(Alliance News) - A weaker pound helped the internationally-exposed FTSE 100 outperform counterparts in mainland Europe on Thursday, despite the Bank of England lifting its growth forecasts for the year ahead.
However, traders are eyeing the situation in Jersey as the UK and France tussle over fishing rights, while citizens across the UK head to the polls in what has been dubbed 'Super Thursday'. Scottish National Party leader Nicola Sturgeon's push for a second independence referendum means the stakes are high in the Holyrood contest.
The FTSE 100 index closed up 36.87 points, or 0.5%, at 7,076.17. The FTSE 250 ended up 105.46 points, or 0.5%, at 22,491.36, and the AIM All-Share closed down 8.35 points, or 0.7%, at 1,252.69.
The Cboe UK 100 ended up 0.3% at 703.95, the Cboe UK 250 closed up 0.6% at 20184.13, and the Cboe Small Companies ended up 0.9% at 14836.42.
In European equities on Thursday, the CAC 40 in Paris ended up 0.3%, while the DAX 30 in Frankfurt ended up 0.2%.
Stocks in New York were mostly higher at the London equities close, with the Dow Jones up 0.5%, the S&P 500 index up 0.2%, and the Nasdaq Composite down 0.2%.
Sterling underperformed on Thursday, providing the overseas earnings-exposed FTSE 100 a lift, despite the Bank of England raising its outlook and paring its QE pace.
The pound was quoted at USD1.3876 at the London equities close Thursday, down compared to USD1.3910 at the close on Wednesday.
The BoE's nine-strong Monetary Policy Committee voted unanimously to keep the Bank Rate at 0.1%. It also kept the asset purchases steady at GBP895 billion as widely expected - although one member of the MPC voted to reduce it by GBP50 billion given brighter recovery prospects.
The BoE said UK gross domestic product is expected to rise sharply in the second quarter, but activity is likely to remain on average around 5% below its level in the fourth quarter. GDP is expected to recover strongly to pre-Covid levels over the remainder of this year in the absence of most restrictions on domestic economic activity, the central bank added.
The bank upgraded its UK economic growth outlook to 7.25% in 2021 from 5.0% predicted in February. The central bank also expects GDP of 5.75% in 2022, down from 7.25% previously.
The BoE revealed it was slowing the pace of QE but stressed this was not as a result of the growth upgrades.
"Despite this optimistic outlook the pound has slipped back from two-week highs against the euro, and also fallen back against the US dollar," said Michael Hewson, chief market analyst at CMC Markets.
"The US dollar is also under pressure again slipping back towards last week's lows, losing the most ground against the Swiss franc and the euro."
The greenback slid even after figures showed US initial jobless claims fell as hiring accelerated in tandem with easing Covid-19 restrictions. In the week ending May 1, seasonally adjusted US initial jobless claims were 498,000, down from the previous week's revised level of 590,000 and beating consensus of 540,000. The reading was also the lowest level for initial claims since mid-March.
Nonetheless, the euro stood at USD1.2053 at the European equities close Thursday, up against USD1.2000 at the same time on Wednesday. Against the yen, the dollar slipped to JPY109.09 compared to JPY109.26 late Wednesday.
Gold was a major beneficiary of a weaker dollar, bouncing above the USD1,800 mark. The precious metal was quoted at USD1,813.85 an ounce at the London equities close Thursday against USD1,781.79 at the close on Wednesday.
Tracking the price of the sparkling metal higher was precious metals miner Fresnillo, finishing up 6.2%, while Polymetal International rose 1.4%.
Oil prices fared worse than gold on Thursday. Brent oil was quoted at USD68.39 a barrel at the London equities close Thursday, falling from USD69.89 late Wednesday.
Back in London, Barratt Developments rose 1.9% after the housebuilder said it has performed well since the start of 2021, reflecting underlying market strength and strong customer demand for "high-quality sustainable new homes".
For the period from January 1 to last Sunday, total forward sales were GBP3.70 billion, up 31% from GBP2.83 billion at the same time in 2020 and delivered 4,481 home completions, up 28% from 3,504.
Next shares advanced 1.8% after the clothing retailer boosted its full-year profit guidance for a second time following a strong first quarter, but the high street retailer was cautious over its post-pandemic prospects.
Next said full price sales were down 1.5% in the 13 weeks to May 1 on two years ago, before the Covid-19 pandemic, which the company said was a more "meaningful" comparison.
The FTSE 100 clothing and homewares retailer said it had assumed full-price sales during the period would be down 10%, but beat this forecast by GBP75 million. As such, Next raised its central guidance for full-year pretax profit by GBP20 million to GBP720 million.
Looking ahead, Next remained dour and said it expects the recent post-lockdown sales surge to be short lived - based on the experience of last year - with sales to settle back toward guidance levels within the next few weeks.
At the bottom of the FTSE 100 was Admiral Group, falling 4.7% as the stock went ex-dividend, meaning new buyers no longer qualify for the latest payout. Polymetal also went ex-dividend on Thursday, but managed to get a boost from improved metal prices.
Ending at the top of the FTSE 250 was John Laing Group, surging 20% to 379.80 pence, giving it a market capitalisation of GBP1.9 billion, after confirming it is in talks with a private equity firm interested in buying the infrastructure investor.
John Laing said it is in talks with KKR & Co, a New York-based firm with stakes in real estate, infrastructure and energy firms. "There can be no certainty that any firm offer for the company will be made nor as to the terms on which any firm offer might be made," John Laing added.
Morgan Advanced Materials rose 14% after upping its full-year guidance following a strong start to the year.
Guidance for organic sales growth was increased to between 5% and 8% for the full year. Operating margins are expected to improve, driven by volume leverage and the benefit of a restructuring programme, the industrial products manufacturer said.
The Windsor, England-based industrial products manufacturer said sales for the four months to April 30 were 2.5% higher compared to the previous year. Average daily order intake was also ahead of same period in 2020.
The worst performing mid-cap was Trainline, falling 6.9% after posting an annual sales plunge due to the pandemic.
The company made a pretax loss in the year ended February 28 of GBP106.8 million, widened from GBP80.2 million. Revenue fell 74% to GBP67.1 million from GBP260.8 million, as guided for in the trading update on March 11.
But the ticketing app provider said the first quarter of the new financial year has seen the "first signs of recovery" as net ticket sales have risen with the lifting of lockdown restrictions in the UK.
The UK corporate calendar on Friday has first quarter results from British Airways parent International Consolidated Airlines and Holiday Inn owner InterContinental Hotels Group.
Friday's economic calendar is headlined by the monthly US jobs report at 1330 BST. Also due is trade data from China overnight and a services PMI at 0245 BST, while German industrial production is at 0700 BST and there is a UK construction PMI at 0930 BST.
By Lucy Heming; lucyheming@alliancenews.com
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