- FTSE 100 down 128 points
- Flutter falls after results
- Russian miners slump
4:50pm: FTSE 100 ends lower, US stocks down midday
The FTSE 100 finished the day on a down note, losing 128 points, or 1.7%, to 7,330, as Russia’s invasion of Ukraine looks set to enter a more deadly phase.
“Screens across global markets have turned red again, as market sentiment shifts back towards risk aversion, due to the worsening situation in Ukraine,” IG chief market analyst Chris Beauchamp said.
Notably movers included shares of Flutter Entertainment PLC (LSE:FLTR), which slid more than 12% after the gambling company reported an 11% decline in its 2021 earnings.
4.05pm: Market decline accelerates again
After an early positive move, investors lost their enthusiasm for the market as fighting continued between Russia and Ukraine, and so far it has not returned.
Heading into the close the FTSE 100 is down 87.56 points or 1.17% at 7370.69.
Sentiment has not been helped by an acceleration of the falls on Wall Street, with the Dow Jones Industrial Average down 1.26%, the S&P 500 0.79% lower and the Nasdaq Composite off 0.52%.
The big fallers in London are the obvious ones. Russian mining groups Evraz PLC (LSE:EVR) and Polymetal International PLC (LSE:POLY)l - both set to lose their places in the leading index - are down 26.98% and 22.55% respectively.
But with the hostilities continuing, defence group BAE Systems PLC (LSE:BA.) is up 3.72%.
Elsewhere Flutter Entertainment PLC (LSE:FLTR) has fallen 11.35% after its disappointing results.
Providing some support are the non-Russian miners, in the wake of a reasonably positive manufacuting report from China, a major consume of commodities.
So Anglo American PLC (LSE:AAL) has added 3.52%, Antofagasta PLC (LSE:ANTO) is up 3.32% and Rio Tinto PLC (LSE:RIO) has risen 3.09%.
3.23pm: US manufacturers report growth in February
The US manufacturing sector continues to grow, according to two new surveys just out.
But both reports were compiled before the invasion of Ukraine, which is likely to have a big effect on future performance.
The ISM purchasing managers' index came in at 58.6% in February, an increase of 1 percentage point from the January reading of 57.6%. This shows the economy has expanded for the 21st month in a row after a contraction in April and May 2020.
US ISM Manufacturing Feb: 58.6 (est 58.0; prev 57.6)
- Prices Paid: 75.6 (est 77.5; prev 76.1)
- New Orders: 61.7 (est 56.3; prev 57.9)
- Employment: 52.9 (est 54.2; prev 54.5)
— LiveSquawk (@LiveSquawk) March 1, 2022
Meanwhile the IHS Markit PMI rose to 57.3 in February, from 55.5 in January and only slightly lower than the initial estimate of 57.5.
Chris Williamson, chief business economist at Markit, said: "With the survey data collected prior to the escalation of the conflict in Ukraine, the full impact of the situation is yet to appear in the data. Supply chains are likely to be further disrupted, with existing shortages exacerbated by safety stock building, and prices will likely come under further upward pressure.
"Perhaps most important will be the effect on business optimism and whether the improvement in prospects seen in February will be reversed, which could lead to reduced spending and investment."
3.14pm: US markets follow the global downturn
US markets have, as expected, opened lower as investors worry about the outcome of the Russian invasion of Ukraine.
They appear to have taken little comfort from reports that a second round of talks between the two sides has been scheduled for tomorrow.
Perhaps this is not surprising given that the first meeting on Monday ended with no resolution.
The Dow Jones Industrial Average is down 245.9 points or 0.73% at 33,646.7, while the &P 500 has lost 0.38% and the tech-heavy Nasdaq Composite is 0.24% lower.
Back in the UK, the FTSE 100 has fallen 57.5 points or 0.77% to 7400.75.
However it is off its lowest level of 7347.
2.09pm: London firms with exposure to Russia have tumbled since the turn of the year
London listed-companies with exposure to Russia have lost £10bn worth of value since the start of the year.
That's the calculation from Panmure Gordon chief economist Simon French.
There are 19 such companies with more than 5% exposure to Russia, he says.
Staggering loss of market capitalisation amongst the 19 London-listed public companies with >5% Russian exposure. Down 2/3rds since start of the year - shrinking total market cap from £75bn to less than £25bn. Now less than 1% of FTSE All Share. pic.twitter.com/LJ3gdtcrU6
— Simon French (@shjfrench) March 1, 2022
12.43pm: No surprise but Polymetal and Evraz are set to lose their FTSE 100 places
The plunge in value of Russian miners Polymetal International PLC (LSE:POLY) and Evraz PLC (LSE:EVR) - down another 27.1% and 16.65% today respectively - means that both are unsurprisingly set to lose their berths in the leading UK index.
