LONDON MARKET MIDDAY: Gains ahead of Fed minutes; Wise starts trading

(Alliance News) - London stocks were pushing higher midday Wednesday as investors await the release of Federal Reserve meeting minutes to glean any hints over the direction of US monetary policy.

Oil major Royal Dutch Shell was helping to drive up the blue-chip FTSE 100 index on the promise of increased shareholder returns, while money transfer firm Wise's first day of dealings in London was being received in a positive, albeit volatile, fashion.

The FTSE 100 index was up 36.42 points, or 0.5%, at 7,137.30 midday Wednesday. The mid-cap FTSE 250 index was up 89.60 points, or 0.4%, at 22,984.96. The AIM All-Share index was up 0.1% at 1,265.25.

The Cboe UK 100 index was up 0.6% at 709.88. The Cboe 250 was up 0.4% at 20,680.47 and the Cboe Small Companies down 0.2% at 15,510.84.

Oanda analyst Sophie Griffiths said stocks were rebounding Wednesday after Tuesday's sell-off.

"Today, concerns surrounding the economic outlook are being overshadowed by upbeat corporate updates as oil major Shell announced it will step up its distributions to shareholders," said Griffiths.

Shell 'A' shares rose 1.6% and 'B' shares rallied 1.7% after the energy firm 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.

Also lifting London's oil stocks were Brent prices, which were recovering after slumping on Tuesday following the break-up of talks amongst OPEC+ crude producers.

US oil futures approached a seven-year peak after the talks between the 23 members of the petroleum producers group were called off, ending negotiations on a proposal to boost crude supply. But investors quickly shifted course, selling off both Brent and West Texas Intermediate futures contracts, as investors fixated on a possible disintegration of any effort to rein in supply.

Brent oil was trading at USD75.74 a barrel midday Wednesday, up from USD74.74 late Tuesday but off recent highs of near USD78 a barrel. On the London Stock Exchange, BP shares were up 0.8% at midday.

Gold was quoted at USD1,807.80 an ounce , rising from USD1,804.50 on Tuesday.

Outside of corporate updates, investors on Wednesday are eyeing the latest US Federal Reserve policy meeting minutes, due at 1900 BST.

"Given the growing differences between a relatively dovish BoE, and progressively hawkish Fed, GBPUSD traders will be expecting some fireworks should today's minutes continue to reiterate their potential pathway to higher rates in response to rising prices," commented Joshua Mahony, senior market analyst at IG.

Sterling was quoted at USD1.3823 midday Wednesday, rising from USD1.3798 at the London equities close on Tuesday.

However, the dollar was on stronger footing against both the Japanese yen and the euro.

Against the yen, the dollar trading at JPY110.79, up from JPY110.57.

The euro traded at USD1.1824 on Wednesday, soft against USD1.1829 late Tuesday after data showed German industrial production unexpectedly declined for a second straight month in May.

Production in industry fell 0.3% on a monthly basis in May, following a revised 0.3% fall in April. Output had been expected to grow 0.5% in May, according to FXStreet. Markets had expected growth of 0.7% for April's reading.

The data comes a day after it was revealed German new manufacturing orders fell month-to-month in May, in a surprise that massively missed market expectations.

More positively, the European Commission on Wednesday raised its outlook for the eurozone economy, tipping gross domestic product to return to pre-virus levels at the end of the year.

In its summer forecast, the European Commission predicted 4.8% economic growth in the eurozone and wider EU, raised from the 4.2% climb in its spring outlook. In addition, it predicts GDP to return to pre-Covid-19 levels in the final quarter of 2021.

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.

Wall Street is on track for a modestly higher start on Wednesday, with the Dow Jones seen flat, the S&P 500 poised for a 0.1% rise, and the Nasdaq Composite heading for a 0.4% gain.

Back in London, Capital & Counties Properties was the top mid-cap performer, up 3.2% after Berenberg initiated the stock with a Buy rating.

PageGroup rose 2.9% after the recruitment firm raised its annual guidance following a strong second quarter performance.

The FTSE 250 constituent expects operating profit this year of GBP125 million to GBP135 million, up from the GBP90.0 million to GBP100.0 million it was forecasting in April. Operating profit was GBP17.0 million in 2020, which had been well down on GBP146.7 million in 2019.

The guidance uplift comes after a strong second quarter that saw gross profit of GBP219.7 million, up 94% from the coronavirus-affected prior year and 2.0% higher than 2019.

There was also an upbeat update from fellow London-listed recruitment firm Robert Walters, whose stock rose 6.3%. Robert Walters now expects full-year profit to be "significantly ahead" of its prior forecast. In June, the firm upgraded its 2021 outlook for a second time.

888 Holdings fell 5.0% 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%.

Wise shares got off to a volatile start to life in London as its lengthy opening auction concluded late Wednesday morning, with shares opening at 800p, rising to 830.9p and then falling back to 803.6p around midday. At this current level, the stock has a market value just shy of 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.

"The price has already fluctuated significantly since it launched so it will be hard to get a sense of how this price has been received by investors for a few days."

By Lucy Heming; lucyheming@alliancenews.com

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