The latest ratcheting upward in sanctions against Russia didn't put off equity investors early Wednesday, as markets across Europe staged a rally.
New signs of life in M&A activity also helped lift spirits in London.
The US and UK announced Tuesday they are cutting off imports of Russian oil, in the most far-reaching action yet by Western allies to punish Moscow for invading Ukraine.
The moves mark a crucial escalation in international sanctions against Russia. Western allies had initially omitted energy, a crucial source of revenue for President Vladimir Putin's government, from an array of economic penalties imposed in response to the attack.
Despite ongoing 'stagflation' concerns due to soaring commodities prices, major European indices advanced.
‘Financial markets seem calmer this Wednesday despite the continuing tragedy in Ukraine,’ commented ING bank. ‘There seems more focus on diplomacy ahead of a meeting between Ukraine and Russian foreign ministers in Turkey tomorrow. Yet energy prices look set to stay high as the West weans itself off Russian exports. Expect the commodity export/import story to dominate FX.’
The FTSE 100 index was up 120.33 points, or 1.7%, at 7,084.48 early Wednesday. The mid-cap FTSE 250 index was up 489.48 points, or 2.6%, at 19,707.10. The AIM All-Share index was up 9.57 points, or 1.0%, at 972.82.
The Cboe UK 100 index was up 1.6% at 705.99. The Cboe 250 was up 2.4% at 17,322.89, and the Cboe Small Companies up 1.5% at 14,358.12.
In mainland Europe, the CAC 40 in Paris was up 3.6% and the DAX 40 in Frankfurt up 3.8%.
Brent oil was quoted at $129.82 a barrel on Wednesday morning in London, slipping from $132.65 late Tuesday, though still elevated.
Gold stood at $2,046.10 an ounce early Wednesday, down from $2,056.80 late Tuesday.
In London, both Evraz and Polymetal International jumped at the open after the Russia-linked firms said they are not the object of any sanctions imposed on Russia, thus far. They said the sanctions have not hurt daily operations.
Evraz was up 14% and Polymetal up 43%. Evraz remains down 85% so far in 2022, while Polymetal is down 90%.
Fellow Russian miner Petropavlovsk also noted its operations, which are located in the Far East of Russia, currently continue without interruption.
Petropavlovsk continues to sell gold, as before, to domestic commercial banks at London fixing and is therefore not affected by export controls at this time, it added. It also noted it has sufficient funds available to service its current debt.
It was up 23% in the FTSE 250, though remains down 81% in 2022.
Prudential was up 6.8% in the FTSE 100.
It reported ‘high-quality, resilient growth’ as the Asia-focused insurer saw new business profit rise by a double-digit percentage.
For 2021, pretax profit slipped to $3.02 billion from $3.18 billion in 2020. New business profit rose by 13%, however, to $2.53 billion from $2.20 billion.
EEV operating profit increased 4% to $3.54 billion from $3.40 billion.
Total revenue, net of reinsurance, dropped to $26.50 billion from $36.25 billion. Gross premiums earned rose to $24.22 billion from $23.50 billion, but Pru saw a marked drop in investment return of $3.49 billion from $13.76 billion.
Annual premium equivalents grew 8% to $4.19 billion from $3.81 billion.
Present value of new business premiums rose 12% to $24.15 billion from $21.59 billion.
Legal & General advanced 4.5% after it delivered operating profit in line with internal guidance for 2021, with all of the firm's contributing to the ‘resilient’ performance.
‘This marks a return to our long-term rate of growth, having been resilient through the pandemic. Our diversified business model benefited from the post pandemic economic recovery and easing of restrictions over 2021 to deliver strong earnings. All five businesses are well positioned to execute on compelling structural market opportunities to deliver further profitable growth,’ L&G said.
For 2021, operating profit was up 2% to £2.26 billion from £2.22 billion in 2020. Excluding mortality releases, operating profit rose 11%, which was in line with company guidance issued with its interim results.
L&G declared a full-year dividend of 18.45 pence, rising from 17.57p in 2020.
Solvency II coverage ratio rose to 187% from 175% at the end of 2020. L&G ‘estimated’ its coverage ratio had risen to 198% by the start of this week.
Network International Holdings was sitting atop the FTSE 250, up 13%.
The payment solutions provider's profit surged to $56.6 million in 2021 from $5.6 million in 2020. Revenue jumped 24% to $352.2 million from $284.8 million.
Total processed volume rose 28% to $42.81 billion, as the total number of transactions increased 29% to 979.9 million from 758.1 million.
‘We are encouraged by the momentum we saw in 2021 and the recovery of our business from the pandemic, which has continued into 2022,’ the company said.
Looking ahead, it has guided for 27% to 29% revenue growth in 2022.
Stagecoach was driven 36% higher after it walked away from its all-share merger with larger UK peer National Express, opting for a cash offer instead.
National Express was 7.7% higher.
The Perth, Scotland-based bus and train operator on Wednesday said its directors unanimously recommend a new £594.9 million cash offer from Pan-European Infrastructure III SCSp, an infrastructure fund managed and advised by DWS Infrastructure.
They no longer recommend a previously agreed all-share merger with Birmingham-based National Express. That deal, struck back in December, would have created a £1.9 billion market-cap public transport provider, though it was being reviewed by the UK Competition & Markets Authority.
DWS will offer Stagecoach shareholders 105 pence in cash, which is a 37% premium to its closing price on Tuesday.
The pound was quoted at $1.3139 early Wednesday, firm on $1.3110 at the London equities close Tuesday.
The euro was priced at $1.0952, up from $1.0890. Against the yen, the dollar was trading at JP¥115.77, up from JP¥115.62.
In Asia on Tuesday, the Japanese Nikkei 225 index closed down 0.3%. In China, the Shanghai Composite ended 1.1% lower, while the Hang Seng index in Hong Kong closed down 0.7%. The S&P/ASX 200 in Sydney closed up 1.0%.
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