European equities opened higher on Wednesday, after US tech shares, including chipmaker and artificial intelligence titan Nvidia, returned to form overnight.
In London, investors had a host of corporate updates to sink into, including bullish earnings from pandemic winners AO World and ProCook. A merger agreement between Witan Investment Trust and Alliance Trust also grabbed some of the spotlight.
The FTSE 100 index traded 28.42 points higher, 0.3%, at 8,276.21. The FTSE 250 was up 60.31 points, 0.3%, at 20,423.74, though the AIM All-Share fell 0.68 of a point, 0.1%, at 767.35.
The Cboe UK 100 rose 0.3% to 823.17, the Cboe UK 250 added 0.1% at 17,769.98, and the Cboe Small Companies was flat at 16,863.70.
In European equities on Wednesday, the CAC 40 in Paris was up 0.3% and the DAX 40 in Frankfurt shot up 0.8%.
In China on Wednesday, the Shanghai Composite ended 0.8% higher. The Hang Seng in Hong Kong was 0.1% higher. The Nikkei 225 in Tokyo closed up 1.3%, though the S&P/ASX 200 in Sydney fell 0.7%.
In New York on Tuesday, the Dow Jones Industrial Average ended 0.8% lower. The S&P 500 rose 0.4% and the Nasdaq Composite jumped 1.3%.
Among the tech shares recovering was chipmaker Nvidia, adding 6.8%.
Elsewhere, a top Federal Reserve official has backed more interest rate rises if inflation sticks at its current level, saying immigration and aggressive fiscal stimulus are likely to keep US prices rising more quickly than in other rich economies.
Michelle Bowman, one of the Fed’s governors and a voter on its rate-setting Federal Open Market Committee, said she remained ‘willing to raise’ borrowing costs again ‘should progress on inflation stall or even reverse’.
ING analysts commented: ‘Bowman’s call for no cuts in 2024 confirmed her position as the most hawkish member of the FOMC. Fed members are being generally cautious about jumping into disinflation optimism, and while we expect an encouraging 0.1% month-on-month core PCE on Friday, the narrative may not turn more dovish unless the June CPI (out 11 July) cools off too. Market pricing continues to hover around 45-50bp of easing by year-end, which sounds quite dovish compared to recent Fed communication but is not inconsistent with the latest data, in our view.’
The pound was quoted at $1.2669 early Wednesday, falling from $1.2676 at the time of the European equities close Tuesday. The euro stood at $1.0687, down from $1.0705. Against the yen, the dollar was trading at JP¥159.89, up from JP¥159.73.
Focus remains on political developments in the UK and France, with elections looming.
The Westminster gambling row has deepened after a Cabinet minister revealed he had placed bets on the date of the UK general election.
Scotland Secretary Alister Jack denied having broken any rules but said he put three wagers on the timing of the July 4 poll, becoming the latest of seven politicians and officials to get drawn in to the controversy.
UK Prime Minister Rishi Sunak will face further pressure over the revelation, which comes after he caved to mounting calls from within the Tory Party to withdraw support for two parliamentary candidates facing a Gambling Commission investigation.
Labour was also dragged into the row on Tuesday, with the party suspending its candidate Kevin Craig after it emerged he had bet that he would lose to the Tories in the contest for Central Suffolk & North Ipswich.
French Prime Minister Gabriel Attal and the chief of the main far-right party Jordan Bardella clashed in an ill-tempered debate Tuesday that exposed fierce tensions less than a week ahead of the most polarising election in decades.
Attal, Bardella and hard-left MP Manuel Bompard, representing the left-wing coalition, exchanged accusations in a sometimes bruising live TV encounter where discussion of issues was often drowned by a cacophony of voices.
Bardella’s National Rally still has a clear lead in opinion polls ahead of Sunday’s first round of voting in the parliamentary elections, followed by the left-wing New Popular Front coalition with President Emmanuel Macron’s centrist alliance lagging in third.
In London, Future shares jumped 9.9% after Jefferies upgraded the magazine publisher to ’buy’ from ’underperform’.
Witan Investment Trust and Alliance Trust announced a merger to form Alliance Witan.
The deal will see Witan’s assets rolled into Alliance Trust in exchange for shares in the enlarged company. The firm will have net assets of around £5 billion and it will be primed for FTSE 100 inclusion.
The firms said Alliance Trust shareholders will not suffer any NAV dilution. Depending on how many take up a cash exit option, shareholders in Witan Investment Trust will not either.
Witan investors will have the option for a cash exit for some or all of their shares at a price equal to just under 98% of Witan’s NAV. This option will be limited to just under 18% of Witan shares in issues.
It will be the ‘largest ever investment trust’ combo, Witan Chair Andrew Ross said.
‘The deal will result in one of the leading investment companies listed in London and will stand our shareholders in good stead for many years to come,’ Ross added.
Witan shares rose 4.4%, while Alliance Trust added 1.0%.
AO World rose 3.6% after the electricals retailer posted a profit beat. Pretax profit in the year ended March 31 jumped to £34.3 million, from £7.6 million the year prior. Adjusted pretax profit also amounted to £34.3 million, surging from £12.0 million, and beating its guidance range of £28 million to £33 million.
Revenue, meanwhile, fell 8.8% to £1.04 billion from £1.14 billion. It said the revenue outturn was expected, after it removed ‘non-core channels and loss-making sales’. AO World noted revenue returned to growth in the fourth-quarter, meanwhile.
Looking ahead, it said: ‘Despite the ongoing macro-economic challenges our objectives remain unchanged and we are confident in our ability to deliver on our ambition for double digit revenue growth in FY25.’
It targets adjusted pretax profit of £36 million to £41 million, at best a 20% rise on-year.
ProCook surged 9.6% on improved annual results and a confident outlook.
The pots and pans seller said revenue in the year to March 31 rose 0.4% to £62.6 million from £62.3 million. It swung to a pretax profit of £700,000 from a loss of £6.5 million.
‘The group has had a strong start to the new financial year with trading momentum continuing to build on the trend established during the last financial year,’ it added.
During the first-quarter of the new year, like-for-like sales rose 3.5%.
ProCook said: ‘Whilst mindful of the uncertain macro backdrop, we are confident in our unique specialist proposition and encouraged by the improving momentum we have been delivering over the last year.’
Brent oil was quoted at $84.58 a barrel early Wednesday, down from $85.05 at the time of the London equities close Tuesday. Gold was quoted at $2,315.71 an ounce, fading from $2,324.50 an ounce.
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