- FTSE 100 down 252 points
- FTSE 250 at lowest since Nov 2020
- US stocks join worldwide sell-off
4:50pm: Weak close in London; US stocks down midday
The FTSE 100 finished Friday on a down note, losing 252 points, or 3.5%, to 6,987, as the escalating conflict in Ukraine continues to shake investor confidence.
“The week ends on a poor note for stocks, although gold and oil prices are still finding buyers, even after their huge rallies,” IG chief market analyst Chris Beauchamp said.
Notably movers included shares of Marks and Spencer Group PLC (LSE:MKS), which slid more than 3% after the food and clothing retailer said it had suspended shipments to its Turkish franchisee's Russian business.
4:05pm: Heavy selling
The week is ending with two days of heavy selling for shares, although commodities such as gold and oil are still finding buyers despite their elevated levels.
Down 209 points to 7,030 with half an hour to go in the week, the FTSE 100 is on course for a 6.16% decline this week.
The mid-caps of the FTSE 250 are down 3% to 19,472.43 today and close to a 7% drop over the five days.
“As a see-saw week draws to a close, the sellers once again have the upper hand,” said Chris Beauchamp, chief market analyst at IG.
“Stock markets are under pressure again, and look at risk of another sweeping decline. European markets have taken it on the chin all week, but they have been joined by the FTSE 100 today, which briefly slipped below 7000 and has hit three-month lows.
“It is clear that ‘Ukraine worries’ will be the catch-all term for market declines, but with the war now over a week old the same bearish view that developed last week still applies – markets are ill-prepared for a conflict with all its unknowable consequences, especially when combined with surging oil prices and rising inflation, mixed in with central banks who are not displaying any of the dovishness needed to rescue sentiment.”
Stocks being abandoned today was perhaps in no small part because the strong US jobs reading, Beauchamp added.
“This removes any cover Powell might have had for rowing back on rate hikes, since (for now at least) the US economy is in excellent health when it comes to job creation. But the war seems to override everything else, and with gold back on the up and oil prices rising again too investors are going back to what works.”
2pm: Wall Street joins the selling
US stocks have joined the mass global sell-off today after Nato chief Jens Stoltenberg warned there are “likely to be worse” days to come as Russia is expected to step up its attacks on Ukraine.
Stoltenberg reiterated that Nato would not impose a no-fly zone over Ukraine after calls from Kyiv to help stop bombardments.
European markets are closing in on bear market territory, analysts said, with heavy selling as investors grow increasingly fearful of recessionary and escalation risks.
"The sell-off has gathered pace as the morning has progressed and I can't expect the mood will improve as we head into another highly uncertain weekend," said market analyst Craig Erlam at Oanda.
"The fact that Vladimir Putin is showing no desire to de-escalate despite crippling economic sanctions says everything about his mentality and that is bad news for everyone.
"Europe is coming under considerable pressure as investors fret about the bloc's exposure to the conflict and the risk that it may be dragged into recession. Sanctions were never going to come without an element of self-harm and we're seeing evidence of that this week. With Putin clearly undeterred, further measures will be demanded which will come at a further cost."
While the Footise has trimmed the worst of its losses, it is still down 2.6% at 7,053.
Across the pond, the Dow Jones, S&P 500 and Nasdaq index fell 1.2%, 1.3% and 1.4% respectively in early trading.
Oil prices have resumed their rise, with Brent crude up 4.5% to US$115.42, having come within a whisker of US$120 yesterday before falling more than 8% in European trading hours.
"It's hard to imagine that it's peaked. We could well be heading for recessionary oil prices," said Erlam.
"We keep hearing that a nuclear deal between the US and Iran is close but another day passes without an agreement. A deal would bring around 1.3 million barrels per day back to the market quickly, which would go some way to alleviating the imbalance. Unless of course, Russia weaponises oil exports in response to Western sanctions, something that still looks unlikely at this stage. It could soften the blow of unintentional disruptions though and perhaps take some of the heat out of the market."
1.54pm: US jobs market tightening further
The non-farm payrolls report showed that the US economy saw 678,000 jobs added in February, more than the 440,000 expected.
The US unemployment rate also eased to 3.8% from 4%, while wages grew 5.1% on a year ago, which was down from a revised-down 5.5% the month before and slightly lower than expected.
"We have a very tight labour market, and it confirms that there is plenty of room for the Fed to increase the interest rates," said market analyst Naeem Aslam at AvaTrade.
