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ADVFN Morning London Market Report: Thursday 3 March 2022

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London open: Stocks edge lower amid deluge of earnings


London stocks were a little weaker in early trade on Thursday as investors waded through an avalanche of earnings news, with all eyes firmly on the Ukraine crisis as both sides are due to meet later in the day for more talks.

At 0900 GMT, the FTSE 100 was down 0.4% at 7,403.70, while Brent crude neared $120 a barrel.

Victoria Scholar, head of investment at Interactive Investor, said: “Brent crude briefly touched $119.30 per barrel this morning, hitting the highest level since March 2012 while WTI is also sharply higher, trading above $115. The US has targeted Russia’s oil refining sector with sanctions, with the possibility that Russia’s oil and gas exports will be next on the list.

“With OPEC+ refusing to respond to the sharp spike in oil prices by sticking to its 400,000 barrels per day increase in output in March and with the market unfazed by the IEA’s global crude reserve release, the geopolitical tensions look set to push oil prices higher with Brent crude on track to breach $120 or even $125 as the next major resistance hurdles.”

In equity markets, Anglo-Russian precious metals miner Polymetal was the worst performer on the FTSE 100.

ITV also slumped after the broadcaster said that annual profit surged as revenue rebounded from the Covid-19 crisis, but investors were concerned about its spending plans.

GKN owner Melrose fell as it shelved a planned payout to shareholders because of concerns caused by Russia’s invasion of Ukraine.

Admiral was down after it reported a rise in 2021 profits, driven by its motor insurance business and the release of reserves set aside for claims during the Covid pandemic, but reported a loss at its international insurance business.

Rentokil lost ground even as it posted a jump in full-year profits and revenue following a particularly strong performance from its pest control business.

Airlines were under the cosh again, with Wizz and easyJet both trading lower.

On the upside, miners rallied as metals prices rose, with GlencoreAngloAntofagasta and Rio Tinto all higher.

LSE was the standout gainer on the FTSE 100, however, after it reported a jump in an annual revenues, boosted by its $27bn acquisition of Refinitiv.

Sports betting and gaming group Entain also rose as it hailed a strong full-year performance, with a rise in core profits.

Cybersecurity firm Darktrace surged as it raised annual guidance after a strong jump in customer numbers in the first half of its fiscal year.

Industrial thread maker Coats Group advanced after it said annual operating profit and revenue rose as demand recovered and struck an upbeat note on the outlook.


Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Glencore Plc +6.00% +27.15 479.75
2 Antofagasta Plc +4.12% +65.00 1,641.50
3 Bhp Group Limited +3.40% +90.50 2,753.50
4 Anglo American Plc +3.25% +127.50 4,056.50
5 Johnson Matthey Plc +3.04% +56.00 1,901.00
6 Rio Tinto Plc +2.79% +171.00 6,299.00
7 Centrica Plc +1.53% +1.12 74.44
8 Bp Plc +1.50% +5.60 380.00
9 Taylor Wimpey Plc +1.28% +1.85 146.20
10 Persimmon Plc +1.22% +29.00 2,399.00


Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Itv Plc -13.75% -15.21 95.44
2 Admiral Group Plc -8.05% -238.00 2,720.00
3 Melrose Industries Plc -7.58% -10.75 131.00
4 Rentokil Initial Plc -5.37% -28.10 495.10
5 Coca-cola Hbc Ag -4.07% -68.00 1,602.50
6 Pearson Plc -3.81% -24.60 620.60
7 Evraz Plc -3.50% -2.10 57.90
8 Hikma Pharmaceuticals Plc -3.44% -69.00 1,934.00
9 Flutter Entertainment Plc -3.37% -308.00 8,824.00
10 Hiscox Ltd -3.34% -31.60 915.20


Europe open: Early optimism fades as oil price, weak earnings hit sentiment

Early cautious optimism on European markets dissipated on Thursday as shares slipped into the red at the opening, as the growing impact of sanctions on Russia offset booming commodities prices.

The pan-regional Stoxx 600 index was barely moving the needle in early deals. Oil & gas shares were in focus as Brent rose above $118 a barrel as sanctions imposed on Russia over its invasion of Ukraine fuelled worries about supply disruptions.

Metals miners were also in demand as prices rose, with BHP, Glencore, Anglo American and Antofagasta all rising.

However, Russian gold miner Polymetal continued its headlong spiral, as the company lost another third in value. The shares have fallen from 806p before the invasion to 208p on Thursday.

The global community’s willingness to impose restrictions on Russian firms and oligarchs has shaken the country’s financial system, with the rouble plunging to record lows on currency markets.

In other equity news, shares in London Stock Exchange Group gained 8.5% after it said applying financial sanctions on Russia would have only a minor impact on its business.

