- FTSE 100 climbs 76 points
- Oil price recovers
- GlaxoSmithKline slips
4:50pm: FTSE 100 ends higher, US stocks climb
The FTSE 100 finished the day on an up note, rising 76 points, or 1%, to 7,643, after hitting a two-year high following reports the UK government may lift all pandemic restrictions in February rather than at the end of March.
“Stocks of all types and sectors have made headway, a fact underlined by the inflows to equity markets in recent weeks, which has shown that investors are still content to buy the dip,” IG chief market analyst Chris Beauchamp said.
“While there is still a lingering sense of unease, price action at the moment continues to point towards the buyers having rescued the situation once again,” Beauchamp added.
Notable movers included shares of Kingfisher plc, which gained more than 3% after analysts at Credit Suisse said they believe the international home improvement company will increasingly take market share via online growth, as they leverage their scale, technology, and logistics platforms at the expense of smaller players.
3.45pm: Packaging and airline groups in demand
Leading shares have hit a new two year high as investors continue to come to terms with interest rate rises and assess the latest corporate updates.
Also helping is news that the government may lift all pandemic restrictions in February rather than at the end of March.
The FTSE 100 is up 80.08 points or 1.06% at 7647.15, its highest level since January 21 2020.
Michael Hewson, chief market analyst at CMC Markets, said: "European markets have seen another strong session today, with the FTSE 100 setting a new two year high, while the FTSE 250 has also seen strong gains due to some outperformance in companies who are most exposed to the ebb and flow of the UK economy, and the announcement of a possible easing of COVID-19 restrictions in England, at the end of this month."
Packing group Mondi PLC (LSE:MNDI) is the biggest riser in the leading index, up 4.18% after a positive update from peer Smurfit Kappa Group plc (LSE:SKG), up 1.87%.
Airlines are flying high as brokers suggest more consolidation in the sector.
British Airways owner International Consolidated Airlines Group (LSE:IAG) has climbed 4.06% and Wizz Air Holdings PLC (AIM:WIZZ) is up 5.34%.
IAG is also in focus after reports it may be forced to spin off its UK airline post-Brexit due to EU ownership rules.
Elsewhere insurer Admiral Group Plc (LSE:ADM) has added 3.89% as HSBC moved from hold to buy.
And a revival in the oil price after an early dip has lifted BP PLC (LSE:BP.) by 3.55%.
Brent crude is now up 0.52% at US$91.25 while West Texas Intermediate is 0.3% better at US$89.63.
The rise came after the US Energy Information Administration reported a draw of 4.8mln barrels last week rather than an expected rise of 0.4mln, suggesting growing demand.
This compares to the previous week which saw a decline of 1mln barrels.
#EIA-U.S. weekly crude #oil stocks off 4.8 mln bbls to 410.39 mln, vs forecast of 0.4 mln bbl build #OOTT
— Mauro ???? (@Trader_Mauro) February 9, 2022
But GlaxoSmithKline PLC (LSE:GSK) has dropped 1.13% after reporting a fall in annual profits.
3.15pm: US markets build on the rebound
US stocks traded high on Wednesday as investors await another round of corporate earnings from more companies including Uber and Disney, as well as inflation data due tomorrow.
The tech-laden index continued to build on the rebound for the second day in a row. The Nasdaq Composite and the broader S&P 500 gained 1%, alongside the Dow Jones Industrial Average which was up by 0.8%, or 273 points, at 35,742.
3.00pm: Bank of England economist on interest rates
The Bank of England has now raised interest rates twice since December, having faced much criticism before than for hinting at a move and then doing nothing at the last minute.
Setting out his view of events, Huw Pill, the Bank's chief economist, said today he favours a measured approach to any decision.
In a speech to the Society of Professional Economists, he said: "[It is] better to adopt a more measured and data-dependent approach, which learns from how the economy responds to each step taken rather than pre-commits to a concept surrounded by uncertainty...
"I worry that taking unusually large policy steps may validate a market narrative that bank policy is either foot-to-the-floor on the accelerator or foot-to-the-floor with the brake."
And where will rates go from here?
