London close: Stocks end up as investors mull ECB announcement, Trump tariffs

Equity indices in London rose on Thursday alongside their European peers as European Central Bank chief Mario Draghi signalled that the central bank’s exit from quantitative easing would be gradual.

The FTSE 100 closed up 0.6% to 7,203.24, while the pound was down 0.6% versus the dollar at 1.3818 and 0.3% firmer versus the euro at 1.1224.

The European Central Bank kept all its main policy settings unchanged and reiterated that its programme of asset purchases may run past September, if needed, contrary to some analysts' expectations. However, the ECB omitted the reference to the possibility that it might increase the size or duration of its APP if "the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation”. The euro fell 0.7% against the dollar and yen, and was down around 0.5% against all other major currencies.

Joshua Mahony, market analyst at IG, said. "While the ECB decided to remove their reference to potential further QE increases, the focus has instead been centred on today’s inflation downgrade with CPI expected to remain below target for years to come. Once again Draghi has managed to retain a dovish theme despite a marginally hawkish shift in tone, with the governor taking with one hand and giving in return."

Investors were also keeping an eye on developments across the pond as the White House delayed the signing of proposed tariffs on steel and aluminium imports in order to have more time to prepare the legal documents, according to Bloomberg, which cited a person familiar with planning within the Oval Office.

UK house price data was also in focus as the latest RICS residential survey showed the balance of UK surveyors reporting that prices have risen over the last three months fell to zero in February from +8 in January, below the consensus +7. The new buyer enquiries balance fell to -16, from -11 in January, remaining below zero for the 11th consecutive month.

"The downturn in housing market activity accelerated in February, indicating that the stimulus to demand from the Chancellor’s stamp duty reforms has been outweighed by the prospect of further increases in interest rates," said economist Samuel Tombs at Pantheon Macroeconomics. He noted that new buyer demand has not fallen for such a protracted period since the 2008/09 financial crisis.

In corporate news, Aviva was down despite a bullish full year report. Earnings per share grew 7% and the dividend 18% and the life insurer upgraded its growth targets to aim above 5% EPS growth from 2018, with 55-60% to be paid out in dividends.

Retailer Next was in the red on news that it’s facing a demand for up to £30m in back pay from thousands of mostly female shop-floor employees as it emerged that they were being paid an average of £2 an hour less than male warehouse workers.

More broadly, the retail sector was in focus as department store chain John Lewis revealed a 77% drop in annual profits amid subdued consumer demand and margin pressure.

G4S fell even though the security company reported a 6.5% rise in underlying annual profit and that the outlook for its business was good.

Shares in estate agency Countrywide ended down but well off earlier lows as it said it swung to a loss in 2017, scrapped its dividend and sounded a cautious note on its outlook.

AA was under the cosh on news that former boss Bob Mackenzie is suing the roadside assistance company and insurer for up to £220m, claiming he was victimised while he suffered from stress.

Software developer Alfa Financial Software Holdings took a beating as it warned that growth in the current year will be slower due to a weaker dollar.

Persimmon was among the top fallers as it was one of the band of stocks going ex-dividend, also including BHP, CRH, Land Securities, Standard Chartered and Thomas Cook.

On the upside, Domino's Pizza UK & Ireland scooted higher as sales increased 15% but profits only by 10%. UK sales in the first eight weeks of 2018 were said to have got off to a strong start.

Euromoney Institutional Investor advanced after completing the acquisition of research outfit Extel from WeConvene.

Defence contractor Ultra Electronics surged, with traders attributing the move higher to its ongoing buyback.

Primark owner Associated British Foods was lifted by an upgrade to ‘buy’ at Goldman Sachs while Britvic rallied as Morgan Stanley bumped it up to 'overweight' after a material pull-back in the shares lately. Weir gained on the back of an initiation at ‘buy’ by Liberum.

Outside the FTSE 350, Interserve surged more than 40%, exerting a deep squeeze on one of the most shorted stocks on the London Stock Exchange, on renewed chatter about a rescue by Punch Taverns founder Alan McIntosh. He was reported over the weekend as having hoovering up the embattled outsourcer's debt.

Market Movers

FTSE 100 (UKX) 7,203.24 0.63%
FTSE 250 (MCX) 19,968.01 0.98%
techMARK (TASX) 3,390.50 1.39%

FTSE 100 - Risers

Mediclinic International (MDC) 607.00p 4.94%
NMC Health (NMC) 3,362.00p 2.69%
Diageo (DGE) 2,441.00p 2.54%
Unilever (ULVR) 3,880.00p 2.42%
Coca-Cola HBC AG (CDI) (CCH) 2,516.00p 2.32%
Reckitt Benckiser Group (RB.) 5,752.00p 2.28%
SEGRO (SGRO) 605.20p 2.23%
Ferguson (FERG) 5,334.00p 2.03%
Carnival (CCL) 4,743.00p 2.00%
Compass Group (CPG) 1,544.50p 1.98%

FTSE 100 - Fallers

Persimmon (PSN) 2,548.00p -3.59%
Evraz (EVR) 439.50p -3.43%
Marks & Spencer Group (MKS) 278.60p -3.26%
Anglo American (AAL) 1,707.40p -2.93%
BHP Billiton (BLT) 1,406.60p -2.56%
Next (NXT) 4,721.00p -2.46%
G4S (GFS) 258.30p -2.16%
Rio Tinto (RIO) 3,693.00p -1.27%
Glencore (GLEN) 363.30p -1.10%
Sainsbury (J) (SBRY) 241.80p -0.86%

FTSE 250 - Risers

Ultra Electronics Holdings (ULE) 1,458.50p 8.44%
Britvic (BVIC) 725.00p 6.30%
Capita (CPI) 169.00p 6.19%
Euromoney Institutional Investor (ERM) 1,296.00p 5.71%
Merlin Entertainments (MERL) 375.40p 5.51%
Vectura Group (VEC) 77.75p 5.07%
Cineworld Group (CINE) 236.80p 4.87%
Sophos Group (SOPH) 517.50p 4.42%
Senior (SNR) 298.40p 4.19%
Mitie Group (MTO) 165.00p 3.84%

FTSE 250 - Fallers

Alfa Financial Software Holdings (ALFA) 391.00p -18.20%
AA (AA.) 79.96p -6.33%
Ferrexpo (FXPO) 302.00p -4.46%
CLS Holdings (CLI) 234.50p -4.09%
John Laing Group (JLG) 263.60p -3.87%
Jupiter Fund Management (JUP) 499.60p -3.78%
Card Factory (CARD) 202.60p -1.65%
Vedanta Resources (VED) 731.20p -1.64%
Fisher (James) & Sons (FSJ) 1,624.00p -1.58%
Barr (A.G.) (BAG) 630.00p -1.56%