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ADVFN Morning London Market Report: Friday 4 March 2022

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London open: Stocks fall after Russia attacks Ukraine power plant

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London stocks fell in early trade on Friday following reports that Russia had seized a nuclear power plant in Ukraine after shelling it overnight.

At 0825 GMT, the FTSE 100 was down 0.6% at 7,198.79, although the losses were not as bad as had been feared.

The Zaporizhzhia Nuclear Power Plant in Ukraine was said to have been seized by Russian forces after shelling sparked a fire overnight.

Richard Hunter, head of markets at Interactive Investor, said: “Risk assets lurched lower once more following reports of an attack on a nuclear plant in Ukraine, while commodities continued their rise amid the inflationary impacts of the conflict.

“Oil spiked to almost $120 per barrel on the news before settling back to around $112 – but still up by 44% in the year to date – as news emerged that an increase in output following a deal between the US and Iran is not close to materialising. Meanwhile, there were further spikes in commodities such as nickel, copper and aluminium as the escalation of sanctions on Russia threatened general supply chains.”

With all eyes firmly on the Russia-Ukraine war, the release of the latest US non-farm payrolls – normally a key and widely-anticipated event – was likely to take on less importance.

Hunter said “another strong showing is expected”, with the consensus being that 400,000 jobs were added in February, as compared to 467000 in January, with the impact of the Omicron variant subsiding. The unemployment rate is also expected to improve marginally to 3.9% from a previous reading of 4%.

In equity markets, airlines were under the cosh, with BA and Iberia owner IAGWizz and easyJet all sharply lower. Other travel-related shares also sank, with cruise operator Carnival, travel firm Tui and Upper Crust owner SSP all down.

On the upside, Hammerson gained after the retail property owner reported a rise in full-year adjusted earnings as the easing of Covid restrictions saw a rebound of footfall to its shopping centres.

Morgan Advanced Materials surged to the top of the FTSE 250 after saying it swung to a full-year pre-tax profit as demand recovered strongly across the global economy.

Russian steelmaker Evraz and gold miner Petropavlovsk – which has operations in Russia – were both high risers following heavy losses in recent sessions.

 

Top 10 FTSE 100 Risers

# Name Change Pct Change Cur Price
1 Evraz Plc +18.27% +9.70 62.80
2 Fresnillo Plc +1.79% +12.20 695.40
3 Sse Plc +0.99% +15.50 1,581.00
4 Bae Systems Plc +0.92% +6.40 700.40
5 Centrica Plc +0.58% +0.42 72.98
6 Severn Trent Plc +0.56% +16.00 2,878.00
7 Admiral Group Plc +0.55% +14.00 2,554.00
8 Sage Group Plc +0.32% +2.20 682.80
9 Bunzl Plc +0.11% +3.00 2,823.00
10 United Utilities Group Plc +0.05% +0.50 1,052.00

 

Top 10 FTSE 100 Fallers

# Name Change Pct Change Cur Price
1 Melrose Industries Plc -5.89% -7.65 122.25
2 Easyjet Plc -5.56% -28.40 482.40
3 Mondi Plc -5.51% -79.50 1,363.50
4 Rolls-royce Holdings Plc -5.49% -5.22 89.78
5 Itv Plc -5.29% -4.24 75.98
6 Carnival Plc -5.07% -64.20 1,202.80
7 Crh Plc -4.42% -144.00 3,112.00
8 International Consolidated Airlines Group S.a. -4.04% -5.32 126.46
9 Tui Ag -3.99% -8.25 198.75
10 Hiscox Ltd -3.87% -34.40 855.40

 

Europe open: Stocks lower as Russia captures Ukraine nuclear plant

European shares were on the slide again at the open on Friday after Russian troops seized a Ukrainian nuclear plant after shelling it.

The pan-European Stoxx 600 index was down 0.9% in early deals with all major regional bourses lower. US and Asian stocks were all lower overnight with Wall Street futures mixed.

“Markets in Asia have taken another leg lower this morning after reports that one of Ukraine’s nuclear power stations, at Zaporizhzhia had caught fire after being shelled by Russian forces,” said CMC Markets analyst Michael Hewson.

“Putting to one side that it takes a special kind of stupid to start firing on a nuclear power station, it’s doubly incomprehensible and reckless given Russia’s experience with Chernobyl nearby, and the potential impacts on Russia itself, as well as Europe, from any potential fallout.

“The environmental damage in that region alone has rendered the agricultural land there unusable for years, and further damage from another nuclear meltdown would be catastrophic. Early reports suggest the fire is under control but as an indication of the lengths Russia will go to achieve its goals, it’s an even more worrying development, sending wheat and corn prices soaring.”

Oil prices surged again, almost hitting $120 per barrel on the news before Brent crude wound back to $108 and US crude $108 a barrel. There were also spikes in commodities such as nickel, copper and aluminium as the escalation of sanctions on Russia threatened general supply chains.

