London stocks closed in a mixed state on Thursday, after a session that saw investors sifting through a slew of earnings, as well as the latest policy announcement from the European Central Bank and the third-quarter GDP reading out of the United States.
The FTSE 100 ended the session 0.05% lower at 7,249.47, while the FTSE 250 was 0.12% higher at 23,199.87.
Sterling was also going in different directions, last trading 0.4% stronger on the dollar at $1.38, while weakening 0.27% against the euro at €1.1812.
“US markets are outperforming their European counterparts, with a weaker third quarter GDP reading helping to allay fears over a swift tightening phase from the Fed,” said IG senior market analyst Joshua Mahony.
“While it is questionable whether today’s GDP reading will be enough to halt the expected commencement of tapering next week, it does build on the weak payrolls figure to bring a greater degree of doubt.
“Tech names remain an outperformer as earnings season rumbles on, while manufacturing names such as General Motors, General Electric, 3M, and Boeing have all expressed struggles with higher costs and supply bottlenecks.”
The European Central Bank left key interest rates unchanged earlier in the afternoon, as it said the pace of asset purchases under its Pandemic Emergency Purchase Programme (PEPP) would be “moderately lower”.
It left its main interest rate at 0%, while the deposit rate was kept at -0.5%, in line with consensus expectations.
The marginal lending facility rate was also unchanged, at 0.25%, in line with consensus.
In its release, the ECB said the pace of its asset purchases under the PEPP would be moderately lower than the €80bn a month level in September.
It confirmed the overall size of the programme – which was due to end in March next year – at €1.85trn.
The central bank’s president, Christine Lagarde, insisted that was not tapering, but rather that the ECB was “recalibrating” like it did in December and March.
“The governing council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation stabilises at its two per cent target over the medium term,” the ECB said.
Across the pond, US economic growth slowed more sharply than anticipated over the three months ending in September, according to preliminary data.
The US Department of Commerce said the rate of growth in US gross domestic product slowed to a quarterly annualised pace of 2.0% in the third quarter.
That was down from the 6.7% clip observed during the preceding three months.
On home shores, UK car production fell for the third month in a row, hitting its lowest level in four decades.
A total of 67,169 cars were produced in Britain last month, down 41.5% year-on-year and the lowest since September 1982, the Society of Motor Manufacturers and Traders (SMMT) said, in what it called a “worrying trend”.
Car makers were struggling globally with a shortage of semiconductors as the industry tried to recover from the slump last year as the Covid pandemic battered demand.
“The substantial decline in UK car output in September continues the worrying trend we have seen over the past three months,” said SMMT chief Mike Hawes.
“The industry is continuing to battle the effects of the pandemic with the shortage of semiconductors stalling production.”
Looking ahead to the Bank of England’s decision next week, Capital Economics said there was a “high chance” it would raise interest rates, adding that it would be “fast out of the blocks but won’t go the distance”.
The research consultancy said it expected the Monetary Policy Committee to raise rates to 0.25% from 0.10% at the meeting on 4 November, and reckoned the Bank could raise rates to 0.50% in February, if not in December.
“But we think investors are wrong to price in interest rates rising to 1.25% by the end of next year,” said chief UK economist Paul Dales.
In equity markets, Royal Dutch Shell was 3,47% weaker after it reported lower-than-expected third-quarter adjusted earnings after taking a $400m hit from Hurricane Ida’s impact on operations.
Travis Perkins was in the red by 2.84% despite lifting its profit forecast again, while steel producer Evraz fell 1.51% after it said third-quarter sales declined amid a slowdown in the Russian construction market.
On the upside, WPP gained 8.05% after the advertising giant upgraded its guidance for 2021 as it hailed a “very strong” third-quarter performance.
DS Smith advanced 2.08% after the packaging company said its first half was in line with expectations as price rises offset rising input costs.
