LONDON MARKET MIDDAY: Packaging firms lift FTSE 100; Walt Disney ahead

(Alliance News) - Stock prices in London were higher at midday on Wednesday with paper and packaging companies giving the FTSE 100 a boost, while earnings season in the US continues with results due from entertainment firm Walt Disney.

The FTSE 100 index was up 43.66 points, or 0.6%, at 7,610.73. The mid-cap FTSE 250 index was up 380.08 points, or 1.0%, at 22,167.54. The AIM All-Share index was up 8.14 points, 0.7%, at 1,090.62.

The Cboe UK 100 index was up 0.7% at 755.55. The Cboe 250 was up 1.8% at 19,783.43, and the Cboe Small Companies was 1.0% higher at 15,470.45.

In mainland Europe, the CAC 40 stock index in Paris was up 1.1% and the DAX 40 in Frankfurt was 1.3% higher.

In the FTSE 100, Smurfit Kappa was up 2.3% after the Irish corrugated packaging company reported a strong performance for 2021 and raised its dividend.

For 2021, revenue was up 18% to EUR10.11 billion from EUR8.53 billion in 2020, and pretax profit was EUR913 million, up 22% from EUR748 million.

The Dublin-based firm declared a final dividend of 96.1 cents, up 10% from 87.4 cents in 2020.

Smurfit Kappa said containerboard pricing in Europe and the Americas moved higher throughout 2021, initially driven by recovered fibre prices and then by surging energy costs. Increasing recovered fibre prices cost the group an additional EUR440 million in 2021 versus the prior year while rising energy prices cost an additional EUR235 million.

While costs remain at elevated levels, Smurfit Kappa expects to recover these in the year ahead.

Rivals Mondi and DS Smith were up 5.1% and 2.5% respectively in a positive read-across.

"The FTSE 100 made a robust start on Wednesday, lifted by some decent corporate results and a rally in the packaging sector," said AJ Bell's investment director, Russ Mould. "Smurfit Kappa helped lift its industry peers with guidance for rising prices that should benefit the entire space amid strong demand."

Admiral was up 3.8% after HSBC upgraded the insurer to 'buy' from 'hold'.

Conversely, GlaxoSmithKline was down 1.0%. The drugmaker met expectations with its 2021 results as it said the demerger of its consumer health business is on track for this year.

Revenue for 2021 nudged up to GBP34.11 billion from GBP34.10 billion the year before, marginally ahead of market forecasts for GBP34.08 billion. The Brentford, England-based pharmaceutical firm noted that sales, while stable year-on-year on a reported basis, were up 5% at constant exchange rates.

For Consumer Healthcare, Glaxo said it is on track to demerge the business mid-year. It will provide a medium-term outlook for the division at a capital markets day later this month.

In the FTSE 250, Chemring was the worst performer, down 1.0%, after Barclays cut the military countermeasures maker to 'equal weight' from 'overweight'.

Elsewhere, John Menzies was up 34% at 447.50 pence after the aviation-services provider rejected a GBP468.7 million takeover approach from a subsidiary of Kuwaiti logistics firm Agility Public Warehouse Co.

John Menzies said the approach was for 510.00p per shares in cash, up from a previous approach of 460.00p. The latest price was a 52% premium to the company's closing share price of 335.00p on Tuesday.

Having considered the offer, Menzies said the proposal was "entirely opportunistic, conditional and that the terms fundamentally undervalue Menzies and its future prospects".

On AIM, boohoo Group was down 1.5% after Barclays downgraded the online fashion retailer to 'underweight' from 'equal weight'.

The dollar was lower across the board. The pound was quoted at USD1.3573 at midday Wednesday, up from USD1.3551 at the London equities close Tuesday.

"The British pound is closely correlated with equity market dynamics, and the latest upward momentum in major global indices supports GBP buyers. Also noteworthy is that the Bank of England switched to the next gear in its monetary policy tightening as last week's rate hike was 25 basis points rather than 50 bps by only a slight margin," commented Alex Kuptsikevich, a market analyst at FxPro.

The euro was priced at USD1.1435, rising from USD1.1413 late Tuesday. Against the Japanese yen, the dollar was trading at JPY115.45, lower from JPY115.60 in London on Tuesday.

Brent oil was quoted at USD90.30 a barrel Wednesday at midday, little changed from USD90.28 late Tuesday. Gold stood at USD1,827.77 an ounce, marginally higher against USD1,825.73.

New York was pointed to a higher start ahead of earnings from Dow 30 member Walt Disney after the market close Wednesday. Disney shares were up 0.8% in pre-market activity.

The Dow Jones Industrial Average was called up 0.5%, the S&P 500 up 0.7%, and the Nasdaq Composite up 1.0%, based on futures trading. The indices had closed up 1.1%, 0.8% and 1.3% respectively on Tuesday.

SoftBank wants to list UK chipmaker Arm in the US after the collapse of its sale to Nvidia, the Financial Times reported.

On Tuesday, SoftBank said it had terminated its agreement with Nvidia to sell UK mobile chip technology business Arm due to "significant regulatory challenges". SoftBank said it now plans a public offering of Arm by March 2023.

SoftBank Chief Executive Masayoshi Son told the FT the Nasdaq stock exchange in the US would be the "most suitable" for a listing.

The FT said the London Stock Exchange is expected to enter talks with Arm over the benefits of a UK listing. Arm could also pursue a dual listing in the UK and US, the newspaper added.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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