European share prices were higher early Wednesday, after Western nations took a measured approach in imposing sanctions against Russia for move into rebel-held areas of Ukraine.
‘It feels like we could get war headlines at any moment; still the pullback in dollar/ruble, oil prices, and gold suggest that investors are satisfied that Russia’s incursion into eastern Ukraine will not escalate into a broader incursion into Ukraine,’ commented Stephen Innes of SPI Asset Mangement.
‘However, the risk to this view is that with the severest sanctions avoided, for now, there is plenty of scope for on-the-ground escalation before NATO countries’ firmest stance on sanctions materializes.’
The FTSE 100 index was up 34.45 points, or 0.5%, at 7,528.66 early Wednesday. The mid-cap FTSE 250 index was up 155.97 points, or 0.7%, at 21,149.30. The AIM All-Share index was up 3.57 points, or 0.4%, at 1,035.19.
The Cboe UK 100 index was up 0.5% at 748.24. The Cboe 250 was up 0.6% at 18,923.49, and the Cboe Small Companies up 0.3% at 15,156.48.
In mainland Europe, the CAC 40 in Paris climbed 0.3%, while the DAX 40 in Frankfurt was 0.5% higher.
‘Market mood is not cheerful but the softer-than-feared sanctions somewhat help,’ said SwissQuote analyst Ipek Ozkardeskaya.
UK Prime Minister Boris Johnson has been urged to impose tougher sanctions on Russia as Foreign Secretary Liz Truss said the government was already considering a number of further measures to stop Vladimir Putin’s incursion into Ukraine
Johnson is likely to come under fire in the Commons on Wednesday over the punishment doled out to Kremlin-linked oligarchs and banks in response to Russian aggression.
Writing in The Times, Truss said she had held a call with G7 allies to ‘agree the next package‘ of sanctions, while No 10 insisted there was more to come if Russia did not back down from manoeuvres in eastern Ukraine where troops had been sent into the Donbas region under the guise of being ‘peacekeepers.’
In the FTSE 100, Barclays was the best performer at the open, up 3%, after the lender said it delivered a strong performance in 2021.
For 2021, total income edged higher to £21.94 billion from £21.77 billion in 2020, though net interest income was down slightly to £8.07 billion from £8.12 billion. Pre-tax profit almost tripled to £8.41 billion from £3.07 billion in 2020.
Barclays declared a total dividend of 6p, substantially higher than the 1p paid out in 2020. The bank also intends to initiate a share buyback of up to £1 billion, which is expected to commence in the first quarter of 2022.
At the other end of the large-caps, DIY retailer Kingfisher was the worst performer, down 2.8%, in a negative read-across from US peer Home Depot.
Dow 30 member Home Depot closed down 8.9% in New York on Tuesday. The Atlanta-based home improvement retailer expects gross profit margins to remain under pressure through the year as it grapples with supply-chain bottlenecks.
Rio Tinto was down 0.1%. The Anglo-Australian miner hiked its dividend to a record level for 2021, following a sharp rise in profit and revenue, driven by significant price rises for major commodities, more than offsetting a decline in output.
For the year, Rio reported a pre-tax profit of $30.83 billion, doubled from $15.39 billion in 2020, while underlying earnings before interest, tax, deprecation and amortisation rose 58% to $37.72 billion from $23.9 billion.
Consensus expectations had underlying EBITDA coming in at $38.29 billion.
This was on sales revenue which grew 42% year-on-year to $63.50 billion from $44.61 billion. This figure was short of consensus expectations, which stood at $65.12 billion.
In the FTSE 250, Unite was the best performer, up 8.3%, after the student accommodation provider saw a strong recovery in performance in 2021 and said it is well positioned for further growth.
For 2021, Unite swung to a pre-tax profit of £343.1 million from £120.1 million loss in 2020 on revenue of £266.9 million, up from £215.6 million.
Looking ahead, Unite said it expects to see strong demand in 2022 and 2023 as students return to campuses and government support for growth in international student numbers.
Aston Martin Lagonda was up 1.1%. The luxury automaker posted a sharp rise in annual revenue, boosted by significant growth in Americas and record sales in China.
For 2021, Aston Martin generated revenue of £1.10 billion, up 79% from £611.8 million in 2020, and its pre-tax loss narrowed by half to £213.8 million from a loss of £466 million.
Aston Martin’s 2021 total wholesales were £6.18 billion, up 82% from £3.39 billion in 2020, as more normal operations were resumed following Covid-19 restrictions in 2020. The carmaker said its brand desirability is strong, pointing to retails outpacing wholesales.
In Asia on Wednesday, the Shanghai Composite was ended 0.9%, while the Hang Seng index in Hong Kong was up 0.4%. The S&P/ASX 200 in Sydney closed up 0.6%. Financial markets in Japan were closed for the Emperor’s Birthday holiday.
The pound was quoted at $1.3604 early Wednesday, firm from $1.3595 at the London equities close Tuesday.
The euro was priced at $1.1334, down from $1.1344. Against the Japanese yen, the dollar was trading at ¥115.04 in London, up from ¥114.94.
Brent oil was quoted at $96.90 a barrel Wednesday morning, firm from $96.70 late Tuesday. Gold stood at $1,895.84 an ounce, soft from $1,900.36.
In Wednesday’s economic calendar, there is eurozone inflation data at 10am UK time.
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