- FTSE 100 soars 282 points
- US equities mostly higher
- US durable goods data proves stronger than expected
4:50pm: FTSE 100 ends higher, US stocks up midday
The FTSE 100 finished the day on an up note, gaining 282 points, or 3.9%, to close at 7,489.46, as Western sanctions against Russia following its invasion of Ukraine were not as severe as investors had feared.
“While the situation in Ukraine continues to keep markets on edge, we have seen a recovery in risk appetite this afternoon. Whether this lasts long into next week is a much bigger question,” IG chief market analyst Chris Beauchamp said.
Bank and insurance stocks led the UK benchmark’s advance.
Other notably movers included shares of Pearson PLC (LSE:PSON), which jumped more than 12% after the global education group said it would initiate a 350 million pound stock buyback.
3:00pm: US markets mixed at open
US stocks have mostly got off to a buoyant start although the tech-heavy Nasdaq Composite is in the red.
The Dow Jones index rose 230 points (0.7%) to 33,454 while the S&P 500 jumped 20 points (0.5%) to 4,309 but the Nasdaq slipped 10 points (0.1%) to 13,464.
US equities had been expected to open lower but that was before stronger than expected US economic data.
“Nominal personal spending rose 2.1% in January and when adjusted for inflation, the real growth rate came in at 1.5% month-on-month [MoM] versus1.2% expectations. Durable goods (those that should last three years or more) jumped 8.5% MoM after falling 6% in December, while non-durable goods spending (such as food) rose a more modest 1.9% after contracting 2.6% in December. Services spending rose 0.1%, but this is still a pretty good outcome given the people movement numbers already mentioned,” reported James Knightley at ING.
“Also note that the Fed's favoured measure of inflation – the core personal consumer expenditure deflator – rose to 5.2% year-on-year from 4.9%. This was as expected, but the combination of strong growth and elevated inflation will give the Fed hawks more ammunition to push for an aggressive series of rate hikes. Our current expectation of five Fed rate hikes this year is looking a little too cautious, even in light of Russia's military advance into Ukraine,” Knightley said.
In the UK, the FTSE 100 remained on a tear, hitting 7,452, up 245 points (3.3%), with banking stocks doing much of the heavy lifting, especially Standard Chartered PLC (LSE:STAN), up 8.4%, and Lloyds Banking Group PLC (LSE:LLOY), up 7.2%.
2.25pm: Clawing back yesterday's losses
Somewhat improbably, the FTSE 100 has claimed back three-quarters of yesterday’s losses.
London’s index of leading shares – including a clutch of stocks with strong Russian connections – is up 227 points (3.2%) at 7,434, after slumping 291 points yesterday.
Precious metals miner Fresnillo PLC (LSE:FRES), which was one of the few stocks to make headway yesterday, is the only blue-chip faller today, down 1.3%.
Avast PLC (LSE:AVST), the cybersecurity firm, is barely in positive territory, however, after publishing its full-year results this morning. The market probably regards the results as largely academic as the company is set to be taken over by NortonLifeLock Inc in a couple of months' time.
NortonLifeLock receives antitrust clearance in Spain for merger with Avast PLC (LSE:AVST) $NLOK
— ALGO BOT NEWS (@algobotnews) February 24, 2022
1.30pm: Gold and oil out of favour
The price of Brent crude has eased a tad today, while the price of gold has fallen sharply, both of which are probably good signs.
Brent crude for April delivery is 40 cents cheaper at US$98.68 a barrel, while gold is US$27.60 (1.4%) cheaper at US$1,898.70 a barrel.
“The key question investors would be asking themselves is whether Thursday’s sharp recovery off the lows for global indices marked a turning point. So far, we haven’t seen much bullish follow-through in US index futures to suggest that is the case, and you can understand why with everything happening on the ground in Ukraine. What’s more, the existing macro concerns – soaring inflation and the upcoming interest rate hikes – are further discouraging stock market investors. Today’s Core PCE Price Index, the Fed’s favourite inflation gauge, could revive those worries with a print well north of the 5.1% y/y expected,” said Fawad Razaqzada at ThinkMarkets.
With all that is happening today in Ukraine, today would be a good day to bury the proverbial bad news but so far as Footsie stocks are concerned, there does not seem to much bad news to bury.
Rightmove PLC (LSE:RMV), the property listings website, put up a decent set of numbers in its full-year results, pushing the shares 5.8% higher to 651.2p.
