London open: FTSE nudges up ahead of ECB announcement

London stocks nudged up in early trade on Thursday as investors eyed the latest policy announcement from the European Central Bank.

At 0850 GMT, the FTSE 100 was up 0.1% at 8,311.2.

The ECB is widely expected to cut rates by 25 basis points when it makes its announcement at 1315 GMT.

Patrick Munnelly at Tickmill Group said: "At today’s ECB meeting, expectations for a rate cut may clash with Lagarde's reluctance to make firm commitments. A 25 basis point reduction in the ECB’s deposit rate, bringing it down to 3%, is the most probable outcome from the Governing Council’s meeting today. Therefore, the market's attention will be on hints regarding future actions. If a 25 basis point cut occurs today, the market anticipates over 60 basis points of cumulative easing spread across the January and March meetings.

"In other words, market expectations suggest a significant likelihood that one of the first two meetings in 2025 will see a 50 basis point cut, alongside a 25 basis point reduction at the other meeting. Since October, expectations had initially leaned towards a larger cut in December before tapering off.

"The immediate concern is that the forecasts for January and March may need to be adjusted downwards at this point. Historical patterns indicate that Lagarde tends to use press conferences to avoid making firm commitments and emphasise a'meeting by meeting' decision-making process. A continued trend of poor PMI data, for instance, could further bolster expectations for rate cuts in early 2025, but that will be addressed next week. At this moment, it may be overly optimistic to expect Lagarde to completely endorse the market's dovish outlook."

Investors were also eyeing the release of the US producer price index for November, due at 1330 GMT.

Munnelly said: "This announcement comes just a day after the market received a consumer inflation report that was in line with expectations and not excessively high. This particular reading of consumer inflation has significantly influenced market sentiment, leading many to believe that the Federal Reserve is likely to implement a rate cut during their upcoming meeting on December 18."

Earlier, the Swiss National Bank surprised markets with its biggest interest rate cut in nearly a decade. The SNB cut rates from 1% to 0.5% - the lowest level since November 2022. Economists were expecting a 25 basis points rate cut.

In equity markets, Diageo fizzed higher after an upgrade to ‘buy’ at UBS, while Pennon gained after an upgrade to ‘overweight’ at Barclays.

Currys rallied after saying it swung back into the black in the first half, with a solid performance in UK and Ireland helping to offset weakness in the Nordics. The electricals retailer reported a group adjusted pre-tax profit of £9m, versus a loss of £10m in the same period a year earlier, as revenue ticked up 1% to £3.9bn.

Auction Technology was also firmer after private equity firm TA Associates said it had agreed to sell its entire 12.6% stake in the company for £85.3m.

Recruiter SThree plunged after it posted a slide in net fees and warned that the ongoing challenging market conditions would hit profits. Updating on full-year trading, FTSE 250 firm - a specialist in the science, technology, engineering and maths sectors - said group net fees were down 9% year-on-year.

Contract fell 7%, representing 84% of fees. The contractor order book, meanwhile, was down 10% year-on-year, at £161m.

Hays was also sharply lower.

Investec was hit by a downgrade to 'neutral' at JPMorgan.

Market Movers

FTSE 100 (UKX) 8,311.22 0.12%
FTSE 250 (MCX) 20,964.16 -0.04%
techMARK (TASX) 4,651.42 -0.19%

FTSE 100 - Risers

Diageo (DGE) 2,559.50p 2.81%
Lloyds Banking Group (LLOY) 55.16p 1.73%
Glencore (GLEN) 387.85p 1.20%
BP (BP.) 398.75p 1.19%
Barclays (BARC) 269.60p 1.11%
Antofagasta (ANTO) 1,781.50p 1.05%
Centrica (CNA) 131.50p 1.04%
Severn Trent (SVT) 2,574.00p 0.98%
Scottish Mortgage Inv Trust (SMT) 968.00p 0.98%
Smith & Nephew (SN.) 992.80p 0.96%

FTSE 100 - Fallers

Associated British Foods (ABF) 2,138.00p -2.46%
Rentokil Initial (RTO) 407.30p -1.95%
British American Tobacco (BATS) 2,946.00p -1.77%
Imperial Brands (IMB) 2,560.00p -1.27%
Unilever (ULVR) 4,566.00p -1.19%
Smith (DS) (SMDS) 533.00p -1.11%
Diploma (DPLM) 4,494.00p -1.10%
Bunzl (BNZL) 3,554.00p -0.95%
Auto Trader Group (AUTO) 817.20p -0.83%
Haleon (HLN) 375.90p -0.82%

FTSE 250 - Risers

Currys (CURY) 85.05p 7.66%
Auction Technology Group (ATG) 602.00p 6.55%
Pennon Group (PNN) 612.00p 2.94%
Burberry Group (BRBY) 1,010.00p 2.43%
CMC Markets (CMCX) 280.00p 2.19%
Primary Health Properties (PHP) 95.00p 2.15%
Raspberry PI Holdings (RPI) 461.30p 1.97%
Watches of Switzerland Group (WOSG) 574.00p 1.95%
Ashmore Group (ASHM) 168.20p 1.94%
St James's Place (STJ) 893.50p 1.71%

FTSE 250 - Fallers

SThree (STEM) 269.50p -25.35%
Hays (HAS) 78.50p -5.08%
Investec (INVP) 566.00p -4.07%
Zigup (ZIG) 325.50p -3.41%
Sirius Real Estate Ltd. (SRE) 83.35p -2.97%
Ninety One (N91) 154.00p -2.78%
Bakkavor Group (BAKK) 144.00p -2.70%
Pagegroup (PAGE) 365.40p -2.61%
Me Group International (MEGP) 210.00p -2.55%
PRS Reit (The) (PRSR) 103.00p -2.46%