FTSE 100 muted as investors await ECB interest rate decision

The UK's blue-chip index is struggling to make major gains as investors digest a batch of earnings. Read More...
FTSE 100 A man crosses Waterloo Bridge during the evening rush-hour with skyscrapers of the City of London financial district seen behind in London, Britain, October 10, 2022. REUTERS/Toby Melville

The FTSE 100 was muted in early trading. Photo: Toby Melville/Reuters

The FTSE 100 (^FTSE) and European stocks started the day on the back foot on Thursday as investors continue to weigh rising interest rates and the risk of recession.

The FTSE 100 slipped 0.3% to 7,036 points at the open but managed to recover slightly, while the CAC (^FCHI) was down 0.6% in Paris to 6,235 points. In Germany, the DAX (^GDAXI) slipped 0.3% to 13,163.

The UK’s blue-chip index was struggling to make major gains as investors digest a batch of earnings and await the latest interest rate decision from the European Central Bank (ECB) with a rate hike of 75 basis points expected.

Lloyds (LLOY.L) fell 1.4% after reporting below forecast third quarter pre-tax profits of £1.5bn ($1.7bn) and increased its bad debt provisions to £668m for the quarter, taking them above £1bn for the year to date.

Shell (SHEL.L) rose 3.4% after the oil major announced plans to increase its dividend in the fourth quarter to 15% as as cooling oil prices failed to take the shine off the energy company’s bumper profits.

Unilever (ULVR.L) also gained ground after it raised its sales forecast thanks to higher prices, with investors shrugging off concerns about declining consumer sentiment.

Airtel Africa (AAF.L) was the biggest laggard, dropping 5.2% following its half-year results.

European stocks were lower ahead of the ECB announcement, with markets pricing in an expected rate hike of 75 basis points.

Read more: FTSE 100: Lloyds profits slump as it braces for loan losses

CMC Markets analyst Michael Hewson said: “The inability of US markets to sustain yesterday’s rebound along with the negative reaction to Meta’s (META) latest numbers looks set to see a lower open for European markets ahead of today’s key ECB interest rate decision.

“At its last meeting in September, it was widely expected that the ECB would raise rates, with the only uncertainty being around whether they would go by 75bps or 50bps.

“The decision to raise rates by 75bps was dictated by the upgrading of the banks inflation forecasts, which were adjusted higher to 8.1% in 2022 and 5.5% in 2023.

Victoria Scholar, head of investment at Interactive Investor, added: “Focus turns to the European Central Bank’s rate decision at lunchtime which is expected to announce the second 75 basis point hike in a row as it looks to get to grips with inflation in the euro zone.”

“In the US, investors will be looking for further signs of an economic slowdown stateside with the release of its latest GDP growth figures.”

Meanwhile, Brent crude (BZ=F) retreated to $95 per barrel, slipping 0.4%.

S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the green as trade began in Europe.

In Asia, Tokyo’s Nikkei 225 (^N225) retreated 0.3% to finish at 27,345 while the Hang Seng (^HSI) in Hong Kong gained 0.8% to 15,452. The Shanghai Composite (000001.SS) also closed in the red, falling 0.5% to 2,984 points.

Read more: FTSE 100: Shell profits double to $9.5bn on higher oil and gas prices

On Wall Street, stocks finished mostly lower on Wednesday as investors digested disappointing results from Microsoft (MSFT) and Alphabet (GOOG). The Dow Jones (^DJI) was muted, gaining only 0.01% to close at 31,839. The S&P 500 (^GSPC) dropped 0.7% to 3,830 points and the tech-heavy Nasdaq (^IXIC) slipped 2% to 10,970.

Watch: What is a recession and how do we spot one?

Read More

Add Comment

Click here to post a comment