"The initial reaction in the forex market for the dollar index has been positive because the data has brought good news for them. As for the equity markets, we also see a relief there, but the main focus among traders is the ongoing geological tensions in Ukraine, and they are likely to remain there. Watch the banking sector in Europe more closely as it there where we see most of the pain. As for the energy sector, we believe that there is still plenty of room for oil prices to move higher given the circumstances."
Back in London, the FTSE was down 220 points or 3.05% at 7,018.
1.25pm: Crypto retreat
In crypto markets, bitcoin gave up some of the strong gains made earlier in the week to retest its 20-day moving average at around $41,000 this morning.
After a 32% rally over the past week, bitcoin failed to secure a higher-high on the daily time frame as it closed below the key $44,600 level and, said Marcus Sotiriou, analyst at GlobalBlock, "is not bullish until this level is reclaimed".
Despite the fall today, Sotiriou said on-chain metrics show that 180,000 bitcoin have been withdrawn from exchanges this year, as net flow has again turned negative.
"The last time we saw outflow being consistently negative was in early November when Bitcoin reached a new all-time-high. Bitcoin being withdrawn from exchanges is bullish as it indicates these market participants are long-term holders," he said.
With HM Treasury and the Financial Conduct Authority among the official bodies pressuring crypto exchanges to block Russian users, Sotiriou said it put exchanges in a difficult position.
"They clearly want to cement relationships with regulators and be on their side, but they also want to provide technology neutrally without being political."
Binance, for example, said that although it is complying with sanctions on Russian users by restricting cardholders of sanctioned Russian banks, it will not issue a blanket ban on Russian users.
12.41pm: Global sell-off
The FTSE has continued to lurch lower, falling 240 points or 3.3% to below 7,000 for the first time since November.
London's blue-chip index has plummeted 256 points or 3.5% to 6,982.78, with banks and telecoms companies joining the main fallers.
European stocks are also staggering similarly, with Germany's Dax and France's CAC 40 down 3.6% and Italy's MIB index down 4.1%.
Wall Street is also expected to end a volatile week firmly in the red, while the latest monthly US jobs report is expected to add to pressures on the Federal Reserve to hike interest rates this month as inflation spirals higher.
Futures for the blue-chip Dow Jones Industrial Average, the broader S&P 500 and tech-laden Nasdaq-100 are all down more than 1%.
Friday's jobs report, which is due at 8.30am New York time or 1.30pm in London, is expected to show a 440,000 increase in non-farm payrolls in February and the unemployment rate falling to 3.9% from 4.0% a month earlier, according to a Wall Street Journal survey of economists.
Such a jobs gain would be more than double the average monthly increase of 164,000 jobs in the year before the coronavirus pandemic but would also mark a slowdown from the increases in January, December and November.
The numbers, however, won’t show what effect, if any, Russia’s invasion of Ukraine last week and the subsequent run-up in oil prices have had on the labour market.
In the UK, there has been some data on the housing market from Zoopla (LSE:ZPLA), with a 5% rise in the number of properties put up for sale in January versus the five-year average.
House prices rose by 7.8% in the year to the end of January, but the rate of house price growth may be easing.
The mismatch between supply and demand continues, said Myron Jobson at financial firm Interactive Investor.
“The increase in the supply of homes across the board is great news for buyers, allowing existing homeowners to progress up the property ladder towards their ‘forever home’ while freeing up inventory for the new wave of first-time buyers who’ve struggled to find a footing," he said.
“House price growth continues to exceed expectations, powered by robust demand. While the escalating cost of living crisis and the spectre of higher interest rates are likely to exert a cooling effect on the housing market, the demand for property could grow further still if proposals to unwind the tough mortgage affordability tests, implemented in 2014 to prevent a repeat of the financial crisis, see the light of day."
11.11am: Five-month and 15-month lows for UK indices
The FTSE 100 is down 216 or almost 3% at 7,022.8, its lowest since early October, while the FTSE 250 is at its lowest since late 2020, down over 600 points or 3% to 19,477.91.
Investors' flight to safety is continuing on the financial markets as investors exit positions they see as more risky, and pile into other asset classes which they hope may offer some more defence against the volatility, said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
"Just over a week on from invasion, shockwaves are still sending repercussions across the world with many commodities shooting up to record levels and others to a price not seen in more than a decade."
Streeter noted that while the flight for safety was seeing risers including gold miner Fresnillo and defence and cybersecurity group BAE Systems, with some bargain hunting going on amid the volatility as Russian miners Evraz and Polymetal International were lifted.
"Commodities are on a seemingly unstoppable march upwards, adding to fears that the conflict will damage global growth as import costs rise dramatically and companies and consumers are forced to take big hits on their budgets," she said.
