- FTSE 100 closes 29 points lower
- Wall Street closed for President's Day
- Retail footfall falls as storms buffet Britain
4.50pm: Last lurch lower
The FTSE 100 index finished lower on Monday, lacking any lead from Wall Street which was closed for President's Day, as investors continue to eye the potential for conflict in Ukraine with Russia still looking poised to invade the country
At the close, the UK blue-chip index was down 29.29 points, or 0.4% at 7,484.33, above the session low of 7,446.43 but well below the early peak of 7,571,07.
Chris Beauchamp, chief market analyst at online trading platform IG commented: “A conflict in eastern Europe now looks very likely, and as a result markets remain firmly under pressure. After the losses last week we saw an attempt at a recovery early on in the session, fuelled by hopes of a Putin/Biden summit later in the week, but once cold water was poured on that idea and news came through of an actual clash between Russian and Ukrainian troops the market went firmly back into ‘risk off’ mode.
"US markets are out today due to the holiday, but in all probability the resumption of trading on Wall Street tomorrow will only intensify the selling, as traders there seek to play catch-up and continue reducing their allocations to risk assets like equities.”
3.50pm: Flat Footsie nearing close
Is it still OK to use the Grand Old Duke of York as a metaphor?
Assuming it is, equities have marched to the top of the hill then down again and now find themselves neither up nor down.
The FTSE 100 index is off 2 points (so, yes, technically “down”) at 7,511.
While market pundits have had their eyes focused on developments in eastern Europe, closer to home people have been more preoccupied with the recent storms.
Footfall across Britain fell by 32% last Friday compared to the previous week, largely thanks to Strom Eunice forcing shoppers to stay at home, according to research.
Winds of 122 miles per hour hit most of Northern Europe, and even blew the roof of the O2.
Springboard, the research company that collected the data, said that footfall for the entire week was down 3.8% in the United Kingdom, although it was up 5.5% until the storm appeared on Friday.
Director Diane Wehrle said the storm negated the positive impact that was brought on at the start of the week by the February half-term school break.
High street retailers such as JD and Superdry were 2.26% to 161p and 1.44% to 191p, while pub chain was down slightly by 0.89% to 868p in afternoon trading.
2.55pm: "Premature to talk about any specific plans for organising any kind of summits"
The day is fizzling out, thanks in part to the lack of impetus from the US markets, which are closed today.
Given the Footsie was looking like it was stuck in reverse gear over the lunchtime period, a spot of fizzling would not go amiss and in fact, the index has recovered a tad to 7,486, down 27 points.
For what it is worth, had US markets been open it is likely they would have been deep in the red as that is the way futures contracts on the major indices are currently trading.
London’s shares turned back following a bright start after a spokesperson for the Kremlin said people were getting a bit previous – those exact words might not have been used – over a planned meeting between US President Joe Biden and Russian President Vladimir Putin.
#UPDATE Kremlin says it is too early to organise summit between Putin and Biden, after Paris announced the possibility of a meeting to calm tensions over Ukraine.
"It's premature to talk about any specific plans for organising any kind of summits," Kremlin spokesman Peskov says pic.twitter.com/X1JN7d2ZiR
— AFP News Agency (@AFP) February 21, 2022
It has been an even tougher day for the mid-cap FTSE 250 with fewer than 40 stocks eking out a gain today, despite sterling rising by more than a fifth of a cent against the US dollar; a strong sterling exchange rate is usually regarded as a good thing for UK-focused FTSE 250 stocks.
Among the tiddlers, Synairgen had a day to forget, with the shares crashing 84% to 26.58p after a crushing result of a phase III clinical trial of its treatment for Covid.
Synairgen’s SNG001 did not materially shorten hospital stay or recovery time compared with the standard of care, investors were told.
There is hope, however, as Richard Marsden, Synairgen’s chief executive pointed out this may be the result of significant changes in the way patients are routinely treated in the period between the phase II and phase III evaluations.
2.00pm: All eyes on Russia
The Footsie is proving it can go into a nosedive without any help from US markets today.