“Rightmove is the ultimate lesson in pricing power. Regardless of what’s going on in the wider market, whether it’s up or down, today’s estate agents can ill afford not to advertise on Rightmove. That allows Rightmove to pump up its prices as it so chooses, it also offers insulation from the housing market rollercoaster. It makes money from agents, rather than being too bothered about how many houses are being sold. Running a website also essentially means adding each new customer is costless, feeding into an envious operating margin position of 74%,” said Sophie Lund-Yates at Hargreaves Lansdown.
“That isn’t to say Rightmove is a perfect business. A severe housing market downturn would affect the top line, as it would see estate agents under pressure and potentially needing discounts. Worse still would be an accelerated reduction in the number of operating estate agents. This is already a structural issue, but the decline is tempered at the moment, and one that’s being offset by Rightmove’s ability to increase prices and cross-sell a suite of extra products,” she added.
Hikma Pharmaceuticals PLC (AIM:HIK, OTC:HKMPF) shot up 6.3% to 1,949.5p after it kicked off its previously announced buyback programme that will see up to US$300mln of shares repurchased for cancellation.
The FTSE 100 was up 197 points (2.7%) at 7,404.
12.10pm: US stocks to open lower
US stocks are expected to start the day lower, reversing a late Thursday rebound, as Russian forces enter Kyiv, raising concern of a tank attack on Ukraine’s capital following a night of explosions in the city.
Futures for the Dow Jones Industrial Average declined 0.86% in Friday pre-market trading, while those for the broader S&P 500 index also fell 0.86% and the tech-heavy Nasdaq shed 0.8%.
US markets staged a turnaround in the previous session, recovering steep losses from earlier in the day, as the US imposed fresh sanctions against Russia after President Vladimir Putin ordered the start of military operations in Ukraine. Investors were relieved that the new measures didn’t include energy or restrictions on Russian access to Swift, a global messaging system for financial transactions.
The Dow Jones Industrial Average ended with gains of 92 points or 0.28% at 33,224, while the S&P 500 was up by 1.5% at 4,289 and the Nasdaq saw a sharp rise of 3.34% to 13,474.
Among the stocks bought in the dip were Amazon, Netflix, Alphabet, and Microsoft.
“The Nasdaq Composite entered bear market territory, then reversed, turning a 3.5% loss into a gain of 3.3% for the session,” commented Neil Wilson, chief market analyst at Markets.com.
"Reasons for the turnaround? Chiefly we can say that markets sold off aggressively early yesterday on fear – fear of sanctions rather than a fear for the future of Ukraine. The absence of any sanctions on Russia oil and gas, and the decision to not exclude the country from the Swift payments network left the market breathing a sigh of relief as to the global economic impact the invasion might have," Wilson added.
In London, the FTSE 100 was up 148 points (2.1%) at 7,355.
10.55am: IAG loses altitude as Russian bans UK flights from Russian airspace
Roughly half of yesterday’s losses on the Footsie have been retrieved today as all but four blue-chip stocks bounce back.
The index of leading shares was up 142 points (2.0%) at 7,349, with British Airways owner International Consolidated Airlines Group (LSE:IAG) SA, down 2.1% at 144.3p, among the small band of party poopers after the Russian civil aviation authority went tit-for-tat and banned British aircraft from flying over Russia.
In its results this morning, the company predicted a return to profit this year as it reported narrowing losses for 2021 with travel demand improving following the lifting of pandemic-related restrictions.
The situation in Ukraine plus the soaring cost of oil has hit sentiment towards the stock, however.
“With Russia responsible for around 11% of global oil exports, the invasion could present a risk to supply, which is already tight following low levels of investment; however, we expect the economic impact to be lower compared to previous oil shocks (e.g. 1970s). The Eurozone is most exposed given its closer economic linkages and dependency on Russia for natural gas, but we do not expect the invasion to trigger a deep recession,” said Daniel Casali, the chief investment strategist at Tilney Smith & Williamson.
Laura Hoy, an equity analyst at Hargreaves Lansdown, said IAG’s results suggest the airline is finally turning a corner, which is perhaps an odd thing for an airline to do.
“However the group’s not out of the woods just yet. The first quarter is expected to produce more losses as Omicron and seasonal trends weigh. Cash flow was negative, driving debt further skyward. While we don’t have any immediate liquidity concerns, it’s worth noting that it’s going to take a long time to get debt back down to manageable levels—it’s likely to remain a priority over shareholder returns for some time to come, particularly if interest rates continue to rise.
“The Ukraine crisis, rising inflation and ongoing geopolitical tension is likely to weigh on passenger numbers moving forward,” she predicted.
“Buy the invasion”
Rarely a good idea to hit the panic sell button due to geopolitical turbulence pic.twitter.com/6WbuIVZFXx
— AndreasStenoLarsen (@AndreasSteno) February 24, 2022
9.50am: Pearson succeeds in wrenching attention away from Ukraine
Russian stocks are back in fashion after yesterday’s panic selling.
