London close: Stocks mixed after ECB rate cut

(Sharecast News) - London stocks finished on a mixed note Thursday, as investors digested an interest rate cut from the European Central Bank, as Diageo held onto gains through the close. The FTSE 100 index gained 0.12% to end at 8,311.76 points, while the FTSE 250 slipped 0.12% to 20,949.04 points.

In currency markets, sterling was last down 0.4% on the dollar to trade at $1.2700, as it dropped 0.41% against the euro, changing hands at €1.2097.

"The European Central Bank's fourth interest rate cut to 3% this year and the Swiss National Bank's larger than expected 50 basis point cut to 0.5% propped European shares up," said IG senior analyst Axel Rudolph.

"US stock indices dipped, though, as the country's producer prices rose more than expected and jobless claims soared to a two-month high."

Rudolph noted that oil and precious metal prices had given back their recent gains, with silver falling by more than 3%, as the dollar appreciated ahead of next Wednesday's Federal Open Market Committee meeting.

"According to the CME FedWatch tool, 98% of respondents anticipate a 25 basis point rate cut to 4.25%-to-4.50%, 10% more than just a few days ago."

UK house prices continue to rise, ECB cuts interest rates

In economic news, UK house prices continued their upward trajectory in November, with market strength evident across most regions, according to the Royal Institution of Chartered Surveyors (RICS).

A net balance of 25% of survey respondents reported price increases, up from 16% in October and marking the fourth consecutive month of improvement.

Northern Ireland saw the most significant gains, while price growth is expected to persist in the short and medium term.

However, agreed sales volumes were stagnant, with the balance dropping to one from eight in October.

Tarrant Parsons, head of market analytics at RICS, sounded a note of caution.

"Although the latest survey results continue to signal a steady improvement in buyer demand, the broader macro environment is likely to pose additional headwinds moving forward," he said.

"Most significantly, the recent rise in mortgage interest rates may curtail the recovery in market activity.

"Moreover, measures of consumer and business confidence across the economy have deteriorated of late and, if sustained, this begins to feed through into housing market conditions in the months ahead."

Looking ahead, Rightmove forecasted a 4% rise in house prices in 2024, driven by falling mortgage rates and strong demand.

The first quarter was expected to be particularly active as buyers rush to finalise deals before April's stamp duty changes.

Mortgage rates were projected to average 4%, underpinned by anticipated rate cuts from the Bank of England.

Despite the current bullish outlook, Rightmove suggested that 2025 may lean towards a buyer's market, as housing inventory levels continue to rise.

"We expect a busier year in 2025," said Tim Bannister, property expert at Rightmove.

"The effects of stamp duty rising will be felt for the rest of the year too, and we may see some negotiation tactics play out, particularly on properties close to the £300,000 mark, as both buyers and sellers try to mitigate their higher costs through the price agreed."

On the continent, the European Central Bank reduced its benchmark interest rate by 25 basis points to 3%, its fourth cut this year.

The ECB also shifted its guidance, dropping references to restrictive monetary policy as inflation trends align with targets.

It projected headline inflation to average 2.4% in 2024 and 1.9% by 2026.

"The Governing Council is determined to ensure that inflation stabilises sustainably at its 2% medium-term target," the ECB said.

"It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance.

"In particular, the Governing Council's interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission."

Switzerland's central bank meanwhile delivered a surprise with a sharper-than-expected rate cut of 50 basis points, lowering its policy rate to 0.5%.

That marked the largest reduction in nearly a decade, as the Swiss National Bank responded to low inflation, tepid growth, and a strengthening franc.

Across the Atlantic, initial jobless claims in the US climbed sharply last week, rising by 18,000 to 242,000, contrary to expectations for a decline.

Continuing claims also ticked up, reaching 1.86 million.

Meanwhile, US producer price index data revealed higher-than-expected inflation pressures, with a 0.4% monthly increase in November and an annualized core rate holding steady at 3.4%.

