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(Alliance News) - London share prices opened higher on Thursday with the pound firm as voters in the UK head to the polls for the first December general election in nearly a century, though the third general election since 2015.
"Markets are implying some astronomical moves in the currency with the most volatile period set to take place in the few minutes after voting closes. Judging by how bets have taken place in the options market, sterling could jump as high or as low as 2.8% over the day – at the very least," said Bethel Loh at ThinkMarkets.
Trepidation over the UK election has stolen some focus from the European Central Bank, which announces its latest monetary policy decision later on Thursday and sees the debut of Christine Lagarde as the central bank's new president.
The FTSE 100 index was 18.05 points higher, or 0.3%, at 7,234.30 early Thursday. The mid-cap FTSE 250 index was 86.61 points higher, at 0.4%, at 20,733.72. The AIM All-Share index was up 0.2% at 896.38.
The Cboe UK 100 index was up 0.3% at 12,262.63. The Cboe 250 was 0.3% higher at 18,652.53, and the Cboe Small Companies down 0.4% at 11,327.93.
In mainland Europe, the CAC 40 in Paris was up 0.2% while the DAX 30 in Frankfurt was 0.3% higher early Thursday.
With the US Federal Reserve late Wednesday keeping rates on hold as expected, focus turns to the ECB and Lagarde's debut as the central bank's new president.
The ECB will announce its latest decision at 1245 GMT, followed by a press conference with Lagarde at 1330 GMT.
"We do not expect any policy changes but it will still be interesting to see how Lagarde shapes the ECB. Focus will instead be on the strategic review, where we hope she will outline the scope of the exercise," said Danske Bank.
The euro was quoted at USD1.1135 early Thursday ahead of the ECB, higher than USD1.1088 late Wednesday.
In the UK, currency traders will be waiting for voting to close in Thursday's general election and a subsequent exit poll result at 2200 GMT.
A Conservative victory should provide some support for sterling, said Commerzbank, as it should alleviate some uncertainty around Brexit.
However, analyst Antje Praefcke continued: "Despite the polls a hung parliament remains a possibility, even though the likelihood is slim. In that case sterling would depreciate massively as the hopes of a happy end would unravel right away. And we have seen often enough that anything is possible when it comes to elections in the UK. Those holding GBP positions will have to hedge their positions at the last minute on the end that will hurt them most."
Sterling was quoted at USD1.3205 early Thursday, up from USD1.3177 at the London equities close on Wednesday.
Also in the economic events calendar on Thursday are eurozone industrial production at 1000 GMT and US producer prices at 1330 GMT.
In London, Ocado was the top performer in the FTSE 100 in early trade, up 1.9% as it said its joint venture with Marks & Spencer saw sales growth over the past 13 weeks.
For the period to December 1, Ocado Retail revenue was up 11% to GBP429.1 million, with average orders up 10% and the average order size stable at GBP104.9.
Ocado said it has completed its range review, confirming that M&S has substitutes at the same price or lower, and of the same quality or better, for the majority of products currently supplied by Waitrose.
"I am pleased to report further progress in bringing the Ocado offer to an ever increasing number of customers in the UK. Another strong quarter for customer orders means that we remain the fastest growing grocer in the country. The collaboration between M&S and Ocado Group is working well," said Ocado Retail Chief Executive Melanie Smith.
Outsourcing firm Serco was up 2.7% after reporting strong revenue growth in 2019, particularly in the second half, with profit for the full year expected to show a solid increase.
Revenue for 2019 is expected to grow around 14% to GBP3.2 billion, comprising 7% organic growth and 5% from acquisitions, with 2% coming from currency benefits. Underlying trading profit is forecast to grow by 30% to around GBP120 million.
In the previous year, revenue had totalled GBP2.8 billion and underlying trading profit GBP93 million.
This momentum is set to continue in 2020, with revenue expected around GBP3.4 billion to GBP3.5 billion, and underlying trading profit to increase around 20% to GBP145 million.
"The results that we expect to report for 2019 will represent the second successive year of strong growth in revenue and profits, while our positive outlook for 2020 means that we expect to double our underlying trading profit from the GBP69 million achieved in 2017 to the GBP145 million we plan to deliver in 2020," said Chief Executive Rupert Soames.
Dixons Carphone, up 1.6%, said it had a "robust" first half as its loss narrowed.
Revenue for the 26 weeks to October 26 totalled GBP4.71 billion, down from GBP4.89 billion a year ago. However, the company narrowed its pretax loss to GBP86 million from GBP440 million a year ago, after taking just GBP110 million in adjusting items for the recent period versus GBP500 million a year ago.
Adjusted pretax profit of GBP24 million was sharply lower than the GBP60 million recorded a year prior. As previously guided, this is expected to be around GBP210 million for the full-year.
Like-for-like sales fell 1% in the period, dragged down by UK & Ireland mobile, down 10%.
"We're on track to deliver what we promised this year, and with our longer-term transformation. In a tough UK Electricals market, we've gained significant share...Mobile is challenging as expected. As promised, this will be the trough year for Mobile losses, and it will be break-even by 2022," said Chief Executive Alex Baldock.
Consumer goods firm PZ Cussons said challenging market conditions in some of its geographies led to a decline in first half revenue and operating profit, as it also announced the departure of its chief executive.
The stock was down 2.2% in early trade.
In Europe & the Americas, whilst Imperial Leather soap and shower gel brand Original Source continued to grow market share, continuing consumer uncertainty and "well-documented challenges" in the UK high street hit revenue and profit.
Revenue in Africa declined due to weakness in its mass market Home and Personal Care brands offsetting strong growth in Electricals. Profitability, meanwhile, struggled amid consumer pricing pressure.
"A stronger second half is expected subject to no further worsening of the economic and trading environments across our key geographies. Full-year revenue and adjusted profit before tax is expected to be modestly below the prior year on a like-for-like basis," said PZ Cussons.
Chief Executive Alex Kanellis will step down at the end of January. Kanellis has been CEO of PZ Cussons since 2006, and has overseen "significant development" at the company, it said. A search for his successor has started, and the process should be completed in the first half of 2020.
"During his 13 year tenure as chief executive officer, Alex has led numerous initiatives which have shaped the business, including the acquisition of the brands which now underpin the group's growth and future potential. The group is now ready to move onto the next chapter under new leadership and we are confident that the opportunities to return to profitable growth are significant," said Chair Caroline Silver, who will become executive chair from February 1.
Ryanair shares were up 2.3% at EUR14.30 after Deutsche Bank upgraded the stock to Buy from Hold with a raised price target of EUR16.5 from EUR13.5. Fellow budget airline easyJet was up 1.8% at 1,380.00 pence after Deutsche raised its price target to 1,540p from 1,150p, though kept its recommendation at Hold.
In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite ended down 0.3%, while the Hang Seng index in Hong Kong is 1.3% higher.
Against the yen, the dollar was quoted at JPY108.64, soft versus JPY108.68 late Wednesday.
In commodities, gold was quoted at USD1,472.69 early Thursday, firm versus USD1,471.82 at the London equities close on Wednesday. Brent was quoted at USD63.96 early Thursday, higher than USD63.02 at the London equities close on Wednesday.
By Lucy Heming; lucyheming@alliancenews.com
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