The FTSE 100 was up 95 points (1.3%) at 7,303, with Russian steel-maker Evraz PLC (LSE:EVR), up 19% at 204.5p, leading the advance after its results statement.
“The index took its cue from a dramatic reversal in the US overnight. Results from Russian steel producer Evraz provided an indication of the tricky spot firms with links to Russia are in – with the company just barely acknowledging the conflict, or ‘geopolitical situation’ as it euphemistically dubs it, in a statement so thinly worded as to be meaningless,” said Russ Mould, the investment director at AJ Bell.
“However, after some extremely heavy selling in recent days its shares and those of other firms in the firing line like gold miner Polymetal bounced back.
“Metals markets are surging, lifting the mining sector as a whole, and wheat prices are at a 13-year high – reflecting the fact that both ‘breadbasket of Europe’ Ukraine and Russia are major producers of the crop,” he added.
Away from all things war-like, publishing group Pearson PLC (LSE:PSON) is 8.7% higher at 652.2p after it jumped on the share buyback bandwagon.
The group’s chief executive, Andy Bird, said 2021 was a year of strong progress with the group’s financial performance ahead of expectations.
The publisher posted year-on-year underlying sales growth of 8%, led by its Assessment & Qualifications division, where sales were up 18%, driven by 19% growth in Professional Certification.
Virtual Learning revenues were up 11%, English Language Learning sales were 17% higher as volumes recovered from levels that had been depressed by Covid-19, while Workforce Skill revenues were 6% better.
About the only dull spot was Higher Education, where revenues fell 5%, despite growth in Canadian and UK courseware, which was not enough to offset a 6% decline in the US.
Profit before tax slumped to £157mln from £354mln in 2020 but the market was cheered by a £350mln share buyback programme that will commence “as soon as is practicable”.
8.35am: Russian-related stocks bounce back
The FTSE 100 has clawed back some of the losses incurred in Thursday’s savage sell-down.
However, the mood in the Square Mile is a nervous one as the world watches and waits to see what might play out 1,200 miles away in Kyiv.
The UK blue-chip index opened 80 points to the good at 7,287.80 after closing 290 points lower after a frantic day of selling.
There was a bounce-back for Russian-owned or Russia-focused stocks such as Evraz, whose major shareholder is Chelsea owner Roman Abramovich, which opened 20% higher.
Polyemetal was up 6%, though it also benefited from the rush into precious metals precipitated by the conflict in Ukraine.
The miners also won back some of the ground lost yesterday, with Anglo American, up 2.2%, leading the way.
Outside the Russia-Ukraine affected stocks, Pearson stood out with a 7% gain after it said it would be launching a £1bn share buyback.
6.55 am: Bounce-back expected
After yesterday’s market carnage, bargain hunters are expected to be out in force today.
The FTSE 100 is expected to open around 88 points higher at 7,295.
US markets ended the day in positive territory yesterday after a weak opening, with the Dow Jones advancing 92 points to 33,224 and the S&P 500 climbing 63 points to 4,289.
In Asia this morning, the Nikkei 225 is 497 points higher at 26,467 but the Hang Seng is 77 points weaker at 22,824.
“On the data front we have some important US inflation data, although recent events appear to have altered the calculus when it comes to a Fed rate rise next month, in that a 50bps [half-point] hike has become much less likely,” said CMC’s Michael Hewson.
“With the release of the latest Fed meeting minutes, it was clear there was a quorum of Fed policymakers who were reluctant to consider anything other than a 25bps hike in March.
“The debate has moved on quite a bit since those minutes,” he noted.
In the UK, we have results from Russian steel-maker, Evraz PLC (LSE:EVR) and defence firm Babcock International PLC (LSE:BAB).
The share price of the former is currently being kicked around for obvious reasons while the performance of the latter’s shares might be expected to benefit from all of the sabre rattling that is going on.
6.50am: Early Markets - Asia / Australia
Asian shares recovered on Friday after investors in the U.S. tried to shake off Russia’s attack on Ukraine, with stocks mounting a stunning reversal on Thursday evening to close higher after falling sharply earlier in the session.
Some analysts said the sanctions by the US, Europe and several other countries were not as strong as investors had feared.
Japan’s Nikkei 225 surged 1.95% and South Korea’s Kospi rose 1.06%.
The Shanghai Composite in China gained 0.49% while Hong Kong’s Hang Seng index dipped 0.65%.
Australia’s S&P/ASX200 closed above the flatline, up 0.10%, with the action led by the technology sector, which advanced 8.1%.