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(Alliance News) -Â London stocks started Thursday's session on the front foot following the US Federal Reserve's meeting, with markets looking ahead to the Bank of England's latest policy decision at midday.
The FTSE 100 index was up 25.57 points, or 0.4%, at 6,596.48 early Thursday. The mid-cap FTSE 250 index was up 75.50 points, or 0.4%, at 20,172.06. The AIM All-Share index was up 0.5% at 1,087.58.
The Cboe UK 100 index was up 0.4% at 657.01. The Cboe 250 was up 0.5% at 17,455.40, and the Cboe Small Companies up 0.2% at 11,422.75.
In mainland Europe, the CAC 40 in Paris was up 0.4% while the DAX 30 in Frankfurt was up 0.8% early Thursday.
"Stock markets remain buoyed heading into the end of the week after the Fed held off on new easing measures on Wednesday," said Craig Erlam at Oanda.
The Fed on Wednesday kept key interest rates unchanged and maintained monthly bond purchases of at least USD120 billion at its final policy meeting of 2020.
The Federal Open Market Committee decided to keep the target range for the federal funds rate unchanged at 0.00% to 0.25%. The FOMC said it expects to maintain this target range until labour market conditions have reached levels consistent with the committee's assessments of maximum employment and inflation has risen to 2.0% and is on track to moderately exceed 2.0% "for some time".
In addition, the US central bank said it will continue to increase its holdings of Treasury securities by at least USD80 billion per month and of agency mortgage-backed securities by at least USD40 billion per month until "substantial further progress has been made" toward the FOMC's maximum employment and price stability goals.
Erlam said: "The central bank did commit to maintaining its already highly accommodative stance for longer than it previously had though so I guess this was an easing, of sorts, albeit not the knockout blow many had hoped for. But, armed with fresh economic forecasts which present a much rosier outlook for the economy, the central bank clearly believed that the current stance was appropriate."
To come in the central banking calendar for Thursday is the Bank of England at midday, with the Swiss National Bank earlier in the morning deciding to keep rates unchanged.
The SNB decision comes after the central bank on Wednesday flatly rejected accusations from the US that the wealthy Alpine nation was involved in currency manipulation. The comment came after the US Treasury found in its semi-annual foreign exchange report that Switzerland, along with Vietnam, was intervening in currency markets to affect its balance of payments.
The bank stressed that its interventions on foreign exchange markets were in no way aimed at affecting the balance of payments, nor to gain unfair competitive advantage for the Swiss economy.
Meanwhile, focus on the BoE meeting will lie on any signals the bank provides should the economic backdrop in the UK deteriorate.
"With the central bank having announced new bond buying only last month, today should just be a formality as policy makers await the outcome of the [Brexit] negotiations, like the rest of us," said Oanda's Erlam.
Sterling was quoted at USD1.3582 early Thursday ahead of the BoE, higher than USD1.3500 at the London equities close on Wednesday. The pound is up almost 2% since the start of December as hopes for a post-Brexit trade deal have risen.
The euro traded at USD1.2238 early Thursday, higher than USD1.2188 late Wednesday.
Gold was quoted at USD1,880.14 an ounce early Thursday amid a weaker dollar, higher than USD1,857.15 on Wednesday. Brent oil was trading at USD51.69 a barrel, up from USD50.62 late Wednesday.
Asian markets rose on Thursday. In Japan, the Nikkei 225 index closed up 0.2%. In China, the Shanghai Composite ended up 1.1%, while the Hang Seng index in Hong Kong closed up 0.8%. In Australia, the S&P ASX 200 closed up 1.2%.
WPP topped London's FTSE 100, up 3.1% after setting out plans to return to 2019 levels of growth by 2022.
The advertising agency said it intends to return the core Communications business to sustainable growth and is targeting annual cost savings of GBP600 million by 2025.
