FTSE LIVE: Markets wait for European interest rate decision

Maplin job losses start

Sixty-three head office jobs at Maplin have been axed just over a week after the electronics retailer collapsed into the hands of the administrators.

Accounting giant PricewaterhouseCoopers warned they have yet to find a buyer for the stricken retailer, meaning more staff – and parts of the branch network – could face the chop.

Around 2,500 jobs hang in the balance, with today’s head office culls affecting Maplin’s offices in London and Rotherham.

‘A further sign of the commitment of central banks globally to steadily reduce the loose monetary conditions’

Jake Robbins, manager of the Premier Global Alpha Growth Fund –

“The ECB has slightly unexpectedly removed the option, if necessary, of increasing the size and duration of quantitative easing (QE) from their press release. Whilst not a major change in language it could be taken as a further sign of the commitment of central banks globally to steadily reduce the loose monetary conditions that have prevailed for a decade now.

“Whilst the global economy continues to accelerate, a faster pace of interest rate hikes and withdrawal of QE has the potential to stoke further bouts of volatility like those seen earlier this year. However, given the risks around global trade as a result of US imposed tariffs and some extra political risk in Italy, it is unlikely that the ECB will move any faster than markets expect anytime soon, particularly given inflation remains subdued well below their targets.

“Outside of small short-term spikes in the Euro and EU bond yields, it is unlikely that today’s announcement will have much of a lasting impact on financial markets one way or the other.”

No hurry for ECB to normalise

Timothy Graff, head of macro strategy for Europe, Middle East and Africa at State Street Global Markets, said it was a ‘consensus result’ from the ECB this afternoon.

Above-trend eurozone growth and continuing improvements in the domestic labour market brought the end to its easing bias. However, any shifts in language to ending its asset purchase programme will have to wait, thanks to the currently benign inflation conditions throughout the eurozone and the recent strength of the euro.

‘Our own online inflation measure, PriceStats shows inflation well away from target and actually slowing in recent weeks; suggesting the ECB need not hurry down the road of policy normalisation.

ECB: Baby steps towards QE exit door

Richard Carter, Head of Fixed Interest Research, Quilter Cheviot said:

“The European Central Bank today took a small step towards the QE exit door by adjusting their forward guidance. They dropped their pledge to expand monthly asset purchases if required, suggesting that they are increasingly confident about the economic outlook and the scope for inflation to return to target.

“The ECB’s QE program has had a massive impact since it was begun in 2015, pushing bond yields down to historically low levels and supporting inflows into equity markets.”

Going forward, we expect Mario Draghi and the ECB to tread carefully as they look to wind down their stimulus program – the Eurozone economy is certainly performing well but the inconclusive Italian election results and the brewing threat of a trade war suggest that major risks remain to the outlook.”

Outlook for eurozone growth improves

The outlook for eurozone growth has been revised upwards to 2.4 per cent in 2018 from the 2.3 per cent predicted at the ECB’s December meeting.

Melrose Industries shareholders vote in favour of GKN bid

Shareholders of Melrose Industries have voted in favour of the group’s proposed takeover of GKN. Ninety-eight per cent of Melrose’s shareholders voted in favour.

The European Commission has also given the potential deal the green light to go ahead today.

Earlier this week a group of 16 MPs wrote a letter to Business Secretary Greg Clarke urging the government to block the hostile takeover attempt.

Melrose Industries has offered £7.4billion for the 259 year-old firm.

ECB had an ‘easy decision’

Dennis de Jong, managing director at UFX.com

Mario Draghi has warned against raising interest rates for some time now, and the ECB’s decision to hold will have been an easy one, especially given the recent surge in concerns around economic uncertainty.

“The threat of a trade war triggered by US President Donald Trump seems to have spooked investors and business leaders alike, and the euro has weakened against the dollar in the last few days – perhaps a direct result of the commander-in-chief’s comments.

