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(Alliance News) - Stocks in London ended higher on Wednesday as the strong start to February continued, while attention turns to interest rate decisions from two major central banks on Thursday.
The FTSE 100 index closed up 47.22 points, or 0.6%, at 7,583.00. The FTSE 250 ended up 81.46 points, or 0.4%, at 22,249.40, and the AIM All-Share closed up 2.87 points, or 0.3%, at 1,104.57.
The Cboe UK 100 ended up 0.9% at 753.77, the Cboe UK 250 closed up 0.9% at 19,914.90, and the Cboe Small Companies ended down 0.2% at 15,479.53.
In European equities, the CAC 40 stock index in Paris ended up 0.2%, while the DAX 40 in Frankfurt ended up 0.1%.
"The tech and telecoms sector has led the gains in the UK today, led by the likes of Auto Trader, which is higher on the back of broker upgrade from Jefferies, while Vodafone and BT Group are doing well, as investors weigh up today's results from Vodafone, and ahead of BT's results tomorrow," said CMC Markets analyst Michael Hewson.
In the FTSE 100, Ocado Group ended the best performer, up 5.7%, after Credit Suisse double upgraded the online grocer to Outperform from Underperform.
Auto Trader was up 2.4% after Jefferies raised the automotive marketplace to Buy from Hold.
Vodafone Group finished 3.4% higher after the telecommunications firm hailed a "solid quarter" for business and promised to create "value" for shareholders, as it faces pressure from an activist investor.
Rival BT Group, which also subject of activist investor interest, rose 1.5% in a positive read-across.
In the three months to December 31, revenue rose 4.3% annually to EUR11.68 billion from EUR11.20 billion a year earlier. On an organic basis, growth was 3.7%.
Service revenue, which includes airtime usage, monthly access charges and roaming, climbed 3.1% annually to EUR9.65 billion. It was up 2.7% organically. This is where Vodafone generates most of its revenue.
Late last week, Bloomberg reported that activist investor Cevian Capital had taken a stake in Vodafone, and the two had discussed how to boost the performance of the telecom operator.
At the other end of the large-caps, Chilean copper miner Antofagasta ended the worst performer, down 5.7%, on reports that the government of Chile could consider tax increases to cope with rising social pressures.
In the FTSE 250, Playtech closed up 0.7%. The gambling software provider said its acquisition by Aristocrat Leisure was rejected at a court and general meeting, as the proposal was unable to secure the required approval needed.
The total votes in favour of the resolutions were 56.13% at the court meeting and 54.68% at the general meeting, which were below the minimum threshold of 75% in favour.
This means the acquisition of Playtech by Aristocrate Leisure has been terminated and the scheme has lapsed.
Earlier Wednesday, Playtech noted that the shareholder vote was likely to reject the agreement.
On AIM, AFC Energy rose 14%. All-electric off-road SUV racing series, will continue to use the company's zero-emission fuel cell for its 2022 season.
The new contract, signed on Tuesday, will see the company's fuel cell system being rented to Extreme E again on commercial terms and used to generate power for all of the race vehicles at each of the five rounds in the 2022 season. The inaugural edition of the burgeoning Extreme E series featured teams founded by former Formula One world champions Lewis Hamilton and Nico Rosberg.
The pound was quoted at USD1.3560 at the London equities close, up from USD1.3505 at the close Tuesday, ahead of the Bank of England's interest rate decision on Thursday at midday.
Threadneedle Street is fully expected to carry out a second consecutive interest rate hike as the UK grapples with sky-high inflation.
The BoE lifted the Bank Rate to 0.25% from 0.10% in December in the first rate hike since August 2018. The UK central bank cut the key interest rate twice, both in March 2020, to the record low of 0.10% as the pandemic got underway.
Heading into Thursday's meeting, Governor Andrew Bailey warned about mounting signs that inflation pressures may last longer than first thought. His comments came as data showed UK inflation rushed to a near 30-year high in December.