He said: "Since the outlook for wages and energy prices is uncertain as I have emphasised, then the prospective path for Bank Rate is also uncertain. Were we to see evidence of second round effects in wage and cost developments, a tighter policy than otherwise might be required.
"Were energy prices to fall steadily in line with futures rather than stabilise as we assume, then – other things equal – more policy accommodation could be maintained.
But he refused to rule out interest rate increases of more than 25 basis points if necessary.
2.08pm: Investor confidence continues to build
Leading shares remain in a buoyant mood.
The FTSE 100 is up 56.27 points or 0.74% at 7623.34, not far off the day's peak of 7628 and close to a new two year high.
Craig Erlam, senior market analyst at OANDA, said: "Stock markets are making decent gains in Europe on Wednesday and US futures are also being led higher as confidence continues to build following a torrid start to the year.
"It's hard to pinpoint exactly what has changed; whether it's earnings that are lifting the mood or the soothing tones of central bankers desperately trying to manage expectations. Perhaps it's simply a case of investors coming to terms with the tightening environment and feeling more comfortable with it.
"Whatever the reason, investors certainly appear encouraged by the fact that the falling knife period looks to be in the rear-view mirror and we're now seeing signs of stabilization. In recent week's we've also seen periods of aggressive selling being bought into which has helped create the impression that the worst is behind us.
"Of course, that could change quickly if the inflation outlook worsens, as has repeatedly been the case in recent months. And we won't have to wait long for the next hurdle on that front, with the US CPI data being keenly anticipated tomorrow."
12.50pm: Analysts have their say
Broker recommendations are having some effect today.
Insurer Admiral Group Plc (LSE:ADM) is one of the biggest risers in the FTSE 100, up 3.62% after analysts at HSBC raised their recommendation from hold to buy.
But in the FTSE 250, the biggest faller is defence group Chemring Group (LSE:CHG) down 0.91% as Barclays cut its rating from overweight to equal weight.
11.46am: US investors focused on earnings and inflation
US stocks are expected to open higher, building on Tuesday’s gains as investors continue to focus on corporate earnings including those from Disney and Uber Technologies Inc (NYSE:UBER) (Uber Technologies Inc (NYSE:UBER)) ahead of key inflation data due for release this week.
Futures for the Dow Jones Industrial Average rose 0.54% in Wednesday pre-market trading, while the broader S&P 500 index gained 0.72% and the Nasdaq 100 added 0.94%.
Markets rose on Tuesday following positive earnings from a number of companies. The Nasdaq climbed 1.28% to 14,194, while the Dow Jones added 1.06% to 35,463 and the S&P 500 gained 0.84% to 4,522.
However the blowout in bond yields continued, with the benchmark 10-year Treasury note finishing at 1.93%, having traded above 1.96%, commented Neil Wilson, chief market analyst at Markets.com.
US consumer price data, due for release on Thursday, are expected to show that prices climbed 7.3% year-over-year in January, according to a Reuters poll of economists. The consumer price index climbed 7% in December, the biggest year-on-year increase since June 1982.
“Earnings were important and trumped concerns about inflation and rates,” Wilson said. “Harley-Davidson rose 15% on a surprise rise in profits. Peloton leapt 25% as it ousted its CEO John Foley, reported a bigger-than-expected loss and slashed its guidance: bad news had been well and truly priced so the change at the top is seen as a positive...or could just be some short covering. Likelihood is the company gets bought by one of the big tech names like Amazon.
"Chipotle Mexican Grill (CMG) was up 8% after-hours as it beat expectations on earnings – pricing power was key. So far about three-quarters of the companies on the S&P 500 that have thus far reported have beaten EPS expectations. Another 200 to go..."
Back in the UK, the FTSE 100 continues on its merry way, up 50.78 points or 0.67% at 7617.85.
11.32am: GlaxoSmithKline slips as profits fall
GlaxoSmithKline PLC (LSE:GSK) shares are down 1% after its latest figures.
The pharma giant said revenues were in line with last year at £34bn, includine £1.4bn of COVID-19 related sales.
Profits fell from £6.4bn to £5.1bn.
The company plans to spin off its consumer division, and has already rejected a bid from Unilever for the business.
AJ Bell investment director Russ Mould said: "The £1.4bn in COVID-19-related sales GlaxoSmithKline pointed to last year are a positive in one sense but this chunk of business may start to ebb away as we emerge from the pandemic.
