UK stock indexes remained stable on Thursday as investors prepared for the European Central Bank’s (ECB) interest rate decision. Rentokil’s performance helped mitigate losses among ex-dividend stocks.
The blue-chip FTSE 100 index hovered around 8,328.70 at 0746 GMT, showing little movement, while the mid-cap FTSE 250 index was flat at 20,969.57. However, industrial metal miners faced pressure, with the sector declining by 1.3% due to falling base metal prices.
Several companies experienced declines as they traded without the entitlement to their latest dividend payouts: Smiths Group (SMIN.L) lost 2.1%, Persimmon (PSN.L) fell 2.3%, and Howden Joinery (HWDN.L) dropped 1.5%. The previous day’s optimism over Britain’s inflation rate falling below the Bank of England’s target, which had propelled both indexes to multi-week highs, quickly faded.
All eyes are now on the ECB’s rate decision, scheduled for 1215 GMT, where analysts expect a reduction of 25 basis points. Investors will also closely monitor comments from ECB President Christine Lagarde for insights on future monetary policy.
As the focus shifts from macroeconomic indicators to upcoming earnings, analysts anticipate third-quarter reports will play a critical role. “What is missing at the moment for British equities to start performing better and enter an uptrend is a stronger earnings delivery. That has been the missing link,” stated Lilian Chovin, head of asset allocation at Coutts, a British private bank.
Mondi (MNDI.L) saw a significant drop of 6.9% after the packaging company reported a decrease in core profits compared to the previous quarter. In contrast, Entain (ENT.L) rose by 3.6% after the gambling group raised its 2024 net gaming revenue outlook.
Rentokil Initial (RTO.L) surged 7.8% following a positive trading update, emerging as the top gainer on the FTSE 100. “On the macroeconomic front, the UK has been outperforming Europe in terms of economic surprises and momentum, indicating a healthier environment in the UK at the moment,” Chovin added.
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