- FTSE 100 closes down almost 191 points
- Polymetal continues to slide
- LSE suspends trading for 28 companies linked to Russia
4.55pm: FTSE 100 falls sharply again
FTSE 100 closed firmly in the red as commodity prices surged and the London Stock Exchange suspended trading for 28 companies linked to Russia after stringent sanctions were put on the country after its invasion of neighbouring Ukraine.
The UK blue-chip index lost nearly 191 points on the day, or 2.57%, to close at 7,238.
Oil and gas prices soared earlier before falling back a shade and other commodities like wheat and nickel rose sharply amid big global supply worries.
US benchmark crude, West Texas Intermediate (WTI), is currently at US$109 a barrel but earlier hit US$110.09. Brent crude peaked just short of US$120 earlier.
3.52pm: Russian threats hit markets
Fears of a further escalation of the conflict in Ukraine have sent leading shares sharply lower.
According to the French government Russian president Putin has told his French counterpart Emmanuel Macron that Moscow plans to take full control of the country by any means after Kyiv rejected the invader's conditions. The French reportedly believe "the worst is still to come" in Ukraine.
The reports have pushed the FTSE 100 down 154.96 points or 2.09% to 7274.6 and sent Wall Street into reverse after a positive start.
The Dow Jones Industrial Average is now down 0.21%, the S&P 500 has lost 0.48% and the Nasdaq Composite is 1.18% lower.
Russian miners Polymetal International PLC (LSE:POLY) and Evraz PLC (LSE:EVR) are unsurprisingly among the biggest fallers in the UK blue chip index, down 35% and 13.2% respectively.
It was a bad day for a number of companies to issue their results.
ITV PLC (LSE:ITV) is down 25.9%, Admiral Group Plc (LSE:ADM) has lost 12.64%, Rentokil Initial PLC (LSE:RTO) has fallen 5.41% and Melrose Industries PLC (LSE:MRO, OTC:MLSPF) is off 5.36%.
But London Stock Exchange Group PLC (LSE:LSEG) has bucked that trend, adding 9.17% after it nearly doubled its full year profits.
Climbing commodity prices have helped lift Glencore PLC (LSE:GLEN) by 5.2% and Anglo American PLC (LSE:AAL) by 3.03%.
3.36pm: US service sector grows but below forecast
The US service sector grew for the 21st month in a row in February, but there was a slowdown on the previous month.
The ISM services PMI came in at 56.5, below the forecast of 61.1 and 3.4 percentage points below January's reading of 59.9%.
ISM chair Anthony Nieves said: "Respondents continue to be impacted by supply chain disruptions, capacity constraints, inflation, logistical challenges and labor shortages. These conditions have affected the ability of panelists’ businesses to meet demand, leading to a cooling in business activity and economic growth.”
3.05pm: US markets rise but Footsie fall accelerates
US markets have defied expectations of an opening fall, lifted by financial stocks after Federal Reserve chair Jerome Powell backed a rate rise this month.
Sentiment has also been helped by the oil price slipping back from its highs.
The Dow Jones Industrial Average is up 195.55 points or 0.58% at 34,086.90 while the S&P 500 has added 0.34% and the tech-heavy Nasdaq Composite 0.11%.
Among the gainers at the open were Apple, American Express, and Amgen, all gaining more than 1.5% and boosting the markets.
On the corporate front, shares of Best Buy went soaring by 8% after the company met its quarterly earnings expectations, while Kroger jumped 10% post earnings.
But back in the UK, investors are concerned about the Ukraine conflict and the prospect of higher inflation as commodity prices soar.
The FTSE 100 is currently down 107.72 points or 1.45% at 7321.84.
2.49pm: Oil price slips back after hitting highs
After hitting an eight high of US$119 a barrel earlier, Brent crude has now slipped back.
It is currently down 1.06% at US$111.73 while West Texas Intermediate is off 1.57% at US$108.86.
2.33pm: Europe facing recession?
The war in Ukraine could worsen economies which were already beginning to face problems caused by higher prices and a possible slowdown in demand as a result.