“The impact on Glaxo won’t be as large as on Pfizer which revealed yesterday that, after its vaccine helped double revenue and profit in 2021, its expectations for this year are more downbeat.
“GSK looks set to chalk up some healthy growth in 2022 as it gets set to spin off its consumer health arm in the middle of this year.”
11.02am: Mid-cap index outperforms, Dunelm delivers
Leading shares are off their best levels but still in positive territory.
The FTSE 100 is up 40.34 points or 0.53% at 7607.41, having earlier climbed as high as 7628.
Packaging companies continue to provide support after well-received results fromm Smurfit Kappa Group plc (LSE:SKG), up 2.71%.
The FTSE 250 is outperforming the blue chip index, up 1.7% at 22,160.
Micro Focus International PLC (LSE:MCRO) and TUI AG (LSE:TUI) are heading higher after further consideration of this week's results, up 6.97% and 5.63% respectively.
Elsewhere Dunelm Group PLC (LSE:DNLM) is up 2.72% after the homeware retailer announced its second special dividend in six months and reporteda 25.3% jump in half year profits to a record £140.8mln.
Russ Mould at AJ Bell said: “Dunelm is reaping the benefits of having an incredibly well-run business and the tailwind that COVID-19 has brought to spending more money doing up the home.
“Sales, profit and margins are all up, shareholders are getting a bonus dividend and current trading is upbeat."
He added: “Just as everything seems to be going swimmingly along comes a major headwind in the form of soaring energy prices, higher National Insurance tax, and a general inflationary environment. Family finances are coming under pressure and that could hurt discretionary spending.
“If someone has a few hundred pounds less in their pocket after paying the bills each month, they are going to make some tough decisions about how the remaining cash is used. Do people really need to buy more cushions for the home or new curtains?
“At first glance, one might think Dunelm is vulnerable as many of its goods are non-essential. However, what we might see is a shift in the type of products being bought.
“There is always going to be some demand for towels, lights, cooking equipment and bedding, all of which is sold by Dunelm. The retailer should also benefit from having bulked up its value proposition, with more entry-price products and promotional deals.
“A greater volume of lower-priced items might not necessarily be good for its profit margins, but there seems a good chance that its tills will continue to ring during what could be a difficult time for many other retailers.”
9.49am: Profit taking hits banks and miners
It's not all positive in the leading index.
Banks and mining shares are among the main fallers after a spate of profit taking in the wake of their recent strong performances.
Standard Chartered PLC (LSE:STAN) is down 1.51%, HSBC PLC (LSE:HSBA) has slipped 0.94% and NatWest Group PLC (LSE:NWG) is off 0.44%.
Among the miners, Anglo American PLC (LSE:AAL) has dipped 0.44% and Fresnillo PLC (LSE:FRES) has fallen 0.38%.
This has not done much to stem the rise in the FTSE 100, however.
The UK blue chip index is now up 53.13 points or 0.7% at 7620.2.
9.06am: Mondi and DS Smith lead FTSE 100 risers
Paper and packaging companies are in the spotlight after solid results from Smurfit Kappa Group plc (LSE:SKG).
The firm reported a 22% rise in full year profit to a record €913mln, helped by strong demand (all those Amazon parcels?) and price hikes.
It said it expected to increase prices further this year to cope with higher costs.
Its shares are up 2.1% while from the same sector Mondi PLC (LSE:MNDI) and DS Smith PLC (LSE:SMDS) are the top two FTSE 100 risers, up 4.01% and 3.64% respectively.
That has helped the leading index add to its early gains, and it is now up 51.93 points or 0.69% at 7619.
AJ Bell investment director Russ Mould said: “The FTSE 100 made a robust start on Wednesday, lifted by some decent corporate results and a rally in the packaging sector.
“Smurfit Kappa helped lift its industry peers with guidance for rising prices that should benefit the entire space amid strong demand."
8.16am: Market heads higher with Barratt gaining ground
Leading shares have made another bright start - although the same was true of Tuesday and the rally did not last the day.
In early trading the FTSE 100 is up 36.7 points or 0.38% at 7603.77.
