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ADVFN Morning London Market Report: Tuesday 1 March 2022

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London open: FTSE edges up as all eyes remain on Ukraine crisis

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London stocks edged higher in early trade on Tuesday, holding up better than their European counterparts, as all eyes remained firmly on the Ukraine crisis.

At 0905 GMT, the FTSE 100 was up 0.2% at 7,470.91.

Neil Wilson, chief market analyst at Markets.com, said: “The dreadful situation [in Ukraine] gets worse as heavy shelling of built-up areas shows us what is to come.

“Talks yesterday didn’t get far but the two sides have agreed to try again as a massive Russian convoy starts to encircle Kyiv. Bombing of civilians will harden Western public opinion against Russia – voters are already taking a pretty hard line across Europe. Unified public opinion complicates matters for governments who might prefer to base policy solely on the advice of their military intelligence and strategic advisors. But that is the way of things.

“For markets, this means the question of direct sanctions on oil and gas exports from Russia is a matter of when not if. Canada has already unilaterally banned Russian oil imports, though these are microscopic compared to Europe’s appetite for Russia’s crude and natural gas. Talk of a Nato-enforced no-fly zone needs to be ignored – who really wants the RAF to shoot down Russian jets and risk WW3? The problem of public opinion again…”

In equity markets, Russian steelmaker Evraz was the top gainer on the FTSE 100 following heavy losses in the previous session.

AstraZeneca pushed up after it and Swiss biotechnology firm Neurimmune agreed to develop an antibody-based therapy for a rare, underdiagnosed condition that leads to heart failure in a $760m deal.

Rotork also advanced even as the engineering group reported a fall in annual profits, while mining stocks rose in tandem with metals prices, with RioAnglo and Glencore all higher.

On the downside, Paddy Power owner Flutter Entertainment was the worst performer on the top-flight index after it said underlying annual profit fell as the gambling group was hit by a string of punter-friendly sporting results in the UK and Ireland.

Speciality chemicals firm Croda also declined sharply despite reporting a “record” full-year performance in terms of sales and profits and lifting its dividend as it said all of its business were trading ahead of pre-pandemic levels.

Asset manager Abrdn was in the red even as it said annual profit rose and posted higher full-year revenue for the first time since it was formed from a merger in 2017.

Daily Mirror publisher Reach slumped as it said higher newsprint inflation would result in a modest hit to 2022 operating profit, while reporting a rise in annual earnings last year.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Evraz Plc +4.53% +6.55 151.30
2 Antofagasta Plc +3.35% +51.00 1,572.00
3 International Consolidated Airlines Group S.a. +2.99% +4.44 153.00
4 Bt Group Plc +2.42% +4.50 190.75
5 Micro Focus International Plc +2.34% +9.00 394.00
6 Rio Tinto Plc +2.28% +132.00 5,923.00
7 Pearson Plc +2.13% +13.80 661.80
8 Anglo American Plc +2.09% +80.00 3,903.00
9 Astrazeneca Plc +2.02% +183.00 9,242.00
10 Centrica Plc +1.92% +1.48 78.76

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Flutter Entertainment Plc -10.74% -1,159.00 9,636.00
2 Coca-cola Hbc Ag -4.20% -80.00 1,824.00
3 Croda International Plc -3.74% -280.00 7,204.00
4 Bunzl Plc -3.00% -89.00 2,880.00
5 Fresnillo Plc -2.28% -16.40 702.20
6 Sse Plc -2.05% -35.00 1,669.50
7 St. James’s Place Plc -1.89% -26.50 1,377.00
8 Ocado Group Plc -1.68% -23.00 1,350.00
9 Barratt Developments Plc -1.64% -10.00 601.00
10 Hikma Pharmaceuticals Plc -1.25% -26.00 2,057.00

 

Europe open: Shares slip as sanctions fallout dampens sentiment

European stocks slipped lower at the open on Tuesday, as investors continued to watch the Russian invasion of Ukraine and the growing impact of economic sanctions on Moscow.

The pan-European Stoxx 600 was down 0.5% in early deals with all major regional bourses lower. Meanwhile, US futures were up.

Ceasefire talks between Russia and Ukraine on Monday failed to reach a breakthrough and negotiators have not said when a new round would take place.

The Russian rouble has collapsed as Western nations cut off access to global payment systems, with the country’s central bank forced to double interest rates on Monday and people queuing to take out their cash.

Oil prices continued to hover around the $100 a barrel mark. Brent crude futures rose 2% to $99.88 per barrel but were still well below last week’s $105.79, reached after Russian troops crossed the border.

In equity news, shares in Shell edged ahead after the energy giant said it was dumping all its Russian operations, including a major liquefied natural gas plant.

Flutter slumped almost 10% as underlying annual profit fell after the gambling group was hit by a string of punter-friendly sporting results in the UK and Ireland.

