By Barbara Kollmeyer
With mining stocks leading the charge, U.K. markets climbed on Wednesday, shaking off the previous session’s losses with investors betting on themes surrounding economic reopenings.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -1.90% climbed 1.3% to 7,010. The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.8330% rose 0.1% against the dollar. The index last closed above the psychologically important 7,000 level on April 16. The FTSE fell 0.7% on Tuesday, in step with losses for global equities after Treasury Secretary Janet Yellen spoke of the possible need for U.S. interest rate increases.
But investors were shaking off those concerns and picking up knocked-down shares of companies geared toward an economic recovery, as COVID-19 vaccinations in the U.S. and U.K., and even Europe, pick up pace, despite halting starts in other parts of the world.
“This may be down to investors’ ongoing quest to find angles on how to play the economic upturn that they think will follow the pandemic, it may be down to U.S. Treasury Secretary Yellen’s off-the-cuff remarks about how interest rates may need to rise at some stage and it may be down to gathering signs that inflation may be coming and not just temporarily. It may be down to a combination of all three.
“But whatever the reason, investors’ affections seem to be switching toward ‘jam today’ stocks — cyclicals that have underperformed for a long period of time and whose business models were hit hard by the pandemic, with the result that their share could be cheap just when they are primed to offer very rapid earnings growth from a depressed base. In crude terms, you could call these ‘value’ stocks,” said AJ Bell investment director Russ Mould, in a note to clients.
Banks, miners and building materials plays such as CRH /zigman2/quotes/201759252/delayed UK:CRH -1.90% /zigman2/quotes/202550827/composite CRH -2.28% , up 4%, were climbing. Among heavily weighted mining stocks, shares of Rio Tinto /zigman2/quotes/202627887/composite RIO -2.40% /zigman2/quotes/208934945/delayed UK:RIO -1.24% climbed nearly 3% and Anglo American /zigman2/quotes/201381512/delayed UK:AAL -5.07% /zigman2/quotes/203605158/composite NGLOY -5.62% rose 3.8%.
Shares of heavily weighted HSBC /zigman2/quotes/208272822/composite HSBC -3.43% rose 2.4% and Barclays /zigman2/quotes/206581728/composite BCS -4.16% /zigman2/quotes/208409333/delayed UK:BARC -3.89% rose 2%.
Several shares were moving on earnings news. Croda International /zigman2/quotes/206442951/delayed UK:CRDA -0.59% said on Wednesday that is holding a strategic review of its performance technologies and industrial chemicals, or PTIC, businesses to establish what ownership structure best serves the business going forward.
The FTSE 100 chemicals company said the review, expected to conclude by the end of the year, will create a stronger platform for growth and is consistent with its prioritization of investments in faster-growth life science and consumer markets, which represent more than 80% of the company’s profitability. Shares rose 3.4%.
Online fashion retailer Boohoo /zigman2/quotes/205655689/delayed UK:BOO -1.57% reported a sharp rise in pretax profit for fiscal 2021, and said that revenue for the current fiscal year should rise around 25%, boosted by the performance of its latest acquisitions. But shares fell 2.8%, as analysts at Barclays cited weak guidance on margins.
Virgin Money /zigman2/quotes/207233909/delayed UK:VMUK -3.07% said that it returned to a pretax profit for the first half of fiscal 2021 on the back of significantly lower impairment charges, and that it is cautiously optimistic about its improving outlook.
But analysts at Citi noted higher costs and a “weaker run-rate for noninterest income, which they said points to flat to modestly higher pre-provisional estimates.” Shares of the financial company fell over 3%.