Markets steady as ECB say ‘little doubt’ of more cash injections

Traders applied the brakes on Thursday following huge selloffs a day earlier over fears that a second wave of coronavirus and new lockdowns in France and Germany could damage global economies.

The FTSE 100 leading index closed the day down just 1.05 points at 5581.75.

Comfort was sought following an announcement from the European Central Bank (ECB) that interest rates in the eurozone would be held and its head Christine Lagarde said there is “little doubt” that further cash injections will be on the way in December.

David Madden, market analyst at CMC Markets UK, explained: “Traders took that as a cue to buy back into stocks. In recent years, the markets have become overly reliant on central bank intervention, and the remarks were music to the bulls’ ears.”

The news helped the German Dax close up 0.13%, although warnings from France over Covid-19 restrictions saw the Paris-based Cac close down 0.19%.

Mr Madden added: European equity markets pulled back a small bit of the huge ground that they lost yesterday in the first few hours of trading. The mood was a little cautious as traders got used to the idea of tougher restrictions in France and Germany – which will last for one month.”

Markets were also helped by news in the US that the economy rebounded better than expected – up 33.1% compared with the 31.4% fall in the second quarter of 2020.

Connor Campbell, financial analyst at SpreadEx, said: “Even though that number masks a lot of pain for the average American, likely to materialise figures-wise in the fourth quarter, the surface-level positivity was just about enough for investors.”

In company news, oil giant Shell announced it would increase dividends to shareholders following a better-than-expected third quarter, just months after cutting it for the first time since the Second World War.

Investors reacted positively, with Royal Dutch Shell’s A shares closing up 32.7p at 932.7p and the B shares closing up 31.9p at 898.3p.

Lloyds Banking Group also had a healthy third quarter, returning to profit and ahead of analysts’ predictions as it achieved more than £1 billion in profit before tax. Shares closed up 0.63p at 28.28p.

BT said it had achieved a strong performance and increased the lower end of its earnings target for the year to £7.3 billion despite reporting a decline in revenues by 8% to £10.6 billion over the past six months.

Investors were not convinced, however, with shares closing the day down by 2.53p at 99.12p.

The boss of outsourcing giant G4S reiterated his opposition to an attempted £3 billion hostile takeover by Canadian rival GardaWorld, insisting the 190p-a-share offer was too low.

Shareholders appeared unmoved by the latest call against the deal – although closing down 0.5p at 205p would suggest many are hopeful for an improved offer.

The biggest risers on the FTSE 100 were Flutter, up 985p at 13,270p; Royal Dutch Shell B shares, up 31.9p at 898.3p; Royal Dutch Shell A shares, up 32.7p at 932.7p; Scottish Mortgage Investment Trust, up 24p at 1,015p; and Lloyds Banking Group, up 0.63p at 28.28p.

The biggest fallers were Rolls-Royce, down 12.14p at 72.4p; Standard Chartered, down 28.7p at 345p; IAG, down 2.62p at 91.08p; Next, down 164p at 5,970p; and Prudential, down 25.2p at 934.4p.