London close: Stocks finish lower as ECB stands pat

London's stock markets finished in negative territory on Thursday, as investors reacted to the European Central Bank's latest policy announcement and a producer price index release in the United States.

The FTSE 100 closed down 0.47% at 7,923.80 points, while the FTSE 250 experienced a marginal decline of 0.08%, closing at 19,786.87 points.

In currency markets, sterling was last down 0.06% on the dollar, trading at $1.2532, while it strengthened 0.18% against the euro to change hands at €1.1693.

“The FTSE 100 saw a slight increase [earlier] as investors shifted their attention from the higher-than-expected US inflation data to the European Central Bank's interest rate decision,” said TickMill market analyst Patrick Munnelly.

“The internationally-focused index saw a slight decline post the ECB announcement, where it held the bank rate at 4%.

“ECB president Christine Lagarde did not commit to a specific policy path.”

Munnelly said the ECB's statement indicated that if inflation and monetary policy transmission increased confidence in returning price growth to target, it would be appropriate to reduce monetary policy restrictions.

“Investors inferred that means a rate cut in June is likely.

“However, president Lagarde's comments during the post-meeting press conference left traders uncertain about the future development of policy after June.”

Wholesale prices rise modestly in the US, ECB stands pat on rates

In economic news, US wholesale prices saw a modest increase last month, falling slightly short of expectations.

The Department of Labor reported a 0.2% month-on-month rise in seasonally adjusted total final demand prices in March, with food prices climbing by 0.8%.

However, energy prices experienced a 1.6% decline, serving as a partial offset.

On a year-on-year basis, producer prices were up by 2.1%, indicating a steady yet moderate pace of inflation.

“After another sizzling CPI report, producer prices offer some relief for Fed officials who may view the recent price reports as too hot to consider rate cuts in the immediate future,” said Matthew Martin, US economist at Oxford Economics.

“While we see the odds of the first rate cut occurring in September rising, cooler reports such as the PPI report keep the June meeting on the table, which is our current baseline.”

Meanwhile, initial jobless claims in the US dropped to 211,000 in the week ended 6 April, marking the lowest reading in a month and undershooting market expectations, while continuing claims also decreased.

Closer to home, the European Central Bank (ECB) opted to maintain its current interest rates, signalling a cautious approach amid uncertainties surrounding inflation and geopolitical events.

ECB president Christine Lagarde emphasised the potential impact of geopolitical tensions on economic growth and prices, acknowledging the importance of energy price fluctuations in shaping inflation dynamics.

The ECB's stance remained contingent on future economic projections, with a willingness to adjust interest rates if needed to support price stability.

On home shores, the UK housing market showed signs of resilience, with buyer demand strengthening and house price trends improving.

According to the RICS UK residential survey, buyer demand reached its most positive level since February 2022 in March, while new instructions also increased.

House price trends continued to improve for the seventh consecutive month, indicating a stabilising market despite ongoing uncertainties.

“Demand continues to recover gradually across the UK housing market, with new buyer enquiries rising for a third month in succession,” said Tarrant Parsons, senior economist at the Royal Institution of Chartered Surveyors.

“With the inflation backdrop turning a little less difficult of late, this has led to expectations that the Bank of England will be able to start lowering interest rates later in the year.

“This should continue to support the market to a certain degree going forward.”

Ex-divs prove a big drag, Kingfisher rises on upgrade

On London’s equity markets, ex-dividend stocks proved a major drag, with Aviva, Barratt Developments, Lloyds, Reckitt Benckiser, Phoenix Group, Smurfit Kappa, Man Group, Howden Joinery, Just Group, Savills, TP ICAP, Harbour Energy, Hunting and ITV all in the red as a result.

Travel shares were under pressure amid concerns over potential geopolitical tensions, with IAG, easyJet, Carnival, and Wizz Air Holdings all registering losses.

Jupiter Fund Management faced downward pressure following a downgrade from Barclays.

On the upside, B&Q and Castorama owner Kingfisher rose 2.44% after receiving an upgrade to 'buy' from HSBC.

AstraZeneca increased 2.14% after announcing a 7% rise in its annual dividend, while Great Portland Estates added 1.61% on the back of strong demand and expectations of a rate cut.

Cybersecurity specialist Darktrace jumped 5.82% after raising its guidance for the year following robust third-quarter results.

Elsewhere, Marks & Spencer received a boost after an upgrade from JPMorgan, while outside the FTSE 250, Lok'n Store Group rocketed 16.91% following an acquisition agreement with Belgian rival Shurgard.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,923.80 -0.47%
FTSE 250 (MCX) 19,786.87 -0.08%
techMARK (TASX) 4,458.35 0.37%

FTSE 100 - Risers

Centrica (CNA) 130.30p 3.41%
Smiths Group (SMIN) 1,647.00p 2.68%
Kingfisher (KGF) 248.00p 2.44%
AstraZeneca (AZN) 10,962.00p 2.14%
Rightmove (RMV) 535.80p 1.90%
Unite Group (UTG) 937.50p 1.68%
Hikma Pharmaceuticals (HIK) 1,817.00p 1.62%
Imperial Brands (IMB) 1,701.50p 1.58%
SSE (SSE) 1,605.50p 1.32%
Intermediate Capital Group (ICP) 2,114.00p 1.25%

FTSE 100 - Fallers

Aviva (AV.) 458.80p -6.35%
Phoenix Group Holdings (PHNX) 511.00p -5.81%
Tesco (TSCO) 282.00p -5.05%
Lloyds Banking Group (LLOY) 50.66p -4.63%
International Consolidated Airlines Group SA (CDI) (IAG) 169.10p -3.67%
easyJet (EZJ) 547.20p -3.61%
Barclays (BARC) 183.64p -3.08%
Sainsbury (J) (SBRY) 259.80p -2.77%
HSBC Holdings (HSBA) 646.70p -2.49%
Reckitt Benckiser Group (RKT) 4,206.00p -2.30%

FTSE 250 - Risers

Darktrace (DARK) 466.20p 6.25%
Watches of Switzerland Group (WOSG) 373.00p 5.13%
Safestore Holdings (SAFE) 760.50p 4.54%
Drax Group (DRX) 497.20p 2.90%
Close Brothers Group (CBG) 483.40p 2.68%
Bytes Technology Group (BYIT) 510.00p 2.57%
Big Yellow Group (BYG) 1,044.00p 2.55%
Diversified Energy Company (DEC) 1,106.00p 2.50%
Centamin (DI) (CEY) 127.90p 2.32%
Workspace Group (WKP) 509.00p 2.22%

FTSE 250 - Fallers

TUI AG Reg Shs (DI) (TUI) 646.00p -4.58%
Man Group (EMG) 264.60p -3.85%
TP Icap Group (TCAP) 214.00p -3.83%
Savills (SVS) 1,020.00p -3.77%
W.A.G Payment Solutions (WPS) 68.80p -3.46%
ITV (ITV) 70.70p -3.42%
Wizz Air Holdings (WIZZ) 2,280.00p -3.14%
Jupiter Fund Management (JUP) 87.70p -3.09%
Carnival (CCL) 1,062.50p -2.88%
Aston Martin Lagonda Global Holdings (AML) 159.80p -2.80%