The UK stock market experienced a boost on Thursday, driven by the European Central Bank's (ECB) decision to maintain its monetary policy stance, providing some relief to companies during the current earnings season. The FTSE 100 index closed up 0.21%, marking its second consecutive day of gains after a last-minute rally on Wednesday.
Frasers Group, an established player in the sportswear and apparel retail space, saw a significant rise of 9.19% at closing, leading the charge among London-listed blue-chip companies. This optimism stems from forecasts of a "strong increase" in adjusted pretax profits for fiscal 2025, projected to reach between £575 million and £625 million.
Despite reporting lower attributable profits and revenues for the 52-week period ending April 28, 2024, the positive outlook has investors feeling buoyant about the firm's future performance. On an important note for the market, the ECB's Governing Council opted to keep interest rates unchanged, as was anticipated by many market watchers.
The rates for the main refinancing operations, marginal lending facility, and deposit facility remained stable at 4.25%, 4.50%, and 3.75%, respectively. This decision comes in response to ongoing pressures from elevated domestic price levels that continue to affect economic stability. The council notably refrained from presenting a dot plot, which has historically been used to guide market expectations for future interest rate changes.
Instead, they emphasized a data-driven approach for future decisions, intending to maintain a restrictive monetary policy for as long as necessary. Despite the ECB's recent stance, there remains speculation in the markets regarding a potential rate cut in September. Analysts at ING suggest that the ECB aims to avoid making the June cut appear as a policy blunder in the upcoming weeks, indicating a potential policy shift at the September meeting could be on the horizon.
In terms of domestic economic indicators, recent projections estimate that the number of payrolled employees in the UK may have increased by 16,000 in June, bringing the total to 30.4 million. This follows an early estimate from the Office for National Statistics, which suggested that from April to May, employment grew by an additional 54,000. The unemployment rate in the UK for those aged 16 and over was recorded at 4.4% in the quarter leading to May, with an employment rate of 74.4%.
Previous figures from the three-month period leading to April showed a consistent unemployment rate of 4.4%, with a marginally lower employment rate of 74.3%. This data serves as a critical indicator of the employment landscape within the UK, juxtaposing economic performance amidst fluctuating monetary policy decisions. $UK100 $FRAS.