LONDON MARKET OPEN: Stocks Start On Upbeat Note Ahead Of ECB Decision

(Alliance News) - London stocks were looking to rack up a second session of gains on Thursday after a smooth transition of power in the US to President Joe Biden.

Focus in the day ahead lies on the latest policy decision from the European Central Bank, though no change in monetary measures is expected.

The FTSE 100 index was up 28.12 points, or 0.4%, at 6,768.51 early Thursday. The mid-cap FTSE 250 index was up 46.13 points, or 0.2%, at 20,927.59. The AIM All-Share index was up 0.3% at 1,191.06.

The Cboe UK 100 index was up 0.4% at 673.09. The Cboe 250 was up 0.5% at 18,191.92, and the Cboe Small Companies up 0.3% at 12,422.65.

In mainland Europe, the CAC 40 in Paris was up 0.5% while the DAX 30 in Frankfurt was 0.7% higher early Thursday.

"There is simply a lot of enthusiasm and optimism among investors and traders about the White House's new administration," said Naeem Aslam, chief market analyst at AvaTrade.

Biden was inaugurated as the 46th US president on Wednesday and signed a series of executive orders to launch his administration, including a decision to rejoin the Paris climate accord and a mask mandate for all federal buildings.

The orders included keeping the US in the World Health Organization, ending the ban on entries from mostly Muslim-majority countries, bolstering environmental protections, and strengthening the fight against Covid-19.

Focus on Thursday will shift from Washington to Frankfurt, as the European Central Bank announces its latest policy decision.

"It is pretty much given that market players are not expecting the ECB to move its muscle today. Hence expectations are for no change in the monetary policy. This is because the bank only recently boosted its asset purchase program," said AvaTrade's Aslam.

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.

Ahead of the ECB, the euro traded at USD1.2119 on Thursday, higher than USD1.2100 late Wednesday.

The Bank of Japan, which released its latest rate decision overnight, kept policy on hold while slightly downgraded its economic growth forecast for the current financial year.

The BoJ said the Japanese economy will shrink by 5.6% in the current year, compared with the 5.5% contraction estimated in October. The central bank expects the economy to bounce back 3.9% in the next financial year starting in April in the post-Covid-19 recovery, revised up from the 3.6% expansion predicted three months ago.

The BoJ held its interest rate at minus 0.1%, as expected, and also decided to maintain its ultra-loose monetary policy as the country is battling with the pandemic.

The Japanese yen pared early gains to trade flat on Thursday. Against the yen, the dollar was quoted at JPY103.54, flat versus JPY103.55.

In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.8%. In China, the Shanghai Composite closed up 1.1%, while the Hang Seng index in Hong Kong closed down 0.1%.

The S&P/ASX 200 in Sydney closed up 0.8%.

At the top of the FTSE 100 in early trade was Sage Group, the stock rising 6.0%. The accounting software firm said it performed in line with expectations in the first quarter, posting recurring revenue growth.

Recurring revenue for the three months to December 31 increased 4.7% to GBP408 million, supported by software subscription growth of 11% to GBP303 million.

Other revenue fell 24% to GBP39 million, in line with Sage's strategy to transition away from licence sales and professional services revenue. Organic total revenue grew 1.4%.

"We have continued to deliver against our strategy in the first quarter, growing recurring revenue in line with our plan for the year, supported by good demand for Sage Business Cloud solutions. Accordingly, we reiterate our guidance for the full year, as set out in our FY20 results announcement," said Chief Financial Officer Jonathan Howell.

J Sainsbury rose 1.9% after Berenberg raised the grocer to Hold from Sell.

Pearson was the worst blue-chip performer, down 2.2% as shares gave back some of Wednesday's 8.6% rally. The educational publisher is still up 6.3% in the week-to-date.

In the FTSE 250, AJ Bell shares edged up 1.2% after the investment platform reported customer and asset growth in its first quarter.

For the three months to December, AJ Bell reported a 6% increase in customers over the quarter, closing the period at 312,309 after opening it at 295,305. Platform net inflows, representing organic growth in the quarter, increased by 67% over the prior year to GBP1.5 billion.

Total assets under administration increased to GBP62.5 billion, up 14% over the last 12 months and 11% in the quarter. AJ Bell Investments' assets under management was GBP1.0 billion at the end of 2020, having doubled over the past 12 months.

Sterling was quoted at USD1.3706 early Thursday, up from USD1.3631 at the London equities close on Wednesday and continuing to trade around its best levels since May 2018.

More people will lose their lives in the coronavirus outbreak, Prime Minister Boris Johnson has warned, after the UK saw its deadliest day in the pandemic.

Official figures showed that January 12 saw the highest number of deaths take place on a single day – with 1,110 Covid-19 fatalities, surpassing the previous peak of 1,073 on April 8, 2020. A record 1,820 further deaths within 28 days of testing positive for Covid-19 were reported as of Wednesday, although there is a time lag between a patient dying and appearing in the government's official statistics.

The PM said there are "tough weeks to come" as the vaccine rollout continues, adding that "the light will only really begin to dawn as we get those vaccinations out".

Gold was quoted at USD1,869.37 an ounce early Thursday, higher than USD1,865.55 on Wednesday. Brent oil was trading at USD55.68 a barrel, easing from USD56.30 late Wednesday.

The economic events calendar on Thursday has the latest US jobless claims figures at 1330 GMT.

By Lucy Heming; lucyheming@alliancenews.com

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