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(Alliance News) -Â London started Thursday's session in the green after US lawmakers passed President Joe Biden's bumper USD1.9 trillion financial aid package.
However, gains were modest ahead of the European Central Bank's latest monetary policy decision in the afternoon.
The FTSE 100 index was up 9.65 points, or 0.1%, at 6,735.25 early Thursday. The mid-cap FTSE 250 index was up 107.04 points, or 0.5%, at 21,513.71. The AIM All-Share index was up 0.5% at 1,188.58.
The Cboe UK 100 index was up 0.1% at 670.98. The Cboe 250 was up 0.5% at 191,39.01, and the Cboe Small Companies up 0.2% at 13,746.61.
In mainland Europe, the CAC 40 in Paris was up 0.5% while the DAX 30 in Frankfurt climbed 0.1% early Thursday.
Europe got off to a good start after US Congress on Wednesday passed Biden's enormous economic relief package, delivering a resounding victory for the president and a desperately needed injection of cash to millions of families and businesses enduring the coronavirus pandemic.
The USD1.9 trillion plan, which funds Covid-19 vaccines and sends stimulus checks of up to USD1,400 to most Americans, passed the House of Representatives with zero support from Republicans, who accused Biden of abandoning his Inauguration Day pledge to unify the nation.
The White House said Biden - who made the American Rescue Plan his top legislative priority - planned to sign the measure into law on Friday, days before unemployment benefits were scheduled to expire for millions of people.
Optimism flowed through to Asia overnight with the Japanese Nikkei 225 index closing up 0.6%. In China, the Shanghai Composite closed up 2.4%, while the Hang Seng index in Hong Kong ended up 1.7%. In Sydney, the S&P/ASX 200 index closed marginally lower.
In the foreign exchange market, the dollar was weaker amid Thursday's risk-on moves.
The dollar nudged down to JPY108.62 early Thursday in London from JPY108.65 at the London equities close on Wednesday.
Sterling was quoted at USD1.3933 early Thursday, higher than USD1.3902 late Wednesday.
The euro traded at USD1.1946, up from USD1.1900 late Wednesday, ahead of the European Central Bank's latest interest rate decision.
The ECB Governing Council has met in Frankfurt this week, announcing its latest policy decision at 1245 GMT on Thursday. This will be followed by a press conference with President Christine Lagarde at 1330 GMT.
No policy change is expected this month, but markets will be looking out for comments from Lagarde over rising bond yields and inflation expectations.
"No drama is expected as the ECB isn't anticipated to change its monetary policy's sailing path. It is highly likely that we may hear the echo of the same message that we had in the [Reserve Bank of Australia] and [Bank of Canada's] monetary policy meetings, and that is: the ECB is likely to play down any qualms around inflation," said Naeem Aslam at AvaTrade.
Elsewhere, the economic events calendar on Thursday has the latest US jobless claims figures at 1330 GMT.
Gold was quoted at USD1,737.19 an ounce early Thursday, higher than USD1,719.15 on Wednesday due to a weaker dollar. Brent oil was trading at USD68.24 a barrel, up from USD67.85 late Wednesday.
In London, Rolls-Royce topped the FTSE 100, up 3.5%, even after revealing it burned through GBP4.2 billion in 2020.
The jet engine maker reported revenue of GBP11.82 billion for 2020, down 29% from GBP16.59 billion the year before. Its reported pretax loss deepened to GBP2.91 billion from GBP891 million, while it swung to an underlying pretax loss of GBP3.96 billion from profit of GBP583 million. The underlying pretax loss had been seen by consensus coming in at GBP3.14 billion.
"Our financial performance in 2020 was significantly affected by the Covid-19 pandemic. The global spread of the virus from March resulted in a sudden deterioration of some of our end markets. A positive albeit reduced contribution from Power Systems and growth in Defence were important to the group's overall performance, partly offsetting the severe impact to our Civil Aerospace business," said Rolls-Royce.
Rolls-Royce said its cash outflow for the year was a staggering GBP4.19 billion, versus an inflow of GBP873 million in 2019, though this was in line with analyst expectations. It reflected a deterioration in its underlying performance due to the pandemic and the hit to Civil Aerospace in particularly.
The FTSE 100 constituent expects a cash outflow of around GBP2.0 billion in 2021. It expects to become cash flow positive "at some point" during the second half of this year. Engine flying hours for 2021 are forecast at around 55% of 2019 levels, but the company said things could be worse.
"Our severe but plausible downside scenario assumes approximately 45% EFH in 2021 and 70% in 2022, both compared to the 2019 level," said Rolls-Royce.
Michael Hewson at CMC Markets noted the unchanged engine flying hours guidance for this year.
"This expectation hasn't changed, even though it comes across as very optimistic, given that since they made that assessment air travel has remained very much in the doldrums due to the Europe wide lockdowns that have been in place since the beginning of January," he said.
Morrisons shares slipped 1.1% as it reported a fall in full-year profit.
Total revenue for the financial year to January 31 rose 0.4% to GBP17.6 billion, with like-for-like sales, excluding fuel and VAT, up 8.6% compared to a fall of 0.8% the year before. Pretax profit fell 62% to GBP165 million.
Profit before tax and exceptional items fell 51% to GBP201 million, including GBP290 million in direct Covid-19 costs. Profit would have been up 5.6% to GBP431 million before the payment of GBP230 million waived government business rates relief, Morrisons noted, and it expects to achieve that same figure in financial 2022.
"This target assumes a gradual return to more normal trading conditions, no significant increases in expected direct Covid-19 costs such as elevated colleague absence, and no further restrictions such as another period of prolonged cafe closures. However, we enter 2021-22 with strong trading and operational gearing momentum, and further productivity and cost efficiency opportunities supported by our very robust underlying cash flow and balance sheet," said Morrisons.
Morrisons declared a final dividend of 5.11p, taking the full-year ordinary dividend to 7.15p, up 5.6% on the year before, and the total payout for the year to 11.15p, up 27%.
In the FTSE 250, IG Group Holdings rose 4.5% on "exceptional" levels of trading activity in the third quarter.
The online trading platform delivered revenue of GBP230.3 million for the three months to the end of February, up 65% year-on-year and up 11% on the second quarter. This was driven by sustained elevated levels of trading from existing clients and high levels of client acquisition.
"With the sustained higher levels of volatility in the financial markets in FY21, IG's active client base is now at record levels and is materially larger than in the prior year period, with trading behaviours and levels of retention comparable to historical averages," said IG.
By Lucy Heming;Â lucyheming@alliancenews.com
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