Matthew Ryan, market analyst at Ebury believes "that at least one hike a quarter is on the cards, and expect the bank's communications to leave the door open to such a possibility by not pushing back against market expectations."
"A fully priced-in rate increase to 0.5% would also breach the Bank of England's own threshold to begin normalising its balance sheet in a process known as quantitative tightening. We think there is a good chance this process will begin immediately, although in governor Andrew Bailey's own words, this is not expected to have a big impact. We expect its communications to leave open the possibility of an aggressive tightening cycle in 2022, without explicitly committing to one, which could provide some upside in sterling towards the end of the week."
The euro stood at USD1.1295 at the European equities close, up from USD1.1247 late Tuesday, ahead of the European Central Bank's rate decision on Thursday afternoon.
The ECB Governing Council meets in Frankfurt, announcing its latest policy decision at 1345 CET on Thursday. This will be followed by a press conference with Lagarde at 1430 CET.
"This week's European Central Bank rate announcement is highly unlikely to bring any changes to the bank's policy. Instead, most focus will be on how the ECB addresses the inflation risk and whether there will be any tweaks to rates and quantitative easing guidance," analysts at ING commented.
The meeting takes place against a backdrop of historically high inflation on the continent, increasing the pressure on the ECB to respond with tighter monetary policy.
According to Eurostat, the singe currency bloc's annual consumer price index rate accelerated to 5.1% in January, from 5.0% in December. Though only quickening slightly, the figure was markedly above consensus estimates of 4.4%.
"The CPI inflation number will provide some uncomfortable reading for the ECB. The need for flexibility may lessen the amount of conviction with which ECB President Lagarde pushes back against market expectations for 2022 rate hikes at tomorrow's post council meeting press conference," said analysts at Rabo Bank.
Against the yen, the dollar was trading at JPY114.33, down from JPY114.80 late Tuesday.
Stocks in New York were higher at the London equities close as equities rallied on continued dip-buying in technology shares.
The DJIA was up 0.1%, the S&P 500 index up 0.4% and the Nasdaq Composite up 0.2%.
On Wall Street, Paypal Holdings plunged 25% after the payments processor late Tuesday provided weak guidance that it blamed in part on inflation.
PayPal also missed user growth targets due in part to 4.5 million "illegitimate" accounts that joined the platform, which "affected our ability to achieve our guidance in the quarter," Chief Financial Officer John Rainey said.
Brent oil was quoted at USD89.02 a barrel at the equities close, down from USD89.50 at the close Tuesday, as the latest Organization of the Petroleum Exporting Countries meeting concluded.
Top oil-producing countries led by Saudi Arabia and Russia announced another modest increase in output on Wednesday despite soaring crude prices and geopolitical tensions rattling the markets.
The 23-nation OPEC+ group said in a statement that it will increase production by 400,000 barrels per day in March, the same amount as in previous months.
The group, which includes the 13 members of the Saudi-led cartel and their 10 allies, including Russia, has resisted US pressure to further boost production to tame prices.
OPEC+ said in its statement following a ministerial videoconference that the decision was made "in view of current oil market fundamentals and the consensus on the outlook".
The alliance's prudent approach dates back to the spring of 2021 as demand recovered after drastic 2020 cuts in the face of the Covid-19 pandemic.
"The news was hardly surprising, as the group has rigidly followed this approach since it was first agreed upon, even in December when oil prices plunged following the emergence of Omicron," said Edward Gardner, commodities analyst at Capital Economics.
Gold stood at USD1,808.75 an ounce at the London equities close, firm against USD1,805.05 late Tuesday.
The economic events calendar on Thursday has PMI readings from Germany, the eurozone, the UK and US at 0830 GMT, 0900 GMT, 0930 GMT and 1445 GMT respectively.
The UK corporate calendar on Thursday has annual results from oil major Shell, first-quarter results from contract caterer Compass Group and third-quarter results from telecommunications firm BT Group.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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