In a note entitled War in Europe: is recession now inevitable?, strategists at Rabobank believe these factors have so far been masked by the rebound as economies come out of the pandemic.
They said: "At the current juncture, many businesses in Europe are still working themselves through significant backlogs. This creates a post-pandemic ‘sugar high’, as reflected in elevated purchasing managers’ surveys for the manufacturing sector.
"The latest surveys indicate a gradual fading of supply bottlenecks, which hampered output throughout 2021. That allows companies to raise production in the face of (cooling?) demand for goods.
"Meanwhile, in the services sector, activity is picking up too as COVID-19 restrictions have been relaxed and demand returns. Strong government support through the pandemic ...and these ‘reopening’ effects all go some way in explaining the relatively strong performance of the Eurozone economy
" We would argue that these positive data are, to some extent, deceiving. We increasingly believe that households, businesses, and governments should prepare themselves for a significant economic slowdown, with even higher inflation."
Now with the Ukraine crisis there could be much worse to come.
Rabobank said: "With its large exposure to key Russian/Ukrainian import goods, Europe is more vulnerable than the other big economies in the world...
"The economic pain could be severe: there will be even more inflation and GDP growth will be depressed for longer. The impact will be felt by those imposing sanctions as well as Russia. Moreover, the risks now are of a further shift to even greater shocks via stumbling towards... secondary sanctions on evading countries trying to help Russia. The impact of this globally bifurcating development are so severe that they are not even quantifiable."
1.35pm: US jobless claims fall
US weekly jobless claims have come in much lower than expected, showing a stronger employment market and giving more impetus to the Federal Reserve to raise rates.
The number of Americans seeking unemployment benefit for the first time fell to 215,000 last week from 233,000 the previous week, itself revised up by 1,000.
Analysts had been forecasting a fall to 225,000.
The insured unemployment rate was steady at 1.1%.
Fed chair Jerome Powell told Congress yesterday he expected a rise in rates from 0.25% to 0.5% when the central bank meets later this month.
Tomorrow's non-farm payroll numbers will be widely watched to see if they justify that forecast.
12.30pm: Footsie off worst levels
Leading shares are off their worst levels but there is little sign of a real recovery.
The FTSE 100 is currently down 51.67% or 0.7% at 7377.89, having earlier fallen to 7365.
Russian miner Polymetal International PLC (LSE:POLY) is still the biggest loser, down 34.85%.
But a host of companies have issued results only to see their shares lose ground.
These include ITV PLC (LSE:ITV), off 17.7%, Admiral Group Plc (LSE:ADM), 13.46% lower, Rentokil Initial PLC (LSE:RTO), down 7.47% and Melrose Industries PLC (LSE:MRO, OTC:MLSPF), marked down 3.88%.
Among the other fallers is Hargreaves Lansdown PLC (LSE:HL.), 4.03% lower as its shares went ex-dividend.
11.51am: US markets on edge
US stocks are expected to edge lower in opening trade on Thursday as oil prices continue to bound higher as Russia’s invasion of Ukraine intensifies, with commodities price jumps likely to impact on inflation and the Federal Reserve’s monetary policy.
After triple-digit gains in the previous session, the futures for the Dow Jones Industrial Average fell 0.2% on Thursday, while those for the S&P 500 lost 0.1% and contracts for the tech-laden Nasdaq-100 shed 0.4%.
Brent Crude Oil (LSE:BRENT) prices surged to over $119 a barrel for the first time since 2013, as the buying of Russian oil was shunned, reducing global supply. Investors are concerned that a prolonged elevation in oil prices could precede a combination of slowing growth and higher inflation, known as stagflation.
Investors are worried about how this will feed into already elevated inflation levels and how aggressively central banks will raise interest rates when faced with additional price pressures and an uncertain economic outlook.
Federal Reserve Chairman Jerome Powell said in Congressional testimony on Wednesday that he would propose a quarter-percentage point rate increase at the central bank’s meeting in two weeks.
