(Alliance News) - The blue-chip FTSE 100 index was weighed down by a strong pound at midday Wednesday, though had moved off morning lows.
Meanwhile, the more domestically-focused FTSE 250 charged ahead with travel stocks notching up further gains.
The FTSE 100 index was down 5.52 points, or 0.1%, at 6,620.42 midday Wednesday. The mid-cap FTSE 250 index was up 206.63 points, or 1.0%, at 21,264.35. The AIM All-Share index was up 0.7% at 1,191.73.
The Cboe UK 100 index was flat at 659.15. The Cboe 250 was up 1.0% at 18,908.06, and the Cboe Small Companies up 0.6% at 13,006.02.
In mainland Europe, the CAC 40 index in Paris was up 0.1% while the DAX 30 in Frankfurt was up 0.8%.
"The FTSE 100 is lagging its European counterparts today, as a surging pound hinders sentiment for this highly international index. Value names are once again leading the way in the UK, with rising yields putting pressure on those stocks that have already enjoyed a particularly strong 2020," commented Joshua Mahony, senior market analyst at IG.
Sterling was quoted at USD1.4141 at midday Wednesday, higher than USD1.4103 at the London equities close on Tuesday and having crossed the USD1.42 mark briefly overnight.
The pound, up 3.5% against the dollar since the year started, has gained on the back of the UK successful vaccination campaign and hopes for a return to normality in the coming months.
Stocks exposed to the hard-hit travel and tourism industries basked in another session of gains on Wednesday.
"Travel stocks enjoyed another day in the sun with the likes of easyJet and International Consolidated Airlines flying higher on reports of strong holiday bookings following England's roadmap to coming out of lockdown," said AJ Bell's Russ Mould.
British Airways-parent International Consolidated Airlines was up 2.9% at midday, topping the FTSE 100, while Anglo-German tour operator Tui surged 6.4% to the top of the FTSE 250, with airline easyJet rising 3.8%.
Another sector in the green on Wednesday was housebuilders. Barratt Developments was up 2.2% at midday, Taylor Wimpey up 1.4% and Persimmon up 1.2%.
The UK Chancellor is reportedly planning to extend the stamp duty holiday by three months.
The Treasury announced last year that it would temporarily raise the stamp duty threshold from GBP125,000 to GBP500,000 for property sales in England and Northern Ireland. But many people have been left scrambling to complete their transactions before the deadline of March 31, worried that if they do not, they could be left with a GBP15,000 tax bill.
The Times newspaper said it has been told that Chancellor Rishi Sunak – who has been urged not to end the stamp duty holiday – will use his government budget presentation next week to move the deadline to the end of June.
At the bottom of the FTSE 100 was InterContinental Hotels Group, falling 2.3% after Deutsche Bank cut the Holiday Inn owner to Hold from Buy. IHG had closed 1.6% lower on Tuesday after posting a swing to loss for 2020.
Reckitt Benckiser reversed early gains to trade 1.0% lower at midday, even after reporting a swing to profit in 2020 as its cleaning and disinfectant brands got a sales boost from the coronavirus pandemic.
The Slough, Berkshire-based consumer health and hygiene firm swung to a pretax profit of GBP1.87 billion from a loss of GBP2.11 billion in 2019. Net revenue for 2020 increased 8.9% to GBP13.99 billion from GBP12.85 billion the year before, a hair below company-compiled consensus of GBP14.02 billion.
Like-for-like net revenue growth was 12%, with Reckitt noting the "very strong, volume-led growth in a Covid environment". The figure was exactly in line with market consensus in terms of like-for-like growth. Reckitt said it saw "sustained" strong demand for disinfectant product Dettol throughout the year.
Elsewhere in London, Metro Bank shares fell 8.0% after posting a sharply widened loss for 2020.
For 2020, the challenger bank posted a pretax loss of GBP311.4 million, widened from 2019's loss of GBP130.8 million loss. The lender's expected credit losses ballooned to GBP126.7 million in 2020 from GBP11.7 million in 2019.
Wall Street is pointed to a cautiously positive start on Wednesday ahead of the second day of US Federal Reserve Chair Jerome Powell's testimony to Congress. The Dow Jones, S&P 500 and Nasdaq Composite are all called up 0.1%.
Powell on Tuesday attempted to play down rising inflation concerns and pledged to keep benchmark lending rates low until jobs recover and prices have risen consistently.
With Congress moving towards approving President Joe Biden's USD1.9 trillion rescue plan, the central bank chief remained steadfastly non-committal about the package, but he did downplay the need to address the USD3 trillion US government deficit immediately.
Amid growing fears on markets that a quick recovery from the pandemic - fueled by more government stimulus on top of nearly USD3 trillion last year - will lead to higher interest rates and hinder the ability of companies to borrow, Powell tried to reassure skittish investors during the first day of his semi-annual testimony before Congress.
He insisted that the Fed will keep rates at the current level near zero until the economy reaches "maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time."
Stephen Innes at Axi commented: "With US stocks [on Tuesday] charging back from overnight lows to finish higher into the close and coupled with a welcome reprieve on the recent bond selloff with US10Y yields unchanged at 1.36%, It suggests a job well done by Chair Powell and importantly, for now, the Fed credibility remains intact."
The dollar was broadly lower against major currency pairings on Wednesday, though did gain ground against the safe haven yen.
The euro traded at USD1.2163 on Wednesday, firming on USD1.2160 late Tuesday after figures showed the German economy grew slightly more than initially expected for the final quarter of 2020. Against the yen, the dollar rose to JPY105.83 from JPY105.11 at the London equities close on Tuesday.
Gold was quoted at USD1,809.23 an ounce Wednesday midday, higher than USD1,803.05 late on Tuesday. Brent oil nudged up to USD65.88 from USD65.07.
By Lucy Heming; lucyheming@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
