Stocks mixed ahead of ECB interest rate decision

(Alliance News) - Stock prices in London were mixed at midday on Thursday, as investors nervously wait for the European Central Bank.

The FTSE 100 index was down 19.30 points, 0.3%, at 7,660.01. The FTSE 250 was up 103.41 points, 0.5%, at 19,576.63, and the AIM All-Share was up 1.18 points, 0.2%, at 738.81.

The Cboe UK 100 was down 0.3% at 767.42, the Cboe UK 250 was up 0.6% at 16,935.31, and the Cboe Small Companies was up 1.2% at 14,752.82.

In European equities on Thursday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was down marginally.

"The FTSE 100 dipped at the open to continue its rather lackadaisical progress over the last month, with investors awaiting a catalyst which might push them in either direction," said AJ Bell investment director Russ Mould.

The FTSE 100 has lacked direction recently, with Wednesday's Spring budget having a limited impact on stocks.

A cut to national insurance, stamp duty relief as well as a freeze on fuel and alcohol duties were among the marquee tax measures that Hunt announced in his budget.

After his announcement, Hunt suggested more could be on the way, telling Sky News the budget was "absolutely not" the last throw of the dice before the election, expected to take place in the autumn.

Meanwhile, data from Halifax on Thursday showed that UK house prices rose for the fifth consecutive month in February.

The Halifax house price index rose by 0.4% on a monthly basis in February, after rising by 1.2% in January. The typical UK home now costs around GBP291,699, GBP1,091 more than last month.

The rise came despite interest rates remaining elevated in the UK.

Yet housebuilders continued to lack direction. Taylor Wimpey rose 0.4% and Barratt Developments edged up 0.2%. Persimmon, however, lost 0.3%.

The next Bank of England interest rate decision will be announced on March 21.

Before the BoE, there will be an interest rate decision from the European Central Bank on Thursday. The decision will be announced at 1315 GMT.

The ECB is expected to leave rates on hold, but all eyes will be on clues for future policy decisions, as hope of an April rate cut dwindles.

The pound was quoted at USD1.2757 at midday on Thursday in London, up compared to USD1.2750 at the equities close on Wednesday. The euro stood at USD1.0896, lower against USD1.0908. Against the yen, the dollar was trading at JPY147.78, down compared to JPY149.36.

In the FTSE 100, Rentokil surged 16%.

Rentokil flagged larger-than-expected cost savings from its Terminix acquisition alongside plans to boost its flagging North American business.

The Crawley, West Sussex-based pest control and hygiene firm made the announcements as it reported a much improved financial performance.

In 2023, pretax profit rose 67% to GBP493 million from GBP296 million in 2022, with earnings per share climbing by 31% to 15.14 pence from 11.57p.

Revenue increased by 45% to GBP5.38 billion from GBP3.71 billion, while the dividend was boosted by 15% to 8.68p per share from 7.55p.

Spirax-Sarco Engineering jumped 6.2%.

The Cheltenham, England-based thermal energy management and pumping company said pretax profit fell 21% to GBP244.5 million in 2023, from GBP308.1 million the previous year.

However, revenue increased 4.5% to GBP1.68 billion from GBP1.61 billion, reflecting full-year contributions from acquisitions

Spirax-Sarco increased its total 2023 dividend to 160.0p per share from 152.0p, on the back of the results.

Ladbrokes owner Entain fell 8.4%.

The betting and gambling firm swung to a pretax loss of GBP842.6 million in 2023 from a pretax profit of GBP102.9 million the year before.

However, Entain saw its revenue increase by 11% to GBP4.78 billion from GBP4.30 billion in 2022.

Entain also warned of a hit from regulatory measures this year, a reminder that while the US has turned into the land of opportunity for gambling firms, the situation elsewhere is now less favourable.

In the FTSE 250, Virgin Money UK surged 36%.

Nationwide Building Society said it has reached a "preliminary" agreement to buy Virgin Money UK for GBP2.9 billion in a deal that would create the second largest provider of mortgages and savings in the UK.

The all-cash offer is worth 220 pence per Virgin Money share, comprising 218p cash plus a proposed 2p dividend to be paid by Virgin Money prior to completion.

Chief Executive of Virgin Money David Duffy said: "This potential transaction with Nationwide represents an exciting opportunity to build on the significant progress we have made in becoming the only new Tier 1 bank in recent history. The combined scale and strength would expand our customer offering and complete our journey in the banking sector as a national competitor".

Gary Greenwood, banking analyst at Shore Capital, felt "long suffering shareholders are likely to welcome this offer, especially given its cash nature, but we feel it undervalues the group and that management could have perhaps driven a harder bargain".

Amongst London's small-caps, Funding Circle surged 56%.

The small and medium enterprise loans platform said operating income rose to GBP154.8 million from GBP133.7 million a year earlier.

Pretax loss widened to GBP33.2 million from GBP12.9 million, however.

Funding Circle also announced plans to raise up to GBP25 million through a share buyback.

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.1%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.4%.

Brent oil was quoted at USD82.20 a barrel at midday in London on Thursday, down from USD83.78 late Wednesday. Gold was quoted at USD2,154.98 an ounce, higher against USD2,145.00.

Still to come on Thursday's economic calendar, there is the weekly US initial jobless claims reading.

By Sophie Rose, Alliance News senior reporter

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