London close: FTSE finishes flat after OPEC and ECB meetings

The FTSE 100 was flat at the closing bell on Thursday as traders assessed the outcome of meetings of OPEC and the European Central Bank.

Oil prices fell after OPEC members failed to agree on output levels at their meeting in Vienna, although the need to draw inventories down from levels above the five-year average was acknowledged.

There were suggestions that the talks would seek some agreement on an output ceiling, but this looked unlikely as Iran, having just emerged from the yoke of international sanctions, was keen to boost production to generate much needed revenue and therefore would not agree to any cap.

At 1622 BST Brent crude fell 0.34% to $49.55 per barrel and West Texas Intermediate slid 0.55% to $48.74 per barrel.

Meanwhile, the Energy Information Agency said US crude inventories fell by 1.4m barrels in the week ended May 27 to 535.7m barrels.

ECB keeps policy unchanged

The ECB's Governing Council kept its policy unchanged - as expected by economists - holding interest rates at 0.0%, the marginal lending facility rate at 0.25% and the deposit facility rate at -0.40%.

In a press conference following the policy announcement, ECB President Mario Draghi said the central bank has revised its forecasts for inflation and economic growth in 2016 higher.

The ECB now expects the economy to grow 1.6% in 2016, compared to a March estimate of 1.4%. Inflation is expected to rise 0.2% in 2016, up from the prior estimate of 0.1%, reflecting an improvement in oil prices.

Draghi warned that eurozone inflation is likely to remain very low, or negative, for some time. He also said risks to the global economy are to the downside.

He cautioned that this month's British referendum on European Union membership was one of the downside risks to the economy.

US jobs data

The US private sector added 173,000 jobs in May, a touch lighter than the 175,000 forecast by economists, according to ADP. The April figure was revised up to show a 166,000 increase from 156,000.

The Labor Department said the number of Americans filing for unemployment benefits unexpectedly fell last week. US initial jobless claims fell by 1,000 to 267,000, versus expectations for an increase to 270,000. This marked 65 consecutive weeks of initial claims below 300,000 - the longest streak since 1973.

The labour market data comes ahead of Friday’s non-farm payrolls report, which is expected to show expect US employers added 160,000 jobs in May the same as the previous month. The unemployment rate is expected to fall to 4.9% from 5.0%.

The Fed is monitoring the health of the labour market as it determines the timing of its next interest rate hike ahead of its 14-15 June policy meeting.

Closer to home, data showed the pace of UK construction slowed more than expected in May as many firms held off on placing orders until after the EU referendum on 23 June.

The Markit/CIPS UK construction purchasing managers’ index fell to 51.2 from 52.0 in April, missing expectations for a reading of 51.9 but above the 50 level that separates an expansion from a contraction.

Companies

Johnson Matthey advanced as it reported a 6% increase in full year revenue and said performance in the 2016/17 fiscal year is expected to be ahead of 2015/16 and in line with current market expectations.

British Airways owner International Consolidated Group soared as the International Air Transport Association said industry profits are expected to jump by almost 12% in 2016 to $39.4bn, compared to $35.3bn last year thanks to lower oil prices.

Wolseley was under pressure after Canaccord Genuity downgraded the stock to ‘hold’ from ‘buy’ and slashed its target price to 4,200p from 4,400p.

Marks & Spencer dropped after UBS cut its price target to 440p from 490p and reduced its guidance on pre-tax profit for fiscal year 2017 by 12% to £625m due to the company’s plans to lower prices at its clothing business. The retailer also went ex-dividend on Thursday.

National Grid was another stock under the cosh after going ex-dividend.

Moneysupermarket.com slumped as Jefferies downgraded the stock to ‘hold’ from ‘buy’ and cut the price target to 312p from 440p.

Market Movers

FTSE 100 (UKX) 6,185.61 -0.10%
FTSE 250 (MCX) 17,076.26 0.09%
techMARK (TASX) 3,125.15 0.42%

FTSE 100 - Risers

Johnson Matthey (JMAT) 2,996.00p 5.98%
Standard Chartered (STAN) 534.80p 2.39%
GKN (GKN) 282.20p 2.17%
Barratt Developments (BDEV) 585.00p 2.01%
Ashtead Group (AHT) 979.50p 1.93%
Next (NXT) 5,385.00p 1.70%
Persimmon (PSN) 2,072.00p 1.67%
Shire Plc (SHP) 4,449.00p 1.58%
Tesco (TSCO) 169.50p 1.53%
International Consolidated Airlines Group SA (CDI) (IAG) 533.00p 1.43%

FTSE 100 - Fallers

National Grid (NG.) 959.60p -4.56%
Marks & Spencer Group (MKS) 356.60p -3.86%
Taylor Wimpey (TW.) 192.40p -2.68%
DCC (DCC) 6,275.00p -1.34%
Sky (SKY) 939.00p -1.21%
Hargreaves Lansdown (HL.) 1,311.00p -1.21%
Lloyds Banking Group (LLOY) 70.53p -1.14%
RSA Insurance Group (RSA) 484.70p -1.12%
Wolseley (WOS) 3,786.00p -1.10%
Coca-Cola HBC AG (CDI) (CCH) 1,335.00p -0.96%

FTSE 250 - Risers

Dairy Crest Group (DCG) 568.00p 4.41%
Supergroup (SGP) 1,430.00p 4.00%
JRP Group (JRP) 145.40p 3.86%
AO World (AO.) 174.00p 3.57%
Allied Minds (ALM) 337.60p 3.43%
Ocado Group (OCDO) 278.50p 2.84%
Just Eat (JE.) 460.10p 2.66%
Bovis Homes Group (BVS) 1,006.00p 2.24%
RIT Capital Partners (RCP) 1,601.00p 2.23%
Hastings Group Holdings (HSTG) 184.90p 2.15%

FTSE 250 - Fallers

Moneysupermarket.com Group (MONY) 309.80p -6.40%
Investec (INVP) 447.30p -5.09%
Sophos Group (SOPH) 198.40p -4.20%
Evraz (EVR) 109.90p -3.00%
Marshalls (MSLH) 314.40p -2.66%
Laird (LRD) 345.50p -2.51%
Virgin Money Holdings (UK) (VM.) 352.00p -2.49%
HarbourVest Global Private Equity Limited A Shs (HVPE) 925.00p -1.91%
Tullett Prebon (TLPR) 326.20p -1.81%
Brown (N.) Group (BWNG) 236.00p -1.67%