Stock prices in London fell on Thursday morning before the European Central Bank’s interest rate decision, with the market pricing in a third hold.
The FTSE 100 index opened down 11.17 points, 0.2%, at 7,516.50. The FTSE 250 was down 51.79 points, 0.3%, at 19,119.89, and the AIM All-Share was down 0.77 of a point, 0.1%, at 744.08.
The Cboe UK 100 was down 0.2% at 751.02, the Cboe UK 250 was down 0.2% at 16,570.51, and the Cboe Small Companies was down 0.2% at 14,847.44.
In European equities, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was down 0.2%.
Sterling was quoted at $1.2722 early Thursday, lower than $1.2744 at the London equities close on Wednesday. The euro traded at $1.0888, slipping from $1.0904.
The European Central Bank will announce its interest rate call this afternoon, with the market pricing in a third hold. The focus will remain on any guidance for the timing of rate cuts.
While the market is pricing in a first 25 basis point cut in April, ECB President Christine Lagarde’s recent comments have suggested the bank itself is pencilling in the first cut in the summer.
‘Lagarde...is unlikely to be willing to promise any specifics on timing and will likely reiterate that policy will be driven by upcoming data including inflation and wage growth,’ said Lloyds Bank analysts.
Against the yen, the dollar was quoted at JP¥147.78, up versus JP¥147.33.
Brent oil was trading at $80.46 a barrel, little changed from $80.44.
Another key focus point for the day will be the US economic growth data this afternoon.
The Bureau of Economic Analysis will report gross domestic figures, which are forecast to show that the US economy grew by 2.0% in the three months through December, slower than the 4.9% growth recorded in the third quarter.
‘The data is not expected to make a compelling case for an early cut in interest rates by the Fed,’ Lloyds Bank noted.
The CME FedWatch tool now places a 42% probability of a rate cut at the March meeting of the US central bank, down from as high as 80% in recent weeks.
In the FTSE 100, RS Group initially slipped by around 4% before recovering to be down 0.4%, after reporting ‘weaker than anticipated’ markets in its third quarter ended December 31.
The industrial products and services provided said revenue increased 1% in the third quarter, but fell 10% on a like-for-like basis. This reflected ‘weak industrial sentiment’ and a ‘slower unwinding of customer surplus inventory, particularly in electronics and associated products’.
RS Group commented: ‘Notwithstanding continuing geopolitical uncertainty, extended holiday periods and extreme weather, trading in Asia Pacific is improving, [Europe, the Middle East & Africa] is stable and Americas remains challenging with Q4 comparators easing.’
Haleon rose 0.2%
The consumer healthcare firm said it has agreed to sell the ChapStick brand to Suave Brands, which is a portfolio company of Yellow Wood Partners.
CEO Brain McNamara said the sale is consistent with the firm’s ‘proactive’ approach to managing its portfolio. ‘While ChapStick is a great brand, much loved by consumers around the world, it is not a core focus for Haleon,’ he added.
Haleon will receive pre-tax cash proceeds of around $430 million, as well as a passive minority interest in Suave Brands valued at around $80 million. It will use the proceeds to pay down debt.
In the FTSE 250, Wizz Air fell 4.9%.
The Budapest-based firm reported a third quarter of double-digit topline growth in the three months to December 31. The budget airline said revenue grew 17% year-on-year to €1.06 billion from €911.7 million, as passengers carried jumped 22% to 15.1 million. Its operating loss widened to €180.4 million from €155.5 million.
The firm will be grappling with lower capacity, as its geared turbofan engines are removed for mandatory inspections. It had flagged the issue back in September, after it was told by RTX - formerly Raytheon - that its Pratt & Whitney GTF engines will be subject to inspection intervals.
‘We have worked hard to adjust the schedule in line with updated capacity projections, focusing on seasonality and markets with the greatest potential to deliver stronger yields and optimal operational performance. We continue to actively manage the GTF engine issues to minimize the impact on our operations,’ said CEO Jozsef Varadi.
Elementis rose 6.6% to 132.2p.
The specialty chemicals firm attracted bid interest from a US private equity firm, which has since decided against tabling another offer, Reuters reported on Thursday.
Citing people familiar with the matter, Reuters reported New York City-based KPS Capital Partners had submitted a 160 pence per share bid to the chemicals firm’s board, which would have valued Elementis at £940.5 million.
However, Elementis wanted around 180p per share, implying a £1.06 billion valuation.
Meanwhile, on AIM, Helium One jumped 42%.
The primary helium explorer said its Itumbula West-1 well in Tanzania has successfully reached a total depth of 961 metres. Elevated helium shows, which were twenty times above background, were consistently measured while drilling the Lake Beds Formation, Red Sandstone Group, Karoo Group and Basement targets,
In the US on Wednesday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.3%, the S&P 500 up 0.1% and the Nasdaq Composite up 0.4%.
Shares in Tesla slipped 6.0% in after-hours trading.
Tesla reported fourth quarter earnings below expectations and warned about ‘notably lower’ sales growth in 2024 as it prepares to launch its next-generation vehicle. Elon Musk’s electric vehicle maker said the company ‘is currently between two major growth waves.’
It warned ‘vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next-generation vehicle at Gigafactory Texas.’
In China, the positive mood continued, following the latest interventions from China’s central bank. The Shanghai Composite closed up 3.0% while the Hang Seng index in Hong Kong rose 1.9%.
China on Wednesday said it would next month cut the amount banks must hold in reserve in order to boost lending, state media reported. The decision comes as the world’s second-largest economy faces multiple headwinds, including a prolonged crisis in the property sector, sluggish domestic consumption and weakening foreign demand.
The move will provide ‘¥1 trillion, or $140 billion, of liquidity to the market’, it added.
The Nikkei 225 index in Tokyo ended marginally higher. The S&P/ASX 200 in Sydney closed closed up 0.5%.
Gold was quoted at $2,015.79 an ounce early Thursday, slightly higher than $2,012.59 on Wednesday.
Thursday’s economic calendar has the ECB decision at 1315 GMT, and US gross domestic product data out at 1500 GMT.
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