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(Alliance News) - Blue-chip stock prices in Europe were higher early on Wednesday, helped by progress on the US President Joe Biden's stimulus plan, and as packaging firms in London got a boost from promising results for Smurfit Kappa.
Analysts at Lloyds noted the "risk tone remained broadly positive" overnight, "helped by expectations that the vaccine rollout and fiscal stimulus will fuel an economic recovery".
"That sentiment followed through into the Asian trading session, while European stocks are set to open higher," analysts at Lloyds commented.
President Joe Biden met Tuesday with a handful of top business leaders, hammering home the need to "move big" on his USD1.9 trillion stimulus bill while receiving input on a proposal to raise the minimum wage.
London's blue-chip stock index was up 10.48 points, or 0.2%, at 6,542.04.
However, the mid-cap FTSE 250 index was down 22.61 points, or 0.1%, at 21,090.33, and the AIM All-Share index was down 1.22 points, or 0.1%, at 1,210.60.
The Cboe UK 100 index was up 0.2% at 650.17 points. The Cboe 250 was down 0.2% at 18,549.52, and the Cboe Small Companies was down 0.1% at 12,681.01.
The CAC 40 was up 0.2% in Paris, while Frankfurt's DAX 30 was 0.1% higher.
The pound was quoted at USD1.3829, up from USD1.3790 at the London market close on Tuesday.
The euro stood at USD1.2131 on Wednesday morning London, up from USD1.2100 at the European equities close Tuesday.
Against the yen, the dollar was trading at JPY104.57, down from JPY104.62 at the London equities close on Tuesday.
Smurfit Kappa shares rose 2.0%, among the best FTSE 100 performers, after annual profit rose. Revenue declined, however, amid "the adverse impact of currency and the fall in box prices".
Smurfit Kappa's revenue in the year ended December 31 fell 5.8% to EUR8.53 billion from EUR9.05 billion. However, profit rose as finance costs were reduced. Smurfit posted pretax profit of EUR748 million, up 10% from EUR677 million. Finance costs fell 28% to EUR179 million from EUR247 million.
Earnings before interest, tax, depreciation and amortisation fell 8.5% to EUR1.51 billion from EUR1.65 billion, though Chief Executive Officer Tony Smurfit noted earnings came in ahead of guidance.
"Driven by strong secular trends such as e-commerce and sustainability, the outlook for our industry is increasingly positive," CEO Smurfit said, referring to paper-based packaging.
The company recommended an 87.4 cents final payout, to go with the 80.9 cents interim payout and a 27.9 cents dividend it paid in December.
Smurfit had pulled its final dividend for 2019 in the wake of the Covid-19 crisis. Its interim dividend in 2020 was more than double the 27.9 cents from the prior year and equal to the final 2019 dividend it had pulled due to the virus crisis. It then paid the same 27.9 cents as a second interim dividend to catch up.
Peers Mondi and DS Smith rose 1.5% each, in a positive read-across.
Blue-chip housebuilders were lower early on Wednesday. Berkeley was 1.8% down, Barratt Developments lost 1.4% and Persimmon fell 1.2%.
Persimmon said its 2020 results will include a GBP75 million provision to address cladding issues.
"As first and foremost a builder of traditional family homes, the group has not been a major developer of high-rise buildings. We believe we account for less than one percent of all high-rise developments. However, in the past we have built multi-storey buildings which met all the fire safety rules and regulations in place at the time, but which used cladding materials which may now be considered unsafe and require removal," the company explained.
"The group believes strongly that it has a responsibility to step forward and tackle this issue head-on. Persimmon has therefore made a provision of GBP75 million in its 2020 results to pay for our contribution to any necessary work on 26 buildings that may be affected by the cladding issue."
Flammable building cladding came into focus following the fire that engulfed Grenfell tower, a residential tower block in London. The fire killed 72 people. The UK government is expected to announce billions of pounds in funding to help tackle the cladding crisis.
Housing Secretary Robert Jenrick is due to address the Commons on Wednesday, and he is expected to set out a package of measures.
JD Sports Fashion shares were 1.2% lower. Executive Chair Peter Cowgill said Tuesday the impact of Brexit has been "considerably worse" than feared and that it plans to open a warehouse site in the EU amid the impact of red tape and delays. Cowgill said disruption in shipping goods to mainland Europe meant extra costs in the "double digit millions".
Among the mid-caps, housebuilder Redrow said revenue in the six months ended December 27 soared 20% to GBP1.04 billion from GBP870 million. Pretax profit rose 11% to GBP174 million from GBP157 million. Its shares gave back 1.1%, however.
Dunelm rose 6.3%. The homewares retailer's sales in the six months to December 26 soared 23% year-on-year to GBP719.4 million from GBP585.0 million. Pretax profit rose 34% to GBP112.4 million from GBP83.6 million.
Dunelm posted "very strong sales growth of 23%, despite the impact of store closures in the second quarter".
"Sales were particularly strong in the first quarter, before we had to navigate the various restrictions which impacted the remainder of the period. These restrictions have become more severe in the second half of our financial year, with all but one of our stores currently closed, although we continue to serve customers through our digital channels, which have significantly advanced during the last year, CEO Nick Wilkinson said.
Dunelm declared a 12.0p interim payout, after no dividends were paid in financial 2020.
Brent oil fetched USD61.12 a barrel early on Wednesday morning London time, up from USD60.70 a barrel at the London equity market close on Tuesday. Gold was quoted at USD1,842.96 an ounce, up from USD1,837.66.
US futures were higher on Wednesday. The Nasdaq Composite is called up 0.5%, the S&P 500 up 0.3% and the Dow Jones Industrial Average 0.2% higher.
Wednesday's US earnings calendar as fourth-quarter figures from Coca-Cola and General Motors.
Twitter shares rose 3.5% after hours on Tuesday after it reported a strong end to the end of 2020 and raised its guidance for the upcoming first quarter.
For the fourth quarter ended December 31, revenue was up 28% to USD1.29 billion from USD1.01 billion in the fourth quarter of 2019. Net income was up 88% at USD222.1 million from USD118.8 million, with fourth quarter basic earnings per share of USD0.28, up from USD0.15.
"The results add to a successful reporting season for big tech, resulting in the ongoing strength of the Nasdaq, which has already risen by 8.7% in the year to date," interactive investor analyst Richard Hunter noted.
Still to come on Wednesday is CPI data from the US at 1330 GMT.
By Eric Cunha; ericcunha@alliancenews.com;
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