UK and European stocks rallied strongly after a speech by the European Central Bank president, Mario Draghi, instilled confidence in the markets. Draghi insisted that he and his fellow central bankers would do everything they could to hold together the eurozone.
“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough,” said Draghi at a speech in London.
The FTSE 100 index responded by rallying ahead by 1.4%, closing at 5,573. This comes after the index lost nearly 4% of its value over the last 4 trading days. The FTSE 250 index also rallied ahead by 1.5%, closing at 11,040.
Investors and traders also had plenty of earnings reports to parse through since UK companies are in the midst of earnings season.
“A barrage of updates from UK companies is keeping investors fully occupied today, wading through news both good and bad,” said Chris Beauchamp, a market analyst at IG Index. “Among those doing well are Intertek (ITRK), Travis Perkins (TPK) and Compass Group (CPG), but Royal Dutch Shell (RDSB) is suffering the effects of a fall in oil prices ... Also in corporate news, engineering firm Lamprell (LAM) has served up yet another profit warning, its third in as many months.” This profit warning caused the company’s shares to fall by nearly 35%.
Other major gainers on the FTSE 100 included heavyweights such as the auto-manufacturer Rolls-Royce (RR.) and the consumer-goods company, Unilever (ULVR).
Lloyds Banking Group (LLOY) was the first of the large UK banks to report earnings this season. Shares in the bank dipped down by 0.5% after the bank set aside more money to cover costs related to the mis-selling of payment protection insurance (PPI). The bank has now set aside a total of £4.3 billion to cover PPI costs.
When looking at the earnings statement as a whole, Shore Capital analyst Gary Greenwood says: “Overall this feels like the usual story of decent balance sheet progress, but some questions (remain) around P&L performance, most notably income.”