Barratt Developments PLC (LSE:BDEV) has built up a good gain, adding 2.9% after a positive update.
Richard Hunter, head of markets at interactive investor, said “The housing market is showing little signs of cooling and the likes of Barratts are seeing the benefit of previous careful land management.
"Demand has been stronger than perhaps even the company was anticipating, and came despite the watering down of the Help to Buy scheme and the end of the stamp duty holiday. Even so, from a government perspective the drive towards more home ownership remains intact, which helps provide a generally forgiving environment for the housebuilders.
"Some concerns remain, such as cost inflation and ongoing supply chain issues, while from a broader consumer perspective the elevated levels of inflation and the varying demands on the consumer wallet in the coming months could well impact sentiment as well as activity. In addition, the cost of repair to some legacy properties is ongoing, although the costs are containable and slowly reducing.
"There is also the muddying effect on the numbers of the pandemic lockdowns and how these impacted on consumer behaviour. In this reporting period Barratts saw a decline of 9.9% to its revenues, with home completions also falling by 11% in part due to the strong Covid-related comparisons. Even so, the company has slightly increased its anticipated number of completions for the year to around 18000 and despite the reported dip the company is well on track to deliver."
Meanwhile, after falling sharply yesterday, oil prices are under pressure again.
Commenting on Tuesday's drop, CMC's Michael Hewson said: "It’s not immediately apparent what caused the sudden fall in oil prices, as we saw the biggest one day fall this year, although a couple of different factors have been blamed.
"The first one was the resumption of talks between Iran and the US, over a nuclear deal which might allow Iranian oil exports to return to the international market. While a new oil deal may well get agreed the likelihood of a quick agreement remains highly unlikely, as well as the fact that we’ve been here before, so it would be unwise to raise too many hopes.
"The other factor was comments from French President Macron that his meeting with Russian President Vladimir Putin had gone well, and had prevented a worsening of the crisis, although this was later denied by the Kremlin.
"While both seem plausible enough, the most probable reason for the fall in crude oil prices was that we were well overdue a correction, and yesterday’s falls are simply straightforward profit taking after seven weeks of gains."
That trend seems to be continuing, with Brent crude down 0.55% at US$90.28 a barrel and West Texas Intermediate off 0.56% at US$88.91.
So BP PLC (LSE:BP.) is down 0.48% and Shell PLC (LSE:SHEL, NYSE:SHEL, EURONEXT:SHELL) is off 0.92%.
With their bumper profits, the two oil giants face growing calls for a windfall tax.
6.50am: Market set to start higher again
The FTSE 100 is seen starting Wednesday on the front foot as rallying global stock indices provide support.
CFD firm IG Markets reckons the blue-chip benchmark will rise around 69 points, making the price 7,626 to 7,630 with just over an hour to go until the London open.
It comes after US markets enjoyed a strong showing with all major indices finishing strongly last night and as Asian markets give further support.
“US stock markets appear to be becoming more comfortable with the sharp increase in yields, finishing higher on the day across the board,” said Michael Hewson, analyst at CMC Markets.
The Dow Jones marked a 371 point, or 1.06%, rise to close Tuesday’s session at 35,462.
Meanwhile, the S&P 500 added 0.84% to finish at 4,521 and the Nasdaq gained 1.28% to 14,194.
America’s small-cap focussed Russell 2000 index was also higher, rising 1.63%, to 2,045.
Around the markets
The pound: US$1.3556, up 0.1%
Gold: US$1,827 per ounce, up 1.07%
Silver: US$23.22 per ounce, up 3.05%
Brent crude: US$90.73 per barrel, down 2.1%
WTI crude: US$89.31 per barrel, down 2.2%
Bitcoin: US$43,771, down 1.86%
Ethereum: US$3,102, down 2.34%
6.50am: Early Markets - Asia / Australia
In Asia, Japan’s Nikkei advanced 1.08% to 27,579 whilst Hong Kong’s Hang Seng rose by nearly 2% to 24,801.
The Shanghai Composite at the same time notched up 0.9% to 3,483.
Australia’s S&P/ASX200 surged 1.14% to close at its highest level since January 20, with a strong result from Commonwealth Bank supporting financial sector stocks.