After another terrible start to the year and following the awful events in Ukraine, investors have rediscovered confidence to buy cheap stocks. Here are the shares attracting interest right now.
The bargain hunting, which was aided by the price of Brent crude falling from its overnight $130 a barrel, helped the FTSE 100 index to climb 2% and the FTSE 250 index by more than 3% as investors swept up heavily sold stocks.
This respite for financial markets came despite little change in the wider picture, with stagflation a major threat after the unprecedented spike in commodity prices caused by the invasion of Ukraine and subsequent sanctions against Russia.
Earnings optimism was a factor in the improved risk appetite after updates from Adidas (XETRA:ADS) and Deutsche Post (XETRA:DPW) in Germany and Prudential (LSE:PRU) and Electrocomponents (LSE:ECM) in London.
Adidas shares jumped 7% in Frankfurt as it reported a tripling of 2021 profits and said it expects double-digit rates of growth this year despite the heightened uncertainty. The sportswear giant also increased its dividend for the last year by 10%.
- Global Financial Crisis: best shares to own 13 years after the low
- How to invest for difficult times
- Check out our award-winning stocks and shares ISA
Its performance provided a read-across boost for London-listed JD Sports Fashion (LSE:JD.), which rose 10.6p to 142.35p but remains 22% lower over the past month.
Other blue-chip stocks reversing some of their recent heavy falls included Primark owner Associated British Foods (LSE:ABF) and Premier Inn business Whitbread (LSE:WTB). By mid-afternoon, there were 37 stocks in the FTSE 100 up by 5% or more.
They included Lloyds as this week’s wild ride for the UK's biggest lender continued after falling to below 40p on Monday morning. It stood 3.2p higher at 45.14p, still well short of the 54p seen less than a month ago.
Electrocomponents jumped 76.5p to 944.5p as it delivered another of its trademark profit upgrades to suggest the recent sell-off in its shares may have been overdone. Like-for-like revenues were 22% higher in the face of tougher comparatives over the past nine weeks, leaving it ahead of City forecasts as the end of its financial year nears.
Chief executive Lindsley Ruth said: “Our ability to operate against headwinds and outperform our markets reinforces our confidence in our growth opportunities."
In their search for bargains, investors swooped on several FTSE 250-listed stocks whose recoveries from the Covid-19 pandemic have been interrupted by the heightened economic uncertainty.
- ii Super 60 investments: quality options for your portfolio, rigorously selected by our impartial experts
- Chart of the week: when the FTSE 100 could drop below 6,000
Airline stocks easyJet and Wizz Air Holdings (LSE:WIZZ) bounced by double-digit percentages and there was also significant buying to support Trainline (LSE:TRN), Currys (LSE:CURY) and Cineworld Group (LSE:CINE). The return to form for Watches of Switzerland (LSE:WOSG) also accelerated after yesterday’s reassuring trading update.
The Rolex retailer had been one of the driving forces behind September’s record high for the FTSE 250 index, but inflation pressures and a reduction in M&A activity means the second tier has since fallen more than 20% to find bear market territory.
The commodities-focus of the FTSE 100 index has provided a geopolitical hedge during the Ukraine crisis, but this protection has reversed over the past two days to mean the mid-cap benchmark has outperformed its blue-chip counterpart.
Other FTSE 250 stocks doing well today included asset manager Quilter (LSE:QLT) after promising the return of £328 million to shareholders through a buyback equivalent to 20p a share. The stock lifted 15p to 132.6p.
- Shares, funds and trusts for your ISA in 2022
- Friends & Family: ii customers can give up to 5 people a free subscription to ii, for just £5 a month extra. Learn more
National Express (LSE:NEX) also jumped 21p to 213.6p as investors expressed relief that a merger with Stagecoach (LSE:SGC) appears to have been run off the road by its Perth-based partner backing an offer from a European infrastructure fund. The original £1.9 billion National Express tie-up was unveiled in December and had been due to complete by the end of 2022.
The FTSE 250 fallers board included a number of mining stocks after the Brent crude price eased towards $120 a barrel and the gold price retreated back below $2,000 an ounce.
Egyptian gold miner Centamin (LSE:CEY) fell 11p to 99p and Peru’s Hochschild Mining (LSE:HOC) dropped 11.3p to 135.2p, while Africa-focused Endeavour Mining (LSE:EDV) slid 185p to 1905p ahead of its promotion to the FTSE 100 in the quarterly reshuffle later this month.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.