"In partnership with our agency brands we are deepening and accelerating the change already happening within WPP. We aim to return our Communications business to sustainable growth and invest further in the high-growth areas of Commerce, Experience and Technology. We are converting our size into scale," said Chief Executive Mark Read.
The FTSE 100 constituent wants to supplement growth with mergers & acquisitions of GBP200 million to GBP400 million annually.
WPP said like-for-like revenue less pass-through costs fell 6.7% in the two months to November, with the result for 2020 expected to be in line with the year-to-date performance of an 8.4% decline. WPP is aiming for a recovery to 2019 revenue less pass-through costs levels by 2022.
The company expects 3% to 4% annual growth in revenue less pass-through costs from 2023, and will implement a new dividend policy, intending to grow this annually with a payout ratio of around 40% of headline earnings per share. The 2020 dividend will be in line with this new policy.
"Our goal is to pay a dividend that is growing and sustainable, reflecting the strong cash generation of the business while allowing for sufficient reinvestment for growth," said WPP, adding that it anticipates recommencing the share buyback funded by the Kantar transaction proceeds in 2021.
Separately, WPP said a revised proposal of AUD0.70 per share to acquire the remaining shares in WPP AUNZ it does not already own has been accepted. The total aggregate consideration payable for WPP for the remaining shares will be around AUD230 million.
TalkTalk Telecom shares rose 1.1% to 97.30 pence after agreeing to be bought out in a GBP1.11 billion deal.
Shareholders will receive 97 pence in cash per TalkTalk share under the deal, a 16% premium to the stock's closing price on October 7, being the last business day before the offer period started. TalkTalk shares closed at 96.25 pence in London on Wednesday.
Tosca IOM newly-incorporated company, formed at the direction of London-based alternative asset manager Toscafund and private equity investor Penta.
"Having considered in detail the best interests of all shareholders and TalkTalk as a whole, the independent TalkTalk directors believe that the cash offer from Toscafund provides an opportunity for shareholders to recognise immediate value for their shares at a premium of approximately 26% to volume-weighted average price for the three month period ended 7 October 2020," said TalkTalk Senior Non-Executive Director Ian West.
The deal is expected to close in the first quarter of 2021.
Separately on Thursday, TalkTalk reported interim results. Revenue fell to GBP740 million for the six months to September from GBP792 million a year prior, with the company swinging to a pretax loss of GBP3 million from a GBP1 million profit.
In light of the recommended acquisition, there will be no interim dividend, the firm said.
SSP fell 4.0% after reporting a sharp swing to loss in its recently ended financial year as the pandemic hit the travel market.
Revenue for the year slumped to GBP1.43 billion from GBP2.79 billion the year before, sending SSP - an operator of food and beverage outlets in travel locations - to a pretax loss of GBP425.8 million, turning from a profit of GBP197.2 million the year prior.
Like-for-like sales were down 51%, with the company noting these were hit by Covid-19 and the closure of most global travel markets since March.
From very low sales in the third quarter - 93% lower year-on-year - passenger numbers increased gradually over the final quarter and by the end of September were 76% lower year-on-year. However, the re-emergence of the virus and further lockdowns since the end of the financial year has resulted in further volatility in passenger numbers.
"As a result we expect sales during the first quarter of the 2021 financial year to remain broadly in line with the final quarter of the year, approximately 80% lower year-on-year. This volatility is expected to continue through the second quarter of the new financial year," said SSP.
Avon Rubber slumped 18% after it said approval processes have been delayed for its US Defense Logistics Agency Enhanced Small Arms Protective Inserts and US Army Vital Torso Protection body armour plates contracts.
"Whilst we remain confident of completing these processes and are working with our customers to expedite the approvals, this initial delay means that first deliveries under these contracts are now expected to commence in the first half of our 2022 financial year," said Avon Rubber.
The data calendar on Thursday has eurozone inflation readings at 1000 GMT and the latest US jobless claims figures at 1330 GMT.
By Lucy Heming;Â lucyheming@alliancenews.com
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