The quarterly FTSE changes will be based on tonight's closing prices, and there is no way that either will regain enough ground to remain in the FTSE 100.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said: "Instead of a gentle reshuffling of cards in the FTSE review, the conflict in Ukraine has thrown the pack up in the air, with Russian miners plummeting down in value."
Their likely replacements are gold producer Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) and kitchen group Howden Joinery Group (LSE:HWDN)
Royal Mail PLC (LSE:RMG) is also teetering on the brink of relegation from the blue chip index.
Should it fall out once more, there are two companies which are vying to return to the top flight, British Gas owner Centrica PLC (LSE:CNA) and easyJet plc (LSE:EZJ).
Richard Hunter at interactive investor said: "There is barely a glimmer of light between the two companies in line to replace [Royal Mail], namely either Centrica or easyJet. Having risen so far this year by 9% and 8% respectively, Centrica is currently shading it, having been boosted by a recent return to a healthy profit having dealt with a sizeable pension deficit and the possibility of a return to dividend payments emerging into view.
"Meanwhile, a promotion for easyJet would be the latest in a rollercoaster ride, which has seen the shares relegated from the FTSE 100 in June 2019, promoted again in December 2019, only to be relegated once more (along with Centrica) in June 2020, having suffered the effects of the height of the pandemic.”
Centrica is currently down 0.72% while easyJet has dropped 4.93% on concerns about travel while war is raging in Ukraine.
12.14pm: Companies continue to distance themselves from Russia
The Russian stock market remains closed today, as the number of companies distancing themselves from the country continues to grow.
Shell PLC (LSE:SHEL, NYSE:SHEL, EURONEXT:SHELL) andBP PLC (LSE:BP.) have already said they will divest their interests in Russia - although its seems French group Total Energies will not follow suit although it will "no longer provide capital for new projects in Russia."
Elsewhere asset manager Abrdn PLC (LSE:ABDN) said it had been cutting its exposure to the country while hedge fund Man Group (LSE:EMG) told Reuters it had reduced its investments there in recent weeks and now had a "negligible" presence.
Meanwhile Mastercard (NYSE:MA) and VIsa have both been blocking transactions to comply with Western sanctions.
11.51am: US markets forecast to lose ground
US stocks are expected to open lower as a Russian convoy reported to be 40 miles long closes in on Ukraine’s capital, Kyiv as the offensive on the country enters its sixth day.
Futures for the Dow Jones Industrial Average fell 0.53% in Tuesday pre-market trading, while those for the broader S&P 500 index declined 0.6% and the tech-heavy Nasdaq lost 0.68%.
Stocks ended mixed in a volatile session on Monday as investors closely followed the escalating crisis between Russia and Ukraine. High-level talks between Kyiv and Moscow ended with no agreement except to continue talking.
The Dow Jones lost 0.49% to 33,893 while the S&P 500 shed 0.24% to 4,374. The Nasdaq closed in the green, with a gain of 0.41% to 13,751.
Back in the UK, the FTSE 100 is now down 93.71 points or 1.26% at 7364.54.
11.22am: BAE in demand
No surprise investors are keen on defence companies under the circumstances.
BAE Systems PLC (LSE:BA.) is currently the biggest riser in the leading index, up 2.92% at 740.6p.
The company has been helped by analysts at Jefferies, who have issued a buy note and raised their price target from 695p to 875p.
Overall though the mood remains grim, with the FTSE 100 now down 70.75 points or 0.95% at 7387.50.
10.37am: Market slide gets worse
The market falls are accelerating as the uncertainties over Ukraine continue.
The FTSE 100 is now down 66.5 points or 0.89% at 7391.75.
Russian miners which had made a reasonably positive start are now anything but.
Polymetal International PLC (LSE:POLY) has now slumped 19.13% while Evraz PLC (LSE:EVR) has lost 11.16%.
Flutter Entertainment PLC (LSE:FLTR) continues to fall following its figures, down 14.4%, while rival gaming group Entain PLC (LSE:ENT) is off 6.15%.
And it's not a good day for the vowel-less Abrdn PLC (LSE:ABDN) to put out its results, given a fall of 3.92% in its shares.
The mid-cap FTSE 250 is doing worst than the main index, down 1.28% at 20,811.75.
Publisher Reach PLC (LSE:RCH) has lost 22.37% following its results while another Russian miner, Petropavlovsk PLC (LSE:POG), is down 20.69%.
9.46am: Positive UK manufacturing report but concerns remain
Some positive news for the UK economy, with manufacturing hitting a three month high in February as firms caught up on work that had been previously delayed.
The seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index rose to 58.0 last month, up from 57.3 in January. The PMI has remained above the neutral 50.0 mark for 21 successive months.
IHS said the growth rate of UK manufacturing production accelerated to a seven-month high in February, aided by stronger domestic demand, fewer raw material shortages and easing global supply chain pressures.
