LONDON MARKET OPEN: Barclays helps FTSE nudge cautiously higher

(Alliance News) - Stock prices in London were higher early Wednesday, though the FTSE 100 underperformed continental peers, despite strong gains from Barclays and St James's Place.

The FTSE 100 index was up 3.81 points, or 0.1%, at 6,999.89 early Wednesday. The mid-cap FTSE 250 index was up 128.76 points, or 0.6%, at 23,005.77. The AIM All-Share index was up 8.02 points, 0.7%, at 1,239.13.

The Cboe UK 100 index was marginally lower at 697.00. The Cboe 250 was up 0.6% at 20,770.81, but the Cboe Small Companies was down 0.3% at 15,190.81.

The CAC 40 in Paris was up 0.3%, while the DAX 30 in Frankfurt was 0.1% higher.

There was trepidation ahead of Wednesday's main event, the latest US Federal Reserve interest rate decision at 1900 BST.

"The focus of a busy day for data and events in the US will be the outcome of the latest FOMC meeting. There is little prospect of any change in policy settings and the post-meeting statement is likely to contain little change in tone from that issued in June, with the economy maintaining good forward momentum and further upside inflation prices surely to be dismissed as temporary," Daiwa Capital Markets analyst Chris Scicluna commented.

"Therefore, most interest will centre Chair Powell's post-meeting press conference, where reporters will doubtless seek information on whether the committee has made any progress in plans for an eventual tapering of the QE programme. Unfortunately, investors can expect little clarity to emerge."

In China, the Shanghai Composite closed down 0.6%, while the Hang Seng index in Hong Kong was up 0.9% in late trade, rebounding from recent share declines. The Nikkei 225 in Tokyo ended 1.4% lower and the S&P/ASX 200 in Sydney closed down 0.7%.

In London, Barclays rose 5.0% as it announced a new share buyback programme, after a release of credit impairment provisions resulted in a big improvement in half-year results for the UK lender.

Barclays said pretax profit in the six months to June 30 more than tripled to GBP4.98 billion from GBP1.27 billion a year earlier. Net operating income jumped 53% to GBP12.06 billion from GBP7.88 billion. Barclays benefited from a GBP742 million credit impairment release, compared to a charge of GBP3.74 billion a year earlier.

Chief Executive James Staley labelled it a "strong first half".

Barclays declared a 2.0 pence per share payout, having not paid one a year earlier. In addition, it plans to kick off a GBP500 million buyback in the third quarter. This is on top of the GBP700 million share repurchase programme it completed in April.

St James's Place was up 4.7%, the next best large cap performer. The wealth manager's funds under management climbed 11% to a record GBP143.77 billion on June 30 from GBP129.34 billion at the end of last year. Annually, it was up 24%. The company eyes GBP200 billion in funds under management by 2025.

Gross inflows jumped 27% year-on-year to GBP9.19 billion from GBP7.26 billion. What's more, it swung to a pretax profit of GBP482.6 million from a GBP71.9 million loss a year earlier.

St James's Place declared an 11.55p per share first half payout, in line with its plan for interim dividends to amount to 30% of the prior year's total dividend. It did not make a payout in the first half of 2020.

Gold miner Fresnillo rose 3.5% on a "solid operational performance" in the second quarter of 2021.

Total silver output rose 9.6% annually to 14.9 million ounces, while gold production rose 8.6% to 200,163 ounces.

Fresnillo left its annual guidance unchanged.

Wizz Air climbed 3.2%, among the best mid-cap performers. It posted reported an increase in revenue for its first quarter, as travel restrictions around Europe began to ease.

The Budapest-based low-cost airline promisingly said it expects to operate up to 100% of its 2019 capacity during July and August. It noted it will be the first major European carrier to "fully recover capacity".

Its pretax loss for the three months ended June 30 widened, however, to EUR113.5 million from EUR107.4 million a year earlier. Total operating expenses were 56% higher at EUR307.7 million from EUR197.1 million a year earlier.

Wizz Air posted revenue of EUR199.0 million, more than doubled from EUR90.8 million a year ago. Ticket revenues accounted for EUR87.2 million and ancillary revenues increased by 82% to EUR111.9 million.

Looking ahead, Wizz Air expects a busy summer.

CEO Jozsef Varadi said: "In July and August 2021 we expect to operate around 90% and 100% of our 2019 capacity, respectively, making Wizz Air the first major European airline to fully recover capacity to pre-Covid-19 levels."

Other airlines on the London Stock Exchange climbed. easyJet rose 3.9%, Ryanair added 1.8% and British Airways parent International Consolidated Airlines Group was up 3.6%.

England is expected to open its borders to allow US and EU travellers who are fully vaccinated against coronavirus to enter without the need to quarantine, according to reports.

The plans, which would be a boost to the aviation and tourism sectors, are expected to be discussed by ministers on Wednesday, The Guardian and The Times reported.

It comes after aviation firms claimed a trial has demonstrated the UK can safely exempt fully vaccinated US and EU visitors from self-isolation.

The pound was quoted at USD1.3876 on Wednesday morning in London, down from USD1.3882 late Tuesday.

House prices fell by 0.5% in July as the tapering of stamp duty relief has "taken some of the heat" out of the UK's bullish housing market, according to numbers from the Nationwide Building Society.

Nationwide said the average house price in July stood at GBP244,229, slipping from GBP245,432 in June. It followed a 0.7% hike in June.

Annually, prices were 11% higher in July, following June's 13% hike.

Robert Gardner, Nationwide's chief economist, said: "The modest fall-back in July was unsurprising given the significant gains recorded in recent months.

"The tapering of stamp duty relief in England is also likely to have taken some of the heat out of the market."

Nonetheless, London-listed housebuilders were still higher early Wednesday. Taylor Wimpey rose 1.5%, Barratt was up 1.4% and Persimmon was 1.3% higher.

The euro stood at USD1.1808 early Wednesday, down from USD1.1834 at the European equities close on Tuesday. Against the yen, the dollar rose to JPY109.85 from JPY109.66.

Alongside the Fed decision, Wednesday's economic calendar has Irish retail sales at 1100 BST and US goods trade figures at 1330 BST.

Gold advanced slightly to USD1,804.11 an ounce early Wednesday, from USD1,802.67 at the London equity market close on Tuesday. Brent oil was quoted at USD74.68 a barrel, up from USD74.58.

By Eric Cunha; ericcunha@alliancenews.com

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