2nd Mar 2022 16:55
(Alliance News) - European equities closed higher on Wednesday, snapping a two-day losing streak at the start of the week, though stocks with links to Russia largely continued to fall as the conflict in Ukraine continues.
London's FTSE 100 got a boost from its cohort of housebuilders and oil majors, as well as a strong share price gain from Polymetal International. The Russian gold miner could soon wave goodbye to the blue-chip index, however.
In the central banking space, Fed Chair Jerome Powell is testifying before US lawmakers, offering an idea about the bank's outlook for monetary policy ahead of its meeting later this month.
The FTSE 100 index closed up 99.36 points, or 1.4%, at 7,429.56. The mid-cap FTSE 250 index rose 275.18 points, or 1.3%, at 20,775.82. The AIM All-Share index inched up 0.42 of a point at 1,027.69.
The Cboe UK 100 index was up 1.5% at 740.37. The Cboe 250 was up 1.1% at 18,413.10, and the Cboe Small Companies up 1.2% at 14,747.52.
In mainland Europe, the CAC 40 in Paris rose 1.6%, while the DAX 40 in Frankfurt closed up 0.7%.
"The sell-off is on hold on Wednesday as investors regroup following another big move lower a day earlier," Oanda analyst Craig Erlam commented.
"There is mild hope that talks between the Ukrainian and Russian delegates can make some headway but I wouldn't go as far as to say there's optimism. The gulf between the demands of the two countries is enormous and the actions being taken by Russia in the midst of the negotiations are utterly horrific. Not exactly the foundations for a compromise."
The dollar was mixed on Wednesday.
The euro rose to USD1.1130 at the European equities close on Wednesday, from USD1.1093 on Tuesday. The single currency had fallen to USD1.1058 on Wednesday, its weakest level since May 2020.
The pound rose to USD1.3363, from USD1.3334. Against the yen, the dollar advanced to JPY115.60 from JPY114.89.
Oil prices advanced. A barrel of Brent rose to USD109.94 late Wednesday, from USD106.10 on Tuesday. The North Sea benchmark rose above USD110 for the first time since 2014.
Saudi Arabia, Russia and other top oil producers on Wednesday agreed to hold firm on only gradually opening the taps despite Russia's assault on Ukraine sending prices spiralling.
OPEC+ – at monthly back-to-back meetings that lasted less than an hour – decided to stick to a decision from last year for an output target of 400,000 barrels per day for April as well, the group said in a statement.
Gold prices initially rose on Wednesday, but weakened later in the session. The yellow metal fetched USD1,923.31 an ounce at the London equities close, down from USD1,930.54 late Tuesday.
Still, Polymetal topped London's FTSE 100, rising 19%. The Russian gold miner reported a fall in annual earnings due to higher costs, as the miner deals with the effects of sanctions on Russia after it invaded Ukraine last week.
Net earnings in 2021 fell 16% to USD904 million from USD1.07 billion in 2020. The fall in earnings was due to higher costs which hit operating profit, the company noted.
AJ Bell analyst Russ Mould commented: "What isn't discussed is whether Polymetal might decide to delist its shares from London. There has been a rapid shift in thinking from institutional investors in the West towards exposure to Russia, and we're likely to see a lot of them cut ties with the country. Support for the business is vanishing fast.
"Polymetal is set to lose its position in the FTSE 100 index because of the share price slump. That's the least of its worries given the headwinds facing the business."
FTSE Russell announces its latest index review after the market close on Wednesday.
Other Russia-exposed stocks struggled again, with Petropavlovsk losing 60% and steel maker Evraz falling 42%.
BP and Shell rose 5.1% and 5.0%, respectively, tracking oil prices higher.
Housebuilder Persimmon added 3.0%. The York, England-based housebuilder brought in total revenue for 2021 of GBP3.61 billion, up 8.4% year-on-year from GBP3.33 billion. This was only 1.4% short of pre-pandemic revenue of GBP3.66 billion in 2019.
Pretax profit grew 23% to GBP966.8 million from GBP783.8 million.
FTSE 250-listed housebuilder Vistry rose 5.5%, after also reporting a sharp earnings hike.
musicMagpie tumbled 48% as it warned on margins going forward. Revenue for the year ended November 30 fell 5.1% to GBP145.5 million and it swung to a pretax loss of GBP14.8 million from a GBP7.0 million profit.
The AIM listing warned: "Consumer tech revenues for the first quarter of the year have been in line with management expectations, but a trend towards lower sales volume at a higher average selling price and an increase in the proportion of products sourced from intermediary wholesale partners, is currently expected to compress the gross margin on outright sales in the category in the current year by 4.0 percentage points compared to FY21."
Equities in New York were higher at the time of the closing bell in London. The Dow Jones Industrial Average was up 1.7%, the S&P 500 up 1.6% and the Nasdaq Composite 1.2% higher.
US Federal Reserve Chair Powell said Wednesday he favours raising the benchmark lending rate by a quarter point later this month, but would consider a sharper increase if inflation remains "persistently high."
Some Federal Reserve officials have been calling for a more aggressive move of 50 percentage points at the March 15-16 meeting of its policy setting committee, but in an unusually direct statement, Powell told congressional lawmakers, "I'm inclined to... support a 25 basis point rate hike."
With prices rising at the fastest pace in four decades and oil soaring above USD100 a barrel due to the war, the Fed chief repeated that policymakers are ready to raise interest rates to tamp down inflation.
However, "the near-term effects on the US economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain," he said in his semi-annual testimony to Congress. "We will be monitoring the situation closely."
Thursday's economic calendar has a raft of services PMIs including the eurozone at 0900 GMT, the UK at 0930 GMT and the US at 1445 GMT. Eurozone unemployment data is reported at 1000 GMT.
A stacked local corporate calendar has annual results from packaging firm Mondi, housebuilder Taylor Wimpey and gambling firm Entain.
By Eric Cunha; [email protected]
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