London close: Stocks finish mixed after ECB rate hike

London stocks were in a mixed state by the close on Thursday, with the top-flight index underpinned by well-received results from Shell, as investors digested a fresh rate hike from the European Central Bank.

The FTSE 100 ended the session up 0.25% at 7,073.69, while the FTSE 250 lost 0.13% to 18,081.92.

Sterling was also struggling for direction, and was last trading down 0.42% against the dollar at $1.1576, while it strengthened 0.55% on the euro to change hands at €1.1597.

“The ECB failed to follow their Canadian and Australian counterparts in easing back on the pace of their tightening phase, with the bank raising rates by another 75-basis points today,” said IG senior market analyst Joshua Mahony.

“With the ECB having previously taken time to act, they appear willing to continue raising rates in a bid to reach the levels seen elsewhere around the world.

“It is worthwhile noting that the ECB will have one eye on the euro, for any signal that they will tighten less could bring a weaker euro and higher imported inflation.”

Indeed, hogging the headlines during the afternoon was the news that rate-setters in Frankfurt had gone ahead with a 75-basis point interest rate hike.

The ECB hiked its refinancing operation rate, the marginal lending facility and the deposit facility to a respective 2.0%, 2.25% and 1.50%, as widely expected.

It did, however, appear to hint at the possibility of a slower pace of tightening, while it refrained from any mention of quantitative tightening in its policy statement.

The ECB said policymakers expected to raise rates "further" while sticking to their meeting-by-meeting approach.

"In recent months, soaring energy and food prices, supply bottlenecks and the post-pandemic recovery in demand have led to a broadening of price pressures and an increase in inflation.

"The Governing Council’s monetary policy is aimed at reducing support for demand and guarding against the risk of a persistent upward shift in inflation expectations."

On home shores, UK retail sales bounced back in October, according to the latest Distributive Trades Survey from the Confederation of British Industry.

The reported sales balance - the weighted difference between the percentage of retailers reporting an increase and those reporting a decrease - for the month rose to +18 from -20 in September.

“Retail sales volumes recovered to grow at a firm pace this month, but retailers continue to face a challenging operating environment due to rising costs, higher interest rates, and labour shortages,” said CBI principal economist Martin Sartorius.

"The government must continue in its efforts to re-establish macroeconomic stability and restore business confidence.

“Delivering comprehensive reform on business rates and the apprenticeship levy would be helpful first steps to encourage business investment through these difficult times.”

Across the pond, the US economy bounced back in the third quarter, according to fresh data from the Bureau of Economic Analysis.

GDP grew at an annual rate of 2.6%, coming in ahead of expectations for a 2.4% increase and marking the first jump this year after six months of contraction.

In the second quarter, GDP contracted by 0.6%.

The biggest contribution to growth in the period came from a narrowing of the trade deficit, as US retailers imported fewer items.

Americans lined up for unemployment benefits at an accelerated pace in the week ended 22 October, meanwhile, increasing by 3,000 from the prior week's unrevised level, to a total of 217,000.

According to the Labor Department, the four-week moving average came to 219,000, an increase of 6,750 from the previous week's unrevised average.

The advance seasonally adjusted insured unemployment rate came to 1.0% for the week ended 15 October, unchanged from the previous week's unrevised rate.

Finally on data, orders for goods made to last more than three years grew more quickly than expected last month, led by gains for orders of civilian aircraft and automobiles.

According to the Department of Commerce, durable goods orders increased at a seasonally-adjusted month-on-month pace of 0.4% in September, below expectations for a 0.6% rise, to reach $274.72bn.

On London’s equity markets, oil giant Shell surged 5.46% after it announced a $4bn share buyback and posted better-than-expected third-quarter profits.

Adjusted earnings rose to $9.5bn from $4.1bn in the third quarter a year earlier, but down from the record $11.5bn posted in the second quarter of the year.

Analysts had been expecting net earnings of $9bn.

BP and Harbour Energy also rallied on the news, ending the session up 3.41% and 2.98%, respectively.

