Stock prices were higher in Europe early Wednesday after a positive close on Wall Street, though for investors in London, there was more troubling news about UK government borrowing.
The FTSE 100 index of London large-cap stocks opened up 10.67 points, 0.1%, at 7,381.29. Mid-caps were faring better. The FTSE 250 was up 106.72 points, 0.6%, at 18,651.48. The AIM All-Share was up 2.13 points, 0.3%, at 823.87.
The Cboe UK 100 was up 0.2% at 738.20, the Cboe UK 250 was up 0.7% at 16,127.21, and the Cboe Small Companies was up 0.2% at 12,836.20.
UK public sector borrowing ballooned in November, according to Office for National Statistics, due the government’s energy support schemes and high inflation.
Public sector net borrowing excluding public sector banks jumped to £22.0 billion, which was £13.9 billion higher than November of 2021. Borrowing reached its highest level for November since monthly records began in 1993, ONS said.
In European equities early Wednesday, the CAC 40 in Paris and DAX 40 in Frankfurt both were up 0.4%.
Consumer confidence in Germany is expected to improve for the third month in a row in January. The latest GfK forecast is minus 37.8 points for its consumer sentiment index, which is up 2.3 points from the revised figure of minus 40.1 points in December. Economic and income expectations have improved, as has the propensity to buy.
‘The consumer sentiment is thus continuing its cautious recovery. More moderate energy prices than originally expected and the German government’s relief packages to curb energy costs are responsible for the decreased pessimism,’ GfK explained.
Wall Street ended higher on Tuesday, with the Dow Jones Industrial Average up 0.3%, the S&P 500 up 0.1% and the Nasdaq Composite marginally higher.
In Asia on Wednesday, the Nikkei 225 index in Tokyo closed down 0.7%, extending Tuesday’s losses after the shock move from the Bank of Japan to widen the range for 10-year government bond yields.
Against the yen, the dollar was quoted at JP¥131.75 early Wednesday, up versus JP¥131.27 at the London equities close on Tuesday.
The dollar was lower elsewhere. Sterling was quoted at $1.2156, higher than $1.2139. The euro traded at $1.0633, edging up from $1.0627.
In China, equity markets were mixed. The Shanghai Composite lost 0.2%, while the Hang Seng index in Hong Kong added 0.3%. The S&P/ASX 200 in Sydney closed up 1.3%.
Back in London, Bunzl shed 0.8% in early trade.
Bunzl said it expects to deliver strong growth in 2022, with revenue set to grow 17% year-on-year, or by 10% at constant currency.
This is due to ‘inflation driving underlying revenue growth and the impact of acquisitions further supplementing growth’, the distribution services firm said. Bunzl said its operating margin is expected to be slightly ahead of prior guidance, and will be in line with 2021.
Looking ahead to 2023, Bunzl expects revenue to grow slightly, with adjusted operating profit to be ‘resilient’. Adjusted earnings per share are expected to be ‘moderately’ lower from 2022, however.
AstraZeneca edged up 0.1%, after reporting new approvals for Lynparza and Imfinzi in the EU.
Lynparza, or olaparib, has been approved as a combination treatment for the treatment of metastatic castration-resistant prostate cancer. Imfinzi, or durvalumab, has been approved as a first-line treatment in combination with chemotherapy for unresectable or metastatic biliary tract cancer.
Housebuilders were higher in early trade. Persimmon was up 1.4%. Barratt and Taylor Wimpey both were up 1.2%.
‘The UK housing market shut down early for Christmas due to uncertainty and the spike in mortgage rates, but house prices have held up well. We expect mortgage rates to fall to around 4.5%, which should mean better activity in spring 2023,’ Liberum noted.
In the FTSE 250, Pets at Home added 1.4%.
The pet-focused retailer said it has appointed former Asda CEO Roger Burnley to its board. He will join as a non-executive director from February 14.
‘Roger has deep knowledge of the retail sector and food supply chains and his experience will be of great value to Pets at Home as it embarks on the next stage of its ambitious strategic plan,’ said Chair Ian Burke.
Ferrexpo was up 0.1%, as it is said it is now receiving sufficient power levels to bring one pelletiser line back into operation in Ukraine.
‘This will allow the group, together with its stockpiled material, to meet the requirements of existing customer contracts,’ it explained.
The iron pellet producer had suspended its operations in central Ukraine back in October. Ferrexpo said it has produced around 300,000 tonnes of pellets in the fourth quarter so far, and expected total pellet production for 2022 to be around 5.9 to 6.0 million tonnes. In 2021, it produced 11.2 million tones.
Liberum said the 2022 guidance was slightly below its own forecast of 6.1 million tonnes, but it noted that sales should be about 1.75 million tonnes, improved on its own estimate of 1.60 million and helping cashflow for Ferrexpo.
On AIM, Scotgold Resources shed 14%.
In the year ended June 30, the Scottish gold producer revenue rose to A$17.9 million from A$299,807 a year before. However, its pretax loss widened substantially to A$10.8 million from A$5.0 million.
It also lowered its production forecasts for the quarter to December at its Cononish gold and silver mine. Due to changes in the short-term mining schedule and worse-than-expected weather conditions in December, it now expects 2,000 ounces of gold. This is down from a previous range of 3,000 to 3,5000 ounces.
Gold was quoted at $1,815.76 an ounce early Wednesday, up from $1,814.62 on Tuesday, while Brent oil fetched at $79.60 a barrel, little changed from $79.88.
Still to come on Wednesday’s economic calendar, there is a consumer confidence survey from the US at 1500 GMT.
By Elizabeth Winter, Alliance News senior markets reporter
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