Germany’s Lufthansa slipped 5.6% after the airline said it could not provide a detailed outlook for 2022 due to the war in Ukraine and the pandemic.

UK broadcaster ITV slumped almost 14% on concern about its spending plans, despite surging annual profit.

British insurer Admiral fell 7% after a bigger-than-expected loss at its international division.

Melrose Industries shares fell as the company shelved a planned payout to shareholders because of concerns caused by the invasion of Ukraine.

Telecom Italia shares plummeted 13.7% after a record loss and plans to split the company.


US close: Stocks firmer after another turbulent day

Major indices closed higher on Wall Street on Wednesday as Russia’s ongoing incursion of neighbouring Ukraine continued to push the price of oil higher.

At the close, the Dow Jones Industrial Average was up 1.79% at 33,891.35, while the S&P 500 was 1.86% firmer at 4,386.54, and the Nasdaq Composite ended the day ahead 1.62% at 13,752.01.

The Dow opened 596.4 points higher on Wednesday, biting into the losses recorded in the previous session as Russia’s invasion of Ukraine progressed.

Market participants were continuing to monitor events in eastern Europe, with reports indicating that Russian forces had penetrated the southern Ukrainian city of Kherson and surrounded nearby Mariupol.

Also in focus were rising oil prices, given that they could potentially drive up inflation, choke the US economy and pose further challenges for the Federal Reserve when it comes to shaping policy.

Bond yields were also drawing an amount of investor attention, with the yield on the benchmark 10-year Treasury note trading slightly higher at 1.796%.

On the macro front, mortgage applications fell 0.7% to 463.1 points in the week ended 25 February to the lowest level seen since December of 2019.

The fall marked the fourth straight week of declines, according to the Mortgage Bankers Association, as applications to purchase a home fell 1.8%, while those to refinance a home loan went up 0.5%.

The average fixed 30-year mortgage rate also continued to rise, advancing nine basis points to 4.15% – the highest since 2019.

Elsewhere, US job growth was more robust than expected last month, according to consultancy ADP, which said private sector payrolls in America grew by 475,000 in February, besting economists’ forecasts for an increase of 310,000 by a comfortable margin.

Turning to the Federal Reserve, the US central bank will likely go ahead and begin to tighten policy when it next meets, despite “high uncertainty” stemming from the war in Ukraine.

In prepared remarks posted to the Federal Reserve’s website, chairman Jerome Powell said: “The near-term effects on the US economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain.

“Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways.

“We will need to be nimble in responding to incoming data and the evolving outlook.”

Powell also said that policy would be tightened through a mix of interest rate hikes and balance sheet reductions.

In the corporate space, Dollar Tree eked out gains of 0.15% even after it said earnings had fallen in its fourth trading quarter as a result of a deferred tax benefit.

American Eagle Outfitters jumped 4.1%, and Box was 2.69% firmer, ahead of both publishing earnings after the closing bell.


Thursday newspaper round-up: Russian oligarchs, Amazon, Tui

The UK-based Russian billionaire oligarchs Mikhail Fridman and Petr Aven have had their shares in the $22bn (£17bn) conglomerate LetterOne, which owns Holland & Barrett, “frozen”, days after they were hit with EU sanctions following Russia’s invasion of Ukraine. LetterOne, which is just under 50% owned by Fridman and Aven, announced on Wednesday night that the men had “ceased to have any involvement with the company” and that it had frozen their shares. – Guardian

Angry dockers have vowed not to unload cargoes of Russian oil and gas, as it emerged that shipments were en route to British ports because of an apparent loophole in a government ban and could even be used to heat UK homes. The government imposed a ban on Russian vessels docking in the UK on Tuesday, in response to Vladimir Putin’s invasion of Ukraine. – Guardian

Amazon is closing a raft of electronics and book shops in Britain and the United States after they failed to take off. The online retail giant is closing 68 Amazon 4-star, Amazon Books and Amazon pop up branches, of which two are in the UK. The Seattle-based company is known for experimenting with store formats and services and swiftly ditching them if they prove unpopular with shoppers. – Telegraph

The Russian oligarch who owns a third of Tui Group has quit the travel company’s supervisory board after sanctions were imposed on him by the EU. Tui said that Alexey Mordashov, the billionaire owner of the steelmaker Severstal, had left with immediate effect. The company added that the development would have no impact on Tui, its customers or its employees. – The Times

Two leading British companies have been dropped from a government-backed scheme that promotes fair treatment of suppliers for “failing to honour their commitments”. Unilever UK and four entities owned by Diageo have been “formally removed” from the Prompt Payment Code after they failed to meet agreed terms to pay suppliers’ bills within 60 days. – The Times


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