- FTSE 100 closes 99 points higher
- Evraz and Polymetal higher
- Persimmon boosted by results
4.50pm: FTSE 100 closes higher
Britain's main equity index, heavy with resources stocks, closed higher while sentiment in Europe generally remained fragile as the conflict in Ukraine intensifies.
FTSE 100 index closed 99.36 points or 1.36% higher at 7,429.56 with oil stocks providing a strong boost to the blue-chip index.
According to analysts, the sell-off is on hold amid more talks.
“European stocks are paring gains and the US has kicked things off in a similar fashion with energy naturally leading the way. I'm not sure broader market sentiment has improved in any way since yesterday given the intensification of the invasion of Ukraine and soaring oil prices, but equity markets are seeing some reprieve,” said Craig Erlam, who is the senior market analyst, UK and EMEA, at OANDA.
“There is mild hope that talks between the Ukrainian and Russian delegates can make some headway, but I wouldn't go as far as to say there's optimism.”
3.49pm: Footsie near its high for the day
Leading shares are near their high for the day as we head into the close of trading, despite continuing uncertainty over the conflict in Ukraine.
The FTSE 100 is up 99.81 points or 1.36%, helped by a strong recovery on Wall Street.
The Dow Jones Industrial Average is up 1.31% or 434.8 points at 33,729.75, while the S&P 500 has climbed 1.18% and the Nasdaq Composite 0.65%.
The two Russian firms set to lose their place in the leading index have been volatile all day, but are now seeing a contrast in fortunes.
Polymetal International PLC (LSE:POLY) has put on 8.15% and is the leading riser in the blue chip index.
But Evraz PLC (LSE:EVR) is down 33.98%, the biggest faller.
Elsewhere the strong oil price - Brent crude is up 5.59% at US$110.5 a barrel - has lifted BP PLC (LSE:BP.) by 5.15% and Shell PLC (LSE:SHEL, NYSE:SHEL, EURONEXT:SHELL) by 4.66%.
A buoyant UK housing market and well received results have seen Persimmon PLC (LSE:PSN) climb 4.48%.
3.12pm: US markets heading higher in early trading
US stocks opened higher on Wednesday despite the intensifying Russia-Ukraine geopolitical conflict.
The Dow Jones Industrial Average rallied at the open, adding 343 points, or 1% at 33,638, while the S&P 500 gained 0.9%, and the tech-laden Nasdaq Composite was up by 0.5%.
Meanwhile, oil prices continued to soar, adding to the already-high inflationary pressure and exposing the equities to higher volatility. West Texas Intermediate crude jumped almost 5%, trading at $108.47.
Among the well-performing shares Wednesday morning was Nordstrom, gaining 32% as the company projected higher-than-expected earnings for the year. Shares of SoFi Technologies inc also went soaring with gains of 6.4% post earnings.
Back in the UK, the FTSE 100 index is up 79.29 points or 1.08% at 7409.49.
2.18pm: US rate rise likely this month, says Fed chair Powell
Federal Reserve chair Jerome Powell said the US central bank was monitoring the Ukraine conflict closely, but also confirmed it was likely to raise interest rates at its meeting later this month.
In his semi-annual testimony to Congress, Powell said: "The conflict is causing tremendous hardship for the Ukrainian people. The implications for the U.S. economy are highly uncertain, and we will be monitoring the situation closely."
On monetary policy he said: "With inflation well above 2 percent and a strong labor market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month."
He added: "Reducing our balance sheet will commence after the process of raising interest rates has begun, and will proceed in a predictable manner primarily through adjustments to reinvestments."
He said inflation was expected to decline over the course of the year, but the bank was aware of the risks of further upward pressure and would use its policy tools to prevent inflation from becoming entrenched.
He added; "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."
1.22pm: US jobs beat expectations
Normally investors would be focusing this week on the US non-farm payroll numbers due on Friday, but obviously these are not normal times.
Even so, the latest private payroll numbers from ADP - which sometimes but not always give some guidance to the non-farms - have just come out showing a 475,000 rise in February.
This was higher than the 375,000 increase expected.
Last month ADP reported a decline of 301,000, which turned out to be markedly different to the January non-farm figures which - rather than a fall - showed a gain of 467,000.
Startlingly, ADP has just revised the fall in its January figures to now show a 509,000 gain.
At least this time both indicators are pointing in the same direction right from the start.
The expectation for the February non-farm report is for 400,000 jobs to be added, which could put further pressure on the US Federal Reserve to raise rates at its meeting this month.
Although with the conflict in Ukraine causing chaos, perhaps not.
12.58pm: Brent hits US$112 after Opec+ meeting
The Opec+ group - which includes Russia - has agreed to stick to its planned production target, rather than increasing it despite the potential supply problems caused by the Ukraine crisis.
