London close: Stocks make gains as ECB cuts rates

17th Oct 2024 15:21

(Sharecast News) - London stocks ended higher on Thursday, buoyed by strong gains in Rentokil and Entain, as investors digested the European Central Bank's rate cut and a wave of economic data from the US.

The FTSE 100 index climbed 0.67% to close at 8,385.13 points, while the FTSE 250 rose 0.58% to 21,100.92 points.

In currency markets, sterling was last up 0.12% on the dollar to trade at $1.3005, as it gained 0.45% against the euro, changing hands at €1.2013.

"Though widely anticipated, the ECB's 25 basis point rate cut of its deposit rate to 3.25%, following similar moves in June and September, weighs on the euro," said IG senior analyst Axel Rudolph.

"Unexpectedly falling US initial jobless claims and other positive US data led to more greenback appreciation and GBP-USD slipping to a two month low below the $1.3000 mark, while Western stock indices benefitted and rose, some such as the German DAX, Dow Jones and S&P 500 hitting new record highs."

Rudolph added that a 9% drop in oil prices since last week's high was taking a breather ahead of US crude oil inventories data.

"Meanwhile the gold price trades in record highs whilst aiming for the $2,700 per troy ounce mark."

ECB cuts interest rates as eurozone inflation revised lower

In economic news, the European Central Bank (ECB) reduced interest rates for the third time this year, cutting the deposit rate from 3.5% to 3.25%.

The ECB cited a more optimistic inflation outlook and signs of easing price pressures as key reasons for the cut.

Officials noted that the disinflationary trend was "well on track", with weaker economic activity and tight financing conditions contributing to the decision.

Meanwhile, eurozone inflation figures for September were revised lower.

The annual inflation rate was adjusted to 1.7%, a dip from the earlier estimate of 1.8%, marking the lowest level since April 2021.

That represented a sharp decline from August's 2.2%, with services inflation easing and energy prices continuing to drop.

"The ECB has little choice but to cut. Germany's economy is continuing to show signs of struggle," said Kathleen Brooks, research director at XTB.

"German investor confidence was weaker than expected this week, and a number of eurozone economies have extremely low levels of inflation."

Across the Atlantic, US unemployment claims fell last week to 241,000, surprising markets that had anticipated a higher figure of 260,000.

The drop, partially influenced by hurricane disruptions, came after claims hit a 14-month high the previous week.

Despite the fall in initial claims, ongoing claims rose by 9,000 to 1.86 million, reflecting mixed conditions in the labour market.

US industrial production also weakened in September, contracting by 0.3% after an August increase.

The Federal Reserve attributed part of the decline to strikes at Boeing, which severely impacted aerospace output, and hurricane-related disruptions.

Manufacturing output and mining activity both fell, while utilities posted their first growth in three months.

Despite those challenges, US retail sales provided a positive surprise, rising 0.4% in September, exceeding expectations.

Excluding auto and gasoline sales, retail activity jumped 0.7%, driven by gains across most sectors, including apparel and grocery stores.

Lower fuel prices contributed to a decline in gasoline station sales, while auto sales saw little movement.

Rentokil rockets on reaffirmed guidance, Mondi and DS Smith in the red

On London's equity markets, Rentokil Initial surged 8.57% after reaffirming its full-year guidance, following a profit warning last month.

The pest control services group reported steady third-quarter revenues of £1.38bn, unchanged from the previous year.

Gambling group Entain rallied 4.62% after it raised its full-year outlook, with third-quarter results exceeding expectations.

Chemring Group added 4.64% after it confirmed that its performance remained on track, supported by a robust £638m order intake and an order book of £1.1bn by the end of September.

St James's Place rose 3.15% after reporting record funds under management of £184.4bn for the third quarter, up from £158.6bn a year earlier, reflecting an improving macroeconomic environment.

Investment platform AJ Bell edged up 0.18%, recovering from earlier losses, after it said assets under administration reached record levels for the year to 30 September.