London’s index of blue-chip shares is down 49 points (0.7%) at 7,465.
“The appetite for risk is very low right now. Sentiment continues to be dominated by headlines concerning Ukraine, Russia and the West. The latest headline was that Russia has apparently killed five people who tried to violate border. Inflation woes haven’t gone away either. The result? Investors have sold stocks, causing haven flows into the Swiss franc. Gold has bounced off its overnight lows and threatening to move decisively above $1900 hurdle,” said Fawad Razaqzada at ThinkMarkets.
Property firm Hammerson (LSE:HMSO) PLC has weakened 1.7% to 36.44p after it confirmed it is in discussions with entities related to Redical Holdings AG on terms for a possible sale of its Victoria Gate and Victoria Quarter shopping centres.
Talking of property, shares in Purplebricks, the estate agent, were down 1% at 19.3p in lunchtime trading, with some in the estate agent industry speculating its founders might take it private again.
Shares in the online estate agent have plummeted 96% to 19p since its all-time high in 2017 of just under 500p, with this lawsuit, brought in November, contributing to that.
Contractors for Justice, who are bringing the class action lawsuit, believe the total could be worth anywhere between £20mln and £100mln.
pic.twitter.com/fRcIO5Tpb3 Purplebricks to set aside millions to cover blunder affecting lettings business landlords https://t.co/tbcBaaz29R
— jfiose44 (@jfiose44) February 21, 2022
Meanwhile, eXp, another hybrid style estate agency has said it has signed up 270 agents and expects to break the 300 mark later this year.
It launched in 2019 and has benefitted from a rising demand in agents wishing to work from home and be considered self-employed members of staff, managing their own time and areas.
12.55am: End of the tech boom?
After a promising opening, London’s leading shares are lower on balance as fears over a Russian invasion of Ukraine will not go away.
The FTSE 100 is off 15 points (0.2%) at 7,499, with Polymetal International PLC (LSE:POLY) and Evraz PLC (LSE:EVR) leading the retreat (from Moscow).
Polymetal International PLC (LSE:POLY) was down 5.94% to 1,057p.
Its strong presence in Russia, coupled with increasing tensions on the Ukrainian and Russian border is prompting investors to bale out of the stock, which has generally been in decline since November.
Russian steel outfit Evraz PLC (LSE:EVR), meanwhile, is off 6.8% at 1,090p for much the same reason.
US markets are closed today which may come as a relief to investors in Scottish Mortgage Investment Trust PLC (LSE:SMT). SMT’s shares are down 3.81% to 939p after the Nasdaq Composite index closed 1.2% lower last Friday.
The trust, which is heavily exposed to technology titans, is out of favour as the likes of Apple, Amazon and Microsoft fall on fears that interest rates might feed through more quickly than previously thought.
Intriguing https://t.co/xEICpm7vUq
— BlondeMoney (@MarketBlondes) February 21, 2022
11.55am: Morning's gains dissolve
The morning’s gains have now all but disappeared and there is no hope of the US Cavalry riding to the rescue as US markets are closed today.
The FTSE 100 index was up 1 point (0.0%) at 7,515.
Meanwhile, it appears that UK Purchasing Managers’ Index data, which on the face of it looked pretty good, has not been the boost for the market that the bulls were hoping for.
February’s punchy flash PMIs provide even more evidence that the economy has rebounded swiftly after the hit from Omicron. And beneath the headline numbers, there are tentative but encouraging signs that supply disruptions and price pressures may be easing.https://t.co/kf8BHs2w6i pic.twitter.com/4QPhskfczY
— Capital Economics UK (@CapEconUK) February 21, 2022
READ UK private business sector at an eight-month high, data shows
“Buoyant client demand, increased confidence due to the end of most Covid-19 related restrictions and easing supply-chain bottlenecks all contributed to another month of expansion for the British economy with the composite index reaching an 8-month high in February; However, minor headwinds remained. Increased employment in February to meet increased workloads led to higher wages with higher energy bills contributing to the inflationary cost pressures for businesses,” said Guidogiorgio Bodrato, an economist at Berenberg.