Although input price inflation remained high, the latest survey also signalled that cost increases were starting to moderate.
The UK manufacturing #PMI rose sharply in February to a 3-month high of 58.0 (Jan: 57.3). Output growth was aided by stronger domestic demand and easing global supply chain pressures. Input price inflation remained elevated, however. Read more: https://t.co/zHzHhXTW3Z pic.twitter.com/u3ld0K5HYT
— IHS Markit PMI™ (@IHSMarkitPMI) March 1, 2022
All this came before the Russian invasion of Ukraine, of course, which is likely to be a dampening factor in the future to say the least.
Rob Dobson, director at IHS Markit, said: “February saw rates of expansion in UK manufacturing production and new orders both accelerate. Growth was boosted by stronger domestic demand and by firms catching up on delayed work as material shortages and supply chain disruptions started to dissipate.
"Consumer goods output in particular also benefitted from increased sales due to a further easing of COVID-19 restrictions
"However, the trend in new export orders is less positive, slipping back into contraction after January’s short-lived uptick.
"While companies maintain a positive outlook for the year ahead, rising headwinds, especially the intensifying geopolitical backdrop, are ratcheting up near-term risks to demand and confidence...
"Companies were hit hard by rising transportation, energy and commodity prices, leading to further increases in selling prices. That said, rates of inflation for input costs and output charges eased further. Although this easing may have provided some temporary respite, signs that energy and oil prices may stay high is a further cause for concern.”
9.35am: Flutter fall helps depress market performance
A sharp drop in the shares of Flutter Entertainment PLC (LSE:FLTR) after its latest update is not helping sentiment.
The gaming group is down 11.55% despite revenues rising 37% last year.
Richard Hunter, head of markets at interactive investor said: "Quite apart from the escalating costs which the company is allocating to further US customer acquisition, the spectre of regulation in the UK still looms large. Affordability checks and the ongoing government review of the Gambling Act could well prove thorns in the side for the sector in the future. The gaming industry is a traditionally easy target for authorities needing to raise taxes and, on this side of the epidemic, this could become a focus as governments look to repair their bruised financial positions following the major costs incurred.
"Challenging COVID-19 comparatives, consumers spending time on other leisure activities following the easing of restrictions and a slew of customer-friendly sports results have all contributed to a difficult time in which adjusted earnings were in line with expectations, although showing a decline of almost 20%."
9.30am: Uncertainty sees investors turn cautious
Well that didn't last long.
Leading shares have turned negative, with the FTSE 100 now down 30.06 points or 0.4% at 7428.19 as uncertainty and anxiety over the situation in Ukraine grow.
AJ Bell investment director Russ Mould said: “Investors, like almost everyone else, have little insight into what happens next in Ukraine or how Russia might respond to what it perceives as provocations by the West.
“Usually in these situations the uncertainty sparks indiscriminate selling of stocks and shares, however for now the sell-off has been fairly contained.
“Late yesterday Shell followed BP’s lead of cutting its ties to Russia and it’s hard to see what the future is for Russian businesses listed in London which, as investments, look about as radioactive as some of the rhetoric coming out of the Kremlin.
“Gold miner Polymetal’s update on operations and resources reads like absolutely nothing untoward is happening, but the true story is told by a year-to-date share price down more than 70%.
8.42am: Miners benefit from positive Chinese data
The postive economic news from China has given a lift to the whole mining sector, given the country's position as a major consumer of commodities.
Antofagasta PLC (LSE:ANTO) has added 1.94%, Anglo American PLC (LSE:AAL) is up 1.66% and Rio Tinto PLC (LSE:RIO) has risen 1.66%.
8.34am: Shell divestment will be a long process - analyst
More on Shell's plans to divest its Russian interests.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “The move to exit from these Russian joint ventures hasn’t come as a total surprise, given BP’s decision in recent days and the fact Shell has comparatively smaller exposure to Russia. From an operational perspective, the biggest impact will come from a capacity reduction from the loss of the Sakhalin project. Shell has been trying to expand its liquified natural gas portfolio, of which the Sakhalin stake played a role.
"The unwinding of these joint ventures won’t be an immediate process, giving Shell time and space to reposition contracts. At the same time, shareholders will be glad to see planned shareholder returns haven’t been affected by this decision, with impairment charges relating to the $3.0bn of assets in Russia, expected to be manageable. This is a fast-moving situation and investors should be mindful of potential share price volatility in the short to medium term.”
8.32am: UK shoppers facing even higher prices
Closer to home, UK grocery sales are falling but prices are soaring - and are likely to rise further as a result of the Ukrainian crisis and continuing supply chain issues.
According to the latest data from research group Kantar, grocery price inflation stood at 4.3% in February.