On the data front, the latest initial weekly US jobless numbers will be eyed today, although mostly as a pointer towards Friday's always key monthly non-farm payrolls report.
Back in the UK, the FTSE 100 is at its low for the day, down 63.86 points or 0.86% at 7365.70.
10.54am: Sterling climbs against euro
The pound is getting close its highest level against the euro since the Brexit referendum more than five years ago .
It is more to do with euro weakness in the wake of the invasion of Ukraine, with the European Central Bank facing the dilemma of trying to deal with rising inflation in the face of the conflict on the continent.
Even so the pound has climbed from €1.2052 to €1.083, its best level since July 2016.
But against the dollar, sterling has dipped 0.087% to US$1.3384.
10.31am: Airline shares fall back
Airline shares are coming under pressure, on concerns that the war in Ukraine will hit the travel sector hard just as it is recovering from the pandemic.
British Airways owner International Consolidated Airlines Group (LSE:IAG) is down 3.12%, and in the FTSE 250, Wizz Air Holdings PLC (AIM:WIZZ) has lost 8.28% and easyJet plc (LSE:EZJ) is down 5.51%.
Steve Clayton, Fund Manager at HL Select, said: "A military no-fly zone is off the cards, but investors are fretting that consumers will declare one of their own."
Overall the FTSE 100 has seen its fall accelerate and is close to its low of the day, down 40.93 points or 0.55% at 7388.63.
The mid-cap FTSE 250 is off 0.44%.
9.47am: UK service sector output hits eight month high
The UK economy grew strongly in February, according to the latest purchasing managers' reports, although this was before the effects of the invasion of Ukraine.
The IHS Markit services PMI business activity index jumped to 60.5 in February from 54.1 in January, signalling a steep rise in output that was the fastest since June last year although it was slightly below the initial reading of 60.8.
But inflationary pressures also intensified, said IHS. Companies passing on higher costs to customers led to the sharpest pace of price rises on record.
???????? The UK services #PMI hit an 8-month high of 60.5 in February (Jan: 54.1) as pandemic restrictions continued to ease. However, rising prices for fuel, utilities and salaries led to a record rate of output price inflation. Read more: https://t.co/hCaEqDoNvQ pic.twitter.com/9JmZJl1RDV
— IHS Markit PMI™ (@IHSMarkitPMI) March 3, 2022
Meanwhile the composite PMI rose sharply to 59.9 in February from 54.2 in January as the easing of the Omicron wave of the COVID-19 pandemic unleashed faster growth across both the manufacturing and services sectors.
Andrew Harker, economics director at IHS Markit said: “The ebbing of the Omicron wave of the COVID-19 pandemic contributed to a rebound in growth in the UK service sector in February, with rates of expansion in activity and new business up sharply. With manufacturing also seeing growth quicken, the UK economy looks to have been expanding sharply midway through the first quarter of the year.
"Inflationary pressures remained acute, however, with selling prices rising at a fresh record pace for the second month running. This pass-through of costs to customers will very likely prompt the Bank of England to hike interest rates again at the next MPC meeting in March
"Although the latest set of PMI data were encouraging, the inflationary picture still has the potential to limit growth, while it remains to be seen what impact the Russian invasion of Ukraine will have on the service sector and wider economy. As such, there are still downside risks even as disruption from the pandemic finally appears to be fading."
Earlier there was also a rebound in the European economy in February, although prices rose at the fastest rate for a quarter of a century.
The composite PMI rose from 52.3 in January to 55.5 although it was slightly below the initial reading of 55.8.
Eurozone #PMI stands at 55.5 in Feb (Jan: 52.3), pointing to a rebound in economic growth following the #Omicron wave, while business optimism improved to an 8-month high. Read more: https://t.co/Q2gFwpEQsT pic.twitter.com/gPfPTTbkvL
— IHS Markit PMI™ (@IHSMarkitPMI) March 3, 2022
Chris Williamson, chief business economist at IHS Markit said: “The survey data for February depict a eurozone economy that was regaining robust growth momentum ahead of the invasion of Ukraine...
