a compromise between growth and inflation worriers, a gut feeling versus a model-based approach and doves against hawks. At the same time, the ECB has dropped the reference to still-needed restrictiveness, keeping the door wide open for more rate cuts to come,’ the broker added.
Matthew Ryan at Ebury said the change in language is another ‘clear indication’ that attention has shifted away from controlling inflation and towards supporting economic activity.
‘Today’s communications make us increasingly confident in our call for a lower euro against most currencies in 2025. The domestic economy remains fragile, Trump’s tariffs loom on the horizon and the ECB appears in a hurry to lower rates to neutral, or below,’ Ryan added.
More surprisingly, US annual producer price inflation surged to 3.0% in November from 2.6% in October, sharply higher than the FXStreet-cited consensus which had predicted 2.6% again.
Separately, the Department of Labor announced that in the week ending December 7, the advance figure for seasonally adjusted initial claims rose by 17,000 to 242,000. Consensus had pencilled in a fall to 220,000.
The FTSE 100 index closed up 10.14 points, 0.1%, at 8,311.76. The FTSE 250 ended down 24.41 points, 0.1%, at 20,949.04, and the AIM All-Share closed up 0.1%, or 0.37points, at 737.91.
The Cboe UK 100 ended up 0.1% at 834.67, the Cboe UK 250 closed down 0.3% at 18,457.91, and the Cboe Small Companies ended up 0.1% at 16,271.05.
Among large caps, Rio Tinto was down 1.6%.
The London-based diversified mining company said it has approved a $2.5 billion investment in its first commercial-scale lithium operation.
Rio Tinto said it would be expanding its Rincon project capacity in Argentina to 60,000 tonnes per year as it looks to capitalise on the ‘attractive long-term outlook for lithium’.
Earlier on Thursday, AFP reported that a group of Australian women has lodged lawsuits against Rio Tinto and fellow miner BHP, alleging widespread discrimination and sexual harassment. BHP closed 1.1% lower.
‘We have heard reports of everything from unwanted touching and sexual harassment to rape, violence and physical threats, as well as gender discrimination and pregnancy discrimination,’ said lawyer Joshua Aylward.
Frasers was down 0.1%. Meanwhile boohoo Group, the Manchester-based owner of PrettyLittleThing and Debenhams, gained 0.7%.
boohoo said independent proxy adviser Glass Lewis recommends voting against Frasers-backed resolutions, seeking to appoint founder Mike Ashley and insolvency expert Mike Lennon to the boohoo board, at the forthcoming general meeting.
Frasers however said that boohoo had grossly exaggerated perceived conflicts and governance concerns.
On the FTSE 250, Henderson European Trust lost 0.3%.
The Europe-focused investment firm said its NAV per share total return was positive 16.6% for the 12 months to the end of September, ahead of the benchmark FTSE World Europe (ex UK) index’s 15.3% return. The trust maintained its full-year dividend of 4.35 pence.
However, Chair Vicky Hastings noted ‘gyrations in the markets’ in the second half including interest rate volatility, potential economic slowdowns in the US and China and ‘AI-angst’. She also said market conditions are ‘unusually volatile’ at the end of 2024 due to fears of a tariff war.
Auction Technology gained 3.4%.
Funds managed by TA Associates Inc have sold their entire 12.6% stake in the London-based auction market operator.
In a placing run by broker Peel Hunt LLP, the funds sold 15.3 million Auction Technology shares at £5.50 per share, worth £84.4 million.
RWS gained 6.5%.
The Buckinghamshire, England-based technology-enabled language services provider swung to a pretax profit in the financial year to the end of September of £60.0 million. RWS proposed a final dividend of 10.00 pence per share, up 2.0% from 9.80p last year.
In European equities on Thursday, the CAC 40 in Paris ended up 0.48 points, while the DAX 40 in Frankfurt ended up 0.2%.
German economic growth is likely to remain flat in 2025, the Kiel Institute for the World Economy said. The IfW expects GDP to shrink by 0.2% this year and stagnate in 2025.
‘The German economy is struggling with decreasing competitiveness mirrored by the sluggish overall economic performance, which hardly allows for any upward forces,’ said IfW researcher Stefan Kooths.
The pound was quoted at $1.2698 at the London equities close Thursday, down compared to $1.2746 at the close on Wednesday.
The euro stood at $1.0491 at the European equities close Thursday, flat against $1.0490 at the same time on Wednesday.
Against the yen, the dollar was trading at JP¥152.22 compared to JP¥152.49 late Wednesday.
Stocks in New York were lower at the London equities close, with the DJIA marginally higher, the S&P 500 index down 0.1%, and the Nasdaq Composite down 0.2%.
Despite the shock rise in US producer price inflation, Capital Economics reassured investors that ‘PPI gives [the] Fed [the] green light to keep cutting rates’.
‘Ignore the fact that PPI final demand prices increased by a slightly bigger than expected 0.4% [on-month] in November,’ analysts said. ‘The components that feed into the Fed’s preferred [personal consumption expenditures] index were universally weak and, together with the CPI data released yesterday, point to a muted 0.03% [on-month] increase in the core PCE index...Even allowing for the possibility of an upward revision to the October PCE data, based on revisions to the PPI figures, it now looks even more likely that the Fed will follow through with another 25bp rate cut next week.’
Meanwhile in Asia, China on Thursday vowed to boost domestic consumption next year, state media said, as leaders grappling with sluggish demand concluded a key economic policy meeting.
Top leaders at the annual Central Economic Work Conference, including Chinese President Xi Jinping, vowed to next year implement a ‘moderately loose’ monetary policy, increase social financing and reduce interest rates ‘at the right time’, according to state broadcaster CCTV.
Brent oil was quoted lower at $72.61 a barrel at the London equities close Thursday from $73.05 late Wednesday.
Gold was quoted lower at $2,681.37 an ounce at the London equities close Thursday against $2,716.47 at the close on Wednesday.
In Friday’s UK corporate calendar, Gore Street Energy Storage Fund releases half-year results.
The economic calendar for Friday has a busy docket including trade balance, industrial production and consumer confidence data from the UK.
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