London pre-open: Stocks seen steady as investors eye ECB announcement
London stocks were set for a steady open on Thursday as investors shifted their attention to the latest policy announcement from the European Central Bank, with worries about a US trade war never from investors' minds..
The FTSE 100 was called to open unchanged at 7,157.
On Wednesday, stocks on Wall Street pared losses into the close on reports that Canada and Mexico could get exemptions from Trump’s planned import tariffs on steel and aluminium.
CMC Markets analyst Michael Hewson said: "We should get the final details in the next day or so with reports that President Trump will announce the details either today or tomorrow, while markets will also be paying attention as to who will replace Mr Cohn. There were concerns that Peter Navarro, one of President Trump’s more hawkish trade advisors might be in the frame for the role, however he appeared to rule himself out yesterday."
As far as the ECB policy announcement is concerned, the market is not expecting any changes to rates or the bond-buying programme, so the main focus will be on the latest staff projections and the Q&A session with the central bank’s chief Mario Draghi, whose words will be scrutinised for any clues as to what might happen after September this year when the current bond buying programme is due to end.
Hewson said: "A number of policymakers on the governing council favour a sudden stop to the €30bn monthly asset purchase program in the aftermath of that date, while some favour a change to the wording with respect to downside risks to the economy.
"If anything the ECB could be facing a bit of a problem in terms of its attempts to draw back from its easy monetary policy, particularly since the data isn’t moving its way. Inflation is falling back, with headline CPI at a one year low, the euro is rising and some of the recent data has been slightly softer of late, and that’s before we even start to look at the current backdrop of Italian politics.
"Draghi is also likely to face questions on recent stock market volatility and the prospect of a trade war."
The ECB rate announcement is at 1245 GMT, while the press conference is at 1330 GMT.
Back in the UK, investors will be digesting the latest RICS residential survey, which showed the balance of surveyors reporting that house prices have risen over the last three months fell to zero in February from +8 in January, below the consensus +7.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The downturn in housing market activity accelerated in February, indicating that the stimulus to demand from the Chancellor’s stamp duty reforms has been outweighed by the prospect of further increases in interest rates.
"The new buyer enquiries balance fell to -16, from -11 in January, remaining below zero for the 11th consecutive month. Demand hasn’t fallen for such a protracted period since the 2008/09 financial crisis. We fear that demand will continue to fall rapidly over the coming months, as new mortgage rates pick up."
In corporate news, life insurer Aviva grew earnings per share 7% and dividend 18% in 2017 and has upgraded its growth targets to aim above 5% EPS growth from 2018, with 55-60% to be paid out in dividends.
With a capital surplus of £12.2bn under the EU Solvency II rules, the company has a solvency cover ratio of 198% that it said will allow it to deploy £3bn of excess cash in 2018 and 2019.
G4S said the outlook for its business was good as the security company reported a 6.5% rise in underlying annual profit.
Adjusted profit before interest, tax and amortisation rose to £491m from £461m as revenue increased 3.1% to £7.8bn. At G4S’s core businesses, stripping out currency moves, adjusted profit rose 4.2% to £496m.
Business information and events group Euromoney Institutional Investor has acquired 100% of the business and assets of Extel from WeConvene. The FTSE 250 firm said Extel would be integrated into its research business, further strengthening its asset management offering. Financial details of the transaction were not disclosed.