(Alliance News) - Stock prices in London were higher at midday on Wednesday as investors took heart from upbeat comments from China's Evergrande Group, as the internationally-exposed FTSE 100 benefited from weakness in the pound.
Embattled property developer Evergrande said it will sell a USD1.5 billion stake in a regional Chinese bank to raise much-needed capital, as it struggles to make interest payments while being choked by debts and ratings downgrades.
The Shenzhen-based conglomerate said in a Hong Kong exchange filing it agreed to sell 1.7 billion non-public shares in northeastern China's Shengjing Bank to Shenyang Shengjing Finance Investment Group.
The FTSE 100 index was up 59.97 points, or 0.9%, at 7,088.07. The mid-cap FTSE 250 index was up 158.97 points, or 0.7%, at 23,288.25. The AIM All-Share index was up 2.79 points, or 0.2%, at 1,258.74.
The Cboe UK 100 index was up 0.8% at 704.50. The Cboe 250 was up 0.2% at 21,090.30. The Cboe Small Companies was 0.1% lower at 15,702.60.
In mainland Europe, the CAC 40 stock index in Paris was up 1.1% and the DAX 40 index in Frankfurt was up 1.0%.
In the FTSE 100, Ferguson was the best performer, up 3.1%, reversing Tuesday's share price decline. The plumbing and heating products supplier on Tuesday reported annual results and announced plans for a new USD1.0 billion buyback. The stock ended down 2.7% on Tuesday.
Next was up 2.9% after the clothing and homewares retailer raised its profit guidance and promised shareholders a special dividend early next year.
For the six months to July 31, revenue was GBP2.12 billion, up 5.2% from GBP2.01 billion at the same time in 2019, and pretax profit was GBP346.7 million, up 5.9% from GBP327.4 million. Compared to last year, Next swung to a pretax profit from a loss of GBP16.5 million.
Looking ahead, Next said it is increasing its full-price sales guidance for the year ending January 2022, to be up 10% against 2019. The company added that the longer-term outlook "appears to be more positive than it has been for many years".
Next said it now expects a pretax profit for the full year of GBP800 million, up 6.9% versus 2019 and GBP36 million ahead of its previous guidance.
"It is our intention to distribute any remaining surplus cash generated this year as a second special dividend at the end of January 2022. Any further dividends will be announced in our Christmas trading statement on Thursday 6 January 2022. We currently plan to return to ordinary dividends in the year to January 2023," it said.
AstraZeneca was up 2.7% after the Anglo-Swedish drugmaker said its newly acquired Alexion Pharmaceuticals arm will purchase the remaining equity in Caelum Biosciences in a deal worth up to USD500 million.
Alexion will pay Caelum the agreed option exercise price of USD150 million, with the potential for additional payments of up to USD350 million upon achievement of regulatory and commercial milestones.
Caelum Biosciences is developing treatments for AL Amyloidosis, a rare and life-threatening hematologic disorder.
Anglo American was up 2.2% after RBC Capital upgraded the miner to Outperform from Sector Perform.
Lloyds Banking Group was up 1.7% after Goldman Sachs raised the lender to Neutral from Sell.
At the other end of the large-caps, Royal Mail was the worst performer, down 6.7%, after UBS double-downgraded the postal operator to Sell from Buy.
Shares in oil majors BP, Royal Dutch Shell 'A' and Shell 'B' were down 0.8%, 0.2% and 0.1% respectively, as oil prices retreated from near three-year highs.
Brent oil was quoted at USD78.45 a barrel Wednesday at midday, down from USD79.00 late Tuesday.
BHP Group was down 0.2% after RBC Capital downgraded the miner to Sector Perform from Outperform.
In the FTSE 250, SSP Group was the worst performer, down 5.2%. The travel concessions operator said its sales recovery in the next financial year will be slower than expected, as the recovery in travel remains uncertain and its performance continues to lag pre-pandemic levels.
The dollar was higher against counterparts. The pound was quoted at USD1.3512 at midday Wednesday, down from USD1.3545 at the London equities close Tuesday.
The euro was priced at USD1.1658, lower from USD1.1684. Against the yen, the dollar was trading at JPY111.40, up from JPY111.27.
"The dollar has enjoyed a period of significant outperformance, with the prospect of tighter monetary policy at the Fed and stock market weakness driving the dollar index into a 10-month high yesterday. While the UK is similarly struggling with above-target inflation, the BoE tightening stance appears to be more cautious, driving GBP/USD into an eight-month low today," said IG Group's Josh Mahony.
"However, GBP/USD weakness comes to the benefit of the FTSE 100, with rising yields and a falling pound likely to bring an environment where the index can outperform going forward," Mahony added.
Gold stood at USD1,744.40 an ounce, rising against USD1,739.12 late Tuesday.
New York also was pointed higher as equity markets look to rebound from Tuesday's heavy losses. The Dow Jones Industrial Average was called up 0.6% based on futures trading, the S&P 500 up 0.7% and the Nasdaq Composite up 1.0%.
On the political front, US President Joe Biden postponed a Wednesday trip to Chicago to stay in Washington and fight for his domestic agenda, which hangs from a thread in Congress, the White House said.
Biden had been meant to address his Covid-19 vaccination policy in the Midwestern city, but his two signature legislative policies - a USD1.2 trillion infrastructure bill and an even bigger social spending package - risk failing in the divided legislature.
Lawmakers were also scrambling to break a deadlock over the prospect of a first-ever US debt default that would plunge the economy into a downwards spiral, alarming investors as the cliff edge draws closer.
The US government is likely to run out of cash on October 18, Treasury Secretary Janet Yellen warned, unless Congress raises the federal borrowing cap.
Meanwhile, top Senate Democrat Elizabeth Warren came out against Jerome Powell's reappointment as chair of the US Federal Reserve.
Powell's term ends at the helm of the US central bank ends in early 2022, leading to speculation about whether or not Biden will choose to reappoint or replace him.
In remarks made during a Senate hearing on Tuesday, Warren pulled no punches, calling Powell a "dangerous man to head up the Fed" and accused him of watering down post-financial crisis bank regulations.
In the economic calendar Powell, European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey will all be speaking at the ECB forum on central banking on Wednesday.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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