Fraser McKevitt, head of retail and consumer insight at Kantar, says: “Apart from the start of the pandemic, when we saw grocers cut promotional deals to maintain availability, this is the fastest rate of inflation we’ve recorded since September 2013. Added to this, ongoing supply chain pressures and the potential impact of the conflict in Ukraine are set to continue pushing up prices paid by consumers."
Supermarket sales fell by 3.7% over the 12 weeks to 20 February 2022, reflecting higher sales during last year’s winter lockdown when the public was eating more meals and snacks at home.
Online sales were down by almost 20% year on year over the past month.
McKevitt said: “In terms of understanding how shoppers are responding, it’s a complex picture for the market this month. Households spent on average £26.07 less at supermarkets in February and own label sales did better than brands for the first time in three months. It’s important to flag that the drop in monthly spending isn’t all down to savvy budgeting. With the formal end to COVID-19restrictions in England, more of us are now eating on the go, buying sandwiches, salads and snacks on our lunch breaks, and enjoying meals out with friends and family. That means we’re buying less food and drink to have at home.
“The discounters especially are benefiting from shoppers making more visits to stores. Aldi and Lidl put in strong performances this period and were the fastest growing retailers, both increasing their sales by 3.3%. Aldi attracted an additional 1.3 million customers compared with 2021 while Lidl brought in nearly an extra million.”
There was also disruption to shopping patterns from the storms which hit the country during the month.
McKevitt said: "“Storms Dudley and Eunice had a noticeable impact on shopper footfall. We recorded nearly 7 million fewer shopping trips during the week ending 20 February compared with our expectations for this time of year. In fact, on the Friday [18 February], there was a 25% drop in footfall compared with the same day in 2021, as many schools, businesses and train links were shut across the country."
Morrisons saw the biggest decline in the 12 weeks to 20 February, down 8.2%. J Sainsbury fell 4.1% and Tesco 2.6%.
8.19am: Positive start amid continuing military assault by Russia
Leading shares have made a positive start after all, despite news that 70 Ukrainian soldiers were killed after a Russian strike on a miltary base and talks between the two sides had ended without signs of any agreement.
The FTSE 100 is up 24.28 points or 0.33% at 7482.53.
Oil prices have moved higher again but are below US$100 a barrel.
Brent crude, which hit a seven year high of more than US$105 on Thursday when the invasion began, is now at US$99.59, up 1.65%.
West Texas Intermediate, the US benchmark, has climbed 1.41% to US97.07.
Shares in Shell PLC (LSE:SHEL, NYSE:SHEL, EURONEXT:SHELL) are up 0.65% as it followed BP's lead and announced it was ending ties with its Russian partner, in this case Gazprom.
Russian miners Evraz PLC (LSE:EVR) and Polymetal International PLC (LSE:POLY), which have unsurprisingly been thumped in recent days, are both among the early risers, up 3.86% and 1.1% respoectively. Polymetal has also issued an operational update, as if nothing untoward was happening.
On a day heavy with economic news in the form of the global purchasing managers' manufacturing indices for February, there were some positive signs from the Chinese figures.
The headline PMI rose to 50.4 in February from 49.1 at the start of the year, a slight increase but positive in the sense it is a move from contraction to expansion.
6.51am: Steady start expected
FTSE 100 was tipped for a steadier day after Monday’s heavy drop and partial recovery as markets globally picked up overnight despite the shock from the heavy sanctions imposed on Russia.
Ahead of the open, financial spread betters were calling London's main index around 23 points lower, though US markets closed higher and Asian markets also improved during the day a trend that might be repeated here.
Ukraine will again dominate trading, initial talks between the sides broke up as expected without any sign of an agreement and reports from the country suggest a huge Russian military column is heading towards Kyiv.
Heavy shelling and missile attacks have continued on other major Ukrainian cities during the night according to the latest updates.
On the non-military front, Shell has followed BP in ending its ties with its Russian partner, which in its case is Gazprom.
Film companies meanwhile have halted new releases in Russia with a host of other businesses reportedly considering severing ties with the country.
The economic sanctions announced over the weekend sent the rouble tumbling and closed Moscow’s stock exchange yesterday, something that has sparked a surge in cryptocurrency activity according to Ipek Ozkardeskaya, a Senior Analyst at Swissquote
"The direct implication of Russin sanctions was a surge in cryptocurrency prices, and especially Bitcoin.
"The coin, which was moving along with the risk assets less than a couple of days ago is now The asset that Russians and Ukrainians rely on to get their funds out of the traditional system which has become very hostile to them.
"It is reported that Bitcoin purchases using Rubles and Hryvnias soared as Russia imposed sanctions on its citizens."
Away from the war, it is a big day for normal stock exchange business with another full schedule for company updates in what should be a busy week.
Intertek, Croda, Abrdn and Flutter are among the big names due to report earnings.