(Alliance News) - London stocks got off to a good start on Wednesday, snapping the week's losing streak, ahead of the US Federal Reserve's latest monetary policy decision after the UK market close.
The FTSE 100 index was up 36.25 points, or 0.6%, at 6,371.97 early Wednesday - though at this level still 1.7% lower since the week started.
The mid-cap FTSE 250 index was up 155.90 points, or 0.9%, at 17,911.15. The AIM All-Share index was up 0.6% at 888.31.
The Cboe UK 100 index was up 0.5% at 10,778.14. The Cboe 250 was up 0.8% at 15,487.52, and the Cboe Small Companies up 0.5% at 9,919.44.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both up 1.0% in early dealings on Wednesday.
Wall Street futures were firm ahead of the Fed, supporting stocks in Europe and Asia.
"The Dow Jones futures are trading higher today after traders caught their breath from coronavirus stock market rally that added USD21 trillion to global stock markets. The S&P 500 futures are also indicating that traders are ready to dig the index out of its black hole, this occurred when the index turned negative for this year yesterday," said Naeem Aslam, chief market analyst at AvaTrade.
The main event for Wednesday is the Fed's latest rate decision.
The Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its decision at 1900 BST. This will be followed by a press conference with Fed Chair Jerome Powell at 1930 BST.
Aslam added: "Market expectations are that the Fed will maintain their dovish stance and that is likely to push the US stock market rally higher."
The dollar was broadly lower ahead of the US rate decision.
Sterling was quoted at USD1.2773 early Wednesday, up on USD1.2742 at the London equities close on Tuesday. The euro traded at USD1.1358 early Wednesday, flat against USD1.1359 late Tuesday. Against the yen, the dollar was quoted at JPY107.34, down from JPY107.71.
In Asia on Wednesday, the Japanese Nikkei 225 index ended up 0.2%. In China, the Shanghai Composite ended down 0.4%, while the Hang Seng index in Hong Kong is up 0.1% in late trade.
China's factory-gate prices remained at four-year lows in May, official data showed, as the demand shock from the coronavirus continued to take a toll on the world's second-largest economy.
The producer price index, which measures the cost of goods at the factory gate, steepened its decline last month, falling 3.7% on-year.
The figure was worse than the 3.2% fall expected by analysts in a Bloomberg survey and also April's 3.1% decline – underscoring the stress faced by manufacturers as China's economy churns back to life after pandemic lockdowns.
China's consumer price index rose 2.4% in May, just below the 2.6% expected and slipping back from 3.3% a month earlier, according to data from the National Bureau of Statistics.
In Japan, the lower house of parliament approved an emergency budget worth nearly USD300 billion, doubling the scale of measures to pep up the world's third-biggest economy after the coronavirus tipped it into recession.
Gold was quoted at USD1,717.51 an ounce early Wednesday, marginally lower versus USD1,718.42 on Tuesday. Brent oil was trading at USD40.54 a barrel early Wednesday, also largely unchanged against USD40.56 late Tuesday.
Rolls-Royce was up 4.4%, the top performer in the FTSE 100, despite being cut to Buy by Goldman Sachs, having been on its Conviction Buy List previously.
France will provide EUR15 billion worth of aid to help its aerospace industry survive the coronavirus crisis, Economy Minister Bruno Le Maire said on Tuesday. The aid should help European aircraft manufacturer Airbus, a major Rolls-Royce partner.
SEGRO was down 1.6% at 845.20 pence after increasing the size of its fundraise to GBP680 million from GBP650 million due to "strong demand" from investors.
A total of 82.1 million shares have been placed by BofA Securities and UBS London Branch at a price of 820 pence each. Alongside this, investors had subscribed for 865,435 shares via the PrimaryBid platform.
The placing price represents a 4.5% discount to Tuesday's closing price of 858.8p.
"The company is pleased by the strong support it has received from new and existing shareholders, including a number of its existing retail shareholders via the retail offer," said SEGRO.
Commercial property landlord Shaftesbury was up 3.4% despite reporting a fall in net asset value as Covid-19 hit visitor numbers in London's West End.
EPRA net asset value fell 11% to 878 pence at March 31 from 982p at the end of September, which the company said was due to revaluation deficits.
Its wholly-owned portfolio valuation fell 7.9% on a like-for-like basis to GBP3.5 billion following an increase in yields reflecting economic uncertainties, the impact of Covid-19 on near-term income and occupancy assumptions, and a softening of residential values.
The "decisive outcome" of the December 2019 UK general election helped to boost business confidence and investment as well as consumer activity, with Shaftesbury's occupiers reporting good footfall and spending over Christmas and the New Year, as well as in the early weeks of 2020
However, Covid-19 began to hit leasing activity in February with a number of negotiations put on hold or terminated. The "collapse" in West End footfall was evident from early February in Chinatown and then spread across the rest of the area from mid-March, Shaftesbury said.
"Although our business performed well during the first four months of the period, the growing impact of the measures to address the pandemic are having a material impact on normal patterns of life and commerce, both for our occupiers and on the near-term prospects for our business and financial performance," said Chief Executive Brian Bickell.
Elsewhere in London, Restaurant Group was up 5.8% after it set out plans to reduce the size of its Leisure estate and rental cost base via a company voluntary arrangement.
The CVA will relate to The Restaurant Group (UK) Ltd, which comprises mainly Frankie & Benny's outlets as well as some Chiquito sites and other Leisure brands. The arrangements will have no impact on Wagamama, Airport Concessions and Pub operations.
A "comprehensive" review of the Leisure estate portfolio has identified 210 trading sites that are either underperforming, on unfavourable lease terms or not expected to generate future profitable returns. Of these, 125 have been selected for closure in the short-term, with the balance of 85 sites to seek a reduction in rental costs and revised lease terms.
There are around 65 Leisure sites which will be unaffected by the CVA
"The issues facing our sector are well documented, and we have already taken decisive action to improve our liquidity, reduce our cost base and downsize our operations. The proposed CVA will deliver an appropriately-sized estate for our Leisure business to ensure we are well positioned despite the very challenging market conditions facing the casual dining sector," said Chief Executive Andy Hornby.
The economic calendar for Wednesday has US inflation at 1330 BST.
By Lucy Heming; lucyheming@alliancenews.com
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