LONDON MARKETS: FTSE 100 Ends Higher, Joining In European Rally After Dovish ECB Remarks
March 08 2018 - 12:34PM
Dow Jones News
By Carla Mozee and Victor Reklaitis, MarketWatch
Aviva shares edge up after earnings report
U.K. blue-chip stocks ended higher Thursday, with analysts
pinning the advance in part on dovish remarks from European Central
Bank President Mario Draghi.
Investors also awaited more details about potential U.S. tariffs
on steel imports that analysts have said could stoke a global trade
war, while also sifting through a round of corporate updates.
How markets moved
The FTSE 100 index rose 0.6% to end at 7,203.24, building on
Wednesday's rise of 0.2%
(http://www.marketwatch.com/story/ftse-100-slides-as-cohns-resignation-shakes-the-market-2018-03-07).
The London benchmark has gained for four straight sessions.
The pound bought $1.3816, down from $1.3903 late Wednesday in
New York.
The pan-European Stoxx Europe 600 closed 1.1% higher at
376.62.
What drove markets
The European Central Bank opted to leave interest rates
unchanged
(http://www.marketwatch.com/story/european-central-bank-leaves-rates-policy-statement-unchanged-2018-03-08),
as expected, but also moved closer to ending its quantitative
easing program, a key stimulus effort. The ECB dropped its
commitment to ramp up asset purchases if the euro zone outlook
deteriorates.
The euro was briefly up against the pound following the
statement, buying around 89.50 pence compared with 89.26 pence late
Wednesday, but then it turned lower after Draghi's remarks. It was
recently changing hands at 89.15 pence.
Analysts noted that Draghi emphasized dovish elements of the
central bank's latest statement
(http://www.marketwatch.com/story/euro-falls-back-as-traders-watch-for-ecbs-qe-hints-2018-03-08),
including a commitment to maintaining rates at present levels for
an extended period beyond the end of asset purchases, as well as a
continued commitment to potentially extending those purchases
beyond September, if necessary.
Traders also were somewhat in wait-and-see mode as President
Donald Trump was moving closer to signing an order to slap tariffs
on steel and aluminum imports into the U.S. The Trump
administration has indicated Canada and Mexico may be exempt from
the levies. The president was expected to make an announcement at
3:30 p.m. Eastern Time, or 8:30 p.m. London time, according to
media reports
(http://www.marketwatch.com/story/trump-tariff-plan-expected-to-exempt-canada-mexico-after-house-republicans-protest-2018-03-08).
Read:How stock-market investors are bracing for a potential
trade war
(http://www.marketwatch.com/story/how-stock-market-investors-are-bracing-for-a-potential-trade-war-after-cohn-exit-2018-03-07)
The European Union has said it's preparing its own tariffs if
Trump moves ahead with the levies.
See: EU leader responds to Trump's tariff plan: 'We can also do
stupid'
(http://www.marketwatch.com/story/eu-leader-responds-to-trumps-tariff-plan-we-can-also-do-stupid-2018-03-07)
What strategists are saying
"Mario Draghi, the head of the ECB, stated that underlying
inflation is subdued and that 'victory' can't be declared yet,"
said David Madden, a CMC Markets UK analyst, in a note.
"The dovish tone of the press conference encouraged buying of
stocks, and the slide in the euro added to the bullish sentiment,"
the CMC analyst added.
Madden also said the news that Canada and Mexico may be exempt
from the planned U.S. tariffs suggests Trump may be less aggressive
than feared, but risks remain.
"The U.S. president may want to 'put America first', but it
could put global investors last," he said.
Stock movers
G4S PLC (GFS.LN) fell 2.2%, with shares retreating from earlier
gains made after the security and consulting services company
declared a higher final dividend
(http://www.marketwatch.com/story/g4s-2017-pretax-profit-rises-30-raises-dividend-2018-03-08-34851154)
for the year and posted a rise in yearly pretax profit to GBP386
million ($536 million).
Aviva PLC shares (AV.LN) declined 0.2% as the insurer said
profit in 2017 rose
(http://www.marketwatch.com/story/aviva-profit-rises-2-in-2017-to-return-500-mln-2018-03-08),
and that it expects to return GBP500 million ($694.3 million) in
excess cash to shareholders this year.
Off the FTSE 100, Countrywide PLC (CWD.LN) sank 1.6%, but was
off session lows, after the estate agent scrapped its dividend
(http://www.marketwatch.com/story/countrywide-scraps-dividend-swings-to-yearly-loss-2018-03-08),
citing the booking of a huge impairment charge and a slide in
earnings as reason for the move.
(END) Dow Jones Newswires
March 08, 2018 12:19 ET (17:19 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Apr 2024 to May 2024
FTSE 100
Index Chart
From May 2023 to May 2024