Currys surges on return to profit, recruiters in the red

On London's equity markets, Currys surged 16.77% after reporting a return to profitability in the first half, supported by strong performance in the UK and Ireland, which helped offset weakness in its Nordic operations.

Diageo rose 2.77% following an upgrade to 'buy' from 'sell' by UBS, which highlighted upside potential in the company's US business.

Utilities stocks also featured prominently among the gainers - Pennon Group climbed 4.21% on the back of an upgrade to 'overweight' from Barclays, while Severn Trent and United Utilities gained 1.8% and 1.07%, respectively

Severn Trent's recovery came after a Barclays price target hike, following earlier pressure this week from allegations of accounting irregularities.

On the downside, SThree plunged 26.59% after the recruiter reported a 9% drop in net fees and warned of ongoing market challenges that are expected to impact profits.

Weakness in its core science, technology, engineering, and mathematics sectors contributed to a 10% decline in its contractor order book.

Sector peer Hays also slid 3.63%.

Elsewhere, Investec dropped 4.07% after a downgrade to 'neutral' by JPMorgan.

Auction Technology Group fell 3.98% as private equity firm TA Associates sold its entire 12.6% stake for £85.3m.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,311.76 0.12% FTSE 250 (MCX) 20,949.04 -0.12% techMARK (TASX) 4,683.00 0.49%

FTSE 100 - Risers

Diageo (DGE) 2,558.50p 2.77% Severn Trent (SVT) 2,595.00p 1.80% Scottish Mortgage Inv Trust (SMT) 975.20p 1.73% Barclays (BARC) 270.70p 1.52% Pershing Square Holdings Ltd NPV (PSH) 3,892.00p 1.46% Lloyds Banking Group (LLOY) 55.00p 1.44% CRH (CDI) (CRH) 7,844.00p 1.40% BAE Systems (BA.) 1,214.50p 1.38% International Consolidated Airlines Group SA (CDI) (IAG) 291.80p 1.32% Sage Group (SGE) 1,306.50p 1.32%

FTSE 100 - Fallers

Rentokil Initial (RTO) 398.90p -3.97% Antofagasta (ANTO) 1,702.50p -3.43% Associated British Foods (ABF) 2,126.00p -3.01% Fresnillo (FRES) 679.50p -2.79% Intermediate Capital Group (ICG) 2,154.00p -2.45% Berkeley Group Holdings (The) (BKG) 4,068.00p -2.26% Vistry Group (VTY) 670.50p -2.05% Diploma (DPLM) 4,452.00p -2.02% Persimmon (PSN) 1,277.50p -1.69% Rio Tinto (RIO) 5,000.00p -1.63%

FTSE 250 - Risers

Currys (CURY) 92.65p 17.28% Wizz Air Holdings (WIZZ) 1,552.00p 9.14% Raspberry PI Holdings (RPI) 488.00p 7.87% NCC Group (NCC) 141.00p 5.07% Pennon Group (PNN) 619.50p 4.21% Bloomsbury Publishing (BMY) 698.00p 4.18% Edinburgh Worldwide Inv Trust (EWI) 198.00p 3.99% Watches of Switzerland Group (WOSG) 582.00p 3.37% Auction Technology Group (ATG) 584.00p 3.36% Baillie Gifford US Growth Trust (USA) 287.50p 2.68%

FTSE 250 - Fallers

SThree (STEM) 265.00p -26.59% Domino's Pizza Group (DOM) 304.00p -5.88% Hochschild Mining (HOC) 226.00p -5.44% Trustpilot Group (TRST) 293.00p -4.56% Pagegroup (PAGE) 359.80p -4.10% Investec (INVP) 566.00p -4.07% Sirius Real Estate Ltd. (SRE) 82.75p -3.67% Hays (HAS) 79.70p -3.63% Moonpig Group (MOON) 220.00p -2.87% Bytes Technology Group (BYIT) 442.80p -2.81%