(Alliance News) - European stocks bounced back on Wednesday, surging into positive territory around midday after a difficult week so far, as investors go searching for bargains.
"For now, markets are relieved by the fact we haven't had any fresh bearish news since yesterday's announcement of a ban in oil imports from Russia," ThinkMarkets analyst Fawad Razaqzada said.
The US and UK on Tuesday moved to halt imports of Russian crude oil. Rocketing commodities prices have fuelled fears that the fragile global recovery from Covid-19 will be replaced by a period of stagflation, in which inflation surges and economies flatline or contract.
"The markets were severely oversold, and any piece of good news would have always been amplified in terms of market reaction, which is what we have seen so far today. Also, let's not forget that this is also typical of a bear market when you sometimes see multiple percentage point gains in a short period of time as the shorts are squeezed, before the rally runs out of steam and the downward trend resumes," Razaqzada added.
Further market volatility may be just around the corner as Russia has showed no signs of letting up on its invasion of Ukraine.
The FTSE 100 index was up 95.25 points, or 1.4%, at 7,059.31 midday Wednesday. The mid-cap FTSE 250 index was up 558.02 points, or 2.9%, at 19,775.64. The AIM All-Share index was up 12.91 points, or 1.3%, at 976.16.
The Cboe UK 100 index was up 1.2% at 702.91. The Cboe 250 was up 2.8% at 17,402.85, and the Cboe Small Companies up 1.2% at 14,317.23.
Brent oil was quoted at USD124.66 a barrel on Wednesday around midday in London, slipping from USD132.65 late Tuesday, though still elevated.
Gold stood at USD2,013.80 an ounce midday Wednesday, down from USD2,056.80 late Tuesday.
Susannah Streeter, senior investment analyst at Hargreaves Lansdown, said: "On the London market there is a spate of bargain hunting going on today, with investors sniffing out stocks which have plunged since the invasion. Airlines, which had suffered some steep losses amid concerns about soaring fuel costs and a knock to traveller confidence, are among the risers."
British Airways-owner International Consolidated Airlines was up 7.3% around midday, and jet engine maker Rolls-Royce advanced 3.4%. InterContinental Hotels rose 5.3% and Premier Inn-owner Whitbread by 5.5%.
Three Russian stocks that have suffered from the invasion - Evraz, Polymetal and Petropavlovsk - were up 28%, 43% and 20%, respectively.
On Wednesday, they said they do not consider themselves to be affected by Russian sanctions. The metals and mining companies said separately that they do not believe themselves to be an "entity owned by, or acting on behalf or at the direction of any persons connected with Russia".
Also in the green, Prudential gained 3.9%. It reported "high-quality, resilient growth" on Wednesday, though the Asia-focused insurer cautioned that Covid-19-related uncertainty in Hong Kong could continue.
For 2021, pretax profit slipped by 5.0% to USD3.02 billion from USD3.18 billion in 2020.
New business profit, however, rose by 13% to USD2.53 billion from USD2.20 billion. It was a revival of fortunes for the insurer, as its new business profit in Asia had fallen 38% in 2020.
European Embedded Value operating profit increased 4.1% to USD3.54 billion from USD3.40 billion.
Total revenue, net of reinsurance, dropped 27% to USD26.50 billion from USD36.25 billion.
Gross premiums earned rose 3.1% to USD24.22 billion from USD23.50 billion, but Prudential saw a marked drop in investment return of USD3.49 billion from USD13.76 billion.
Annual premium equivalents - a measure of the new policies sold - grew 8% to USD4.19 billion from USD3.81 billion. Present value of new business premiums rose 12% to USD24.15 billion from USD21.59 billion.
The company raised its annual payout by 7.0% to 17.23 cents per share from 16.10 cents. Its second interim payout alone was up 11% to 11.86 cents.
Electrocomponents advanced 9.9% as it expects annual revenue and adjusted operating profit margin to be ahead of market estimates, due to a strong trading performance.
In the nine weeks to March 4, revenue grew 22% on a like-for-like basis compared to a year ago. In the financial year to date - the company's financial year ends on March 31 - revenue is up 25%, also on a like-for-like basis.
Revenue in industrial product ranges, which represent around 75% of total revenue, also grew by 22% like-for-like in the recent nine weeks.
Stagecoach was 37% higher after it walked away from its all-share merger with larger UK peer National Express, opting for a cash offer instead.
National Express shares were up 10%.
The Perth, Scotland-based bus and train operator on Wednesday said its directors unanimously recommend a new GBP594.9 million cash offer from Pan-European Infrastructure III, an infrastructure fund managed and advised by DWS Infrastructure.
They no longer recommend a previously agreed all-share merger with Birmingham-based National Express. That deal, struck back in December, would have created a GBP1.9 billion market-cap public transport provider, though it was being reviewed by the UK Competition & Markets Authority.
DWS will offer Stagecoach shareholders 105 pence in cash, which is a 37% premium to its closing price on Tuesday. It was trading at 104.5p around midday on Wednesday.
Under the National Express merger offer, Stagecoach shareholders would have received 0.36 of new National Express share for each Stagecoach share. National Express noted the announcement and asked Stagecoach shareholders to take no action.
In mainland Europe, the CAC 40 in Paris was up 4.5% and the DAX 40 in Frankfurt up 4.9%.
New York was pointed to a higher open on Wednesday. The Dow Jones Industrial Average was called up 1.5%, the S&P 500 up 1.6% and the Nasdaq Composite up 2.1%.
The pound was quoted at USD1.3152 midday Wednesday, firm on USD1.3110 at the London equities close Tuesday.
The euro was priced at USD1.0954, up from USD1.0890. Against the yen, the dollar was trading at JPY115.91, up from JPY115.62.
By Paul McGowan; paulmcgowan@alliancenews.com
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