London close: Stocks higher as ECB cuts rates

(Sharecast News) - London equities finished higher on Thursday, with investor sentiment buoyed by a rate cut from the European Central Bank and a decline in US jobless claims.

The FTSE 100 index advanced 1.04% to close at 8,646.88 points, while the FTSE 250 gained 1.19% to 20,805.07 points.

In currency markets, sterling was last down 0.07% on the dollar to trade at $1.2443, as it dipped 0.01% against the euro, changing hands at €1.1947.

"Stock indices have resumed their advance from Monday's sharp drop and are seen heading towards their January peaks or making new record highs," said IG senior technical analyst Axel Rudolph.

"The slowest US growth in three quarters has revived hopes that the Fed may move away from its hawkish hold.

"Eurozone GDP stalling and the German economy - in a mild recession since 2023 - shrinking more than expected in the fourth quarter have also increased the odds for further European Central Bank rate cuts."

Rudolph noted that the central bank's fifth rate cut since June of last year was widely anticipated.

"With the Fed, ECB rate decisions and the majority of 'Magnificent Seven' earnings out of the way, investors await Apple, Visa and Intel earnings which may increase volatility once more.

"Crude oil, gold and especially silver prices are rising once more ahead of Friday's PCE price index, the Fed's preferred inflation gauge."

US jobless claims fall more than expected, UK mortgage approvals rise

In economic news, US jobless claims fell more than expected in the week ended 25 January, reversing a prior increase.

Initial claims dropped by 16,000 to 207,000, well below forecasts of 220,000, while continuing claims declined by 42,000 to 1.85 million.

However, the four-week moving average edged up, indicating some underlying volatility in the labour market.

Meanwhile, pending home sales in the US unexpectedly slumped in December, falling 5.5% after four consecutive months of growth.

Sales declined across all four major regions, with the West experiencing the steepest drop at 10.3%, according to the National Association of Realtors.

The downturn followed a 1.6% increase in November, defying expectations for stability.

On home shores, UK mortgage approvals rose unexpectedly in December, reaching 66,526, up from 66,061 in November, beating expectations of a decline to 65,400.

The effective mortgage interest rate eased slightly to 4.47%, while net mortgage borrowing jumped £1bn to £3.57bn - the highest since September 2022.

"Despite concerns over the Budget, and signs of a faltering economy, mortgage activity remained surprisingly buoyant in December, with strong enquiry levels continuing into 2025," said Iain Swatton, director at Exemplar Financial Services.

"Rate fluctuations persist and a lender price war has yet to emerge, but demand remains resilient."

However, the British automotive sector faced a more negative outlook, with vehicle production falling 11.8% in 2024 to 905,233 units, according to data from the Society of Motor Manufacturers and Traders.

The decline was expected to continue as the Stellantis plant in Luton shuts down, with production projected to drop further in 2025 before recovering in the following years.

On the continent, the European Central Bank delivered a widely anticipated rate cut, lowering its deposit rate by 25 basis points to 2.75%.

Policymakers expressed confidence that inflation would continue to decline, though ECB president Christine Lagarde emphasized ongoing uncertainty.

The broader eurozone economy stagnated in the fourth quarter, with GDP growth flat at 0% after a 0.4% increase in the previous quarter.

Unemployment in the euro area edged up to 6.3% in December from 6.2% in November.

In Germany, Europe's largest economy, GDP contracted by 0.2% in the final quarter, a sharper decline than the 0.1% drop economists had expected.

Airtel Africa and St James's Place jump, BT Group in the red

On London's equity markets, Airtel Africa surged 9.02% after delivering a well-received third-quarter update and announcing a second share buyback programme.

St James's Place jumped 10.87% as strong investment returns and net inflows helped drive record funds under management for 2024.

Oil major Shell added 2.72%, supported by a dividend increase, though its fourth-quarter profits fell more than expected.

Media group Future climbed 4.97% after naming Kevin Li Ying as its new chief executive, while Serco Group gained 3.52% after agreeing to acquire Northrop Grumman's mission training and satellite communications software business for $327m.

On the downside, BT Group declined 1.4% after reporting a fall in third-quarter revenue, citing weaker phone sales and challenges in its business unit.

Sage Group slipped 0.49% despite posting a 10% rise in first-quarter revenue, as all regions contributed to growth.

Wizz Air plunged 4.81% after cutting its full-year profit forecast due to ongoing engine grounding issues, revising its expected net income to between €250m and €300m, down from a previous estimate of up to €450m.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,646.88 1.04% FTSE 250 (MCX) 20,805.07 1.19% techMARK (TASX) 4,745.13 -0.02%

FTSE 100 - Risers

St James's Place (STJ) 1,030.00p 10.87% Airtel Africa (AAF) 145.00p 9.02% Fresnillo (FRES) 712.50p 5.56% easyJet (EZJ) 511.60p 4.26% Antofagasta (ANTO) 1,745.00p 3.10% Marks & Spencer Group (MKS) 340.20p 3.06% Pearson (PSON) 1,347.50p 2.82% Prudential (PRU) 688.80p 2.68% Intermediate Capital Group (ICG) 2,330.00p 2.64% Shell (SHEL) 2,663.00p 2.62%

FTSE 100 - Fallers

Smurfit Westrock (DI) (SWR) 4,224.00p -2.38% Whitbread (WTB) 2,849.00p -2.33% Admiral Group (ADM) 2,707.00p -1.71% BT Group (BT.A) 143.65p -1.61% Smith (DS) (SMDS) 588.50p -1.42% The Sage Group (SGE) 1,329.00p -0.56% Beazley (BEZ) 839.00p -0.36% NATWEST GROUP (NWG) 433.70p -0.32% CRH (CDI) (CRH) 7,982.00p -0.30% Lloyds Banking Group (LLOY) 62.34p -0.29%

FTSE 250 - Risers

Endeavour Mining (EDV) 1,652.00p 7.20% Hochschild Mining (HOC) 179.80p 7.02% Watches of Switzerland Group (WOSG) 555.50p 6.67% Chrysalis Investments Limited NPV (CHRY) 101.60p 6.39% Burberry Group (BRBY) 1,177.00p 5.85% Genuit Group (GEN) 391.00p 5.53% Auction Technology Group (ATG) 637.00p 5.29% Pennon Group (PNN) 581.50p 4.96% Alpha Group International (ALPH) 2,580.00p 4.88% HarbourVest Global Private Equity Limited A Shs (HVPE) 2,715.00p 4.84%

FTSE 250 - Fallers

W.A.G Payment Solutions (WPS) 74.00p -7.27% Wizz Air Holdings (WIZZ) 1,296.00p -5.54% Bakkavor Group (BAKK) 132.50p -4.33% Sequoia Economic Infrastructure Income Fund Limited (SEQI) 76.60p -2.30% Bank of Georgia Group (BGEO) 4,755.00p -1.96% FirstGroup (FGP) 161.20p -1.65% TBC Bank Group (TBCG) 3,340.00p -1.62% SThree (STEM) 260.00p -1.52% Foresight Solar Fund Limited (FSFL) 68.90p -1.29% QinetiQ Group (QQ.) 364.20p -1.14%