London open: FTSE nudges up ahead of ECB, US PPI
London stocks nudged up in early trade on Thursday ahead of the latest policy announcement from the European Central Bank and PPI reading in the US, as investors continued to mull the impact of the hotter-than-expected US inflation print.
At 0830 BST, the FTSE 100 was up 0.1% at 7,967.87.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "The upbeat mood is despite volatile trading in the US following hotter-than-expected CPI data. Hopes for interest rate cuts across the pond have been dramatically shunted to September, from June. There’s also a growing number of voices that believe no cuts at all will happen this year.
"The consumer price index rose 3.5% in March, which marked an acceleration from February. The data simply didn’t give the much-needed vote of confidence for policymakers to start loosening conditions just yet."
The US producer price index for March is due at 1330 BST. Before that, the ECB policy decision is at 1315 BST, with no change in policy rate expected.
Danske Bank said: "We anticipate that the primary insight from the meeting will be a confirmation of the current ECB narrative, thereby indicating that the ECB is on track to deliver a rate cut in June.
"While this meeting may be considered an interim meeting and lead to limited market reaction, we expect ECB to deliver a clear commitment for a June rate cut, in the form of an explicit guidance of an 'intention to cut by 25bp in June'.
"No guidance will be offered beyond that point on the pace of rate cuts or the end level of the tightening cycle. We still like our baseline scenario of three cuts of 25bp this year, but see risks skewed for ECB delivering less than that this year, due to the sticky underlying inflation."
On home shores, Megan Greene, an external member of the Bank of England’s monetary policy committee, wrote a column for the Financial Times in which she argued that UK interest rate cuts "should still be a way off". She said investors were underestimating the risk that high inflation would linger for longer in Britain than in other advanced economies.
Greene, who is one of the more hawkish members of the MPC, said: "Following surprisingly strong US March CPI inflation, markets now expect the Bank of England will cut rates earlier and by more than the Federal Reserve this year.
"Macroeconomic fundamentals and inflation dynamics differ in the UK and US, and there’s a greater risk of persistence in the former. The markets are moving rate cut bets in the wrong direction."
Investors were also digesting an industry survey out earlier, which showed the housing market continued to strengthen last month as prices stabilised and buyer demand improved.
According to the latest RICS UK Residential Survey, buyer demand had a net balance of 8 in March, the most positive result since February 2022.
New instructions also strengthened, with a balance of 13.
In equity markets, B&Q and Castorama owner Kingfisher jumped to the top of the FTSE 100 after an upgrade to ‘buy’ at HSBC, while Smiths Group also gained after an upgrade to ‘buy’ by the same outfit.
Marks & Spencer was boosted by an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan.
AstraZeneca gained after announcing a 7% increase to the annual dividend. "This uplift is in line with our progressive dividend policy, which remains unchanged, and reflects the continuing strength of AstraZeneca's investment proposition for shareholders," said chair Michel Demaré.
Cybersecurity specialist Darktrace surged as it lifted its guidance for the year after a strong third quarter saw annualised recurring revenue grow 23.5% year-on-year to $731.1m.
On the downside, Aviva, Barratt Developments, Lloyds, Reckitt Benckiser, Phoenix Group, Smurfit Kappa, Man Group, Howden Joinery, Grafton Group, Just Group, Savills, TP ICAP, Harbour Energy, Hunting and ITV all fell as they traded without entitlement to the dividend.
Outside the FTSE 350, self-storage firm Lok'nStore was sharply higher as it agreed to be bought by Belgian rival Shurgard in a £378m deal.
Market Movers
FTSE 100 (UKX) 7,967.87 0.08%
FTSE 250 (MCX) 19,789.32 -0.06%
techMARK (TASX) 4,452.34 0.24%
FTSE 100 - Risers
Kingfisher (KGF) 251.90p 4.05%
Smiths Group (SMIN) 1,644.00p 2.49%
Croda International (CRDA) 4,880.00p 2.31%
Marks & Spencer Group (MKS) 261.40p 2.23%
Ocado Group (OCDO) 374.40p 1.82%
Rio Tinto (RIO) 5,327.00p 1.76%
WPP (WPP) 766.80p 1.54%
BP (BP.) 526.30p 1.19%
AstraZeneca (AZN) 10,844.00p 1.04%
Schroders (SDR) 378.20p 0.85%
FTSE 100 - Fallers
Aviva (AV.) 466.60p -4.76%
Phoenix Group Holdings (PHNX) 521.00p -3.96%
Lloyds Banking Group (LLOY) 51.28p -3.46%
Smurfit Kappa Group (CDI) (SKG) 3,542.00p -2.53%
Whitbread (WTB) 3,189.00p -1.91%
Reckitt Benckiser Group (RKT) 4,224.00p -1.88%
easyJet (EZJ) 562.60p -1.47%
Rolls-Royce Holdings (RR.) 405.10p -0.83%
Tesco (TSCO) 294.60p -0.81%
Weir Group (WEIR) 2,054.00p -0.77%
FTSE 250 - Risers
Darktrace (DARK) 472.80p 8.71%
AJ Bell (AJB) 310.00p 4.91%
RHI Magnesita N.V. (DI) (RHIM) 3,510.00p 2.63%
Safestore Holdings (SAFE) 745.50p 2.54%
Helios Towers (HTWS) 97.80p 2.52%
Balfour Beatty (BBY) 376.80p 2.39%
SSP Group (SSPG) 222.20p 1.93%
Renishaw (RSW) 4,165.00p 1.59%
Diversified Energy Company (DEC) 1,095.00p 1.48%
Ithaca Energy (ITH) 119.10p 1.45%
FTSE 250 - Fallers
TP Icap Group (TCAP) 213.00p -4.05%
ITV (ITV) 70.25p -4.03%
Carnival (CCL) 1,060.50p -3.06%
International Public Partnerships Ltd. (INPP) 120.80p -3.05%
Jupiter Fund Management (JUP) 88.00p -2.76%
Man Group (EMG) 268.00p -2.69%
Softcat (SCT) 1,591.00p -2.63%
Paragon Banking Group (PAG) 683.00p -2.50%
Me Group International (MEGP) 167.00p -2.45%
Supermarket Income Reit (SUPR) 73.50p -2.39%