5th Feb 2020 11:48
(Alliance News) - After a shaky start to the session, stocks in London surged into the green on Wednesday morning to carry on the rally seen in Asia overnight.
The FTSE 100 index was up 66.46 points, or 0.9%, at 7,506.28 on Wednesday - though having traded as low as 7,408.45 in early dealings.
The mid-cap FTSE 250 index was up 102.78 points, up 0.5%, at 21,542.71. The AIM All-Share index was up 0.4% at 964.05.
The Cboe UK 100 index was up 0.9% at 12,714.80. The Cboe 250 was up 0.6% at 19,451.67, and the Cboe Small Companies up 0.1% at 12,495.50.
In mainland Europe, the CAC 40 in Paris was up 1.1% while the DAX 30 in Frankfurt was 1.3% higher early Wednesday afternoon.
"European markets had a mixed opening, setting the trend for US futures on the S&P 500, as investors took some profits after yesterday's strong rally. However, the risk-on mood isn't dead yet as all European benchmarks edged significantly higher shortly after the opening bell," said Pierre Veyret, technical analyst at ActivTrades.
"An extension of the current recovery is now a real possibility as investors digest good corporate earnings as well as reassuring news coming from China about the coronavirus likely peaking on the 21st of February," said Veyret. "In addition, China also confirmed one of its universities has found an 'effective' drug to treat people with the deadly virus."
Having traded higher in the morning, gold fell back to be quoted at USD1,550.43 an ounce at midday as risk sentiment improved, down from USD1,552.50 on Tuesday. Another safe haven, the Japanese yen, also weakened.
Against the yen, the dollar was trading at JPY109.72 versus JPY109.43.
Brent oil managed to claw back some ground, meanwhile, trading at USD55.69 a barrel, up from USD55.00 late Tuesday.
Stocks in the US were on course for a higher start, with the Dow Jones seen up 0.8% and the S&P 500 up 0.7%, while the Nasdaq is set to rise 0.9%.
To come in the US on Wednesday is an IHS Markit services PMI at 1445 GMT, followed by the ISM's non-manufacturing PMI at 1500 GMT. Before this all is ADP employment change at 1315 GMT.
The services PMI for the UK, coming in above the flash reading, sparked an upwards reaction in the pound.
The IHS Markit/Chartered Institute of Procurement & Supply UK services PMI increased to 53.9 in January from the neutral mark of 50.0 in December. The index had registered 49.3 in November, meaning shrinkage in the sector.
January's figure marked the best reading in 16 months and was above the flash estimate of 52.9.
Headwinds from delayed decision making have lifted since the general election in mid-December, which was reflected in a "robust" improvement in order takes.
"January's all-sector PMI provides the clearest sign yet that the economy has turned a corner and supports our view that the next move in interest rates may actually be up, albeit not until 2021," said Capital Economics.
Sterling was quoted at USD1.3058 on Wednesday following the PMI data, higher than USD1.3026 at the London equities close on Tuesday.
And in the eurozone, the service sector softened.
The eurozone business activity index dipped to 52.5 in January from 52.8 the month before, primarily due to weaker expansion in France and Spain. All other nations registered stronger services growth in December, said IHS Markit, with Germany's reading rising to 54.2 in January from December's 52.9.
The euro was at USD1.1018 on Wednesday, lower versus USD1.1035 late Tuesday.
In London, Smurfit Kappa was the top performer in the FTSE 100, the stock gaining 7.7%.
In the year to December 31, revenue was 1.1% higher at EUR9.05 billion from EUR8.95 billion. The packaging firm reported pretax profit of EUR677 million, swinging from 2018's EUR404 million loss.
Last year, the Dublin-based company reported EUR1.34 billion in exceptional items relating to the deconsolidation of Smurfit's business and operations in Venezuela. The government took control of Smurfit Kappa Carton de Venezuela in the third quarter of 2018. Being unable to control the business, Smurfit deconsolidated its operations in the country.
2020 has started well, said Smurfit, with the company expecting another year of "strong" free cash flow.
Smurfit's results helped to boost peers DS and Mondi, the two up 5.5% and 4.6% respectively.
Meanwhile, easyJet was up 3.6% after Societe Generale raised the low-cost airline to Hold from Sell.
Barratt Developments was up 3.6% as it raised its interim dividend and boosted its special returns programme after a "strong first half performance".
In the six months to December 31, revenue was 6.3% higher year-on-year at GBP2.27 billion from GBP2.13 billion, with pretax profit climbing 3.7% to GBP423.0 million from GBP408.0 million.
Barratt upped its half-year dividend by 2.1% to 9.8 pence per share from 9.6p the year prior. The company also extended its capital returns plan, proposing special returns of GBP175 million in November 2021, on top of the GBP175 million planned for this November.
At the bottom of the blue-chips, however, was Imperial Brands.
The tobacco major, down 7.3%, issued a profit warning following headwinds in its vaping operations.
Tobacco trading remains in line with expectations, the FTSE 100 constituent told its annual general meeting, but group constant currency net revenue is now seen at a "similar level" to last year and adjusted earnings per share are expected to be slightly lower.
This is because of the US Food & Drug Administration's ban on certain flavours of cartridge-base vapour devices, as well as weaker-than-expected consumer demand for vapour.
In the FTSE 250, Domino's Pizza was up 6.5% after the firm reported fourth-quarter revenue growth.
In the 13 weeks to December 29, group sales were 3.7% higher year-on-year at GBP352.0 million from GBP339.6 million, the pizza delivery firm said. On an organic basis, at constant currency and excluding acquisitions and disposals, sales climbed 4.1% from the year prior.
In the UK & Republic of Ireland, sales were 4.4% higher at GBP326.7 million from GBP312.9 million, or up 4.5% organically. Like-for-like sales in the UK alone were 3.9% higher during the quarter, though in Ireland, they were down 1.0%.
By Lucy Heming; [email protected]
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