(Alliance News) - US stimulus hopes helped London stocks off to a flying start on Wednesday, while investors get an early reading on December's economic activity with a raft of PMIs and await the US Federal Reserve's latest policy decision.
"The prospect of a rising stimulus tide lifts all boats [and] sees investors revel in holiday cheer as a healthy cocktail of progress over an economic relief package in Washington, Brexit deal optimism that could settle by week's end, and the likely seamless rollout of multiple highly effective vaccines have mixed to paint trading screens Christmassy Green," said Stephen Innes at Axi.
The FTSE 100 index was up 50.24 points, or 0.8%, at 6,563.56 early Wednesday. The mid-cap FTSE 250 index was up 184.76 points, or 0.9%, at 20,037.15. The AIM All-Share index was up 0.4% at 1,074.76.
The Cboe UK 100 index was up 0.7% at 653.75. The Cboe 250 was up 0.9% at 17,338.47, and the Cboe Small Companies up 0.4% at 11,378.10.
In London, FTSE 100-listed Bunzl fell 4.3% as it guided to lower revenue in 2021.
Revenue for 2020 is expected to increase 8%, or 9% at constant currency. Organic revenue growth continues to reflect diverging trends between the strength of Covid-19 related product sales and declines in other products, Bunzl said. The firm's operating margin is expected to be higher than the prior year.
Looking to the year ahead, Bunzl said it expects revenue in 2021 to be lower than the current year, with "minimal benefit" from the Covid-19 related orders that have given the company a boost in 2020.
"The group's performance during the pandemic has demonstrated the resilience of the Bunzl portfolio, the strength of our supply chain and the agility of our decentralised operating model," said Chief Executive Frank van Zanten.
Dixons Carphone rallied 12% in the FTSE 250 as it swung to an interim profit on online sales strength.
Revenue for the half-year to October 31 rose to GBP4.86 billion from GBP4.71 billion a year ago, with Dixons turning to a pretax profit of GBP45 million from a GBP86 million loss.
"We've achieved this performance by doing what we said we'd do. We're winning online, and have triple-digit growth and rapid market share gains to show for it," said Chief Executive Alex Baldock.
For UK & Ireland Electricals, revenue was up 15%, or 16% like-for-like, and online sales more than doubled, offsetting a loss of sales from enforced store closures and in Dixons Travel.
Trading since the period end has continued strongly, the electricals and mobile phone retailer said. In UK & Ireland Electricals, like-for-like growth was 11% in the six weeks to December 12 despite stores in England, Wales, Scotland and Northern Ireland having been closed for substantial periods.
The immediate outlook is "less certain", Dixons said, as it noted the pandemic and possible Brexit disruption. The company added that it continues to discuss the possibility of listing a minority stake of its Nordics business in 2021.
In mainland Europe, the CAC 40 in Paris was up 0.7%, while the DAX 30 in Frankfurt was up 0.8% early Wednesday.
The euro traded at USD1.2169 early Wednesday, firming on USD1.2151 late Tuesday. Attention in the morning lies on flash PMI readings from the eurozone and UK at 0900 GMT and 0930 GMT respectively.
Lloyds Banking commented: "After this week's announcement of new restrictions in parts of England, today's UK December PMIs may immediately look dated. Given the end to the November lockdown in England, we expect the headline services PMI reading to rebound back above the 50 mark that signals expansion, while manufacturing is likely to rise for the second straight month."
Already out, figures showed UK inflation softened in November amid tighter virus restrictions.
Year-on-year, consumer prices rose 0.3% in November versus October's inflation rate of 0.7%. Consensus, according to FXStreet, had expected inflation to ease more modestly to 0.6%.
Month-on-month, prices fell 0.1% in November after stagnation in October.
"With significant restrictions in place across the UK, inflation slowed, predominantly due to clothing and food prices," said Jonathan Athow, deputy national statistician for Economic Statistics at the ONS.
Sterling was quoted at USD1.3515 early Wednesday, higher than USD1.3401 at the London equities close on Tuesday.
In Asia on Wednesday, the Japanese Nikkei 225 index closed up 0.3%. In China, the Shanghai Composite ended flat, while the Hang Seng index in Hong Kong closed up 1.0%.
Against the yen, the dollar weakened to JPY103.39 versus JPY103.72.
Gold was quoted at USD1,855.23 an ounce early Wednesday, higher than USD1,847.70 on Tuesday. Brent oil was trading at USD50.78 a barrel, firm on USD50.63 late Tuesday.
Also to come in the economic events calendar on Wednesday are US retail sales figures at 1330 GMT.
And, the key fixture of the day, is the US Federal Reserve's last policy decision of 2020.
The Federal Open Market Committee will conclude its two-day policy meeting on Thursday and announce its decision at 1900 GMT. This will be followed by a press conference with Fed Chair Jerome Powell at 1930 GMT.
The federal funds rate is currently set at 0.00% to 0.25%, and the CME's FedWatch tool has it fully priced in that the Fed stands pat on rates this week.
By Lucy Heming; lucyheming@alliancenews.com
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