(Alliance News) - Stock prices in Europe started Wednesday on a strong footing, building on Tuesday's decent gains, as monetary policy comes into focus with two key central bank updates later this week.
The Bank of England and European Central Bank both announce monetary policy decisions on Thursday. Before that, inflation data from the eurozone on Wednesday could give the ECB something to mull over. The consumer price index data follows numbers on Monday which suggested Europe's economy was resilient in the final quarter of 2021, despite the emergence of Omicron.
The FTSE 100 index was up 37.09 points, or 0.5%, at 7,572.87 early Wednesday. The mid-cap FTSE 250 index was up 166.46 points, or 0.8%, at 22,334.40. The AIM All-Share index was up 5.07 points, 0.5%, at 1,106.77.
The Cboe UK 100 index was up 0.6% at 751.67. The Cboe 250 was up 0.9% at 19,925.43, and the Cboe Small Companies was 0.1% higher at 15,523.75.
In mainland Europe, the CAC 40 stock index in Paris was up 1.0% and the DAX 40 in Frankfurt was 1.3% higher. Asian equities advanced on Wednesday. The Nikkei 225 in Tokyo surged 1.7%, while the S&P/ASX 200 in Sydney added 1.2%. Markets in China remained closed for Lunar New Year.
"Markets were buoyed by strong [corporate] profit reports and comments from Fed Reserve policymakers suggesting that US monetary policy tightening will take place at a 'measured' pace," analysts at Lloyds Bank commented.
Among those to post decent quarterly updates in New York late Tuesday were Google-owner Alphabet and chipmaker Advanced Micro Devices. Alphabet's A stock rose 9.2% after hours, while AMD surged 10%.
The dollar was weaker early Wednesday.
The euro stood at USD1.1291, up from USD1.1247 at the European equities close on Tuesday. The single currency still remains some way off its year-to-date high of USD1.1483.
Against the yen, the dollar was trading at JPY114.54, down from JPY114.80.
The eurozone's annual consumer price growth is expected to slow to 4.4% in January from 5% in December. The data is due at 1000 GMT on Wednesday. However, figures for both France and Germany this week have come in ahead of expectations.
Elsewhere, the economic events calendar on Wednesday has the US ADP national employment report at 1315 GMT.
The ECB announces its interest rate decision at 1245 GMT on Thursday, after the BoE at 1200 GMT.
In London, Ocado shares rose 7.1%. Credit Suisse lifted its recommendation for the online grocer to Outperform from Underperform.
Digital automotive marketplace Auto Trader rose 3.2%. Jefferies upgraded the stock to Buy from Hold.
Vodafone was another strong performer, rising 2.8%.
It hailed a "solid quarter" for business and promised to create "value" for shareholders, as the telecommunications operator faces pressure from an activist investor.
In the three months to December 31, revenue rose 4.3% annually to EUR11.68 billion from EUR11.20 billion a year earlier. On an organic basis, growth was 3.7%.
Service revenue, which includes airtime usage, monthly access charges and roaming, climbed 3.1% annually to EUR9.65 billion. It was up 2.7% organically. This is where Vodafone generates most of its revenue.
Vodafone reaffirmed that it expects annual adjusted earnings before interest, tax, depreciation, amortisation and after leases between EUR15.2 billion and EUR15.4 billion for all of financial 2022. It expects EUR5.3 billion in free cash flow.
"We remain focused on our operational priorities to strengthen commercial momentum in Germany, accelerate our transformation in Spain and position Vodafone Business to maximise EU recovery funding opportunities. We are also committed to creating value for our shareholders through proactive portfolio actions and continuing to improve returns at pace," Chief Executive Nick Read commented.
Late last week, Bloomberg reported that activist investor Cevian Capital had taken a stake in Vodafone, and the two had discussed how to boost the performance of the telecom operator.
Playtech shares recovered and were 0.6% higher. The stock was around 13% lower at the open, as the gambling software operator cast doubt on a potential takeover by Sydney-listed Aristocrat Leisure.
The FTSE 250 listing said its agreed acquisition by Aristocrat Leisure is likely to not be backed by its shareholders, based on proxy votes. The vote requires 75% shareholder approval.
"Based on the proxy votes received to date, however, the minimum threshold (75% of those shares voted) needed to approve the Scheme and related resolutions will not be achieved," Playtech warned.
"If this remains the case on the final vote count, the acquisition of Playtech by Aristocrat will not proceed, the scheme will lapse and the offer period for the company will end."
Playtech has been "actively considering its options for maximising shareholder value".
It has been mulling "attractive" proposals in respect to its B2B and B2C businesses.
In January, one-time Playtech suitor JKO Play confirmed it does not plan on making a bid to buy the gambling software company. JKO Play is controlled by Keith O'Loughlin and Eddie Jordan, the former boss of a Formula One team. JKO pulling out of the race left Aristocrat in pole position to complete its agreed takeover.
Aristocrat Chief Executive Trevor Croker said: "In particular, the emergence of a certain group of shareholders who built a blocking stake while refusing to engage with either ourselves or Playtech materially impacted the prospects for the success of our offer, which had been recommended by the board of Playtech PLC.
"We are disappointed that our recommended offer to acquire Playtech PLC is expected to lapse."
Aristocrat Leisure shares closed up 0.9% in Sydney.
The pound was quoted at USD1.3543 early Wednesday, up from USD1.3505 at the London equity market close on Tuesday.
UK Prime Minister Boris Johnson is promising to break the link between "geography and destiny" as the government publishes its long-awaited blueprint for "levelling up" the country.
The White Paper will set out a series of wide-ranging national "missions" – from improving public transport to ensuring access to 5G broadband – to be enshrined in law.
At the same time, ministers are promising to provide more power to the regions in a "devolution revolution" with the offer of a London-style deal for any area of England that wants one. Labour however dismissed the plan as "more slogans" with "few new ideas".
The move comes as Johnson struggles to regain the political initiative after the battering he has taken over lockdown parties in Downing Street and the Sue Gray report.
Among the London listings that could benefit from the industrial plans is infrastructure construction company Costain. Its shares were up 3.5%.
Costain is currently working on parts of HS2, the planned high-speed rail line between London and Birmingham.
Gold was quoted at USD1,799.98 an ounce early Wednesday, down from USD1,805.05 at the London equities close on Tuesday. Brent oil fetched USD89.14 a barrel, down from USD89.50.
The 23 members of the OPEC+ oil cartel, who meet on Wednesday, are expected to stick to their guns and increase output modestly as the price of crude surges.
By Eric Cunha; ericcunha@alliancenews.com
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