James Smith, an economist at ING covering developed markets, said the latest UK purchasing manager indices will tick a lot of boxes for Bank of England policymakers.
“Firstly – and perhaps unsurprisingly – the services index jumped by almost seven points to 60.8, the highest reading since the reopenings last spring. Admittedly we should probably avoid reading too much into the size of that increase, given it's consistent with what we’ve seen just after other bouts of Covid turbulence. Ultimately, these indices are simply telling us that a greater proportion of firms are seeing increases in output as government restrictions and Covid caution eases, and the read-across to GDP hasn't always been great.
“Nevertheless, it’s yet another hint that Omicron has done very little lasting damage to the UK economy, and the data is consistent with what we’ve seen with just about every other high-frequency indicator,” Smith said.
“But it’s the survey’s findings on inflation that will really catch the attention of the Bank of England. The IHS Markit/CIPS press release cites ‘severe inflationary pressures’ and the second-highest rate of cost pressure since the survey began in 1998. Much of the BoE’s recent hawkishness appears to be premised on its own survey evidence from its agents, which has pointed to circa 5% wage growth this year,” Smith continued.
“All of this is effectively another green light for a rate hike in March, though we have our doubts that policymakers will go for a sharper, 50 basis-point increase at that meeting. The committee narrowly opted against doing so in February on the basis that it would risk adding yet more fuel to 2022 rate hike expectations,” he added.
“In practice, markets have ramped up expectations regardless, and investors are now pricing close to six rate rises for the remainder of 2022. We wouldn’t be surprised to see policymakers offer some modest pushback against this in the various speeches and testimonies this week,” Smith said.
10.35am: UK PMIs keep the argument for a half-point rate hike in March finely poised.
The FTSE 100 continues to surrender early gains as the latest UK PMIs keep the argument for a half-point rate hike in March finely poised.
London’s index of leading shares was up 16 points (0.2%) at 7,530 while the FTSE 250, which is widely reckoned to be more attuned to the performance of the UK economy, is down 61 points (0.3%) at 21,301.
Simon Harvey, the head of FX Analysis at Monex Europe, said today’s PMI data (see below) “is unlikely to dissuade the more hawkish traders within money markets as services activity exceeded expectations by a considerable margin and manufacturing activity held up despite expectations of a minor slowdown”.
“While diffusion indices have a poor track record at predicting growth figures, the considerable uptick in the services figure from 54.1 in January to a flash reading of 60.2 in February can’t be swept to one side. Additionally, sub-indices relating to new order growth in the services sector and employment growth in the private sector hammer home the message from the headline services data; sequential momentum in the UK economy likely picked up in February as the Omicron impacts faded,” Harvey said.
The suspicion that UK companies are enticingly cheap for foreign companies at the moment grew stronger as two logistics companies look set to fall into foreign hands.
“Clipper Logistics is in the sights of US firm GXO and Kuwait group NAS has just increased its offer again for aviation services group John Menzies. Both takeovers may sense strategically as they would complement the predators’ existing expertise and increase their scale in important markets,” said Russ Mould at AJ Bell.
“With the UK market still trading on a cheaper level relative to other places like the US, we’re likely to see further takeover action. That may be good for investors in that it provides a short-term boost to the value of their assets, but longer-term this isn’t necessarily good for someone’s wealth or indeed the reputation of the market if the pool of companies is shrinking.
“A decent business should generate attractive returns for investors over a long period so giving it up just for a quick 20% to 40% bid premium isn’t always a wise move for someone with a long-term investment horizon,” he added.
$CLG Clipper Logistics amenable to indicative 920p a share offer from GXO Logistics https://t.co/vrsibRmSqU @ClipperPlc $3UC #CLG #3UC #Katie_Proactive
— Proactive (@proactive_UK) February 21, 2022
Menzies (John) PLC – to give it its formal title – was up just 0.3% at 585p after its board took a liking to the improved (and final) terms from National Aviation Services (NAS), but then NAS’s interest in acquiring the company has been known about since early February.
