(Alliance News) - Stock prices in London were marginally higher at midday on Thursday in the wake of the Bank of England's latest interest rate decision, while US drugmakers were in focus after the Biden administration backed a plan to waive Covid-19 vaccine patents.
The central bank left the key UK interest rate unchanged at 0.1% and its quantitative easing programme untouched, with the total target stock of asset purchases at GBP895 billion.
The Bank of England said the outlook for the UK economy remains uncertain due to the virus pandemic. It predicted that gross domestic product will increase sharply in the second quarter but for growth slow thereafter as the boost from reopening wanes.
Following the BoE announcement, the pound was quoted at USD1.3902 at midday Thursday, down from USD1.3910 at the London equities close Wednesday.
Just prior to the announcement, FTSE 100 index was up 15.22 points, or 0.2%, at 7,054.52. The mid-cap FTSE 250 index was up 128.35 points, or 0.6%, at 22,514.25. The AIM All-Share index was down 0.6% at 1,254.10.
The Cboe UK 100 index was up 0.1% at 702.20. The Cboe 250 was up 0.7% at 20,205.81, and the Cboe Small Companies up 0.2% at 14,739.26.
In mainland Europe, the CAC 40 in Paris was down 0.1%, while the DAX 30 in Frankfurt was down 0.2%.
On the economic front, UK services sector activity growth hit a seven-and-a-half year high in April as lockdown restrictions eased, according to IHS Markit.
The IHS Markit/CIPS UK services purchasing managers' index was revised higher to 61.0 points in April from a preliminary estimate of 60.1, having registered 56.3 in March.
The latest reading signalled the fastest pace of expansion in the sector since October 2013.
In the FTSE 100, Next was the best performer, up 3.5%, after the high street and online retailer boosted its full-year profit guidance for a second time this year following a strong first quarter.
Next said full price sales were down 1.5% in the 13 weeks to May 1 on two years ago, before the Covid-19 pandemic, which the company said was a more "meaningful" comparison.
The FTSE 100 clothing and homewares retailer said it had assumed full-price sales during period would be down 10%, but beat this forecast by GBP75 million. As such, Next raised its central guidance for full-year pretax profit by GBP20 million to GBP720 million.
In April, the Leicester, England-based firm had raised its central profit guidance by GBP30 million to GBP700 million and "optimistically" ruled out further store closures as the UK's vaccine rollout continued.
Looking ahead, Next said it expects the recent post-lockdown sales surge to be short lived - based on the experience of last year - with sales to settle back toward guidance levels within the next few weeks.
Barratt Developments was up 2.0%. The housebuilder said it has performed well since the start of the calendar year reflecting underlying market strength and strong customer demand for "high-quality sustainable new homes".
For the period from January 1 to this past Sunday, total forward sales were GBP3.7 billion, up 31% from GBP2.83 billion at the same time in 2020, and it delivered 4,481 home completions, up 28% from 3,504.
The increase in completions in the period reflected the delivery of customers' homes in line with the UK government's original Help to Buy scheme and the stamp duty holiday deadlines, Barratt said.
Mexican miner Fresnillo was up 1.3%, tracking spot gold prices higher. The precious metal was quoted at USD1,793.58 an ounce Thursday midday, up from USD1,781.79 late Wednesday.
National Grid was up 1.2% after Berenberg raised the UK power lines operator to Buy from Hold.
Melrose Industries was up 1.0%. The industrial turnaround specialist said that, in the four months to April 30, trading was modestly ahead of expectations.
Melrose said the momentum seen in the second half of 2020 has continued into 2021, with sales in the period being 8% higher than in the same period in 2020. Excluding Nortek Air Management, group sales grew by 4%. Last month, Melrose agreed to sell Nortek Chicago-based Madison Industries for GBP2.62 billion.
Further, Melrose said operating margins achieved in the first quarter of the year continued to improve faster than expected, and cash generation has been encouraging, with Melrose "being cash neutral in the first quarter, in what is traditionally a cash outflow period".
Looking ahead, Melrose said it expects improvements in trading to continue, but noted the growth rate will be hindered by supply issues for semi-conductors in the global automotive supply chain.
At the other end of the large-caps, Mondi was the worst performer, down 4.1%. The packaging firm said it delivered a "robust performance" in the first quarter despite an expected decline in earnings.
Mondi reported underlying earnings before interest, tax, depreciation and amortisation of EUR353 million, down 8.3% from EUR385 million a year ago. This was in line with the company's expectations, however. Ebitda was up 14% from EUR309 million in the fourth quarter of last year.
Admiral Group, Polymetal International and Croda International were among the worst performers, down 3.5%, 3.0% and 2.9% respectively. The stocks went ex-dividend meaning new buyers no longer qualify for the latest payout.
The euro was priced at USD1.2049, up from USD1.2000. Against the yen, the dollar was trading at JPY109.13, down from JPY109.26.
Polling stations were open for voters to cast their ballots in a set of elections which could shake up British politics and have profound implications for the future of the UK.
On what has been dubbed 'Super Thursday', polling stations opened across Great Britain in the largest test of political opinion outside a general election, with the future of the Labour Party and the state of the Union among the issues at play.
Scottish National Party leader Nicola Sturgeon's push for a second independence referendum means the stakes are high in the Holyrood contest.
In England, as well as local council and mayoral contests, the Hartlepool parliamentary by-election will indicate what progress - if any - Labour has made in regaining votes in its former northern heartlands.
"For GBP, the Scottish parliamentary elections are certainly the one that investors will be watching. If the Scottish National Party manage to achieve a majority, the chances of a Scottish independence referendum is high. This result could negatively impact the British currency, as without Scotland, the British economy weakens," said analysts at OFX.
Brent oil was trading at USD68.70 a barrel at midday, down sharply from USD69.89 late Wednesday.
US stock market futures were pointed higher with the latest jobless claims numbers in focus ahead of the nonfarm payrolls report due on Friday.
The Dow Jones Industrial Average was called up 0.1%, the S&P 500 index up 0.1%, and the Nasdaq Composite up 0.3%.
US President Joe Biden's administration on Wednesday announced support for a global waiver on patent protections for Covid-19 vaccines, offering hope to poor nations that have struggled to access the life-saving doses.
US Trade Representative Katherine Tai said that while intellectual property rights for businesses are important, Washington "supports the waiver of those protections for Covid-19 vaccines" in order to end the pandemic.
Tedros Adhanom Ghebreyesus, head of the World Health Organization, called the US decision "historic" and marked "a monumental moment in the fight against Covid-19."
Patents give drugmakers a short-term monopoly on production to cover the high costs of research and development. Biotech firms have argued that these protections provided incentives to produce Covid-19 vaccines in a short period.
Tai in recent weeks has met with executives from all the major US vaccine producers - Pfizer, Moderna and Johnson & Johnson - to discuss the issue.
Pfizer, Moderna, Novavax and J&J shares were down 3.1%, 2.2%, 5.6% and 0.6% respectively in pre-market trade in New York. In London, AstraZeneca was up 0.7% in London, but BioNTech - partner of Pfizer on Covid-19 vaccines - was down 16% in Frankfurt.
The economic events calendar on Thursday has US jobless claims at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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