Lloyds Banking Group added 1.27% after it improved its full-year guidance following the reversal of bad debts, which contributed to a near doubling of third-quarter profit.
Airtel Africa surged 10.83% as the telecommunications provider posted a jump in first-half profit and revenue, with “strong” performances across its regional segments and key services.
C&C Group fizzed higher after the Magners, Bulmers and Tennent’s maker said it swung back to a profit in the first half as revenues grew thanks to the reopening of hospitality venues.
Car dealership Inchcape was 1.99% higher after it lifted its 2021 profit expectations following a “strong” third-quarter performance.
GlaxoSmithKline was 3.97% higher for the second day running after well-received third-quarter results on Wednesday.
Bytes Technology was in the black by 7.59% after it said it was trading well as the software and security group reported a 19% increase in first-half profit.
Synthomer gained 4.26% after it agreed to buy Adhesive Technologies – the adhesive resins business of Eastman Chemical Company – for $1bn (£728m) in cash.
The deal would be financed through an equity placing to raise around £200m ($275m), existing cash and a new $300m debt facility.
Market Movers
FTSE 100 (UKX) 7,249.47 -0.05%
FTSE 250 (MCX) 23,199.87 0.12%
techMARK (TASX) 4,574.68 0.07%
FTSE 100 – Risers
WPP (WPP) 1,044.00p 8.05%
Darktrace (DARK) 779.50p 6.71%
GlaxoSmithKline (GSK) 1,499.00p 3.97%
Smurfit Kappa Group (CDI) (SKG) 3,861.00p 2.39%
Ashtead Group (AHT) 6,100.00p 2.30%
Fresnillo (FRES) 873.40p 2.08%
Smith (DS) (SMDS) 387.60p 2.08%
Antofagasta (ANTO) 1,442.50p 2.05%
Reckitt Benckiser Group (RKT) 5,946.00p 1.95%
Coca-Cola HBC AG (CDI) (CCH) 2,519.00p 1.90%
FTSE 100 – Fallers
Royal Dutch Shell ‘B’ (RDSB) 1,706.60p -3.47%
Royal Dutch Shell ‘A’ (RDSA) 1,713.20p -2.97%
Vodafone Group (VOD) 108.98p -2.71%
DCC (CDI) (DCC) 6,100.00p -2.27%
Sainsbury (J) (SBRY) 299.60p -2.25%
Kingfisher (KGF) 331.30p -1.98%
London Stock Exchange Group (LSEG) 7,150.00p -1.95%
BT Group (BT.A) 139.25p -1.94%
Smiths Group (SMIN) 1,370.00p -1.90%
Flutter Entertainment (CDI) (FLTR) 14,005.00p -1.86%
FTSE 250 – Risers
Airtel Africa (AAF) 110.00p 10.83%
Bytes Technology Group (BYIT) 527.00p 7.59%
C&C Group (CDI) (CCR) 264.60p 6.01%
Auction Technology Group (ATG) 1,374.00p 4.73%
Indivior (INDV) 246.00p 4.68%
Direct Line Insurance Group (DLG) 294.80p 4.54%
Baltic Classifieds Group (BCG) 215.00p 4.37%
Synthomer (SYNT) 494.20p 4.26%
CLS Holdings (CLI) 234.00p 4.00%
Trainline (TRN) 322.60p 3.33%
FTSE 250 – Fallers
Helios Towers (HTWS) 156.80p -5.77%
Plus500 Ltd (DI) (PLUS) 1,327.50p -5.31%
Network International Holdings (NETW) 337.40p -3.96%
Wood Group (John) (WG.) 217.50p -3.89%
Harbour Energy (HBR) 350.20p -3.80%
Hammerson (HMSO) 32.08p -3.58%
Crest Nicholson Holdings (CRST) 363.60p -3.09%
Cairn Energy (CNE) 181.80p -2.84%
Travis Perkins (TPK) 1,540.00p -2.84%
Currys (CURY) 121.80p -2.79%
