London close: Stocks turn red as ECB holds interest rates for now
London stocks had fallen into the red by the close on Thursday, after a slew of earnings news, and as investors digested the latest policy announcement from the European Central Bank.
The FTSE 100 ended the session down 0.17% at 7,489.05, as sterling weakened 0.06% against the dollar to $1.2476 and lost 0.25% on the euro to €1.1178.
Investors watched the European Central Bank leave interest rates unchanged during the afternoon, with it signalling that a rate cut and more monetary easing were still on the cards, however.
The ECB left its main refinancing and deposit rates unchanged at 0.00% and -0.4%, respectively, as expected, while the marginal lending facility was also held steady, at 0.25%.
In its policy statement, the central bank said rates would be left at "present or lower levels" at least through the first half of 2020.
The ECB had previously said it would leave rates "at present levels" during that time period.
“They should call him Il Postino, because Mario Draghi always delivers,” said Neil Wilson, chief market analyst at Markets.com.
“Markets have lusted for more easing and he’s come good.”
Wilson said that, having indicated back in 2012 he would do “whatever it takes”, Draghi had delivered “one final gift” to the ECB with a new policy direction that his successor would carry forward.
“It’s not quite as dovish as we thought it might be in that there was no policy change today, but it sends a very clear signal.”
On home shores, the latest data from the Confederation of British Industry showed that retail sales fell for the third month in a row in July, marking the longest period of decline since 2011.
The balance of retailers reporting year-on-year growth in sales volumes rose to -16 from -42 in June, missing expectations for a reading of -10.
“Whilst last year’s summer strength in retail sales is driving some of the comparative weakness this year, it is still hugely concerning that sales have fallen for the longest period in almost eight years,” said CBI chief economist Rain Newton-Smith.
“Despite the recent pick-up we’ve seen in households’ real earnings, the sun is clearly not shining on the British High Street.”
Newton-Smith said the UK economy had reached a fork in the road.
“The new Prime Minister must now do everything in his power to achieve a good Brexit deal, thus protecting jobs and our economy.”
Grocers were the biggest positive contributor to headline sales growth in July following a large drop last month.
However, that was more than offset by declines in other categories, particularly department stores, clothing and other normal goods such as jewellery and flowers.
In equity markets, AstraZeneca surged 7.72% as the pharmaceuticals giant bumped up its product sales forecast for the year after better-than-expected second-quarter numbers.
Compass added 3.03%, after saying it expected to deliver full-year organic revenue growth at the top end of its 4% to 6% range, thanks to a solid performance in North America.
Anglo American gave up earlier gains to finish flat, after saying it would return $1bn (£800m) to shareholders through a share buyback and posting a 19% increase in half-year core earnings to $5.5bn.
On the FTSE 250, aerospace and defence supplier Cobham rocketed 34.77% after agreeing to be bought by US private equity firm Advent International for £4bn.
Budget airline Wizz Air flew 3.8% higher as it lifted its full-year capacity growth rate and reported better-than-expected net profit for the three months to the end of June.
Softcat rallied 3.21% as the provider of IT infrastructure products and services said it now expects full-year operating profit to be ahead of its previous expectations.
On the downside, Sage Group slumped 10.36% after saying it expects organic operating profit margin for the year to be at the lower end of the guided range of 23% to 25%.
Unilever was 2.04% lower after the consumer goods giant reported flat interim pre-tax profits as underlying sales grew 3.3%.
Metro Bank was under the cosh, sliding 19.19% following the release of disappointing first-half results after the close on Wednesday and news that founder Vernon Hill was standing down as chairman.
SSE and Pennon were weaker as their stocks went ex-dividend, falling 1.58% and 0.44%, respectively.
Market Movers
FTSE 100 (UKX) 7,489.05 -0.17%
FTSE 250 (MCX) 19,820.35 0.16%
techMARK (TASX) 3,790.68 2.15%
FTSE 100 - Risers
AstraZeneca (AZN) 6,850.00p 7.72%
Compass Group (CPG) 2,018.00p 2.72%
Coca-Cola HBC AG (CDI) (CCH) 2,793.00p 1.90%
Whitbread (WTB) 4,540.00p 1.79%
CRH (CRH) 2,674.00p 1.75%
NMC Health (NMC) 2,507.00p 1.13%
Hiscox Limited (DI) (HSX) 1,754.00p 1.10%
WPP (WPP) 946.60p 1.07%
GlaxoSmithKline (GSK) 1,670.00p 0.99%
Standard Chartered (STAN) 687.20p 0.70%
FTSE 100 - Fallers
Sage Group (SGE) 732.00p -10.36%
SSE (SSE) 1,079.50p -7.34%
Relx plc (REL) 1,867.50p -3.69%
Rentokil Initial (RTO) 408.90p -3.61%
St James's Place (STJ) 1,050.50p -3.40%
Diageo (DGE) 3,240.50p -3.37%
Centrica (CNA) 86.30p -3.03%
Smith (DS) (SMDS) 375.00p -2.24%
International Consolidated Airlines Group SA (CDI) (IAG) 444.70p -2.20%
Standard Life Aberdeen (SLA) 304.00p -2.06%
FTSE 250 - Risers
Cobham (COB) 165.15p 34.54%
Howden Joinery Group (HWDN) 551.80p 8.97%
NewRiver REIT (NRR) 178.60p 4.57%
Barr (A.G.) (BAG) 649.00p 3.83%
Wizz Air Holdings (WIZZ) 3,742.00p 3.80%
Travis Perkins (TPK) 1,359.00p 3.35%
National Express Group (NEX) 440.00p 3.25%
Softcat (SCT) 949.00p 3.21%
PayPoint (PAY) 947.00p 2.93%
Bodycote (BOY) 774.50p 2.58%
FTSE 250 - Fallers
Metro Bank (MTRO) 385.00p -19.19%
Aston Martin Lagonda Global Holdings (AML) 630.60p -17.76%
Royal Mail (RMG) 208.40p -6.96%
Sports Direct International (SPD) 239.20p -6.05%
Investec (INVP) 489.20p -4.34%
Pennon Group (PNN) 719.40p -4.18%
TBC Bank Group (TBCG) 1,260.00p -4.11%
Tullow Oil (TLW) 200.40p -3.69%
IP Group (IPO) 68.90p -2.41%
Capital & Counties Properties (CAPC) 212.40p -2.39%