BREAKING: OPEC and its allies agree to raise oil output by 400,000 barrels per day in April https://t.co/KRJjlxLJG6 pic.twitter.com/4QIx6AzdhP
— Bloomberg Middle East (@middleeast) March 2, 2022
The news is not exactly a surprise but it has pushed oil higher again, with Brent crude up 6.76% at US$112.07.
But the group has reportedly left the door open to raise output further if it decides it is necessary.
OPEC+ May Boost Output Faster If Disruptions Drive Price Higher, Sources Say - WSJ #OOTT
— LiveSquawk (@LiveSquawk) March 2, 2022
12.04pm: US markets forecast to rebound
US stocks are expected to open higher even as Russian steps up its offensive on Ukraine, while sanctions against the country pushed Brent Crude Oil (LSE:BRENT) (Brent Crude Oil (LSE:BRENT)) to a fresh seven-year high above US$113 a barrel over concerns about supply disruptions.
It has since slipped back ahead of the outcome of today's Opec+ meeting, but is still up more than 5% at just over US$110.
Brent Crude #oil price has reached above $110.
The #OPEC+ meeting will start in half an hour.
The meeting will probably be the shortest OPEC+ meeting.
No one will talk about the effects of the #war on the #oil market.
Increase of production by 400 thousand bpd for Apr. #OOTT pic.twitter.com/yMdOpmnEkr
— Reza Zandi (@R_Zandi) March 2, 2022
Futures for the Dow Jones Industrial Average rose 0.5% in Wednesday pre-market trading, while those for the broader S&P 500 index gained 0.52% and the tech-heavy Nasdaq added 0.67%.
Stocks closed with sharp losses on Tuesday as investors continued to follow the escalating war between Russia and Ukraine as well as economic data that furthered expectations for a Fed rate hike expected later this month.
The Dow Jones shed 1.76% to 33,295, while the S&P 500 fell 1.55% to 4,306, and the tech-laden Nasdaq Composite was down by 1.59% at 13,532.
US Federal Reserve Chair Jerome Powell testifies before Congress today and is expected to signal that monetary tightening is still needed despite elevated uncertainty and the rising price.
“Most attention in the US will be on Fed Chair Powell’s testimony to Congress," commented Daiwa Capital Markets analyst Emily Nicol. "The economic impact of events in Ukraine will be much less forcefully felt in the US than Europe, due to a much lower level of trade and financial integration with Russia and energy self-reliance. And given the strength of the US economic recovery, the Fed will be less concerned about any tightening of financial conditions too.
“So, Powell will certainly signal ongoing tightening ahead, although he should be mindful of the risks from the conflict via weaker demand from Europe as well as financial channels."
Back in the UK, the FTSE 100 also remains positive, up 65.79 points or 0.9% at 7395.99.
11.10am: Euro area inflation hits new all time high
European inflation is already at an all time high even before the latest surges in energy and food prices, according to the latest update.
Euro area annual inflation is expected to be 5.8% in February 2022, up from 5.1% in January according to a flash estimate from statistical office Eurostat.
And the top two risers are no surprise. Energy is set to have the highest annual rate (31.7%, compared with 28.8% in January), followed by food, alcohol and tobacco (4.1%, compared with 3.5% in January).
Ima Sammani at Monex Europe said: "The record increase in euro area inflation came as European Central Bank policy makers expressed increased concerns around the risk of stagflation in the eurozone, while money markets pushed back their expectations for an ECB rate hike to January 2023.
"The fact that inflation was already continuously surprising on the upside, even before the war in Ukraine had started, increases fears that inflation will be higher for longer, while higher prices may also restrict economic growth if extended for a prolonged period of time...
"Today’s reading is the last print the [European Central Bank] will see before its next policy meeting, however, the recently increased fears around inflation are unlikely to be included in the ECB’s fresh projections in March, as the cut-off for the central bank’s forecasts was several weeks ago. This, along with the ongoing uncertainties, means the ECB’s initial response to the war in Ukraine will be to pause. However, longer-term risks to the inflation outlook remain."
10.11am: Natural gas prices surge
Oil is not the only commodity heading sharply higher on concerns that the conflict in Ukraine will lead to supply disruption.
Natural gas prices are also soaring despite - so far - no serious interuptions to supply.
Energy markets are seriously rattled this morning by prospect of EITHER Western import ban on #Russia oil and gas OR Russia cutting exports OR interruptions to supplies due to pipeline damage in #Ukraine
UK wholesale gas prices up 34% to 390p per therm... pic.twitter.com/7NKmqtco1z
— Ben Chu (@BenChu_) March 2, 2022
9.54am: UK market outperforms European peers
Leading UK shares remain in positive mood.
The FTSE 100 is currently up 60.94 points or 0.83% at 7391.14.
