(Alliance News) - Stock prices in Europe were higher at midday on Wednesday with London's FTSE 100 shining brighter than continental peers and adding to its already sizeable 2021 climb thanks to price gains for oil and financial stocks.
Oil majors were higher following Saudi Arabia's surprise announcement that it will trim production in February and March, while financials surged as US President-elect Joe Biden's Democrats look poised to take control of the legislative branch of government.
The FTSE 100 index was up 157.50 points, or 2.4%, at 6,769.75 midday on Wednesday. The large-cap index has risen 4.8% so far in 2021.
The mid-cap FTSE 250 index was up 196.88 points, or 1.0%, at 20,914.25. The AIM All-Share index eked out a 0.1% gain to 1,169.05.
The Cboe UK 100 index was up 2.6% at 674.26 points. The Cboe 250 was rose 1.6% to 18,300.01, and the Cboe Small Companies gained 0.9% at 11,861.21.
On the continent, the CAC 40 stock index in Paris was up 0.8% and Frankfurt's DAX 30 up 0.9%.
Topping the FTSE 100 was a buoyant financial sector. Standard Chartered jumped 8.7%. HSBC rose 7.3%. Barclays was up 7.1%.
In Paris, BNP Paribas was up 4.6%. Deutsche Bank climbed 4.0% in Frankfurt.
"European markets are on the rise in early trade today, with traders reacting with optimism at the Democrat victory in both remaining Senate seats in Georgia. With Biden now seemingly on course for a term where both sides of congress are majority Democrat, traders are now looking at a much more disruptive and transformative four-years than previously expected," IG Senior Market Analyst Joshua Mahony said.
"The sharp rise in upside from FTSE banking stocks does highlight the feeling that the more expansive Biden will provide as much support as necessary to avoid major economic suffering, thus lowering the potential losses that come from job losses and defaults."
Brent oil was quoted at USD54.12 on midday Wednesday UK time, up from USD53.01 a barrel at the London equities close on Tuesday.
Members of the oil cartel OPEC and their partners agreed Tuesday to raise output slightly in February and March, but only in Russia and Kazakhstan, while Saudi Arabian Energy Minister Prince Abdulaziz bin Salman announced that the country would cut its own production by one million barrels per day in both months.
"That's not good news for Saudi Arabia, because previously, Saudi Arabia and Russia were moving in parallel. The fact that Saudi Arabia is cutting roughly 9% of its production while Russia is expanding its output means that Russia won," said BDSwiss Group Head of Investment Research Marshall Gittler.
In London, BP rose 6.1% and Royal Dutch Shell 'A' and 'B' shares were up 4.0% and 4.6%.
Greggs topped the FTSE 250s, rising 8.1%, though it cautioned that profits will not return to pre-health crisis levels until "2022 at the earliest".
In a trading update, Greggs said total sales in the 53 weeks ended January 2 slumped 31% to GBP811 million from GBP1.17 billion. It expects a full-year pretax loss of up to GBP15 million, swinging from a GBP108.3 million profit the year before.
The baker was hit hard by the virus crisis which has emptied high streets and offices across the UK. The company did, however, note that it has ramped up its home delivery offering, thanks to its partnership with Just Eat.
"The company's latest trading update shows it achieved positive trading momentum despite there being tighter restrictions in parts of the UK. That's very encouraging for when life does start to return to normal," AJ Bell Investment Director Russ Mould said.
The baker's like-for-like sales averaged 81% of the previous year's level in the fourth quarter. In September, like-for-likes were at 76% of the prior year.
Retailer Marks & Spencer was up 2.1% amid reports it is poised to snap up upmarket fashion brand Jaeger following its collapse last autumn. The retail bellwether is understood to be in the final throes of sealing a deal to buy the Jaeger brand and stock, as first reported by Sky News.
The move to buy up Jaeger would fit with M&S's new strategy of selling third-party brands, with existing tie-ups with the likes of Nobody's Child and Ghost.
M&S also is thought to be among those in the running for some of Philip Green's collapsed Arcadia Group brands, such as Topshop.
On the AIM market, Gaming Realms surged 14%. The company said it has been awarded a provisional iGaming supplier license by the Michigan Gaming Control Board. iGaming is online betting, including sports betting and online casinos. Gaming Realms already operates in New Jersey.
The news comes hot-on-the-heels of UK gambling firms such as Ladbrokes-Coral owner Entain and William Hill receiving takeover interest from the US, and others rushing to boost exposure to the lucrative market.
Paddy Power owner Flutter Entertainment recently struck a USD4.18 billion deal to own nearly all of the US FanDuel gaming business, and 888 Holdings back in December penned multi-year market access agreements to double the number of US states in which it operates.
The pound was quoted at USD1.3654 on Wednesday, up from USD1.3611 at the London equities close on Tuesday.
The UK's services sector rounded off a difficult final quarter with another month of decline.
The headline seasonally adjusted IHS Markit/CIPS UK Services purchasing managers' index posted 49.4 in December, though an improvement from 47.6 in November, it was still below the 50.0 mark which separates growth from decline.
Markit added that in the fourth quarter of 2020, service sector output posted an average of 49.5, a stark contrast to the third quarter average of 57.1. The sector continues to be hit by Covid-19 restrictions.
Meanwhile, the composite output index - which also takes into account Monday's manufacturing data - came in at 50.4, from 49.0 in November, signalling the overall UK private sector returned to growth in December.
The euro stood at USD1.2348 on Wednesday, up from USD1.2280 at the European equities close on Tuesday. Against the yen, the dollar was trading at JPY102.79, marginally up from JPY102.75 at the same time Tuesday.
New York futures were mixed on Wednesday, with the Dow Jones Industrial Average called 0.3% higher but the S&P 500 called down 0.3%. The tech-heavy Nasdaq Composite is called 2.0% lower meanwhile, amid regulatory fears for big tech stocks.
Facebook's stock was down 3.2% in pre-market dealings. Apple, Alphabet and Amazon were all 2.3% lower.
"The likes of Amazon, Apple, Facebook and Google owner Alphabet are vulnerable to Democrat plans to reform US antitrust law, a move which is designed to curb the power of the tech giants and break their monopolies, as well as potential increases in corporation tax," explained AJ Bell's Mould.
Gold fetched at USD1,950.71 an ounce midday on Wednesday, down from USD1,947.54 at the London equities close Tuesday.
Wednesday's US economic calendar has ADP employment change figures at 1315 GMT.
By Eric Cunha; ericcunha@alliancenews.com;
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