“While Draghi is likely to display a dovish tone in his follow up speech this afternoon, investors will be eager to find out when there will be an end to the ECB’s quantitative easing programme.

“Expected to continue until September, any conclusion to the QE programme sooner than then will likely spark a resurgence in the euro – and if it does the job of stimulating the eurozone economy and bringing inflation back up to target, it will tick a number of boxes for Draghi and the ECB.”

‘The ECB finally dropped the easing bias’

Neil Wilson at ETX Capital

“About time: European Central Bank policymakers have finally realised the Eurozone economy is booming. The ECB finally dropped the easing bias from its communique, as was largely anticipated.

It dropped the pledge to increase the scale of QE, but retained guidance that it may extend the APP programme beyond September 2018, which hints that QE will likely be extended beyond that – best guess suggests a quick three-month wind-up with a finish in December. Whilst it dropped the key easing bias sentence, it retained the view that the current monthly pace of purchases at €30 billion ‘are intended to run until the end of September 2018, or beyond, if necessary’ – an important distinction that suggests no abrupt end in the autumn.

Nevertheless, EURUSD spiked on the announcement but it may struggle for momentum. For now it remains below trend resistance which can be seen around the 1.2450 mark. It will likely take a firmly hawkish communication from Mario Draghi in the presser to nudge it past that level. Having done plenty by dropping the easing bias, it seems unlikely that he will wish to do anything further to fuel further gains for the euro. This looks like mission accomplished – normalisation narrative continues without unduly upsetting the markets or pushing the euro higher – and a fairly dry presser is expected now as a result.

ECB asset purchases to continue for as long as needed

The ECB also repeated that its asset purchasing programme, currently at 30billion euros a month, will continue until September this year ‘or beyond if necessary’.

It is what markets expected, with inflation below the ECB’s 2% target at 1.2% it was unlikely the central bank would want to upset any potential for growth on the continent.

Inflation would have to see a ‘sustained adjustment’ towards the banks target for asset purchases to be stripped back, it seems.

ECB: Interest rates UNCHANGED

Interest rates will remain unchanged at 0.00%, 0.25% and -0.40% respectively, the European Central Bank has confirmed.

‘The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases,’ it said today.

What analysts expect from the ECB shortly

Position yourself for all of Draghi's alternatives. We expect a fairly punchy move higher in EUR/USD today pic.twitter.com/NkwMvshS0I

— ING Economics (@ING_Economics) March 8, 2018

100 M&S stores WILL close ‘in two to three’ years

Speaking at Retail Week’s Live event, Marks and Spencer boss Steve Rowe has confirmed 100 stores will have to close in the coming years – last November the company said it had earmarked 100 stores for ‘closure or change’.

14 stores have been confirmed for closure this year alone.

Rowe also said that M&S had been ‘losing customers for eight years’ according to retail analyst Andrew Busby.

100 M&S stores to close in the next 2/3 years – Steve Rowe #RWL18

— Andrew Busby (@andrewbusby) March 8, 2018

WPP, Mediclinic and ITV power FTSE 100 higher

The FTSE 100 has made gains at the beginning of the afternoon after starting the day off in the red.

It is up 0.13% at 7,166.

Advertising agency WPP is the top gainer on the index so far with its shares up 2.27% this morning to 1,237p.

Mediclinic International, the private hospital group, has risen 2.21% to 591p and media giant ITV is up 1.97% at 154p.

15% plunge for shares in Alfa Financial

Shares have dropped for Alfa Financial Software Holdings despite results meeting expectations.

The FTSE 250 listed firm said: ‘Alfa continues to see a strong and diverse pipeline of opportunities which underpin the board’s confidence through 2018, with revenue growth weighted to the second half of the year as the full benefit of recent wins is felt.’

It is trading 15.48% lower at 404p today.

Premier Oil shares jump

Shares in Premier Oil have jumped nearly 7% higher today after the group’s latest results boasted a new oil field discovery and completion of its debt refinancing as well as an increase in production in 2017.

