London pre-open: Stocks seen down ahead of ECB announcement

(Sharecast News) - London stocks were set to fall at the open on Thursday following a downbeat close on Wall Street, after the Federal Reserve stood pat on interest rates, and ahead of the latest policy announcement from the European Central Bank. The FTSE 100 was called to open down around 11 points.

Kathleen Brooks, research director at XTB, said: "The market is certain that the ECB will cut interest rates at this meeting and is 100% priced for a cut. We do not expect the ECB to disappoint market expectations. The impact from the rate cut is not expected to be particularly market moving, instead, the focus will be on ECB President Christine Lagarde's press conference at 1345GMT and the ECB statement that will accompany the decision.

"The market is already expecting an 88% chance of a cut in March, and a decent chance of a further cut from the ECB by June and a total of 3.5 cuts in 2025 in total. Thus, there is a limit to how dovish Lagarde can be at this meeting. There is a growing chance of a 50bp rate cut at some point in the first half of the year, and Eurozone interest rates are expected to end 2025 just above 2%.

"However, some analysts argue that rates need to fall further to boost the Eurozone economy due to multiple threats facing the currency bloc. Expectations are on the extreme dovish side as we lead up to this meeting, the question is, will Lagarde deliver on these dovish expectations?"

In UK corporate news, corporate software group Sage said it has made a strong start its new financial year with revenues rising by a tenth in the first quarter, as all regions delivered solid growth.

Revenues totalled £612m in the three months to 31 December, up from £558m a year earlier, with Sage Business Cloud revenues up 13% at £502m.

"We reiterate our guidance for the full year, as set out in our FY24 results announcement, as we continue to focus on efficiently scaling the group," said chief financial officer Jonathan Howell.

Airtel Africa reported strong operational growth for the nine months ended 31 December, with its customer base increasing 7.9% to 163.1 million, data usage per customer rising by 32.3%, and mobile money subscribers growing by 18.3%.

Revenue rose 20.4% in constant currency but declined 5.8% in reported terms due to currency devaluation, while EBITDA fell 11.9% to $1.68bn, although margin improvements were seen in the third quarter.

The company said it continued reducing foreign currency debt, noted the launch of a second $100m share buyback, and maintained its capital investment strategy despite challenges from currency fluctuations and increased costs.