Shares in German utility Uniper fell 6.85% over concerns about its exposure to Russia, which mainly consists of a 83.7% stake in local utility Unipro. The group, which is majority-owned by Fortum, is also a co-funder of the Nord Stream 2 pipeline and a main recipient of Russian energy giant Gazprom’s gas supplies.

Michelin shares fell after the French tyre maker said it would temporarily halt production at some of its plants in Europe due to logistical issues.

Airlines were under pressure, with BA and Iberia owner IAGWizz and easyJet all sharply lower. Other travel-related shares also sank, with cruise operator Carnival, travel firm Tui and Upper Crust owner SSP all down.

Broadcaster ITV was on the back foot again after a downgrade to ‘equalweight’ from ‘overweight’ at Barclays.

 

US close: Stocks fall amid mixed data, Ukraine invasion intensifies

Wall Street’s main market indices were in the red at the close on Thursday, following the release of a mixed batch of economic data. While investors kept a wary eye on the latest developments in Ukraine.

The Dow Jones Industrial Average ended the session down 0.29% at 33,794.66, as the S&P 500 lost 0.53% to 4,363.49 and the Nasdaq Composite was 1.56% weaker at 13,537.94.

Sentiment was grim amid news of intensified bombing of Ukrainian cities as the Russian fleet headed towards the Ukrainian port of Odessa, and with around one million war refugees now having reportedly already fled the country.

Delegations from Ukraine and Russia held a second meeting, but no particular progress was made.

When asked overnight whether the US might cut Russian oil and gas imports, president Joe Biden said that “nothing is off the table”, although an immediate move appeared unlikely due to the risk it could boost profits for Russian companies while hitting the American economy.

Speaker of the House Nancy Pelosi, however, backed banning imports of Russian oil.

Some observers were musing the need to offer Moscow potential ‘off ramps’ in order to try and deescalate the situation, rather than piling on massive sanctions.

Of those was Bloomberg‘s Clive Crook, who noted that for the US and Europe to work explicitly towards regime change in Moscow would be “extraordinarily risky” even if the current “drastic economic measures” were intended to “destroy the Russian economy and maybe lead to the overthrow of its government.”

“If the regime change scenario happens, this tension will be applauded as a necessary part of a brilliant strategy.

“If it doesn’t, the allies might regret failing to offer Putin an off-ramp.”

In economic news, fresh data from the Department of Labor revealed that the downwards trend in initial US jobless claims had resumed.

Growth in the US services sector slowed more sharply than expected in February, however, according to the Institute for Supply Management‘s closely-followed purchasing managers’ index (PMI).

The PMI slipped from a reading of 59.9 in January to reach 56.5, falling well short of consensus forecasts for a reading of 61.1.

In equities, electronics retailer Best Buy jumped 9.22% after it beat quarterly profit expectations.

Victoria’s Secret was ahead 1.77% after it also beat Wall Street estimates on sales and profit, although the lingerie and body spritz peddler warned shareholders inflation would be a hindrance to growth going forward.

On the downside, enterprise software developer Okta tumbled 8.06% on the back of a disappointing set of fourth quarter numbers.

 

Friday newspaper round-up: UK economic growth, Elon Musk, Lukoil

Britain’s economic growth will halve this year as a result of soaring inflation, hefty tax rises and the destabilising shock from the war in Ukraine, a leading business lobby group has warned. In the first major forecast of the UK economy since the Russian invasion of Ukraine, the British Chambers of Commerce (BCC) said it expected an inflation rate of 8% to cut disposable incomes in 2022, putting the brakes on the recovery from the pandemic. – Guardian

Tesla’s chief executive, Elon Musk, says he is inviting the United Auto Workers labor union (UAW) to hold a vote at the electric carmaker’s California factory. The announcement comes three months after the billionaire Musk criticized the Biden administration and Democrats for a proposal to give union-made, US-built electric vehicles an additional $4,500 tax incentive. – Guardian

Russia’s second-largest oil company has urged Vladimir Putin to end his invasion of Ukraine in a sign of hardening resistance against the conflict among influential oligarchs. Lukoil, led by billionaire founder Vagit Alekperov, called for an “immediate cessation of the armed conflict” and expressed concern over the “tragic events” as domestic pressure on the Kremlin mounts. – Telegraph

OneWeb, the UK-backed satellite internet company, is in discussions with its French contractor and alternative partners after suspending all launches from Russia’s cosmodrome in Kazakhstan amid a deepening stand-off with Russia’s space agency. The decision by OneWeb’s board, which includes representatives of shareholders from the government, Bharti Global, of India, SoftBank, of Japan, and Eutelsat, of France, was welcomed by Kwasi Kwarteng, the business secretary, yesterday. – The Times

The world’s largest asset manager has barred its investors from buying any more Russian securities, after it was criticised by campaigners for its response to the invasion of Ukraine. Yesterday BlackRock said that it had “suspended the purchase of all Russian securities in [its] active and index funds”. The policy, it said, had come in on Monday. It added that it was pressing index providers to remove Russian securities from broad-based benchmarks. – The Times

 

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