LONDON MARKET MIDDAY: Cautious Gains Ahead Of Expected ECB Policy Hold

(Alliance News) - An upbeat start for stock markets in Europe on Thursday gave way to a more subdued scene at midday ahead of the European Central Bank's latest policy decision.

London's blue-chip FTSE 100 index was constrained by the pound's rise as the dollar weakened amid Thursday's risk-on mood.

The FTSE 100 index was up 7.23 points, or 0.1%, at 6,747.62 midday Thursday. The mid-cap FTSE 250 index was up 49.92 points, or 0.2%, at 20,931.38. The AIM All-Share index was up 0.8% at 1,196.35.

The Cboe UK 100 index was up 0.2% at 671.14. The Cboe 250 was up 0.6% at 18215.84, and the Cboe Small Companies up 0.1% at 12400.03.

In mainland Europe, the CAC 40 in Paris was down 0.1%, while the DAX 30 in Frankfurt was 0.5% higher on Thursday.

The ECB announces its latest policy decision at 1245 GMT on Thursday. This will be followed by a press conference with President Christine Lagarde at 1330 GMT.

"European markets are quieter ahead of the ECB, although it seems unlikely that the bank will unveil any major changes this time around. While the euro has weakened against the dollar from its highs earlier in the month, the overall direction of travel remains unchanged," said Chris Beauchamp, chief market analyst at IG.

Ahead of the ECB, the euro traded at USD1.2136 on Thursday, higher than USD1.2100 late Wednesday. The single currency is up more than 9% against the dollar compared to this time a year ago.

Sterling also strengthened on Thursday, to USD1.3722 at midday from USD1.3631 at the London equities close on Wednesday and continuing to trade around its best levels since May 2018.

Kit Juckes at Societe Generale commented: "If this is the dawn of a new (Biden) era, then it has started in somewhat groundhogish fashion: Equity markets are up, bond yields are settling back into their new, slightly higher, range and the dollar is weaker across the board. This despite the promise of a bumper fiscal expansion."

Juckes said markets are betting that the US fiscal package will be watered-down thanks to the "wafer-thinness" of the Democrat majority in Congress.

Biden's Democrats has 221 seats in the House of Representatives to 211 for the Republicans, while the Senate is split 50-50 with Vice President Kamala Harris having a tie-breaker vote.

Joe Biden's administration is seeking to get a USD1.9 trillion stimulus bill through Congress, with the massive plan raising stimulus checks provided under a measure passed last month to USD2,000 from USD600 and calling to increase the federal minimum wage to USD15 an hour from just USD7.50 currently.

The dollar also fell against the Japanese yen. The dollar was quoted at JPY103.43 on Thursday, flat versus JPY103.55.

Gold was quoted at USD1,869.37 an ounce on Thursday, higher than USD1,865.55 on Wednesday as the precious metal benefited from the soft dollar.

Besides the ECB, the economic events calendar on Thursday has the latest US jobless claims figures at 1330 GMT. FXStreet consensus expects weekly initial jobless claims to come in at 910,000, which would be down from the prior week's 965,000.

Ahead of the data, Wall Street is set for a higher open. The Dow Jones is called up 0.2%, the S&P 500 up 0.2% also and the Nasdaq Composite up 0.4%.

In London, Sage shares rallied to the top of the FTSE 100, up 3.5% at midday. The accounting software firm said it performed in line with expectations in its first quarter, posting a slight increase in revenue.

For the three months ended December 31, the Newcastle Upon Tyne-based company posted revenue of GBP447 million, up 1.4% from the year prior. Recurring revenue increased 4.7% to GBP408 million, supported by software subscription growth of 11% to GBP303 million.

At the bottom of the blue-chips was Informa, down 2.6% after UBS cut the stock to Neutral from Buy. Pearson also suffered from a ratings downgrade, shares 2.0% lower at midday after Exane BNP reduced the educational publisher to Neutral from Outperform.

Oil majors slipped as Brent prices fell. Brent oil was trading at USD55.68 a barrel, easing from USD56.30 late Wednesday.

BP shares were down 1.5% at midday, while Royal Dutch Shell 'A' and 'B' stock fell 1.5% and 1.7% respectively.

In the FTSE 250, Ibstock jumped 11% after the brick manufacturer said it expects earnings for 2020 to come in above company guidance, even with an anticipated drop in revenue.

The firm reported an improvement in market trends during the final quarter of 2020, allowing Ibstock to trade well with solid clay brick sales volumes and concrete sales volumes ahead of the year before.

For the year as a whole, Ibstock expects adjusted Ebitda to be "modestly above" previous guidance set at GBP50 million. However, this still reflects a 59% fall from GBP122 million the year before. In addition, despite the strong recovery in market conditions, the group achieved around GBP315 million in revenue for 2020, a 23% fall from GBP409 million in 2019.

IG Group Holdings fell 4.8% after the online trading platform reported a "record" performance in its first half, seeing profit more than double on a year ago as it announced the USD1 billion acquisition of US online brokerage platform tastytrade.

Net trading revenue in the six months to November 30 surged 67% to GBP416.9 million from GBP249.9 million and pretax profit jumped to GBP231.3 million from GBP101.2 million a year before. Active clients rose 55% to 238,600.

Separately, London-based IG unveiled its acquisition of tastytrade, a US online brokerage and trading education platform. IG will pay USD1.0 billion to tastytrade's shareholders, comprising USD300 million in cash and the issue of 61.0 million IG shares.

By Lucy Heming; lucyheming@alliancenews.com

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