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(Alliance News) - Stocks in London ended mostly lower on Thursday as optimism surrounding the inauguration of US President Joe Biden petered out, while the European Central Bank's monetary policy meeting failed to lift sentiment.
The FTSE 100 index closed down 24.97 points, or 0.4%, at 6,715.42. The FTSE 250 ended down 87.74 points, or 0.4%, at 20,793.72, and the AIM All-Share closed up 12.13 points, or 1.0%, at 1,199.63.
The Cboe UK 100 ended down 0.2% at 668.76, the Cboe UK 250 closed up 0.3% at 18,154.94, and the Cboe Small Companies ended down 0.1% at 12,381.26.
In Paris the CAC 40 ended down 0.7%, while the DAX 30 in Frankfurt ended down 0.1%.
"Today's ECB meeting did little to lift European stocks, with US markets outperforming in the wake of Joe Biden's inauguration," said IG Group's Josh Mahony. "US markets are once again leading the push higher for stocks, with moderate gains helping to drive record highs for the S&P 500 and Dow. Unfortunately Christine Lagarde has proved herself to be very different from her predecessor, with the DAX weakening and euro on the rise following today's meeting."
Stocks in New York were higher, having hit fresh intraday highs in early trade, amid optimism over the US presidential transition.
The DJIA was flat, the S&P 500 index up 0.1% and the Nasdaq Composite up 0.5%.
The major indices ended at records Wednesday after Joe Biden was sworn in as president amid optimism over the new administration's plans to support the US economy and improve the Covid-19 vaccine rollout.
In the FTSE 100, Sage Group ended the best performer, up 4.9% after the accounting software provider said it performed in line with expectations in its first quarter, posting a slight increase in revenue.
For the three months ended December 31, the Newcastle Upon Tyne-based accounting software firm posted revenue of GBP447 million, up 1.4% from the year prior.
Recurring revenue increased 4.7% to GBP408 million, supported by software subscription growth of 11% to GBP303 million. Other revenue - from the SSRS and processing units - fell 24% to GBP39 million, in line with Sage's strategy to transition away from licence sales and professional services revenue.
At the other end of the large caps, oil majors BP, Royal Dutch Shell 'A' and 'B' shares closed down 3.1%, 2.7% and 2.9% respectively, tracking spot oil prices lower.
Brent oil was quoted at USD56.05 a barrel at the equities close, lower from USD56.30 at the close Wednesday.
Oil prices were lower amid concerns over Biden's greener ambitions compared to his predecessor Donald Trump. Biden on Wednesday signed a flurry of executive orders, starting with rejoining the 2015 Paris climate accord.
The pound was quoted at USD1.3732 at the London equities close, up sharply from USD1.3631 at the close Wednesday, having hit an intraday high of USD1.3746 in early trade - its highest level since April 2018.
Sterling was enjoying a strong week against the greenback, amid hopes of a recovery for the UK economy in 2021, predicated on vaccine rollouts and following the Brexit deal secured in December.
"GBP gains appear to be demonstrating that there has been relief in the market that a UK/EU trade deal was agreed last month, just ahead of the expiry of Brexit transition phase. There is also some optimism regarding the relatively rapid roll out of the coronavirus vaccine in the UK and some renewed hope that a negative Bank of England Bank rate may be avoided. Related to this, fears are emerging that both Brexit and the recovery from the pandemic could support price pressures in the UK going forward," said analysts at Rabo Bank.
The euro stood at USD1.2151 at the European equities close, up from USD1.2100 late Wednesday, after the European Central Bank left key interest rates unchanged.
The ECB on Thursday kept its interest rates on main refinancing operations, the marginal lending facility, and the deposit facility all unchanged at 0.00%, 0.25% and negative 0.50%, respectively.
The Governing Council made no adjustments to the bank's pandemic-fighting stimulus programmes. The emergency bond-buying scheme, known as PEPP, was in December topped up by EUR500 billion to reach a total envelope of EUR1.85 trillion. What's more, the scheme was extended to March 2022.
The ECB's measures are aimed at keeping credit flowing in the eurozone in a bid to boost growth and inflation. But eurozone inflation has stayed stubbornly low for years and even turned negative in 2020.
At the subsequent press conference in Frankfurt, ECB President Christine Lagarde noted that "inflation remains low" and "short term risks are on the downside", though she also pointed out that downside risks are "less pronounced" with an end in sight to the Covid-19 pandemic.
Complicating the ECB's efforts to control inflation is the appreciation of the euro, which has risen by more than 10% against the dollar since late February. A stronger euro makes imports cheaper, keeping the lid on consumer prices, while exports become less competitive, hurting growth prospects.
On the Euro the ECB said only that it will "continue to monitor developments in the exchange rate with regard to their possible implications for the medium-term inflation outlook".
Analysts at ING said; "The main focus was on the comments on the currency. President Lagarde reiterated the previous sentence that the central bank monitors the exchange rate 'very carefully.' However, she also added that the central bank is 'very attentive' to FX developments. The language with respect to FX is thus somewhat stronger than the last time, but given the ECB's assessment of the economic outlook (''downside risks less pronounced'').
"President Lagarde's focus on positives during the press conference (Brexit deal, vaccination,...) as well as the fact that the trade weighted euro is below its 6-month average, all suggests that the FX market should take the exchange rate comments with a pinch of the salt and the impact on the euro should be very muted. We thus see the overall muted, yet modestly positive reaction of the EUR/USD to the press conference as fully justified."
Against the yen, the dollar was trading at JPY103.53, flat from JPY103.55 late Wednesday.
On the economic front, US weekly initial jobless claims fell more than analysts had expected, figures from the Department of Labor showed.
For the week to January 16, seasonally-adjusted initial claims came in at 900,000, down from 926,000 the week before. Consensus, according to FXStreet, had seen claims coming in at 910,000.
Continuing claims also fell, down to 5.1 million in the week to January 9 from 5.2 million the week prior.
Gold was quoted at USD1,864.60 an ounce at the London equities close, little changed from USD1,865.55 late Wednesday.
The economic events calendar on Friday has UK retail sales at 0700 GMT. In addition, there are manufacturing PMI readings from Germany, eurozone and the UK at 0855 GMT, 0900 GMT and 0930 GMT respectively.
The UK corporate calendar on Friday has trading updates from Computacenter and Record.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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