Chief executive Tony Durrant said: ‘2017 was a successful year for Premier with the refinancing completed, our producing portfolio performing well, the Catcher field brought on-stream and the notable Zama oil discovery in Mexico.

‘2018 will see further production growth, allowing us to deliver on our plans for reducing net debt to restore balance sheet strength while also progressing projects that deliver the highest financial returns.

FTSE tightens on losses

After opening down, the FTSE 100 has recovered some of its losses as the morning goes on.

It is now largely flat, at just 0.02% lower than yesterday.

Fiona Cincotta, senior market analyst at City Index, said the softening stance of President Trump on the trade tariffs had much to do with the lightening of the market mood.

The FTSE is seen climbing mildly higher in early trading, taking its lead from Wall Street which rallied off the lows into the close, thanks to a softening of stance by President Trump on the steel and aluminium tariffs,’ she said.

‘Trump’s advisors yesterday indicated that there could be exemptions from the tariffs for Mexico and Canada, and possibly other countries, considered on a case by case basis. This softening of stance could be considered a concession to congressional Republicans who were fiercely opposed to the ideas of pushing allies rather than the principal target, China.

‘This news picked Wall Street off its session lows, with the Dow finishing just 80 points down, recovering from an earlier 300 point drop. Meanwhile, the S&P closed almost a breakeven and the Nasdaq 0.3% higher.

John Lewis profits slump 77% lower

Profits fell 77% lower over 2017 to for the John Lewis Partnership, made up of John Lewis department stores and Waitrose.

The sharp fall was put down to shrinking margins in Waitrose with weak exchange rates and its commitment to be more competitive in its pricing.

Large exceptional items to cover restructuring and redundancy costs meant profits before tax were lower in 2017, but the group did manage to reduce debt by 13.6% over the year.

Gross sales rose 2%, the partnersip added, amid a ‘challenging’ environment with ‘subdued’ consumer demand.

John Lewis ‘partners’, as it calls its employees, will receive a 5% annual bonus – the lowest bonus paid since 1954.

Jane Denton has the full story.

Full story: Countrywide’s 20% share slump

Estate agency group Countrywide has slumped to a full year loss of more than £200million and issued its second profit warning since Christmas today.

The firm, which owns a string of brands including Hamptons International and Gaiscoigne-Pees, has seen its share price plummet over 20 per cent this morning.

Jane Denton has the full story.

Stobart Group shares rise on solid trading update

Shares in the Stobart Group are up 1.5% this morning after a solid trading update.

The number of passengers at London Southend airport, which the group owns, rose 25% over the last year to more than one million and it said it was on track to hit earning expectations in its rail arm.

It also confirmed a new airport, Carlisle Lake District Airport, will open for passengers for the first time in the summer of 2018.

The group holds a 12.5% stake in haulage firm Eddie Stobart which it said had continued to perform ‘satisfactorily’, with that company reporting a 12% YoY increase in revenues.

Stobart Group maintained its quarterly dividend at 4.5p per share.

Lloyds’ share buyback scheme begins

Lloyds Bank has launched a share buyback programme today, repurchasing £1bn worth of shares between now and February 2019.

The sole purpose of the programme is to reduce the ordinary share capital of the company,’ Lloyds said in a statement today, the shares will be cancelled once repurchased.

Countrywide issues profits warning and suffers £200m loss

The group, which owns brands including Hamptons International and Spencers, saw its share price plummet over 20 per cent in early morning trading.

Alison Platt, the group’s former boss, resigned last month amid a separate profits warning.

The group has now vowed to go ‘back to basics’ in a bid to drive up sales, win back customers and return to profit.

No dividend has been recommended for 2017.

A tricky decision ahead for the ECB?

