London close: Stocks firmer as ECB keeps rates on hold

The FTSE 100 ended Maundy Thursday up 0.47% at 7,616.38, and the FTSE 250 added 0.65% to 21,121.61.

Sterling was mixed at the end of thee day, last sitting 0.53% weaker against the dollar at $1.3047, while it strengthened 0.41% on the euro to €1.2092.

“In the wake of this afternoon’s ECB meeting, European markets managed to claw their way into positive territory,” said CMC Markets chief market analyst Michael Hewson.

“One of the more notable takeaways this week has been how investors are paying more attention to how companies view the economic outlook than the fact that they have done well over the past 12 months.

“For example, Tesco has seen its share price decline this week, despite posting bumper profits, at the same time as warning about lower profits for 2023, as it looks to cushion some of the effects of the cost-of-living crisis on its customers as it widens its Aldi Price Match program to 650 products.”

On the flip side, Hewson pointed to decent gains for British Airways owner IAG on optimism that the summer could see a big rebound for airline stocks, with US operator Delta Air Lines reporting hope overnight that its next three quarters would see a return to profit.

“After a negative day yesterday, consumer discretionary companies have had a slightly better day ahead of the Easter weekend, with Holiday Inn owner IHG and Premier Inn owner Whitbread finishing the week on the up as the UK gets set for a warm holiday weekend.”

The European Central Bank left its key interest rates unchanged earlier, and confirmed plans to end its asset purchase programme in the third quarter.

Its main refinancing rate remained at zero, while its marginal lending facility stayed at 0.25% and the bank deposit rate at -0.5%.

The ECB said it would buy €40bn of bonds this month, going down to €30bn in May and €20bn in June.

Rates would also remain at record lows and rise until projections showed inflation sustainably at 2%, the ECB added.

“Inflation has increased significantly and will remain high over the coming months, mainly because of the sharp rise in energy costs,” the eurozone’s central bank said.

“The Governing Council will take whatever action is needed to fulfil the ECB's mandate to pursue price stability and to contribute to safeguarding financial stability.”

ING economist Carsten Brzeski said the announcement to end net asset purchases in the third quarter was slightly firmer than at the last meeting.

“In fact, it would now require a severe recession or a sharp drop in headline inflation forecasts for the ECB not to stop net asset purchases over the summer.

“For the rest, there were no changes. Interest rates remain unchanged, and there was no new hint at the future path of rates.

“To probably tackle the recent debate on how the ECB could deal with widening bonds spreads and rumours about a new asset purchase programme, the ECB stressed that the reinvestments of the Pandemic Emergency Purchase Programme could be used to tackle market fragmentation.”

In economic news, UK retail footfall was set to rise 6.2% over the Easter long weekend, according to retail expert Springboard, with a spike predicted on Saturday.

The Easter weekend period was predicted to be "a notable one", with a mini heatwave and the first Easter without any social restrictions since 2019.

“High streets and retail parks are likely to benefit more than shopping centres over the weekend as a whole,” said Springboard's Diane Wehrle.

“High streets will be supported by the forecast warm and sunny weather which will draw people to outdoor destinations, and shoppers are likely to head to retail parks to purchase garden products and food and groceries for home entertaining of family and friends.”

Across the pond, US consumer sentiment unexpectedly improved in April, according to a survey from the University of Michigan.

The Michigan sentiment index rose to 65.7 from 59.4 in March, coming in well above consensus expectations for a reading of 59.0.

At the same time, the expectations index increased to 64.1 in April from 54.3 the month before, while the current conditions index printed at 68.1 compared to 67.2.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the rebound in the stock market from mid-March likely explains most of the jump in the headline index, which was driven by the expectations component, up 10.5 points to a three-month high.

“The hit to expectations from the invasion of Ukraine has reversed, more quickly than we expected, given that gas prices have retraced less than a quarter of the spike triggered by the war,” Shepherdson said.

“The current conditions index rose only 0.9 points. Inflation expectations were unchanged at both the 12-month and 5/10-year horizons.”

In equity markets, broadcaster ITV reversed earlier losses to close up 1.61% even as it traded without entitlement to the dividend.

Easten Europe-focussed low-cost carrier Wizz Air flew 7.75% higher after saying it was expecting to ramp up capacity beyond pre-pandemic levels for its summer schedule, forecasting a better-than-expected final quarter.

