It was a better close for London stocks on Wednesday, with oil majors continuing to prosper from rising prices as the invasion of Ukraine continues, while Polymetal rebounded from consecutive falls in its share price.
However, the Russian gold miner is still in danger of losing its place in the FTSE 100.
In the central banking space, Fed Chair Jerome Powell is testifying before US lawmakers, offering an idea about the bank's outlook for monetary policy ahead of its meeting later this month.
MARKET REACTION
The FTSE 100 index closed up 99.36 points, or 1.4%, at 7,429.56. The mid-cap FTSE 250 index rose 275.18 points, or 1.3%, at 20,775.82. The AIM All-Share index inched up 0.42 of a point at 1,027.69.
In mainland Europe, the CAC 40 in Paris rose 1.6%, while the DAX 40 in Frankfurt closed up 0.7%.
The dollar was mixed on Wednesday. The euro rose to $1.1130 at the European equities close on Wednesday, from $1.1093 on Tuesday. The single currency had fallen to $1.1058 on Wednesday, its weakest level since May 2020.
The pound rose to $1.3363, from $1.3334. Against the yen, the dollar advanced to JP¥115.60 from JP¥114.89.
ENERGY SPIKE
Oil prices advanced. A barrel of Brent rose to $109.94 late Wednesday, from $106.10 on Tuesday. The North Sea benchmark rose above $110 for the first time since 2014.
Saudi Arabia, Russia and other top oil producers on Wednesday agreed to hold firm on only gradually opening the taps despite Russia's assault on Ukraine sending prices spiralling.
OPEC+ - at monthly back-to-back meetings that lasted less than an hour - decided to stick to a decision from last year for an output target of 400,000 barrels per day for April as well, the group said in a statement.
Gold prices initially rose on Wednesday, but weakened later in the session. The yellow metal fetched $1,923.31 an ounce at the London equities close, down from $1,930.54 late Tuesday.
STOCKS ON THE MOVE
Still, Polymetal topped London's FTSE 100, rising 19%. The Russian gold miner reported a fall in annual earnings due to higher costs, as the miner deals with the effects of sanctions on Russia after it invaded Ukraine last week.
Net earnings in 2021 fell 16% to $904 million from $1.07 billion in 2020. The fall in earnings was due to higher costs which hit operating profit, the company noted.
AJ Bell analyst Russ Mould commented: ‘What isn't discussed is whether Polymetal might decide to delist its shares from London. There has been a rapid shift in thinking from institutional investors in the West towards exposure to Russia, and we're likely to see a lot of them cut ties with the country. Support for the business is vanishing fast.
‘Polymetal is set to lose its position in the FTSE 100 index because of the share price slump. That's the least of its worries given the headwinds facing the business.’
FTSE Russell announces its latest index review after the market close on Wednesday.
Other Russia-exposed stocks struggled again, with Petropavlovsk losing 60% and steel maker Evraz falling 42%.
BP and Shell rose 5.1% and 5.0%, respectively, tracking oil prices higher.
Housebuilder Persimmon added 3.0%. The York, England-based housebuilder brought in total revenue for 2021 of £3.61 billion, up 8.4% year-on-year from £3.33 billion. This was only 1.4% short of pre-pandemic revenue of £3.66 billion in 2019.
Pretax profit grew 23% to £966.8 million from £783.8 million.
FTSE 250-listed housebuilder Vistry rose 5.5% after also reporting a sharp earnings hike.
musicMagpie tumbled 48% as it warned on margins going forward. Revenue for the year ended November 30 fell 5.1% to £145.5 million and it swung to a pretax loss of £14.8 million from a £7.0 million profit.
The AIM listing warned: ‘Consumer tech revenues for the first quarter of the year have been in line with management expectations, but a trend towards lower sales volume at a higher average selling price and an increase in the proportion of products sourced from intermediary wholesale partners, is currently expected to compress the gross margin on outright sales in the category in the current year by 4.0 percentage points compared to FY21.’
U.S. RALLIES
Equities in New York were higher at the time of the closing bell in London. The Dow Jones Industrial Average was up 1.7%, the S&P 500 up 1.6% and the Nasdaq Composite 1.2% higher.
US Federal Reserve Chair Powell said Wednesday he favours raising the benchmark lending rate by a quarter point later this month, but would consider a sharper increase if inflation remains ‘persistently high.’
Some Federal Reserve officials have been calling for a more aggressive move of 50 percentage points at the March 15-16 meeting of its policy setting committee, but in an unusually direct statement, Powell told congressional lawmakers, ‘I'm inclined to... support a 25 basis point rate hike.’
With prices rising at the fastest pace in four decades and oil soaring above $100 a barrel due to the war, the Fed chief repeated that policymakers are ready to raise interest rates to tamp down inflation.
However, ‘the near-term effects on the US economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain,’ he said in his semi-annual testimony to Congress. ‘We will be monitoring the situation closely.’
WHAT TO WATCH
Thursday's economic calendar has a raft of services PMIs including the eurozone at 0900 GMT, the UK at 0930 GMT and the US at 1445 GMT. Eurozone unemployment data is reported at 1000 GMT.
A stacked local corporate calendar has annual results from packaging firm Mondi, housebuilder Taylor Wimpey and gambling firm Entain.
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