LONDON MARKET CLOSE: Stocks in buoyant mood ahead of FOMC minutes

(Alliance News) - Stocks in London ended Wednesday in the green, able to shake off the opening jitters on Wall Street as investors await the much-anticipated minutes from the US Federal Reserve's most recent monetary policy meeting.

"In Europe indices have generally been able to hold on to at least some of their gains, but with Wall Street struggling it will be tough for European markets to really establish the groundwork for a sustainable bounce. Tonight's Fed minutes should keep sentiment in check too, since investors will be keen to see if the record of the meeting sheds any further light on the hawkish shift seen in the dot plot, even if some of that shift in outlook was walked back in the weeks following the FOMC's latest decision," Chris Beauchamp, chief market analyst at IG, said.

The FTSE 100 index closed up 50.14 points, or 0.7%, at 7,151.02 Wednesday. The mid-cap FTSE 250 index closed up 74.88 points, or 0.3%, at 22,970.24. The AIM All-Share index ended up 0.1% at 1,265.34.

The Cboe UK 100 index closed up 0.8% at 711.64. The Cboe 250 added 0.3% at 20,664.35 but the Cboe Small Companies closed down 0.4% at 15,483.84.

Equities in mainland Europe were mixed on Wednesday, with the CAC 40 in Paris flat but the DAX 30 in Frankfurt 0.8% higher, unshaken by the disappointing German data.

Oanda's Sophie Griffiths said: "European indices have been on a tear as successful vaccine programmes have seen economies re-opening, boosting sentiment and economic growth. However, a few signs are emerging that this growth could be starting to wane, which could begin to put brakes on the relentless move higher in recent months."

In London, miners topped the FTSE 100. BHP added 3.2%, Anglo 3.1%, Glencore 2.6%, Rio 2.6% and Anto gained 2.5%.

Gold was quoted at USD1,801.50 an ounce, slipping from USD1,804.50 on Tuesday.

"All eyes will now turn to the FOMC minutes, which could have a slightly more hawkish bias reflecting the Fed's shift in the June meeting. That said, the minutes are now out of date. The tick higher in NFP unemployment combined with weaker-than-forecast ISM services data are easing concerns that the Fed will accelerate a move towards tightening monetary policy and is therefore supportive of more upside for gold," Griffiths added.

Looking ahead, the latest Federal Open Market Committee policy meeting minutes are due at 1900 BST.

Wall Street was searching for direction ahead of the FOMC minutes. The Dow Jones was up 0.2%, the S&P 500 up 0.1%, while the tech-heavy Nasdaq Composite was 0.2% lower.

Brent oil was trading at USD73.00 a barrel Wednesday evening, down from USD74.74 late Tuesday.

London's oil majors reversed earlier gains to close in the red on Wednesday, following the price of oil. BP ended down 1.1%, while Shell 'A' shares lost 0.5% and the 'B' shares gave back 0.1%.

Shell unveiled plans to lift shareholder distributions and said it will retire its USD65 billion net debt target.

The oil major set out plans to "move to the next phase of its capital allocation framework" and increase total shareholder distributions to within the range of 20% to 30% of cash flow from operations. This will start with its second-quarter results announcement, on July 29. In the first quarter, Shell's cash flow from operations was USD8.29 billion, up 32% quarter-on-quarter.

Shell credited the planned increase in returns to a strong operational and financial delivery, combined with an improved macro-economic outlook.

In the midcaps, 888 Holdings gave back 5.7% as the online gaming firm said it traded slightly ahead of management expectations in the second quarter, with UK revenue beginning to be hurt as retail and leisure physical venues reopened in May.

Gibraltar-based 888 said that in the second quarter of 2021 revenue increased to USD257 million from USD214 million, up 20% year-on-year or up 10% at constant currency.

However, the company noted that, since UK retail and leisure venues reopened in May - providing competition to 888's online offering - average daily revenues in the UK have dropped by 20%.

JD Wetherspoon lost 1.9% after it said a recent rebound in sales was stopped in its tracks due to the pub chain largely not televising the UEFA Euro 2020 football championship.

In addition, the FTSE 250 company warned that it may be forced to boost the prices of its meals, hitting out once again at the "unfairness" of UK government VAT rules.

Wetherspoon said that 850 of its 860 pubs have now reopened following the easing of lockdown restrictions, but it still expects a loss for its year ending July 25.

Between April 12 and May 16, when only outdoor dining was permitted, like-for-like sales were down 49% from two years earlier. During those weeks, 500 of its pubs were opened.

The like-for-like decline tempered to 15% between May 17 and July 4, when pubs were allowed to provide indoor dining. It improved further between May 17 and June 10, before the start of the delayed Euro 2020. Like-for-like sales during that three-week period were 8.1% lower on a two-year basis.

However, since then, like-for-like sales have tumbled 21%.

Mitchells & Butlers shed 3.7% and Fuller, Smith & Turner lost 0.7%.

IG's Beauchamp said: "Investors will be hoping that today marks the nadir for Wetherspoon sales, and that the next few months will see the dire trend of late reverse. Having swept the board in performance terms last year the firm is now hoping that the end of the Euros championship will bring people back to its pubs, and that the end of restrictions will bring a fresh influx of customers.

"The shares have managed to hold on to most of the gains made since October, but shareholder patience will run out if things do not begin to change in terms of sales figures."

In IPO news, Wise shares got off to a volatile start to life in London as its lengthy opening auction concluded late Wednesday morning. Shares opened at 800p, rose to 830.9p, fell back to 803.6p around midday, before surging in afternoon trading to close at 880p. At this current level, the stock has a market value of over GBP8.0 billion.

Wise, which has recently been rebranded from TransferWise, provides money transfer services. It chose to conduct a direct listing in London instead of a traditional initial public offering.

"Wise was valued at GBP5 billion in July 2020, so they will be pleased to have launched well over this valuation, especially as there were concerns over the dual class share structure they opted for," said Zoe Stabler, an investment specialist at finder.com.

Sterling was quoted at USD1.3770 Wednesday evening, slipping from USD1.3798 at the London equities close on Tuesday.

Against the yen, the dollar was trading at JPY110.70, up from JPY110.57.

The euro traded at USD1.1793 on Wednesday, soft against USD1.1829 late Tuesday after data showed German industrial production unexpectedly declined for a second straight month in May.

The economic calendar on Thursday has German trade balance data at 0700 BST, Irish consumer price index at 1100 BST and US initial jobless claims at 1330 BST.

The local corporate calendar has full-year results from pub operator Fuller, Smith & Turner, luxury watch retailer Watches of Switzerland and budget airline Jet2. Industrial and electronics products retailer Electrocomponents and manufacturer Senior will issue trading statements.

By Paul McGowan; paulmcgowan@alliancenews.com

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