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(Alliance News) - Stocks in Europe made a confident start to Tuesday, while sentiment in London continued to be supported by a reversal of a number of mini-budget measures, as well as reports of a delay to a planned Bank of England bond-buying programme.
The Financial Times reported that the start of the bond sales, part of the central bank's quantitative tightening programme, may be delayed beyond the end of this month. The BoE had already shifted the start of a sale of GBP838 billion worth of gilts to the end of October from October 6.
The FTSE 100 index rose 71.79 points, or 1.0%, to 6,992.03 on Tuesday morning.
The FTSE 250 was up 133.59 points, or 0.8%, at 17,636.43. The AIM All-Share added 7.07 points, 0.9%, at 794.73.
The Cboe UK 100 opened 1.0% higher at 698.51, the Cboe UK 250 added 0.7% to 15,097.55, and the Cboe Small Companies traded 0.1% higher at 12,403.21.
In European equities on Tuesday morning, the CAC 40 in Paris and DAX 40 in Frankfurt both rose 1.1%.
In Asia, the Shanghai Composite ended down 0.1%, though the Hang Seng in Hong Kong was 1.6% higher in late trade. The Nikkei 225 in Tokyo rose 1.4%, while the S&P/ASX 200 in Sydney surged 1.7%.
"A recovery in risk appetite has pushed equities higher across Asia, despite ongoing concerns over the health of China's economy, particularly after it delayed the release of its Q3 GDP report. Sentiment has been further bolstered by reports that the Bank of England is set to delay quantitative tightening. With recent UK fiscal events having generated significant volatility in bond markets, the move has been seen as a positive attempt to bring about some stability, particularly in the UK gilt market," analysts at Lloyds Bank commented.
The Bank of England temporarily stepped into the bond market to buy gilts, which are UK government bonds, in response to the mini-budget late last month. This had spooked financial markets and eventually led to the departure of Kwasi Kwarteng as chancellor last week.
The appointment of Jeremy Hunt, who then reversed most of the policies, has stabilised markets somewhat. Yields remain wider than they were ahead of the mini-budget, however.
The yield on the 30-year gilt ended at 4.37% late Tuesday, compared to 3.78% prior to the mini-budget. The yield on the long-dated bond narrowed further to 4.37% around 0840 BST on Tuesday morning.
The pound edged back below the USD1.14 mark. Sterling fetched USD1.1326 early Tuesday UK time, down markedly from USD1.1409 late Monday.
UK Prime Minister Liz Truss will hope openly apologising for "mistakes" in her tumultuous early premiership will pacify restless Tory colleagues as she seeks to fight on for another day in number 10.
She will rally her Cabinet at a meeting on Tuesday, following an informal reception with senior ministers over drinks and nibbles in Downing Street on Monday evening.
Truss has suggested she believes she can weather the storm that has rocked the party in recent weeks, as she vowed to lead the Tories into the next general election.
The euro traded at USD0.9845 early Tuesday in London, up from USD0.9810 late Monday. Against the yen, the dollar improved to JPY149.00 from JPY148.77.
"The yen remains under pressure despite desperate attempts by Japan to influence the currency markets through direct and verbal intervention. Last month's intervention was substantial but short-lived and the commentary before and after has fallen on deaf ears. Overnight there was more of the same - 'a high sense of urgency', 'will take appropriate action decisively' - and even a refusal to comment on whether the [Japan] Ministry of Finance is conducting 'stealth FX intervention'," Oanda analyst Craig Erlam commented.
"If it is, it isn't working particularly well, with the yen now very close to 150 against the dollar, a level that may make traders a little nervous. Another big intervention may soon be on the cards, although Japanese officials may be uneasy about the limited effectiveness of the last."
In London, WPP shares rose 2.8%, among the best of the FTSE 100 members. Smaller peer S4 Capital added 2.0%.
Both were benefiting from a positive read-across from Paris-listed peer Publicis, whose shares were up 2.4%.
In the third quarter of 2022, Publicis said revenue increased 24% to EUR3.24 billion from EUR2.62 billion.
It now expects full-year organic growth of 8.5%, lifted from previous guidance of a 6% to 7% rise.
Fortunes of advertising companies are seen as a barometer for the economy. During downturns, corporates often slash advertising budgets to keep a lid on costs.
Back in London, Ibstock shares rose 5.4% after it said it traded ahead of expectations in the third quarter.
The manufacturer of clay bricks and concrete products now expects annual results "to be above our previous expectations". In the third quarter of 2022, clay sales volumes were "marginally" higher year-on-year, while its performance in concrete was in line with expectations.
"Our strong trading in the first half of the year continued through the third quarter, supported by robust demand across our end markets. We remain focused on serving our customers, through providing high quality, sustainable products and solutions to create much-needed homes and spaces across the UK," Chief Executive Joe Hudson said.
888 shares slid 5.7% as the gambling operator reported "continued pressure" on its UK arm.
Revenue in the third quarter of 2022 amounted to GBP449 million, down 7.2% from GBP484 million a year earlier.
UK online revenue alone dropped 13% year-on-year to GBP171 million.
"Revenues during the third quarter continued the trends we have seen in recent quarters, with relatively resilient trading across our main international markets and in our retail estate, but continued pressure on our UK online revenues in light of the ongoing impact of the enhanced player safety measures," Chief Executive Itai Pazner said.
Among London small-caps, finnCap jumped 25%. It has received a non-binding takeover proposal from peer Panmure Gordon.
The proposal consisted of a cash portion or an alternative which would see electing shareholders receive Panmure Gordon stock.
The stockbroker said talks with Panmure are at an early stage, and there is no guarantee a firm offer is forthcoming.
A barrel of Brent oil rose to USD92.20 early Tuesday from USD91.70 late Monday. An ounce of gold fell to USD1,653.49 from USD1,661.00.
In the international economics events calendar on Tuesday, there is a US industrial production reading at 1415 BST.
In the US, the quarterly earnings season rolls on. There are results from Goldman Sachs, Johnson & Johnson, United Airlines and Netflix.
By Eric Cunha; ericcunha@alliancenews.com
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