Shares in meal kit company HelloFresh were down as annual profits fell.

German chemicals maker Covestro gained 5% after saying it had more than doubled its 2021 core profit and expected upbeat earnings for 2022.

Shares of Austria’s Raiffeisen Bank International traded 7.5% higher early, partly making up for a 14% drop on Monday.

 

US close: Stocks mixed amid heightened Russia-Ukraine tensions

Wall Street stocks turned in a mixed performance on Monday as Russian and Ukraine officials arrived at the border to discuss potentially calling a stop to hostilities between the two sides.

At the close, the Dow Jones Industrial Average was down 0.49% at 33,892.60, while the S&P 500 was 0.24% weaker at 4,373.94 and the Nasdaq Composite saw out the session 0.41% firmer at 13,751.40.

The Dow closed 166.15 points lower on Monday, cutting into considerable gains recorded in the previous session as market participants assessed risks stemming from Moscow’s decision to enter Ukrainian territory.

Monday’s moves came as a result of the ongoing conflict between Russia and Ukraine. Ukrainian forces have held on to key cities, including the nation’s capital of Kyiv but the Russian advance into the country continued over the weekend, with Russian military vehicles entering Ukraine’s second-largest city Kharkiv. There have been reports of fighting taking place in the streets and residents have allegedly been warned to stay in shelters.

Russian President Vladimir Putin also put Moscow’s nuclear deterrence forces on high alert on Sunday amid growing opposition to his invasion. However, the Ukrainian Defense Ministry stated representatives for both sides had agreed to meet on the Ukraine-Belarus border “with no preconditions”.

The Central Bank of Russia more than doubled its key interest rate to 20% from 9.5% after the Russian rouble crashed more than 40% in the wake of unprecedented international sanctions against the country’s financial system as Washington joined allies in both Europe and Canada to block big Russian banks from the interbank messaging system, SWIFT. In addition to the SWIFT move, Russia’s central bank has been isolated and blocked from deploying its international reserves, meaning Moscow has been all but cut off from the world’s financial system.

On the macro front, the US goods trade deficit widened to an all-time high of $107.63bn in January from a revised print of $100.47bn in December, according to an advance estimate from the Census Bureau. Imports rose 1.7% to $262.46bn, while exports fell 1.8% to $154.83bn.

Elsewhere, the Chicago Federal Reserve‘s purchasing managers index decreased to 56.3 points in February, down from 65.2 points in January to miss market forecasts for a print of 63 and the lowest reading since August of 2020. All five of the main indicators fell, with new orders and supplier deliveries taking the largest hit.

Finally, the Federal Reserve Bank of Dallas‘ general business activity index for manufacturing in Texas slipped six points to +2 in January, pointing to the smallest growth in factory activity since July 2020.

 

Tuesday newspaper round-up: NI rise, ultra wealthy, Russian gas, Klarna

Rishi Sunak is facing renewed pressure from business leaders to delay a planned £12bn rise in national insurance, amid warnings over soaring costs for companies and households as the Russian invasion of Ukraine drives up inflation. The manufacturing trade body Make UK, which represents 20,000 firms of all sizes across the country, said the tax hike planned for April should be pushed back until the UK economy is in a stronger position. It warned the government that pressing ahead would risk firms slamming the brakes on recruitment and putting the economic recovery from Covid at risk. – Guardian

More than 51,000 people joined the ranks of the “ultra-wealthy” last year as the fortunes of the already very rich benefited from rising global stock markets and increased property prices during the pandemic. The number of ultra-high net worth individuals (UHNWIs) – those with assets of more than $30m (£22.4m) – rose by a record 9.3% last year to 610,569, according to a report by the property consultants Knight Frank. – Guardian

Britain is joining forces with European allies to help wean Germany off Russian gas, in moves that would pave the way for sanctions against the Kremlin’s powerful energy industry. Officials in Whitehall are laying the groundwork for discussions with Berlin and other European importers about a significant increase in deliveries of liquified natural gas at ports across the Continent, with the aim of meeting demand next winter if supplies from Russia are cut off. – Telegraph

Commuters will be hit with the biggest increase in rail fares for nearly a decade despite a steep fall in the number of train services being run. National rail fares will rise by 3.8pc, the steepest increase since January 2013, in a fresh blow to families facing spiralling energy bills, soaring inflation and steepling mortgage costs. – Telegraph

Net losses at Klarna ballooned fivefold last year as the instalment credit business shouldered heavy expansion costs and a rise in customer defaults. However, despite the losses of SwKr7.09 billion (£558 million), the Swedish group, which has expanded aggressively with its “buy now, pay later” offering, said that it had won 46 million new customers in 45 countries, boosting its total customer numbers to 147million. – The Times

 

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