Stock prices in London were up at the open on Wednesday, with sentiment improved ahead of an important day for investors, as UK Chancellor Jeremy Hunt prepares to lay out the budget.
The FTSE 100 index opened up 18.39 points, 0.2%, at 7,664.55. The FTSE 250 was up 119.71 points, 0.6%, at 19,390.74, and the AIM All-Share was up 0.71 of a point, 0.1%, at 735.60.
The Cboe UK 100 was up 0.2% at 767.53, the Cboe UK 250 was up 0.6% at 16,730.59, and the Cboe Small Companies was up marginally at 14,483.68.
In European equities on Wednesday, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was up 0.1%.
In the UK, focus is on Wednesday’s budget. The budget is expected to be announced around 1230 GMT.
On the back of announcing a cut to the main 12% rate of employee national insurance to 10% during the autumn statement, eyes will be on whether UK Chancellor Jeremy Hunt will unveil some more tax cuts.
‘He [Hunt] is expected to aim for tax cuts to please British voters, but he has a limited margin and some tax cuts could lead to inflationary pressures prompting the Bank of England to maintain a tighter monetary policy for an extended period, which may further burden mortgage payers. Hunt should find a fine balance,’ said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
In the US on Tuesday, Wall Street ended lower, with the market already in a cautious mood ahead of Jerome Powell’s testimony to Congress. Both the Dow Jones Industrial Average and the S&P 500 were down 1.0%, whilst the Nasdaq Composite lost 1.7%.
On Wednesday and Thursday, Federal Reserve Chair Powell will head to Capitol Hill for his semi-annual testimony before Congress.
Powell’s testimony comes in a week which sees a number of data releases on the US labour market, culminating in the US jobs report on Friday.
The price of gold rose heading into Powell’s testimony. Gold was quoted at $2,129.35 an ounce, higher against $2,125.97. The precious metal had hit a record high of $2,141.81 on Tuesday, before retreating.
The pound was quoted at $1.2711 early on Wednesday in London, down compared to $1.2721 at the equities close on Tuesday. The euro stood at $1.0862, down against $1.0866. Against the yen, the dollar was trading at JP¥149.48, lower compared to JP¥150.12.
In London’s FTSE 100, Legal & General lost 4.4%. It was the worst performer on the index in early trade.
L&G’s new chief executive flagged a fresh start for the insurer after operating profit in 2023 fell short of market estimates.
The London-based insurer and asset manager reported flat operating profit in 2023 of £1.67 billion compared to £1.66 billion in 2022. The was below consensus of £1.80 billion.
Citi analyst Andrew Baker said: ‘We expect some weakness today on the lower operating result in a challenging operating environment’.
Convatec, meanwhile, jumped 6.4%.
ConvaTec reported that revenue edged up 3.4% to $2.14 billion from $2.07 billion a year earlier. Pretax profit more than doubled to $167.4 million from $81.9 million.
On the back of the results, the Reading, England-based medical products and technology company upped its dividend by 3.0% to 6.23 US cents from 6.05 cents.
In the FTSE 250, Premier Foods shot up 11%.
Premier Foods said it has reached agreement with the RHM Pension Scheme Trustee to suspend pension deficit contribution payments from April 1. This suspension is taking place earlier than originally expected, the food manufacturer noted.
As a result, Premier Foods said it will benefit from a £33 million increase in free cash flow in the financial year ending March 29, 2025.
Chief Financial Officer Duncan Leggett said: ‘The further significant progress in the funding position of the pension scheme has enabled us to take another important step to expected full resolution of the scheme by the end of 2026. This suspension of pension payments substantially increases the free cash flow available to us and presents us with enhanced capital allocation options to deliver on our growth ambitions.’
Amongst London’s small-caps, Digital 9 surged 19%.
The investor focused on ‘critical digital infrastructure assets’ said it has received merger control approval in Iceland for the completion of the Verne transaction. On Tuesday, Digital 9 had received approval in Finland.
Back in November, Digital 9 announced the sale of its stake in the Verne Group for up to $575 million to funds managed by Ardian France SA, a Paris-based investment and asset management firm.
Closing of the Verne transaction is now expected to take place before the end of the first quarter of 2024.
On AIM, Challenger Energy rocketed 67%.
Challenger Energy said that it has entered into a farm-out agreement with Chevron Uruguay Exploration, a wholly-owned subsidiary of Chevron. The agreement is related to a 60% interest in the AREA OFF-1 block, offshore Uruguay.
Chevron will pay Challenger $12.5 million on completion of the transaction. The funds will be used to support the ‘further development’ of the company’s business.
CEO Eytan Uliel said: ‘We are absolutely delighted to announce the farm-out of our AREA OFF-1 block in Uruguay to Chevron, a globally recognised industry leader. We firmly believe that AREA OFF-1 holds enormous potential, and this farm-out is strong validation of the high-quality technical work CEG has done to-date.’
In Asia on Wednesday, the Nikkei 225 index in Tokyo was down 0.2%. In China, the Shanghai Composite was close down 0.3%, while the Hang Seng index in Hong Kong was up 1.7% in late dealings. The S&P/ASX 200 in Sydney closed up 0.1%
Brent oil was quoted at $82.19 a barrel early in London on Wednesday, down from $82.69 late Tuesday.
Wednesday’s economic calendar has a eurozone retail sales reading at 1000 GMT, after a UK construction PMI at 0930 GMT. The Bank of Canada announces its latest interest rate decision at 1445 GMT.
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