It is outperforming European markets, with Germany's Dax down 0.35% and France's CAC 0.31% lower.
On the outlook for markets, UBS strategists said events linked to geopolitical turmoil have historically tended to be short-lived, with the greater risk to investment performance coming from panic selling or under-diversifying.
They added: "Equities are likely to stay volatile amid geopolitical and interest rate risks, but we don’t think this is a time to turn outright negative on the asset class. Economic growth is still above trend, corporate earnings remain resilient, and at least some of the risks are now priced in
"We expect earnings strength to help equities withstand tighter [US Federal Reserve] policy. In our global positioning, we maintain a tilt toward cyclicals and value, including a preference for the energy and financials sectors, balanced with more defensive exposure to healthcare. From a regional perspective, we maintain our preference for the Eurozone. We also like Chinese stocks relative to other Asian markets."
9.00pm: UK house prices hit new record - Nationwide
Whether it be war in Ukraine or rising inflation, UK house prices cannot seem to stop rising. At least for the moment.
Annual UK house price growth increased to 12.6% in February, according to the Nationwide, up from 11.2% in January.
The monthly increase was 1.7%, while the value of the average house has exceeded £260,000 for the first time.
The price of a typical home is now 20% higher than in February 2020, the month before the pandemic struck.
Robert Gardner, Nationwide's chief economist, said: "The price of a typical home rose .. £29,162 over the past 12 months. This is the largest ever annual increase in cash terms since the start of our monthly index in 1991."
He added: “The continued buoyancy of the housing market is a little surprising, given the mounting pressure on household budgets from rising inflation, which reached a 30-year high of 5.5% in January, and since borrowing costs have started to move up from all-time lows in recent months.
“The strength is particularly noteworthy since the squeeze on household incomes has led to a significant weakening of consumer confidence...
“The economic outlook is particularly uncertain at present. Nevertheless, it is likely that the housing market will slow in the quarters ahead. The squeeze on household incomes is set to intensify, with inflation expected to rise above 7% in the coming months.
“Indeed, there is scope for inflation to rise even further as events in Ukraine threaten to send global energy prices even higher. Assuming that labour market conditions remain strong, the Bank of England is also likely to raise interest rates, which will exert a further drag on the market if this feeds through to mortgage rates."
Iain McKenzie, chief executive of The Guild of Property Professionals, said: “The industry waits with bated breath for a readjustment to prices this year, but there are no signs of a slowdown after seven consecutive months of increases.
“Demand is driving this upward trend and in many areas, hordes of prospective buyers are ready and waiting for the right property to come on the market.
“Housing affordability remains a concern, and with the cost of living crisis impacting households, it is likely that price growth will have to ease at some point this year.”
Meanwhile shares in housebuilder Persimmon PLC (LSE:PSN) have put on 4.65% as it reported a 12.7% rise in full year profits.
Rival Taylor Wimpey PLC (LSE:TW.) is up 3.01%.
8.29am: Russia's Polymetal "shocked and appalled" by Ukraine situation
Miners are among the early risers as commodity prices - and not just oil - continue to remain firm.
Those risers include the recently hammered Russian firm Evraz PLC (LSE:EVR), which is currently up 12%.
Evrax, along with Polymetal International PLC (LSE:POLY), are both losing their places in the blue chip index after slumping in the wake of the attack on Ukraine.
Polymetal is up 1.66% as it reported a 12% fall in annual earnings as costs rose.
It maintained its production guidance but suspended guidance on capital expenditure.
Chief executive Vitaly Nesis said: "We are shocked and appalled by the events going on in Ukraine. The conflict in Ukraine and related economic and political developments are likely to require a lot of management efforts to maintain company performance. However, despite a wide range of uncertainties we will be working under in 2022, it is our current intention to operate as normally as possible."
Elsewhere Rio Tinto PLC (LSE:RIO) has risen 3.19% and Fresnillo PLC (LSE:FRES) 2.43%.
The rise in the crude oil price has boosted Shell PLC (LSE:SHEL, NYSE:SHEL, EURONEXT:SHELL) by 2.64%, while BP PLC (LSE:BP.) is 1.96% better.
8.16am: Market makes positive but nervous start
Leading shares have gained ground in early trading but the mood is still extremely nervous, as uncertainty over the outcome of the Russian attack on Ukraine continues.
The FTSE 100 is up 40.57 points or 0.55% at 7370.77, recovering a little from Tuesday's 1.72% slump as the fighting intensified.
Investors remain nervous as the consequences of the attack become ever clearer, and the West does its best to isolate Russia.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: ''Anxiety is again rippling through global financial markets with the fear of stagflation taking hold, as the Ukraine conflict ratchets up inflationary pressures and threatens to derail global growth....