“However, business activity continued to be constrained both by supply chain bottlenecks and labour shortages, meaning a sellers’ market persisted for many goods and services. Prices rose to the greatest extent yet recorded in almost a quarter of a century of data collection.
"Although some of these constraints will ease as the Omicron wave ebbs, energy and other commodity prices, notably agricultural goods, are spiking higher again due to the conflict in Ukraine, meaning the risks are heavily tilted towards inflation running even higher and persisting for longer than previously expected, squeezing household budgets.
“Though it remains early days to be assessing the impact of the war, growth prospects are also likely to have been hit by heightened risk aversion and new sanctions, dampening the rebound from the pandemic
“With inflation risks rising and growth prospects waning, the Ukraine conflict adds to business and household headwinds for the coming months, and exacerbates the difficult juggling act of the European Central Bank in controlling inflation while sustaining a robust economic recovery.”
9.21am: Leading shares now in the red
Well that didn't last long.
Given the fast moving situation in Ukraine, it is no surprise that markets are volatile.
And after an early rise, the FTSE 100 is now in negative territory, down 27.12 points or 0.37% at 7402.44.
Polymetal International PLC (LSE:POLY) remains the biggest faller and unless it stages a remarkable recovery, it is likely to stay there.
Its shares are now down 29.95%.
After their results, ITV PLC (LSE:ITV) has lost 13.69% and insurer Admiral Group Plc (LSE:ADM) 7.91%. Melrose Industries PLC (LSE:MRO, OTC:MLSPF) is down 8%.
AJ Bell investment director Russ Mould said: “Not even continuing strength in the oil and gas market and the resulting upswing in BP and Shell shares could save the FTSE 100 from a fall on Thursday.
“Investor nervousness is perfectly understandable as we won’t know the full impact of the conflict sparked by Russia’s invasion of Ukraine for some time.
“However, one thing is already clear, it has supercharged the inflationary pressures already facing the globe, while at the same time blunting central banks’ response, as they will be wary of being too aggressive on rates at a time of such uncertainty.
“Big share price falls for ITV, as investors baulk at the potential costs associated with its newly unveiled ITVX streaming platform, as well as Melrose Industries and Admiral on their latest results also helped put the index under pressure.
“This offset strength in the wider resources sector and a strong showing from London Stock Exchange Group following the release of its own numbers.
“The big fall for Melrose seemed at odds with results which were ahead of expectations, however the decision to delay the return of capital from the sale of several businesses in 2021 spoke volumes."
8.59am: Polymetal leads the fallers
Russian miner Polymetal International PLC (LSE:POLY) continues its slide.
Its shares are down another 31% as the West continues to impose sanctions amid the fighting in Ukraine.
The company has lost its place in the leading index, as has Roman Abramovich-linked Evraz PLC (LSE:EVR), although the steelmakers shares are only down 2.4% at the moment after its recent falls.
Broadcaster ITV PLC (LSE:ITV) is among the biggest fallers, down 15.05% despite positive full year results showing a 48% riser in pre-tax profits to £480mln, as investors worry about increased spending on its digital business and ever growing competition from the likes of Netflix and Disney.
Richard Hunter, head of markets at interactive investor, said: "Leading up to these results, the market had reacted with some cynicism to ITV’s lofty ambitions, and the share price reaction today reflects a mauling by the bears, with a concentration on the investment spend needed and the strength of the competition rather than improving prospects."
Elsewhere Coca Cola HBC AG (LSE:CCH), which has lost its fizz in recent days on concerns about its presence in Ukraine, is down another 4.16%.
The company said it had temporarily stopped production at our plant in Kyiv on the 24th of February and evacuated our employees.
It added: "It is still too early to quantify the impact that the evolving geopolitical crisis and many governments' developing reactions to it will have on our business or on our full year 2022 results.
"Given that we generated around 20% of 2021 volumes and EBIT from [Ukraine and Russia], combined with the uncertainty of the duration and economic impact, we no longer believe that it is prudent to provide guidance for our group's current financial year."
