LONDON MARKET CLOSE: Stocks regain poise ahead of central bank fever

(Alliance News) - Stock prices in Europe defied geopolitical worries and pre-central bank nerves to push higher on Wednesday, though the same could not be said for a beleaguered pound, which almost fell below the USD1.13 mark.

The FTSE 100 index closed up 44.98 points, or 0.6%, at 7,237.64 on Wednesday. The FTSE had fallen in the previous two trading days.

The mid-cap FTSE 250 index ended up 186.53 points, or 1.0%, at 18,714.67. The AIM All-Share index closed up just 0.02 of a point at 855.34.

The Cboe UK 100 index rose 0.7% at 722.76. The Cboe 250 added 1.0% at 16,026.93, and the Cboe Small Companies fell 0.1% to 13,363.44.

In mainland Europe, the CAC 40 index in Paris ended up 0.9%, while the DAX 40 in Frankfurt climbed 0.8%.

Over in New York, the Dow Jones Industrial Average was up 0.5%, the S&P 500 climbed 0.6%, while the Nasdaq Composite was 0.4% higher.

"Stocks have held up well this afternoon, even with Putin's escalation and an impending Fed rate hike," IG analyst Chris Beauchamp commented.

"Vladimir Putin's decision to go for partial mobilisation while waving his nuclear arsenal around is a serious development, but for now markets are too focused on what they hope the Fed might say."

Russian President Vladimir Putin has announced a partial mobilisation in Russia as the war approaches the seven-month mark.

Putin's address to the nation comes a day after Russian-controlled regions in eastern and southern Ukraine announced plans to hold votes on becoming integral parts of Russia.

The Kremlin-backed efforts to swallow up four regions could set the stage for Moscow to escalate the war following recent Ukrainian successes on the battlefield.

The referendums will start on Friday in the Luhansk, Kherson and partly Russian-controlled Zaporizhzhia and Donetsk areas.

Putin said that Russia will use all available means to protect its territory, accusing the West of seeking to "weaken, divide and ultimately destroy our country".

Sterling was quoted at USD1.1336 at the time of the London equities close on Wednesday, down against USD1.1404 at the London equities close on Tuesday. The pound fell to an intraday low of USD1.1303 on Wednesday.

The euro traded at USD0.9879, down from USD0.9989 late Tuesday. Against the yen, the dollar was quoted at JPY144.13, higher versus JPY143.75.

The geopolitical worries boosted the dollar, as traders now look towards the evening's Federal Reserve decision. The Fed is expected to lift rates by 75 basis points.

Over the next 24 hours, there will also be interest rate decisions by the Bank of England and Bank of Japan. The BoE is forecast to hike by 50 basis points, though the BoJ is set to keep rates in negative territory.

In London, housebuilders ended higher. Taylor Wimpey rose 3.6%, Barratt added 3.1% and Persimmon shares climbed 4.2%.

UK Chancellor Kwasi Kwarteng unveils a mini-budget on Friday. The Times reported that Kwarteng is planning to announce a cut in stamp duty in a further attempt to boost growth – although Downing Street refused to comment.

UK Prime Minister Liz Truss confirmed she will be reversing the national insurance hike and axing the planned increase to corporation tax.

Ahead of Friday, the UK government announced a new package of energy bill support, but business groups warned it is just a "short-term fix".

Ministers said the new scheme could roughly halve the price paid for wholesale gas and electricity by non-domestic customers, which include businesses, schools and charities. The government will foot part of an organisation's bill if the wholesale price of gas and electricity stays above a set level.

Back in London, Aveva rose 2.2% to 3,113.83 pence, giving it a market capitalisation of GBP9.40 billion. The industrial software firm agreed to a takeover offer from majority owner Schneider Electric, under which the French energy management company will acquire the remaining stake it does not already own.

Schneider currently owns a 59% stake in Aveva and will acquire the remaining 41% stake at a price of 3,100 pence per share in cash, valuing Aveva's total equity at GBP9.48 billion, and implying an enterprise value of GBP10.15 billion.

John Wood ended 7.2% higher as the company mulls its "capital allocation options" after sealing a deal to sell its Built Environment consulting business to WSP Global for USD1.94 billion gross.

The energy sector-focused engineering and consulting business struck a deal to sell the unit in June.

"We are very pleased to have completed the sale of our Built Environment Consulting business to WSP. This transaction marks a new chapter for Wood - the proceeds have transformed our balance sheet and restored financial flexibility to the group," Chief Executive Ken Gilmartin said.

"Wood has an exciting future ahead as we capture growth opportunities across the energy and materials markets. We are developing our updated strategy and will outline more details, including our approach to capital allocation, at our capital markets day in November."

Elsewhere in London, Ten Entertainment rose 5.6%. The ten-pin bowling operator swung to a pretax profit of GBP21.0 million in the six months that ended June 26 from a loss of GBP10.8 million a year before. Revenue soared to GBP63.2 million from GBP10.6 million.

It reinstated its interim payout with a 3p per share dividend. It has fully repaid a UK Coronavirus Large Business Interruption Loan Scheme, paving the way for it to reinstate payouts.

Brent oil was trading at USD89.80 a barrel, down from USD90.82 late Tuesday. Gold was quoted at USD1,667.36 an ounce, higher than USD1,664.71 on Tuesday.

Thursday's economic calendar has the latest Bank of England interest rate decision at 1200 BST, before a US unemployment claims reading at 1330 BST.

On the local corporate calendar, there are half-year results from gambling software firm Playtech and retailer JD Sports, while hazard detection and life protection services provider Halma reports a trading statement.

By Eric Cunha; ericcunha@alliancenews.com

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