"The upward march [in the oil price] has been fuelled by warnings from the International Energy Agency that global energy security is now under threat and the release of emergency supplies by members including the US and Japan has done little to calm prices. President Biden is under increasing pressure from US lawmakers to suspend crude imports from Russia."
It is not just oil which is on the rise. With Ukraine and Russia accounting for a third of the wheat exports, the war there is likely to disrupt supplies.
Streeter said: "Food producers will find it increasingly difficult not to pass higher prices onto customers given the surging costs, with wheat prices jumping to levels not seen in 14 years. The most actively traded contract in Chicago hit $10.23 a bushel, the highest level since March 2008."
And there's more. Streeter again: "There are now worries that the conflict could inflame the global computer chip crisis, which had shown signs of easing. High tech exports of components like chips are among those on the sanctions lists and Japan has said curbs will be imposed on semi-conductors.
"Ukraine is home to half of the world's neon gas, which is critical for manufacturing semiconductor chips, and the conflict risks limiting supplies. Palladium is also crucial for chip manufacturing and it has been pushed to multi-month highs on concerns that Western sanctions will hit supply from Russia which currently supplies around 35% of the rare metal."
7.47am: Crude price hits new eight year high
Oil continues to soar, despite the US and its allies agreeing to release 60mln barrels from strategic reserves to try and stabilise the market amid supply concerns.
Brent crude is currently at US$111.39 a barrel, up 6.12%, while West Texas Intermediate has climbed the same amount to US$109.74.
The rises come ahead of the latest meeting of Opec+ - which includes Russia - where the group is expected to keep its production targets unchanged, with an increase of 400,000 barrels a day.
This is hardly meaningful and nor really is the release of reserves in the light of the potential for supply disruptions caused by the current conflict.
Ipek Ozkardeskaya, senior analyst at Swissquote, said: "The strategic reserves will help boost oil supply for only some time; it’s not a durable solution. Therefore, today’s OPEC meeting is critical.
"So far, the cartel confirmed that they remain committed to the OPEC+ deal with Russia, and they are not expected to change their production boost plans despite the Ukrainian war.
"If that’s the case, we shall see the positive pressure on oil prices intensify above the $100 per barrel level, and we could see the barrel of US crude advance toward the $125/150 range.
"That’s a big problem, globally, that could gather some reaction from the government heads, as Biden for example has been calling OPEC to increase production [for] months now."
6.51am: Leading shares set to edge higher
The FTSE 100 is predicted to start into positive territory, pausing the declines of the week so far.
CFD firm IG Markets calls London’s blue-chip benchmark around 15 points higher, making the price 7,343 to 7,345 with just over an hour to go until the market opens.
Ordinarily, the market would be counting down to Friday’s monthly US non-farm payroll data for the next meaningful economic market with which to potentially read the tea-leaves of the American economy, to make our best guesses of what it might mean in regards to inflation and interest rates.
The continuing war in Ukraine however continues to pull focus, further adding uncertainty to markets as fighting continues.
“Everything is still about the Russian invasion of Ukraine and we continue to expect volatile markets near-term,” Danske bank analyst Allan von Mehren said in a note.
“Today, the peace negotiations between Russia and Ukraine continue but with the war continuing we are not sure they will be successful. Markets are seemingly stabilising but risk sentiment remains fragile to any negative news.
“Besides that, Fed Chair Jerome Powell testifies before lawmakers today. We expect him to signal that tightening is still needed despite elevated uncertainty.”
Global stock benchmarks saw another day of losses Tuesday. On Wall Street, the Dow Jones shed close to 600 points, 1.76%, to close at 33,294 whilst the S&P 500 fell 1.55% to 4,306. Down 1.6%, the Nasdaq finished the session at 13,532.
The small-cap focussed Russell 2000 index, meanwhile, gave up nearly 2% to end at 2,008.
Around the markets
The pound: US$1.3293, down 0.24%
Gold: US$1,937 per ounce, down 0.4%
Silver: US$25.08 per ounce, down 0.98%
Brent crude: US$110 per barrel, up 13%
WTI crude: US$109 per barrel, up 14%
Bitcoin: US$44,108, up 15%
Ethereum: US$2,977, up 2.2%
6.50am: Early Markets - Asia / Australia
Asian stocks were mostly lower on Wednesday as oil prices continued their surge in the afternoon of Asia trading hours, with international benchmark Brent crude futures up 4.43% to US$109.62 per barrel.
Japan’s Nikkei 225 slumped 1.68% while South Korea’s Kospi lifted 0.27%.
The Shanghai Composite in China dipped 0.22% and Hong Kong’s Hang Seng index fell 1.29%.
Australia’s S&P/ASX200 ended the day 0.28% higher, helped by rising oil price that pushed up the value of energy companies, and by gains for the large miners.