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London stocks edge higher ahead of ECB rate decision; GSK slumps

Published by Uma Rajagopal

Posted on June 3, 2024

Featured image for article about Top Stories

By Pranav Kashyap

(Reuters) -London stocks rose on Monday, mirroring counterparts in Asia, ahead of the highly anticipated rate cut by the European Central Bank due later this week, while drugmaker GSK kept gains in check.

The blue-chip FTSE 100 index was up 0.1% as of 0808 GMT, after rising as much as 1% at open.

The mid-cap FTSE 250 was up 0.8%. Both the indexes were set to log a third consecutive session of gains.

“London had a really good open this morning and that’s short term. Investors seem to be taking some profits,” said Axel Rudolph, senior market analyst at IG Group.

The European Central Bank (ECB) will meet later this week where investors expect it to trim borrowing costs by a quarter point.

Analysts predict the Bank of England (BoE) to closely shadow the ECB’s movements, positioning itself to quickly follow suit in initiating the rate-cutting cycle.

“Once the ECB cuts, what will happen then? It’s already priced in. We may actually fall back and could lead to a much more significant correction in the FTSE 100,” Rudolph added.

The BoE will meet two weeks from now to take a call on interest rates in Britain. Traders have priced in a full cut only in November.

Investors will also closely monitor a slew of economic data set to be release this week, including domestic manufacturing data for May due later in the day.

Among individual stocks, GSK tumbled 9.4% after a Delaware ruling allowed more than 70,000 lawsuits to proceed over its discontinued heartburn drug Zantac. GSK’s slump also pushed the pharma sector to a more than one-month low.

St. James’s Place gained 4.6% after JP Morgan upgraded the stock to “overweight” from “neutral”.

Hunting PLC was the top gainer on the mid-cap index with an 8% jump after the oilfield services firm secured a $86 million order.

(Reporting by Pranav Kashyap in Bengaluru, Editing by Sohini Goswami and Eileen Soreng)