LONDON (Alliance News) - European Central Bank President Mario Draghi's dovish press conference on Thursday was continuing to support UK and European stocks on Friday, while positive US company earnings were lifting futures ahead of the New York market open.
The London market was bolstered some more just after midday after the People's Bank of China cut its one-year lending rate by 25 basis points to 4.35% and its benchmark deposit rate by 25 points to 1.5%.
The FTSE 100 index was up 1.7% at 6,481.77 points, the FTSE 250 was up 1.1% at 17,235.17, and the AIM All-Share index was up 0.3% at 746.70.
In Europe, the CAC 40 in Paris was up 1.8% and the DAX 30 in Frankfurt was up 2.0%. European shares also were being supported by upbeat purchasing managers' index readings.
The flash euro-zone composite PMI, which represents both manufacturing and services, rose to a two-month high of 54.0 from 53.6 in September. Economists had expected a score of 53.4. A PMI reading above 50 suggests expansion in activity. The composite PMI has remained above the neutral mark since the middle of 2013.
The flash PMI for the euro-zone services sector also climbed to a two-month high of 54.2 from 53.7 in September. Economists had estimated a score of 53.5. The flash PMI for the manufacturing sector held steady at 52, beating forecasts for an easing to 51.7.
In the US, futures also were pointing higher, with the DJIA and S&P 500 both up 0.4% and the Nasdaq 100 up 0.8%. The Nasdaq was boosted by Alphabet, the newly formed parent company of internet giant Google, which released earnings after the market close on Thursday and beat analysts' estimates. The performance reflected the financial results of Google "as it existed prior to the reorganization", according to the Alphabet statement. The stock was up 11% in pre-market trade.
Amazon shares were up 9.6% in the pre-market after the online retailer reported a surprise third-quarter profit that beat Wall Street estimates by a huge margin, largely driven by a 23% jump in revenue.
Microsoft also was helping to push the Nasdaq index higher after it announced a profit for its fiscal first quarter that also came in well above analysts' expectations. The better-than-expected performance came despite a significant drag from currency exchange rates. The software giant was up 8.0% pre-market.
Meanwhile, stocks in the UK and Europe were still being driven ECB President Draghi's press conference on Thursday, in which he hinted at further economic stimulus at the central bank's next meeting in December, even saying that further interest rate cuts have been discussed at the meeting that was held this week.
Draghi told a press conference that ECB policymakers had a very "rich discussion" regarding the various monetary policy tools available to them, adding that the central bank's attitude is not "wait and see", but "work and assess".
"The degree of monetary accommodation will need to be re-examined at our December meeting," Draghi said.
The ECB president also said that some of the central bank's members wanted stimulus action on Thursday, but he added that it was not the general sentiment in the rate-setting body.
The press conference was held after the ECB left its key interest rates unchanged at a record low for a tenth consecutive policy meeting, with the refinancing rate at 0.05%, the marginal lending rate at 0.30% and the deposit rate unchanged at -0.20%.
UBS economist Reinhard Cluse had expected no policy changes in the October meeting, but for the central bank to leave the door open for an extension to its quantitative easing programme in December. However, Cluse said that the strongly accommodative signals by Draghi went beyond his expectations, such that the ECB now seems largely committed to delivering more stimulus in December.
Cluse said that no action in the December 3 meeting by the ECB will risk disappointment for the market.
"Obviously, our call for more policy accommodation in December could be wrong, particularly if sentiment and hard data hold up well and the ECB makes few changes in its new staff macroeconomic forecasts, so that the Governing Council decides to leave its policy unchanged. But given the guidance provided by Mr Draghi, the disappointment in the markets might then be substantial," the economist said.
On the London market, Irish pharmaceuticals group Shire reiterated its earnings guidance for 2015, as it reported a fall in pretax profit for its third quarter due to costs related to its acquisition of NPS Pharmaceuticals and its proposed offer for Baxalta Inc, and investments in its pipeline. Shire shares were up 3.2%.
Additionally, Shire reiterated its commitment to its offer for Baxalta, saying it continues to believe the deal would help deliver its targeted USD20 billion in sales by 2020. In August, Baxalta rejected an unsolicited USD30 billion takeover bid from Shire, saying it had determined the offer was not in the best interest of Baxalta or its shareholders.
Cable & Wireless Communications shares were up 9.4% after it confirmed it is in talks with US cable company Liberty Global regarding a possible shares and cash offer for the company.
At the market close on Thursday, the FTSE 250-listed telecommunications company, which has operations in the Caribbean and Central America, said that shareholders are advised to take no action, and added there can be no certainty any firm offer will be made, or the terms on which any offer may be made.
Cable & Wireless' confirmation followed a report in the Wall Street Journal on Thursday that Liberty Global was in talks to buy the company in a deal that could be worth more than USD5 billion, to be reached by early November. NASDAQ-listed Liberty Global is headed by media mogul John Malone and owns Virgin Media in the UK.
Bookmaker William Hill led decliners in the FTSE 250, down 7.9%. The company reported a drop in net revenue and operating profit in the third quarter of 2015 and said it now expects full-year operating profit to be around the bottom of the analyst consensus range.
William Hill said net revenue in the 13 weeks ended September 30 fell 9% on the same period the year before, as operating profit dropped 39%. As a result, the company now expects operating profit for the full year to be around the lower end of the GBP290.9 million to GBP312.1 million analyst consensus range. That would be down from the GBP372.2 million operating profit that William Hill achieved in 2014.
TalkTalk Telecom Group was down 5.4% after the telecommunications company confirmed that a criminal investigation has been launched by the Metropolitan Police's Cyber Crime Unit following a "significant and sustained" cyber attack on the company's website on Wednesday.
TalkTalk said the investigation by the Met is ongoing but said that the data compromised in the hack may have included names, addresses, dates of birth, phone numbers and email addresses. More importantly, it said the details at risk also included TalkTalk account information and credit card or bank details of its customers. TalkTalk has around 4.0 million subscribers, all of which have been informed about the breach as a "precaution".
In the AIM All-Share, Holders Technology shares were off 33%. The company, which supplies materials for printed circuit board manufacturing and LED products, warned it expects to post an operating loss for its current financial year on a fall in revenue, due to a fire at a major customers premises, reduced demand for a number of its product lines, and the strengthening of sterling.
Additionally, the company said it faces an unforeseen taxation liability of between GBP65,000 and GBP200,000, in relation to EU Cross Border Group Relief claims related to its former Swedish and Dutch divisions.
Flash Markit US manufacturing PMI is still ahead in the economic calendar at 1445 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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