Very difficult balancing act for #draghi#ecb at lunchtime. Headline #eurozone inflation to remain muted into H2 2018 when markets will seek bond purchase guidance. ECB may be tempted to point to stirring core prices but will be reluctant to trigger higher euro #rockandhardplacepic.twitter.com/XULZw93N0L

— Simon French (@shjfrench) March 8, 2018

Aviva a ‘strong buy’

Richard Hunter of interactive investor descrived Aviva’s performance last year as ‘sparkling’.

Overall Aviva has shown its strength in terms of growth, capital stability and an improved outlook statement. The notable fly in the ointment has been a share price which has not kept pace, having dipped 0.8% over the last year, as compared to a 2.4% drop for the wider FTSE 100.

‘In terms of prospects for the company, there is little question that the market is on board with the story, with the general consensus coming in at a strong buy.’

Shares in Aviva dip

Insurer Aviva has seen its share price dip 1.9% this morning after posting a 16% loss in its insurance and health arm, but overall profits were up 2%.

The group said it had delivered growth in profits, in dividends, in capital and in cash.

The full year dividend rose 18%, the fourth consecutive year of double-digit dividend growth at the company.

Shares fell sharply and traded at less than 499 before 9am despite the generally strong figures for the group.

Trade war on the back burner as markets anticipate ECB announcement

The week’s trade war concerns have seemingly been put on the back burner for the moment, allowing investors to give their full attention to what Mario Draghi and co. have in store,’ Connor Campbell of SpreadEx has said this morning.

The ECB chief has been notably less hawkish than his US and UK peers of late, though there is still room for a bit of tinkering with the exact wording and tone of the central bank’s message, especially in regards to the eventual unwinding of QE.

‘There’s still a while to go until Draghi takes the stand, however, leaving things in a stifling state of anticipation. The forex markets were resolute in their inaction, with the euro, dollar and pound refusing to budge from their opening positions.’

Dominoes slices through expectations to record bumper profit rise

Domino’s Pizza Group Plc, Britain’s biggest pizza-delivery firm, has reported a better-than-expected 10.2% rise in full-year pre-tax profit.

The company forecast 65 to 75 store openings in the UK this year and said UK system sales in the first two months of 2018 climbed 10.9 percent, with a 7.1 percent rise in like-for-like sales.

Underlying pre-tax profit rose to £94.4million in the 52 weeks ended December 24, from £85.7million a year earlier, the company said, beating analyst expectations.

Analyst’s take on today’s ECB meeting

Craig Erlam, a senior market analyst at Oanda, said the ECB meeing today may give a hint that the end of quantitative easing is close.

He said: ‘The language that is speculated to be targeted on Thursday is the reference to the central banks readiness to increase the asset purchase program in size or duration if the outlook becomes less favourable.

‘While this was always a pointless line, the ECB has stuck by it and the removal of it is a small acknowledgement that less dovish language in warranted.’

How far this hits markets and currency movements remains to be seen, however, with Erlam stating ECB presdient Mario Draghi is likely to have the biggest impact today.

The question is how much this tiny gesture is priced in, what impact it will have on the euro and whether they will go any further given the tense environment – trade wars, fragile market sentiment. We may well see some movement in the euro around the release but ultimately, Mario Draghi – the ECB President – will likely determine what markets will do.

‘I expect he may keep his cards very close to his chest and let the press conference pass without any major talking points. Either way, traders will be sitting and waiting to pounce on any unexpected hawkish or dovish message Draghi decides to divulge.

Today’s agenda: Interest rate decision in Europe

One of the big economic events of today will be an announcement on interest rates from the European Central Bank (main picture).

Rates have been held so far, with the central bank’s asset purchasing programme still intact.

With rising inflation on the cards markets will be waiting for signs of the bank’s opinion on the wider economy.

Over in the US there will be a jobs report released this afternoon, a key indicator of the health of the economy.

FTSE starts the day on the back foot

The FTSE 100 has opened lower this morning after weathering a poor day over on US markets yesterday.

Despite finishing on a high on Wednesday, the index has lost six points on opening, or 0.08%, and stands at 7,151.


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