Centamin gained 4.58%, benefiting from a strong third-quarter performance at its Sukari gold mine, where production rose 30%, and gold sales surged 44% amid record prices.

Building products manufacturer Ibstock saw a 1.77% rise after the company reported a solid third-quarter performance, with earnings meeting internal expectations.

Outside the FTSE 250, N Brown Group soared 43.47% after announcing a deal to be taken private by a company owned by Joshua Alliance, in a transaction valued at £191m.

On the downside, Mondi plunged 7.45% after the paper and packaging group reported a drop in core profit for the third quarter due to muted trade and planned maintenance shutdowns.

Sector peer DS Smith also fell, down 1.2%.

Investment manager Man Group lost 1.94% after its assets under management declined to $174.9bn as of 30 September, down from $178.2bn three months earlier.

Rathbones Group slipped 0.43% after reporting a slight dip in funds under management, down to £108.8bn from £108.9bn at the end of June.

Smiths Group, Persimmon, and Howden Joinery all declined after trading without dividend entitlement, losing 1.76%, 1.66%, and 0.33%, respectively.

In broker note action, RS Group dropped 2.72% following a downgrade to 'hold' from 'buy' by Deutsche Bank, which also lowered its price target, while Plus500 dipped 0.32% after Canaccord Genuity downgraded the stock to 'hold' from 'speculative buy' ahead of the company's third-quarter update.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,385.13 0.67%

FTSE 250 (MCX) 21,100.92 0.58%

techMARK (TASX) 4,814.54 0.82%

FTSE 100 - Risers

Rentokil Initial (RTO) 371.00p 8.77%

Melrose Industries (MRO) 448.80p 4.01%

Informa (INF) 841.00p 3.93%

Anglo American (AAL) 2,337.50p 3.41%

Barclays (BARC) 245.10p 3.40%

Entain (ENT) 732.20p 2.84%

3i Group (III) 3,416.00p 2.71%

Diageo (DGE) 2,645.50p 2.66%

Intermediate Capital Group (ICG) 2,162.00p 2.56%

Fresnillo (FRES) 684.50p 2.32%

FTSE 100 - Fallers

Mondi (MNDI) 1,286.50p -7.45%

Smurfit Westrock (DI) (SWR) 3,340.00p -2.14%

United Utilities Group (UU.) 1,085.50p -1.85%

Rio Tinto (RIO) 4,946.00p -1.85%

Persimmon (PSN) 1,688.50p -1.83%

Smiths Group (SMIN) 1,626.00p -1.75%

Croda International (CRDA) 3,740.00p -1.66%

Vodafone Group (VOD) 75.02p -1.42%

Prudential (PRU) 654.80p -1.36%

Land Securities Group (LAND) 650.00p -1.29%

FTSE 250 - Risers

Hochschild Mining (HOC) 238.50p 9.40%

Indivior (INDV) 658.50p 5.78%

Burberry Group (BRBY) 687.60p 5.04%

Wood Group (John) (WG.) 133.90p 5.02%

St James's Place (STJ) 855.00p 4.72%

Chemring Group (CHG) 383.00p 4.64%

Centamin (DI) (CEY) 164.50p 4.58%

Me Group International (MEGP) 205.50p 3.79%

Apax Global Alpha Limited (APAX) 141.40p 3.21%

RIT Capital Partners (RCP) 1,784.00p 3.12%

FTSE 250 - Fallers

Tate & Lyle (TATE) 778.00p -3.59%

Hays (HAS) 82.75p -3.50%

Fidelity China Special Situations (FCSS) 207.50p -3.04%

RS Group (RS1) 732.00p -2.72%

Senior (SNR) 131.40p -2.67%

Empiric Student Property (ESP) 94.40p -2.58%

Foresight Group Holdings Limited NPV (FSG) 496.00p -2.36%

ITV (ITV) 76.55p -2.36%

IP Group (IPO) 47.40p -2.27%

Morgan Advanced Materials (MGAM) 256.00p -2.10%