Clipper Logistics PLC (LSE:CLG) was 13.9% firmer at 885p after an indicative offer worth 920p from GXO Logistics.
9.45am: Swift rebound in economic activity in January
Purchasing Managers’ Index (PMI) data for February indicated a swift rebound in UK economic conditions.
The Flash Composite Output index rose to 60.2 from 54.2 in January. The February reading was an eight-month high.
The Flash UK Services Business Activity Index also hit an eight-month high, of 60.8, up from 54.1 in January.
The Flash UK Manufacturing Output Index rose to a seven-month high of 56.7 from January’s 54.5.
The Flash UK Manufacturing PMI was unchanged from January’s final reading of 57.3.
The FTSE 100 was up 27 points (0.4%) at 7,541.
8.30am: Hopes rise that Russian invasion of Ukraine can be averted
The FTSE 100 made a stronger than anticipated start to proceedings, booking a 50-point gain at the open amid hopes that an all-out invasion of Ukraine can be averted.
A France-led initiative is aiming to get presidents Putin and Biden to the negotiating table and has raised hopes that Russia may back away from conflict.
“Concerns around the inflationary and tightening monetary environment have certainly not dissipated, but for the moment these concerns are secondary to the Russia and Ukraine tensions, with markets gyrating on the news flow,” said Richard Hunter, head of markets at Interactive Investor.
Back here in the UK, Boris Johnson is widely expected to announce the relaxation of the last vestiges of Covid restrictions as he sets out his blueprint for living as a nation with the virus.
On the markets, the main movers were those affected by a possible Ukraine invasion.
So, picking up on the mood of guarded optimism Evaraz, which has iron and steel activities in the Russian Federation, recouped some of its recent losses with a 6.5% gain.
British Airways owner IAG was up 3.3%, as was Wizz Air amid hopes that travel restrictions to Eastern Europe may not yet be imposed.
The day’s biggest faller was Synairgen, which was off 92% early on after disappointing Covid trial results.
6.55 am: FTSE 100 set to start in the green
Hopes that a last-ditch summit could avert the invasion of Ukraine led to a rally in Asia’s main markets on Monday and looks likely to put a pep in the step of European stocks.
In London, the FTSE 100 is on course to open 18 points to good at 7,531.62 as France worked to get presidents Putin and Biden around the negotiating table to avert conflict.
Reports for days now have suggested that the estimated 190,000 troops massed at the border with Ukraine are ready to push on into the country
“Russia continues to deny that it has any plans to invade Ukraine, however its actions along Ukraine’s borders paint a very different picture,” said Michael Hewson, an analyst at CMC Markets.
“Having said that, if Putin was intending to invade, giving your enemy plenty of warning to dig in and prepare is a sure-fire way to ensure that you suffer way more casualties when you do go in, than you would from a surprise attack. Then again, maybe he doesn’t care?”
Here at home, Boris Johnson looks set to outline plans to liberate the UK from the last vestiges of Covid restrictions later Monday as he outlines his proposals to effectively live with the virus.
Looking ahead, it is expected to be a busy week for corporate news with updates expected from Lloyds Banking Group, Barclays, Rolls-Royce and British Airways owner IAG.
Around the markets
- Pound US$1.3621 (+0.24%)
- Bitcoin US$ 39,242.80 (+2.22%)
- Gold US$ 1,893.10 (-0.35%)
- Brent crude US$93.05 (-0.52%)
6.50am: Early Markets - Asia / Australia
Asia Pacific markets were mostly lower on Monday as China held steady on its benchmark lending rate, with the one-year loan prime rate kept unchanged at 3.7%.
The Shanghai Composite slipped 0.09% while Hong Kong’s Hang Seng index declined 0.77%.
Japan’s Nikkei 225 fell 0.78% and South Korea’s Kospi dipped 0.03%.
Australia’s S&P/ASX200 advanced 0.2% as Wall Street futures suggested a strong start to the week’s trade in the US when markets open on Monday.