(Alliance News) -Â The FTSE 100 was missing out on gains enjoyed elsewhere in Europe on Thursday as the blue-chip index traded flat, weighed on by Royal Dutch Shell cutting its dividend for the first time since the second world war.
The FTSE 100 index was just 2.38 points lower at 6,112.87 early Thursday. The mid-cap FTSE 250 index was up 46.40 points, or 0.2%, at 16,881.74. The AIM All-Share index was down 0.2% at 814.77.
The Cboe UK 100 index was down 0.4% at 10,328.04. The Cboe 250 was down 0.4% at 14,507.93, and the Cboe UK Small Companies up 0.5% at 9,123.11.
By contrast, in mainland Europe, the CAC 40 in Paris was up 0.9%, while the DAX 30 in Frankfurt was up 0.5% early Thursday.
"Optimism continues to boost the markets, this time driven by encouraging results from a covid-19 treatment trial," said Fiona Cincotta at City Index.
"Any encouraging news on Covid-19 drugs or vaccines will boost sentiment. The market is fully aware that any cure or prevention will see economies bounce back to pre-coronavirus form rapidly," Cincotta continued. "Even without a cure, the market is happy to settle for control of the spread of coronavirus. With regards to the spread, we are definitely in a better place than a month ago, although it is still far to early to sing any victory song."
US scientists on Wednesday hailed a potential breakthrough in the coronavirus fight as a trial showed patients responding to a Gilead Sciences antiviral drug, fuelling global hopes for a return to normal.
In the first proof of successful treatment against the illness that has claimed more than 226,000 lives, a clinical trial of the drug remdesivir showed that patients recovered over 30% more quickly than those on a placebo.
In Asia on Thursday, the Japanese Nikkei 225 index ended up 2.1%. In China, the Shanghai Composite closed up 1.3%, while the Hong Kong Stock Exchange was closed for a local holiday.
"The initial euphoria about the slow easing of restriction in some countries, mainly in Europe, is still visible on the markets. However, we urge caution. The euro's strength will be put to the test with the publication of the Q1 GDP data," said Antje Praefcke at Commerzbank.
Eurozone gross domestic product is due at 1000 BST alongside inflation. Later, the European Central Bank releases its latest policy decision at 1245 BST followed by a press conference with President Christine Lagarde at 1330 BST.
"We do not expect the ECB to provide any particular momentum today. The central bankers too can now hope that following the major support packages implemented at the height of the crisis the pandemic will now slowly begin to ease off with market optimism returning on a sustainable basis. No doubt the ECB will underline that it would implement further measures if required. But at the same time it is likely to point out that fiscal policy in the euro zone has to make its contributions too," remarked Praefcke.
The euro traded at USD1.0870 early Thursday, higher against USD1.0855 late Wednesday.
Elsewhere in the economic calendar on Thursday, US jobless claims are at 1330 BST.
Sterling was quoted at USD1.2445 early Thursday, up from USD1.2434 at the London equities close on Wednesday. Against the yen, the dollar was quoted at JPY106.65 versus JPY106.58.
Gold was quoted at USD1,720.48 an ounce early Thursday, higher than USD1,702.03 on Wednesday.
Brent oil rose to USD23.68 a barrel early Thursday from USD22.90 late Wednesday.
At the bottom of the FTSE 100 in early trade was Royal Dutch Shell as the oil major made its first dividend cut since the second world war.
Shell 'A' shares were down 7.0% and 'B' shares down 7.5%.
Shell's first quarter current cost of supplies earnings attributable to shareholders, excluding items, were USD2.9 billion, down 46% on a year ago due to a drop in oil, gas and liquefied natural gas prices as well as lower sales volumes.
Earlier in April, West Texas intermediate crude oil prices crashed into negative territory as the expiry date for the May contract loomed. Oil markets have plunged in recent weeks as lockdowns and travel restrictions to fight the coronavirus around the world have battered demand, compounding an earlier production war between Saudi Arabia and Russia.
Shareholder returns are "a fundamental part" of Shell, the company said.
"However, given the risk of a prolonged period of economic uncertainty, weaker commodity prices, higher volatility and uncertain demand outlook, the board believes that maintaining the current level of shareholder distributions is not prudent."
It has slashed its first quarter dividend to 16 US cents. Shell has not cut it since World War Two, but there has not been a hike since 2014. It paid out 47 cents each quarter in 2019.
David Barclay, senior investment manager at Brewin Dolphin, said: "Royal Dutch Shell's decision to cut its dividend for the first time since World War Two reflects the unprecedented economic impact of Covid-19. The share buyback programme has also been discontinued for now. There was a great deal of speculation about what the energy company would do leading up to these results, and the market was braced for bad news."
Lloyds Banking shares slipped 5.6% as the UK lender's profit almost disappeared in the first quarter on an impairment charge.
Pretax profit was GBP74 million for the quarter versus GBP1.60 billion a year before, hit by a "significantly increased" impairment charge of GBP1.43 billion, versus GBP275 million, due to the economic outlook.
The impairment charge was a result of to changes to the group's IFRS 9 assumptions, given an expected deterioration in the UK economy as a result of Covid-19.
Net income was down 11% to GBP3.95 billion amid lower interest rates, competitive asset markets and a slowdown in retail and commercial markets in March.
In the FTSE 250, Mitchells & Butlers was up 8.5% after JPMorgan raised the pub operator to Overweight from Neutral.
By Lucy Heming;Â lucyheming@alliancenews.com
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