(Alliance News) - Stock prices in London are seen opening higher on Thursday, after the Bank of England unleashed a further GBP150 billion of support for the UK's fragile economy, while over in the US, the chances for four more years of Donald Trump as president became increasingly slim.
In early UK company news, AstraZeneca left annual guidance unchanged after a third-quarter revenue rise. Grocer Sainsbury's said the latest Covid-19 lockdown in England could boost annual profit by 5% but also announced 3,500 job cuts.
IG futures indicate the FTSE 100 index is to open 38.2 points higher at 5,921.46. The blue-chip index gained 96.49 points on Wednesday, or 1.7%, to end the session at 5,883.26.
The pound was quoted at USD1.3016 early on Thursday, up from USD1.2977 at the London equities close Wednesday. The euro rose to USD1.1741, from USD1.1710.
The Bank of England on Thursday kept interest rates on hold, as expected, but boosted quantitative easing by a bit more than anticipated, as the UK's already damaged economy is set for a further hit from the new lockdown measures.
The Bank of England's Monetary Policy Committee voted unanimously to keep the Bank Rate at 0.1%.
But the Andrew Bailey led central bank unleashed an extra GBP150 billion of economic support, taking its total stock of UK government bond buying to GBP875 billion. The market had widely expected just GBP100 billion of QE to be added.
Thursday's decision comes as England begins a minimum four weeks of stay-at-home restrictions, with the UK government seeking to stem a second wave of Covid-19 after similar actions elsewhere in Europe.
"There are signs that consumer spending has softened across a range of high-frequency indicators, while investment intentions have remained weak," the central bank said.
The BoE now expects to see a decline in the UK's gross domestic product during the fourth quarter but tips household spending and GDP to increase early in 2021 as Covid-19 restrictions ease.
"Sterling has pared its losses after the BOE left the interest rate unchanged. Traders were expecting the bank to leave the interest rate unchanged," said Avatrade analyst Naeem Aslam.
"The BoE has acknowledged the weakness in consumer confidence and spending, and to restore this, the bank has increased its asset purchase program. The Bank of England has also given a clear message that it is set to do more if the economy needs any further help. The fact that the bank has used the most famous phrase 'whatever it takes' shows that it is committed to do anything to restore growth."
Across the Atlantic, US challenger Joe Biden won the battleground prizes of Michigan and Wisconsin on Wednesday, reclaiming a key part of the "blue wall" that slipped away from Democrats four years ago and dramatically narrowing Trump's pathway to re-election.
By early on Thursday morning, neither candidate had cleared the 270 electoral college votes needed to win the White House.
But Biden's victories in the Great Lakes states left him at 264, meaning he was one state away – any state – from crossing the threshold and becoming president-elect.
"I will govern as an American president, Biden said, adding: "There will be no red states and blue states when we win. Just the US of America."
It was a stark contrast to Trump, who early Wednesday morning falsely proclaimed that he had won the election, even though millions of votes remained uncounted and the race was far from over.
The election has scrambled seats in the House and the Senate but ultimately has left Congress much like it began, deeply split as voters resisted big changes despite the heated presidential race.
It is an outcome that damps Democratic demands for a bold new agenda, emboldens Republicans, and almost ensures partisan gridlock regardless of who wins the presidency.
Back in London, AstraZeneca left annual guidance unchanged after posting a 3% third-quarter revenue hike.
Revenue in the quarter amounted to USD6.58 billion, taking revenue for the nine-month period to USD19.21 billion, 8% higher annually on a reported basis, or 10% at constant currency.
"We made encouraging headway in the quarter, despite the ongoing disruption from the COVID-19 pandemic. Highlights of the sales performance included further success in Oncology and an acceleration in the progress of Farxiga," Chief Executive Officer Pascal Soriot said.
Looking ahead, annual revenue is still expected to grow by a "high single-digit to a low double-digit percentage" at constant currency.
Supermarket chain Sainsbury's sunk to a GBP137 million interim pretax loss, from a GBP9 million profit a year earlier. The company was hit by a bruising GBP438 million in one-off costs.
Group sales, excluding VAT but including fuel, inched 1.1% lower to GBP14.93 billion from GGBP15.10 billion. Like-for-like sales excluding fuel jumped 6.9% annually, however.
"Sales during the first half were stronger than the base case assumptions we outlined in April, particularly at Argos, driving a strong underlying profit increase against a soft comparative base," the company said.
Commenting on the lockdown that has gone into effect on Thursday in England, which doesn't close grocery stores and limits competition from restaurants, Sainsbury's said: "We cannot fully predict the impact of COVID-19 and lockdown restrictions on retail sales and costs for the remainder of the second half of the year, but our current assumptions would result in full year group underlying profit before tax increasing by at least 5% year on year."
Looking further ahead, the company said it will close around 420 Argos standalone stores, reducing the standalone estate to just 100 by March 2024. However, it will open 150 more Argo stores in Sainsbury's supermarkets by the target date, as well as 150 to 200 more Argo collection points in supermarkets and convenience stores.
Sainsbury confirmed that as part of its cost-cutting plans, "around 3,500" jobs could be lost. This is higher than the 3,000 job cuts reported by UK media outlets ahead of Thursday's results announcement. "We will do everything possible to find alternative roles for our colleagues," Sainsbury's said.
The economic calendar on Thursday has a UK Markit construction PMI at 0930 GMT. Eurozone retail sales are due at 1000 GMT and the weekly US initial jobless claims are out at 1330 GMT.
In China on Thursday, the Shanghai Composite closed up 1.3%, while Hong Kong's Hang Seng Index climbed 3.0%. The Nikkei 225 in Tokyo closed up 1.7%.
Versus the Japanese yen, the dollar was at JPY104.33, down from JPY104.49 at the London market close on Wednesday.
In the US, the Federal Open Market Committee will conclude its two-day policy meeting on Thursday and announce its decision at 1900 GMT. This will be followed by a press conference with Fed Chair Jerome Powell at 1930 GMT.
By Eric Cunha; ericcunha@alliancenews.com;
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