Lloyds Banking Group nudged 0.54% higher, having been weaker earlier in the session, after it lifted net income guidance despite a fall in third-quarter profit and rise in bad loan charges.

The company said it now expected net interest margin, a key measure of the difference between lending and savings rates, to be above 2.90% compared with a 2.84% in the year to date.

Pre-tax profit fell 26% to £1.5bn, while net income rose 12% to £13bn on the back of surging interest rates with impairment charges soaring to £668m from a release of £119m a year ago.

On the downside, Unilever slipped 0.1% after the consumer goods behemoth posted a 10.6% rise in third-quarter underlying sales growth and lifted its sales guidance for the year, but warned over the challenges of high inflation.

Airtel Africa tumbled 15.12% after its half-year pre-tax profit missed analysts’ expectations.

Anglo American was down 2.04% after the miner reported a slight fall in third-quarter output, as it ramped up its steelmaking coal longwall operations and posted a strong performance at its De Beers diamond unit.

Miners more generally were under pressure, with Rio Tinto Group down 3.7%, Glencore off 2.89%, and Antofagasta losing 0.73%.

Shares in drinks maker C&C Group were down 3.02% even after it said both underlying earnings and operating profits had surged in the six months ended 31 August, driven by increased revenues and stronger margins.

Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti, Iain Gilbert and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,073.69 0.25%
FTSE 250 (MCX) 18,081.92 -0.13%
techMARK (TASX) 4,227.15 -0.62%

FTSE 100 - Risers

Shell (SHEL) 2,425.00p 5.46%
BP (BP.) 481.90p 3.41%
Harbour Energy (HBR) 394.00p 2.98%
Melrose Industries (MRO) 116.45p 2.92%
Rolls-Royce Holdings (RR.) 76.34p 2.51%
Entain (ENT) 1,272.50p 2.21%
Unite Group (UTG) 912.00p 2.13%
Standard Chartered (STAN) 535.80p 1.86%
Land Securities Group (LAND) 578.20p 1.76%
SEGRO (SGRO) 808.20p 1.66%

FTSE 100 - Fallers

Airtel Africa (AAF) 107.80p -15.12%
Rio Tinto (RIO) 4,664.00p -3.70%
Coca-Cola HBC AG (CDI) (CCH) 1,840.00p -3.36%
Glencore (GLEN) 501.00p -2.89%
Intertek Group (ITRK) 3,757.00p -2.74%
Reckitt Benckiser Group (RKT) 5,592.00p -2.27%
Rightmove (RMV) 497.80p -2.24%
Anglo American (AAL) 2,716.00p -2.04%
Scottish Mortgage Inv Trust (SMT) 742.00p -1.96%
Hargreaves Lansdown (HL.) 767.60p -1.74%

FTSE 250 - Risers

Wizz Air Holdings (WIZZ) 1,690.00p 7.57%
Moonpig Group (MOON) 140.90p 7.39%
Petrofac Ltd. (PFC) 113.90p 4.59%
Mitchells & Butlers (MAB) 115.30p 4.44%
Workspace Group (WKP) 427.20p 4.04%
Molten Ventures (GROW) 322.60p 3.93%
Dr. Martens (DOCS) 246.80p 3.44%
888 Holdings (DI) (888) 96.65p 3.04%
TBC Bank Group (TBCG) 1,906.00p 3.03%
Hammerson (HMSO) 19.49p 2.98%

FTSE 250 - Fallers

HGCapital Trust (HGT) 367.50p -5.90%
Baltic Classifieds Group (BCG) 139.80p -5.03%
Hochschild Mining (HOC) 59.45p -4.27%
Renishaw (RSW) 3,590.00p -3.34%
Bellevue Healthcare Trust (Red) (BBH) 164.40p -3.29%
Drax Group (DRX) 495.80p -3.26%
Morgan Advanced Materials (MGAM) 252.50p -3.26%
C&C Group (CDI) (CCR) 160.50p -3.02%
FirstGroup (FGP) 105.30p -2.95%
4Imprint Group (FOUR) 3,545.00p -2.74%