London pre-open: Stocks seen touch higher ahead of ECB announcement

Thu 07 Sep 2017

LONDON (SHARECAST) - (ShareCast News) - London stocks were set to nudge just a touch higher at the open on Thursday as investors eye the latest rate announcement from the European Central Bank.
The FTSE 100 was expected to open five points higher at 7,359.

Halifax house prices are due at 0830 BST, while the ECB rate decision is at 1245 BST, followed by the press conference at 1330 BST.

With rates largely expected to remain on hold, the focus will be on what ECB chief Mario Draghi has to say.

CMC Markets analyst Michael Hewson said: "Much will depend on the tone of ECB President Mario Draghi's press conference as he tries to balance out the competing arguments from the more hawkish members of the governing council who want an interest rate rise sooner rather than later, and those who are concerned a premature tightening could prompt a slowdown in some of the weaker countries of the euro area, where unemployment levels still remain unacceptably high.

"It is this more than anything that highlights the dilemma for policymakers in trying to set a monetary policy for an economy that has full employment in Germany, with Italy and Spain who remain a long way short of it. One thing is certain Mr Draghi will have to use every ounce of his verbal dexterity in keeping expectations managed on both sides of the monetary policy divide."

In corporate news, AstraZeneca put out a pair of positive respiratory updates from Phase III trials of combined treatment Duaklir and Phase IIb trials of tezepelumab.

Duaklir met its primary targets of demonstrating that its dual-drug formulation produced a statistically-significant improvement in lung function in patients with moderate to very severe stable chronic obstructive pulmonary disease compared to the single elements, while tezepelumab produced a significant reduction in the annual asthma exacerbation rate compared with placebo in patients with severe, uncontrolled asthma.

Go-Ahead Group posted results "in line with expectations" on Thursday, reporting bus operating profit of 90.7m, down slightly from 91.2m, and rail operating profit of 59.9m, sliding from 71.4m in the prior year.

The FTSE 250 passenger transport operator put the rail profit slide down to ongoing industrial action at its Govia Thameslink Railway franchise - in particular, the Southern division - although it claimed service levels were now improving as the impact and level of industrial action reduced.

Housebuilder Bovis Homes reported a 31% drop in first-half pre-tax profit as total completions fell and the company said it was cutting back its growth targets.

In the six months to the end of June, pre-tax profit declined to 42.7m from 61.7m as total completions dropped 6% to 1,512. The company, which fended off two takeover bids this year and set aside 10m to fix issues with some faulty homes, said profitability was dented by increased build costs and investment and the costs related to its bid approaches.
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