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(Alliance News) - Stock prices in London opened mixed on Thursday, as investors looked nervously towards the latest European Central Bank decision.
Looking at individual shares, Rentokil surged on the back of its earnings. Virgin Money UK jumped, too, after is accepted a takeover offer from Nationwide.
The FTSE 100 index opened down 19.49 points, 0.3%, at 7,659.82. The FTSE 250 was up 36.80 points, 0.2%, at 19,510.02, and the AIM All-Share was up 0.14 of a points at 737.77.
The Cboe UK 100 was down 0.3% at 767.12, the Cboe UK 250 was up 0.4% at 16,886.76, and the Cboe Small Companies was up 0.5% at 14,649.28.
In European equities on Thursday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both down 0.4%.
All eyes have been on central bank decisions the past week, and there will be no change on Thursday.
The US Federal Reserve's progress in bringing down inflation is not yet certain, the chair of the country's central bank said on Wednesday.
"If the economy evolves broadly as expected, it will likely be appropriate to begin dialling back policy restraint at some point this year," Fed Chief Powell said in a statement.
"But the economic outlook is uncertain, and ongoing progress toward our two percent inflation objective is not assured," he added.
Powell's prepared remarks to lawmakers on the House Financial Services Committee kick off two days of hearings on Capitol Hill, in which he will likely be grilled about when the Fed will start cutting elevated interest rates.
Also on Wednesday, the Bank of Canada left its interest rate unchanged.
The next to announce an interest rate decision is the European Central Bank on Thursday. The decision will be announced at 1315 GMT.
The ECB is expected to leave rates on hold, but all eyes will be on clues for future policy decisions, as hope of an April rate cut dwindles.
"The European policymakers will leave rates unchanged but will revise their economic projections. There is a lot of confusion and uncertainty regarding when Europeans could eventually start cutting their rates as many among them came to push back on expectations of a too-early rate cut in Europe – and they were right given that the doves tend to get well ahead of themselves with the slightest smell of lower rates," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
"The ECB is expected to revise its inflation forecast down and hint that inflation in the euro area could reach the 2% target sooner than in the December projection. If that’s the case, if the Europeans look confident that inflation is trending lower toward their 2% target, there is nothing to prevent them from cutting rates: the economic outlook is soft, growth is stagnating, a sufficiently soft inflation is the only missing thing."
The pound was quoted at USD1.2740 early on Thursday in London, lower compared to USD1.2750 at the equities close on Wednesday. The euro stood at USD1.0894, down against USD1.0908. Against the yen, the dollar was trading at JPY147.85, lower compared to JPY149.36.
In London housebuilders were housebuilders lacked direction, despite new data showing that the housing market is recovering.
Taylor Wimpey and Persimmon both lost 0.1%, whilst Barratt Developments edged up 0.1%
UK house prices rose for the fifth consecutive month in February, according to data from Halifax on Wednesday.
The Halifax house price index rose by 0.4% on a monthly basis in February, after rising by 1.2% in January.
The typical UK home cost now costs around GBP291,699, GBP1,091 more than last month.
On an annual basis, prices rose by 1.7% last month, having risen by 2.3% in January.
"While it is encouraging that we've seen growth in recent months, what happens next remains uncertain. Although lower mortgage rates, alongside expectations of Bank of England interest rate cuts this year, should help buyer confidence in the short term, the downward trend on rates is showing signs of fading," said Kim Kinnaird, director at Halifax Mortgages.
Elsewhere in the FTSE 100, Rentokil surged 16%.
The pest control and hygiene firm reported that revenue in 2023 climbed to GBP5.38 billion from GBP3.71 billion a year earlier. This was more or less in line with consensus, with markets expecting revenue to come in at GBP5.37 billion.
Pretax profit increased to GBP493 million from GBP296 million.
On the back of the results, Crawley, West Sussex-based Rentokil recommended a final dividend of 5.93p per share, bringing the total dividend to 8.68p up from 7.55p.
In the FTSE 250, Virgin Money UK surged 36%, after it agreed to a takeover by Nationwide Building Society.
Under the Nationwide over, Virgin Money UK shareholders to receive 218p per share in cash, as well as 2p dividend from Virgin Money. This bring the total to 220p.
The Nationwide takeover offer values all of Virgin Money equity at GBP2.9 billion, this marks a 38% premium to Wednesday. Nationwide and Virgin Money said the combination will create a group with GBP366.3 billion in assets.
This will represent "the second largest provider of mortgages and savings in the UK."
In Asia on Thursday, the Nikkei 225 index in Tokyo was down 1.2%. In China, the Shanghai Composite was down 0.4%, while the Hang Seng index in Hong Kong was down 1.3%. The S&P/ASX 200 in Sydney closed up 0.4%.
In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.2%, the S&P 500 up 0.5% and the Nasdaq Composite up 0.6%.
Brent oil was quoted at USD82.55 a barrel early in London on Thursday, down from USD83.78 late Wednesday.
Gold was quoted at USD2,158.01 an ounce, higher against USD2,145.00.
By Sophie Rose, Alliance News senior reporter
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