8.17am: UK market makes a positive start
Leading shares have opened higher following gains in the US and Asian markets.
Although Russia continued its attacks on Ukraine overnight, the two sides are set for talks over a possible ceasefire with delegations reportedly heading to the Belarus-Poland border.
The FTSE 100 is currently up 20.63 points or 0.28% at 7450.19.
Meanwhile oil continues its relentless rise as the current war raises supply concerns and Opec+ - which includes Russia - decided not to raise output more than the previously expected 400,000 barrels a day.
Brent crude has hit US$118.35 a barrel, up 5.42% while West Texas Intermediate is up 4.93% at US$115.5.
Aluminium and other metal prices are also adding to their recent rises, as is wheat, with Chicago futures at a 14 year high.
So commodity companies are among the early risers, with Glencore PLC (LSE:GLEN) up 5.4%, Anglo American PLC (LSE:AAL) adding 3.65% and BP PLC (LSE:BP.) 2.47% better.
Meanwhile the London Stock Exchange Group PLC (LSE:LSEG) has suspended trading in 27 companies with strong ties to Russia, including Gazprom, Lukoil and Sberbank.
Speaking of the exchange, its own shares have jumped just over 7%, making it the biggest riser in the leading index, after it nearly doubled its full year statutory profits. They rose from £492mln to £987mln, helped by the acqusition of data and infrastructure group Refinitiv.
Elsewhere on the agenda, apart from the raft of corporate news, there are the latest economic snapshots from around the globe in the form of service sector PMIs, plus the latest US weekly jobless claims.
6.41am: Investors nervous as Russia wins control of Kherson
FTSE 100 was heading for an uncertain start as heavy fighting continues in Ukraine.
Early calls from spread bet firms were for a small early loss, but such is the volatility at present that can easily change said market commentators.
London’s blue-chip index managed to push ahead on Wednesday, adding 99 to 7,429, largely on the back of oil stocks which rose strongly as crude hit US$110 per barrel.
Oil prices continued to surge higher again overnight with Brent hitting US$117 at one point, up 20% in a week, and prompting economists to warn that the global economy is heading for a stagflation shock due to the surge in commodity prices.
The price of coal, natural gas, aluminium and wheat also all surged higher as traders factored in the possibility of supplies from Russia coming to a halt.
Ipek Ozkardeskaya, Senior Analyst at Swissquote noted that short-bets against energy companies have also risen to their highest levels in more than a year raising the possibility of a short squeeze on share prices in the energy sector.
“According to S&P Global Market Intelligence, the short interest against the energy stocks has peaked to the highest levels in more than a year, as the latest rally in global energy stocks ‘may be petering out, even with oil prices surging to their highest levels since 2014’.
“Therefore, the rising short bets also means a rising risk of a short squeeze, where investors who have bet for the prices to fall decide to close their positions - and closing a short position involves buying back the stock, which gives a further positive momentum to a market rally as it has been the case for stocks like GameStop and AMC last year. “
In Ukraine, reports overnight suggested Russia has ratcheted up its attacks with the strategically important city of Kherson on the Black Sea now confirmed as being under its control and more explosions in the capital Kyiv.
Ramifications of the war are now starting to spread wide with the news yesterday that Roman Abramovich is to sell Chelsea FC after 19 years of owning the premier league club as he looks to liquidate his assets ahead of his possible inclusion on the European and UK sanctions list.
Ukraine overhangs today's diary as Darktrace, Melrose Industries and London Stock Exchange lead a long list
Fed Chair Jerome Powell meanwhile confirmed that US interest rates would rise this month, but acknowledged the uncertainty caused by the war and said the rise would only be 25 basis points (0.25%) with the timetable of future rises now more flexible because of the invasion.
US equity markets all closed higher and there were also gains in key Asian markets.
On the UK company front, it is another heavy day of scheduled news with Meggitt, Melrose, Darktrace, all reporting alongside housebuilder Taylor Wimpey, bookmaker Entain and the LSE.