Travel-related shares in general were higher, with InterContinental Hotels up 4.13%, BA owner IAG ascending 3.69%, Premier Inn owner Whitbread gaining 3.66%, Upper Crust owner SSP Group jumping 7.19%, and easyJet 3.24% firmer.

Dunelm managed gains of 0.47% after it said annual profit would match market expectations after a strong third quarter for the homewares retailer.

DiscoverIE Group was in the black by 5.92% after it reported strong trading in the final two months of the year, with the group now expecting to deliver full-year underlying earnings from continuing operations ahead of previous guidance.

Ashmore clawed back earlier losses to rise 0.53%, even after reporting a 10% fall in assets under management in the third quarter, as investors withdrew funds following Russia's invasion of Ukraine.

On the downside, gold miner Petropavlovsk - which has operations in Russia - tumbled 26.7% after saying it was considering the sale of its operating subsidiaries.

The company said it appointed AlixPartners to assist the board as it explored options and determined its best course of action.

Last month, the UK imposed sanctions on Russia’s Gazprombank, with which Petropavlovsk has a $2000m loan.

As a result of the sanctions, Petropavlovsk remained prohibited from selling any gold to Gazprombank - its sole buyer - and unable to pay interest on its loan.

Elsewhere, Smiths Group slipped 0.21% after it announced the appointment of Clare Scherrer as its chief financial officer from 29 April, succeeding John Shipsey.

Market Movers

FTSE 100 (UKX) 7,616.38 0.47%
FTSE 250 (MCX) 21,121.61 0.65%
techMARK (TASX) 4,411.22 0.29%

FTSE 100 - Risers

InterContinental Hotels Group (IHG) 5,200.00p 4.13%
Rolls-Royce Holdings (RR.) 93.43p 3.78%
International Consolidated Airlines Group SA (CDI) (IAG) 145.06p 3.69%
Whitbread (WTB) 2,915.00p 3.66%
Land Securities Group (LAND) 770.80p 2.99%
Flutter Entertainment (CDI) (FLTR) 8,626.00p 2.69%
Compass Group (CPG) 1,677.00p 2.26%
Melrose Industries (MRO) 122.90p 2.12%
Halma (HLMA) 2,521.00p 1.98%
Smurfit Kappa Group (CDI) (SKG) 3,141.00p 1.95%

FTSE 100 - Fallers

Dechra Pharmaceuticals (DPH) 3,822.00p -6.42%
ITV (ITV) 77.02p -2.63%
Fresnillo (FRES) 804.00p -2.28%
Ocado Group (OCDO) 1,138.50p -1.30%
Coca-Cola HBC AG (CDI) (CCH) 1,583.00p -1.03%
Aveva Group (AVV) 2,415.00p -1.02%
BT Group (BT.A) 187.10p -1.01%
Howden Joinery Group (HWDN) 758.00p -0.97%
Rightmove (RMV) 637.20p -0.75%
Pearson (PSON) 772.00p -0.69%

FTSE 250 - Risers

Wizz Air Holdings (WIZZ) 3,116.00p 7.75%
SSP Group (SSPG) 244.60p 7.19%
Discoverie Group (DSCV) 805.00p 5.92%
Capricorn Energy (CNE) 208.20p 5.85%
Dr. Martens (DOCS) 234.40p 4.74%
WH Smith (SMWH) 1,517.00p 4.48%
Ferrexpo (FXPO) 192.30p 4.17%
Ninety One (N91) 262.60p 3.79%
BlackRock World Mining Trust (BRWM) 792.00p 3.53%
C&C Group (CDI) (CCR) 197.60p 3.46%

FTSE 250 - Fallers

Darktrace (DARK) 364.90p -8.73%
Vesuvius (VSVS) 325.80p -6.14%
Polymetal International (POLY) 254.40p -5.85%
Baltic Classifieds Group (BCG) 157.80p -5.17%
Hochschild Mining (HOC) 141.40p -3.94%
Trustpilot Group (TRST) 139.90p -3.85%
Ibstock (IBST) 165.40p -3.56%
Tullow Oil (TLW) 58.70p -3.29%
Baillie Gifford US Growth Trust (USA) 221.50p -2.21%
Indivior (INDV) 327.80p -2.03%