The FTSE 100 Index closed 27.57 points higher, 0.3%, at 10,722.07 on Thursday, as the European Central Bank's decision to maintain its interest rates and comments from the US Federal Reserve influenced investor sentiment across global markets. The FTSE 250 ended 34.90 points higher, 0.1%, at 24,674.16, while the AIM all-share advanced 2.53 points, 0.3%, at 763.45. Across Europe, the CAC 40 in Paris ended up 1.1% and the DAX 40 in Frankfurt climbed 1.3% after the ECB's announcement.
The ECB maintained its deposit facility rate at 2.50%, the main refinancing operations rate at 2.65% and the marginal lending facility rate at 2.90%, while cautioning that rising energy prices posed risks to inflation and growth. The central bank said: "Energy prices have continued to rise, posing upside risks to the inflation outlook and downside risks to the growth outlook." JPMorgan analyst Greg Fuzesi noted that markets expected the decision and predicted a rate hike in December would follow, saying: "A hike in December therefore remains very likely and we continue to expect at least one further hike after that, most likely in March." The ECB announcement came hours after president Christine Lagarde told the Governing Council she would step down on February 7 2027, eight months before her term was due to expire.
Across the Atlantic, the US Federal Reserve also left interest rates unchanged on Wednesday despite accelerating inflation. The personal consumption expenditures price index rose 3.6% in September, quickening from 3.4% in August, while the core reading climbed 3.1% on-year from 3.0% in August. Federal Reserve chairman Kevin Warsh told reporters it was the "right policy decision for this moment" and that the US central bank "will deliver price stability, no ifs, no buts". However, Eric Winograd, chief US economist at AllianceBernstein, said he perceived that "Chair Warsh prefers not to raise rates if he can avoid it". Morgan Stanley expects two more 25 basis point hikes in December and March.
On Wall Street, the Dow Jones Industrial Average was down 0.3%, the S&P 500 was 0.3% lower and the Nasdaq Composite slid 1.3% at the time of London's closing bell. Google owner Alphabet slumped 12% after poorly received earnings, with both earnings per share and revenues coming in below expectations. David Morrison at Trade Nation said investors were concerned about "a sharp drop in free cash flow, along with a slowdown in Google's search engine growth", with alternative AI models "increasingly eating" into the search engine's dominance.
In London, WPP rose 5.4% as it reiterated its annual guidance following third-quarter results in line with expectations, with revenue less pass-through costs falling 2.0% to £2.41 billion from £2.46 billion. Shell gained 2.1% despite lower oil prices, reporting adjusted earnings of 10.81 billion dollars compared with 5.43 billion dollars a year ago, beating 10.33 billion dollars consensus. Haleon slumped 15% after lowering full-year revenue guidance, now expecting 2026 organic revenue growth of around 2.5% down from 3% to 5% previously, citing soft cold and flu consumption in North America and supply issues in China.
Support for equity markets came as oil prices eased amid renewed diplomatic efforts between the US and Iran. Brent was quoted at 113.75 dollars a barrel, down from 116.37 dollars. The pound was quoted at 1.3369 dollars, up from 1.3310 dollars, and sterling climbed to 1.1977 euros from 1.1941 euros. Friday's corporate calendar includes third-quarter results from NatWest, BP and AstraZeneca.