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(Alliance News) - Stock prices in London were higher at midday on Wednesday ahead of closely-watched US inflation data, with investors anticipating the Federal Reserve to start reducing asset purchases before the end of the year.
In addition, markets were getting a boost after the US paved the way for its massive infrastructure project.
On Tuesday, the US Senate approved Joe Biden's historic USD1.2 trillion infrastructure plan, paving the way for a major victory for the president if it wins final passage in the lower chamber of Congress.
The FTSE 100 index was up 38.05 points, or 0.5%, at 7,199.09. The mid-cap FTSE 250 index was up 48.49 points, or 0.2%, at 23,620.46. The AIM All-Share index was up 0.1% at 1,267.03.
The Cboe UK 100 index was up 0.5% at 717.30. The Cboe 250 was up 0.1% at 21,382.35, and the Cboe Small Companies up 0.2% at 15,481.34.
In mainland Europe, the CAC 40 in Paris was up 0.1% and DAX 30 in Frankfurt up 0.3%.
"European stock markets made early gains as risk remains bid, taking a positive cue from a record high on Wall Street for both the Dow Jones industrial average and the S&P 500, though the Nasdaq closed down 0.5% as yields rose, weighing on big tech, and the passing of the USD1tn US infrastructure bill boosted cyclicals," said Markets.com analyst Neil Wilson.
US consumer price inflation is expected to slow to 5.3% on an annual basis in July from the 13-year-high registered at 5.4% in June, according to consensus cited by FXStreet.
"A weaker posting here could work against the US dollar, as the market may wonder if an interest rate hike from the Fed is justified," said analysts at OFX.
The dollar was strong following the Senate vote and ahead of the US inflation reading in the afternoon.
The pound was quoted at USD1.3810 at midday on Wednesday, down from USD1.3847 at the London equities close on Tuesday.
The euro was priced at USD1.1710, lower from USD1.1724. Against the Japanese yen, the dollar was trading at JPY110.73, up from JPY110.52.
Brent oil was quoted at USD69.88 a barrel Wednesday at midday, down from USD70.92 late Tuesday. Gold was trading at USD1,736.17 an ounce, higher against USD1,726.99.
In the FTSE 100, Spirax-Sarco Engineering was the best performer, up 3.6%, after the steam systems engineering firm raised its annual profit outlook and lifted its interim dividend, following a positive performance in the first half.
For the six months to June 30, revenue rose 13% to GBP643.7 million from GBP569.7 million last year, and pretax profit increased to GBP150.0 million, up 41% from GBP106.3 million.
Spirax-Sarco declared an interim dividend of 38.5 pence, up 15% from the 33.5p paid last year.
Looking ahead, the Cheltenham, England-based firm expects its second half operating margin to be similar to the first half margin of 24%. Full-year revenue is also expected to be in line with previous guidance, while Watson-Marlow's annual organic growth in sales to the pharmaceutical and biotechnology sector remains unchanged at over 55%.
However, earnings guidance for the full year has been raised, with Chief Executive Nicholas Anderson commenting that "excellent first half execution underpins our improved full-year profit outlook".
Prudential was up 2.6% after the 173-year-old insurer posted a rise in interim profit as it gets set to complete a demerger of US business Jackson.
Prudential reported half-year pretax profit of USD1.50 billion, up from USD932 million a year before, despite total revenue net of reinsurance falling to USD11.69 billion from USD15.50 billion.
The revenue decline was due to a drop in investment return to USD738 million from USD4.20 billion.
Prudential held its interim dividend at 5.37 US cents. It said it continues to consider raising around USD2.5 billion to USD3.0 billion in equity from institutions and retail investors in Hong Kong, as the company shifts its attention to Asia following the demerger of its Jackson business in the US.
Avast was up 2.3%. The cybersecurity firm posted positive results, as it nears a takeover by larger US peer NortonLifeLock.
For the six months to June 30, revenue was up 8.8% at USD471.3 million from USD433.1 million the year before, and pretax profit was USD269.3 million, more than double from USD115.3 million.
In addition, billings were USD482.7 million, up 2.9% from USD469.1 million the year prior.
Late Tuesday, US cybersecurity firm NortonLifeLock said it agreed with Avast on the terms of a merger. The deal is in the form of a cash and share takeover offer by Norton for Avast. Under the terms of the merger, Avast shareholders will be entitled to receive a combination of cash and newly issued shares in Norton.
Based on Norton's closing share price of USD27.20 on July 13, being the last trading day for NortonLifeLock shares before combination talks were revealed on July 14, the merger values Avast between USD8.1 billion and USD8.6 billion, depending on Avast shareholders' elections.
International Consolidated Airlines Group was up 1.7% after Liberum raised the British Airways parent to Buy from Hold.
At the other end of the large-caps, National Grid was down 1.0%. The UK power lines operator and fellow utility SSE were only partially successful in their appeals against the latest round of energy transmission network price controls, after a provisional ruling from the UK Competition & Markets Authority.
The two power utilities, along with a group of smaller companies, had appealed against aspects of the RIIO-2 price controls created by energy regulator Ofgem. Contentious issues included the so-called 'outperformance wedge', in which Ofgem adjusted pricing because it expects the companies to outperform in the RIIO-2 period, which runs until 2026.
The companies also appealed Ofgem's cost of equity calculations, which cut potential returns on investment to the companies.
The CMA ruled that the outperformance wedge was wrong, but upheld Ofgem's decision on cost of equity. The energy companies can now respond before the CMA makes its final decision by October 30.
Phoenix Group was down 0.8%. The life insurer said it made further strong progress on its focus on cash, resilience and growth.
For the six months to June 30, revenue fell to GBP2.1 billion from GBP2.48 billion last year and swung to a pretax loss GBP454 million from a profit of GBP611 million.
Phoenix pointed to an adverse investment return arising on hedging positions, as well as increased amortisation charges on intangible assets and higher financing costs.
More positively, Phoenix said its cash generation in the first half doubled to GBP872 million from GBP433 million last year. The company added it was on track to deliver at the top end of its guided annual cash generation target range of GBP1.5 billion to GBP1.6 billion.
In the FTSE 250, Hill & Smith was the best performer, up 5.5%. The maker of road safety barrier said 2021 operating profit will beat analyst expectations as trade recovered across all divisions in the first half, following the Covid-impacted year prior.
Revenue for the first half of 2021 was up 12% year-on-year to GBP354.2 million from GBP315.6 million. Pretax profit jumped to GBP39.2 million, 72% higher than the GBP22.8 million reported in that period the year before.
The FTSE 250-listed firm proposed a 12.0p interim dividend, 30% above the 9.2p payout offered at this point in 2020.
US stock market futures were pointing mostly lower following record closes for the Dow and S&P 500 indices on Tuesday.
The Dow Jones Industrial Average was called up 0.1%, but the S&P 500 was called down 0.2% and the Nasdaq Composite was called 0.3% lower.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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