LONDON MARKET CLOSE: FTSE 250 outperforms amid hesitant market mood

(Alliance News) - Markets hovered on Wednesday as US Federal Reserve Chair Jerome Powell's end-of-week appearance draws nearer, but stocks in London managed to pull ahead of peers.

"It's been a relatively subdued day for European stocks, although the FTSE 250 has once again set a record high crossing the 24,000 level for the first time, while the FTSE 100 has also outperformed," said Michael Hewson, chief market analyst at CMC Markets.

The FTSE 100 index closed up 24.34 points, or 0.3%, at 7,150.12. The FTSE 250 ended up 100.36 points, or 0.4%, at 23,986.37 - ending at a fresh closing high and hitting an intraday record of 24,058.93 - and the AIM All-Share closed up 7.41 points, or 0.6%, at 1,279.79.

The Cboe UK 100 ended up 0.5% at 711.31, the Cboe UK 250 closed up 0.4% at 21,812.67, and the Cboe Small Companies ended up 0.2% at 15,486.17.

Hewson commented: "On the FTSE 100 financials have edged higher in line with the rise in yields seen this afternoon, with Standard Chartered, HSBC and Lloyds seeing some afternoon demand. Industrials have also performed well with Weir Group, near the top of the index after Credit Suisse said that the recent declines in the share price had created an attractive entry point for investors."

Standard Chartered closed up 3.1% while HSBC shares advanced 2.2% and Lloyds 1.7%. Weir closed up 3.0%.

Helping to boost London's mid-cap index to fresh highs was Marks & Spencer, which rose 5.1% after Deutsche Bank initiated the food, clothing and homewares retailer at Buy. Blue-chip retailing peer Next was also initiated with a Buy rating, and ended up 1.4%.

"We initiate coverage on the European apparel sector with a preference for growth companies which have adapted to changing consumer habits," said Deutsche Bank.

Also rising in the FTSE 250 on Wednesday was Grafton Group, closing up 3.8% on record half-year earnings as revenue topped GBP1 billion.

Revenue for the six months ended June 30 rose 46% to GBP1.03 billion from GBP703.7 million a year earlier. The Dublin-based firm said it had now "fully recovered" from the impact of the lockdown in the first half of last year, with average daily like-for-like revenue 17% ahead of the first half of pre-pandemic 2019.

The building materials distributor and DIY retailer posted a pretax profit of GBP142.9 million, improved considerably from GBP29.5 million a year before.

Rank Group shares increased 4.3% as the casino operator noted the decision by the UK tax authority to not appeal the tribunal decision on Rank's VAT refund claim, meaning it stands to receive a refund of around GBP80 million.

Elsewhere in London, Augean shares surged 17% to 334 pence as the London M&A train rumbled on. The waste management firm backed a GBP341.2 million takeover bid by a pair of investors, fighting off interest from Morgan Stanley Infrastructure.

Eleia, formed by investment funds managed by London-based Ancala Partners and Toronto, Canada-headquartered Fiera Infrastructure, have offered 325p per Augean share.

The Eleia offer is a 16% premium to Morgan Stanley Infrastructure's 280p per share bid. It also is 31% higher than Augean's closing share price of 248.5p on May 26, the day before it received interest from Morgan Stanley Infrastructure.

In European equities on Wednesday, the CAC 40 in Paris ended up 0.2%, while the DAX 30 in Frankfurt lagged, closing down 0.3%.

Germany's flagship stock index suffered after data from the Munich-based ifo showed the country's economic mood has taken another knock.

In August, the ifo business climate index fell to 99.4 points, after recording a revised 100.7 in July. This decline was due mainly to significantly less optimism in companies' expectations and followed a fall from 101.7 points in June.

"Concerns are growing in the hospitality and tourism sectors in particular. Supply bottlenecks for intermediate products in manufacturing and worries about rising infection numbers are putting a strain on the economy," ifo said.

The euro stood at USD1.1754 at the European equities close Wednesday, firm against USD1.1747 at the same time on Tuesday.

The pound was quoted at USD1.3726 at the London equities close Wednesday, a touch higher compared to USD1.3721 at the close on Tuesday. Against the yen, the dollar rose to JPY110.06 from JPY109.67.

Stocks in New York were higher at the London equities close, with the DJIA up 0.2%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.1%.

"It's all gone very quiet in the markets, which is hardly surprising under the circumstances. The combination of light news flow, few economic releases and caution ahead of the Jackson Hole event has taken all of the excitement out of the markets. Instead, it's been replaced by nervous anticipation as we wait to see what the Fed will do next," said Craig Erlam, senior market analyst at Oanda.

Fed chief Powell gives a speech at 1500 BST on Friday.

Brent oil was quoted at USD71.61 a barrel at the London equities close Wednesday, up from USD70.73 late Tuesday. Gold dropped to USD1,786.95 an ounce at the London equities close Wednesday against USD1,806.44 at the close on Tuesday.

Oanda's Erlam said the precious metal is suffering from profit-taking after a "bumper" few weeks.

Thursday's economic calendar sees German Gfk consumer confidence at 0700 BST, European Central Bank policy meeting minutes at 1230 BST and US GDP and initial jobless claims at 1330 BST.

The UK corporate calendar on Thursday has half-year results from precious metals miner Polymetal International, recruitment firm Hays and building materials firm CRH.

By Lucy Heming; lucyheming@alliancenews.com

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