(Alliance News) - Stock prices in Europe opened higher on Wednesday with London's FTSE 100 getting a boost from oil majors and banking stocks, while investors also keep one eye on developments in the US state of Georgia, where President-elect Joe Biden's Democrats could seal control of Congress.
"Despite sterling continuing with its recent strength – a limiting factor on the FTSE 100 with its constituents' large exposure to overseas earnings – and the announcement of a new national lockdown, the UK's premier index has had a decent start to the year," interactive investor's Richard Hunter said.
"The index has been one to avoid for international investors over recent times, and there are some initial signs that the tide could be turning as investors re-examine areas which have potentially been oversold amid strong performances for other global indices."
The FTSE 100 index was up 45.51 points, or 0.7%, at 6,657.76 early Wednesday.
The mid-cap FTSE 250 index was up 62.35 points, or 0.3%, at 20,779.72. The AIM All-Share index was down 0.1% at 1,166.81.
The Cboe UK 100 index was up 0.9% at 662.85. The Cboe 250 was up 0.5% at 18,112.11, and the Cboe Small Companies was up 0.2% 11,775.31.
In Paris, the CAC 40 was up 0.2%, while Frankfurt's DAX 30 was 0.1% higher.
Focus in the UK will be on Westminster, where MPs will return to vote on regulations enforcing England's national lockdown as the stringent restrictions entered into force overnight amid spiralling coronavirus cases.
UK Prime Minister Boris Johnson said Tuesday he had "no choice" but to plunge England into a third national lockdown, as new figures suggested one in 50 people had coronavirus last week.
UK Chancellor of the Exchequer Rishi Sunak, meanwhile, unveiled a fresh GBP4.6 billion support package for businesses across the UK dealt a further crippling blow by enforced closures.
It includes one-off top-up grants worth up to GBP9,000 for firms in the retail, hospitality and leisure sectors to help nurse them through to the spring.
"The UK looked to dampen the impact of a third lockdown with GBP4.6 billion of fresh stimulus and support," analysts at Liberum noted on Wednesday.
The pound was quoted at USD1.3639 on Wednesday morning, up from USD1.3611 at the London equities close on Tuesday
On the London Stock Exchange, the FTSE 100's banking sector was solidly in the green in early trading.
NatWest rose 4.1%, Barclays was up 4.0% and Lloyds rose 2.8%.
Oil majors Royal Dutch Shell and BP added to Tuesday's gains. Shell 'A' shares rose 1.9%, its 'B' shares 2.7% and BP climbed 3.7%. BP, Shell 'A' and Shell 'B' ended up 7.1%, 6.9% and 6.3% respectively on Tuesday.
Oil prices shot higher Tuesday following Saudi Arabia's surprise announcement that it would trim production.
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.
Brent oil was quoted at USD53.90 on Wednesday morning UK time, up from USD53.01 a barrel at the London equities close on Tuesday.
Back on the London Stock Exchange, Informa rose 2.1%. It affirmed its annual results will be in line in with guidance, and the events firm also laid out chair succession plans.
Informa said John Rishton will replace Derek Mapp as chair. Rishton is currently chair-elect at London-listed security services firm Serco and also an Informa board member.
Rishton takes over as chair at Informa in June.
For 2020, Informa expects to report revenue in the range of GBP1.65 billion and GBP1.68 billion, in line with guidance provided back in September. This would be at best down 42% from GBP2.89 billion in 2019.
Adjusted operating profit will tumble to between GBP250 million and GBP270 million, from GBP933.1 million.
The company did note that it delivered GBP600 million in cost savings by year end, and it has seen a "continued return and recovery of physical events in mainland China and other parts of Asia".
Mid-cap baker Greggs meanwhile, cautioned that profits will not return to pre-health crisis levels until "2022 at the earliest". Greggs shares were up 6.5% early on Wednesday.
Greggs said total sales in the 53 weeks ended January 2 slumped 31% to GBP811 million from GBP1.17 billion. On average, fourth-quarter company-managed shop like-for-like sales were at 81% of the prior year's levels.
Greggs 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.
"With customers spending more time at home we have successfully developed our partnership with Just Eat to offer delivery services and have also seen strong sales through our longstanding partnership with Iceland, offering our products for home baking," Chief Executive Roger Whiteside said.
Greggs said 600 of its shops now provide delivery services, and it expects this to rise to 800 in 2021.
"Looking ahead, the significant uncertainty over the duration of social restrictions, along with the impact of higher unemployment levels, makes it difficult to predict performance. However, we do not expect that profits will return to pre-COVID levels until 2022 at the earliest," Greggs said.
The euro stood at USD1.2326 on Wednesday morning, up from USD1.2280 at the European equities close on Tuesday. Against the yen, the dollar was trading at JPY102.81, up from JPY102.75.
The economic events calendar on Wednesday has services PMI readings from Germany, eurozone and the UK at 0855 GMT, 0900 GMT and 0930 GMT respectively.
There is also US ADP employment change figures at 1315 GMT.
"The reading is expected to show that 88,000 jobs were added last month, and that would be a huge fall from the 307,000 created in the last report. Lately, there have been some concerns that the economic recovery in the US is running out of steam and a weak reading would probably compound those fears," CMC Markets analyst David Madden said.
In US politics, Democrat Raphael Warnock ousted an incumbent Republican in the first of two critical runoff elections in Georgia that will decide control of the US Senate at the outset of Joe Biden's presidency, networks projected.
Warnock, a Black pastor with deep roots in Georgia, narrowly ousted his rival Senator Kelly Loeffler, CBS, NBC and CNN reported, in what is an embarrassment for Donald Trump as he wraps up his four years as president.
The focus now shifts to the second Senate race between Republican David Perdue and Democrat Jon Ossoff. That contest was too early to call as votes were still being counted.
If Democrats win both seats they win back the Senate, effectively handing Biden all levers of political power in Washington and helping him enact his ambitious legislative agenda. The split will be 50-50 but Vice President Kamala Harris will have a tie-breaking vote.
Axi analyst Stephen Innes commented: "The initial reaction by markets to the Georgia Senate run-offs has been logical. The US 10-year treasury yield is through 1% on anticipation of additional stimulus."
The yield on the US 10-year treasury topped 1.0% for the first time in over nine months on Wednesday, as Democrats took the first step toward taking control of the US Senate.
The yield on the US 10-year note was quoted at 1.007% in the early hours US time, having reached a high of 1.02% Yields rise as bond prices decline.
"Conversely, the S&P and Nasdaq futures are weaker driven by fears of increased taxes and regulation," Innes added.
The Nasdaq Composite is called down 1.7% and the S&P 500 down 0.4%. The Dow Jones Industrial Average is called up 0.1%.
Gold fetched at USD1,954.01 an ounce early on Wednesday, down from USD1,947.54 at the London equities close Tuesday.
By Eric Cunha; ericcunha@alliancenews.com;
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