With the S&P GSCI raw materials barometer having leapt by more than 15% in just a week and Streeter said there was "little sign that prices will ease anytime soon".
"The cost of wheat has rocketed with contracts traded in Chicago up by 40% over the last seven days. That is piling the pressure on food producers who are also having to cope with higher transport and logistics costs."
Oil and gas prices are still highly volatile, Streeter added, with natural gas coming back off their highs but "remaining highly sensitive as although the sanctions stop short of hitting the energy supplies directly, they have already made it much harder for Russian companies to ship tankers of oil and gas given the ban on vessels in European ports".
"With raw material costs rocketing, it’s adding to the inflationary tinderbox. Given the added pressure, the US central bank, the Fed, seems unwavered in its intention to tighten monetary policy in response, as concerns grow that higher prices could become embedded in the economy."
Although chairman Jerome Powell said this week he’s still behind a 0.25% rate rise at the next meeting, the US non-farm jobs report out later today will still be closely watched as it is expected to show another month of strong employment as Omicron retreats.
"Policymakers will still be keeping a close watch on ominous events in Ukraine, which risk rippling out further into the global economy," said Streeter.
10.14am: Biggest weekly fall since first half of 2020
The Footsie is down over 218 points or 3% to 7,020.60, a fall of over 6% for the week, which would put it on course for its worst week since the 5.85% decline in June 2020.
It could even be worst since the March of that year, said market analyst Neil Wilson at Markets.com, and is poised to test 7,000 if its cracks below technical chart levels he is watching.
Having shed more than 2.5% on both Thursday and now today, Wilson said fragile technical support started to unravel and at its lows the FTSE has broken through the support levels seen in December.
"If 7,000 goes the next big support is at 6,800. When the words 'nuclear' in the context of a kinetic war enter the headlines you can rest assured investors will be troubled. But really this is about pent-up downside pressure that had really failed to be let out earlier in the week. No one wants to hold risk this weekend."
Oil prices are down from yesterday’s spike to US$119 a barrel but are still elevated above US$111, but Wilson said they remain "susceptible to severe dislocation at any point".
With bond yields back up, he said this may be a sign of a dollar squeeze, with the US dollar index (DXY) breaking above 98 this morning, its highest in almost two years.
The pound is down 0.37% against the greenback at $1.3300.
10.04: UK construction data
Amid the Ukraine headlines, we have had construction PMI data showing the fastest rise in UK output for eight months thanks to a marked and accelerated rise in housing activity and with input cost inflation dropping to an 11-month low.
The UK Markit/CIPS construction PMI for February rose to 59.1 from 56.3, ahead of the forecast 57.5.
"Despite news relating to the Russia-Ukraine war remaining in focus, these figures could reassure the Bank of England and lead it to take further action in the near future as consumer confidence shows signs of improvement and as several sectors in the economy continue to recover," said Walid Koudmani, market analyst at XTB.
Economists at Pantheon Macroeconomics said the high levels of business confidence and a slight easing of supply constraints enabled the sector’s recovery to gather more momentum.
"Admittedly, we would be surprised if the official measure of output rose on a month-to-month basis in February, given that a trio of storms—Dudley, Eunice and Franklin—battered much of the U.K. mid-way through the month," they added, but that the survey "points to a healthy underlying trend in construction output".
Elsewhere we also had retail sales data for the Eurozone, which showed a 0.2% month-to-month rise in January, after dropping 2.7% in December, while the year-on-year rate jumped to 7.8% from 2.1% as pandemic restrictions were eased.
9.15am: Three-month low
London's main equity benchmark has plunged over 180 points or 2.5% to just below 7,059, the lowest since late November.
The biggest fallers include aerospace suppliers Melrose Industries PLC (LSE:MRO, OTC:MLSPF) and Rolls-Royce Holdings PLC (LSE:RR.), along with British Airways owner International Consolidated Airlines Group (LSE:IAG).
Paper and cardboard box supplier are also looking crumpled, with Mondi PLC (LSE:MNDI), DS Smith PLC (LSE:SMDS) and Smurfit Kappa all among the main losers in early trading.
Mondi has suspended production at a plant in Ukraine, but it also owns another in Russia, Syktyvkar, which accounts for 12% of revenue.
ITV PLC (LSE:ITV) continued its drop from yesterday, while BT Group PLC is another at the bottom of the blue chip list.
There were some risers on the FTSE, most notably Russian firms, led by a 16% rebound for steel basher Evraz, and a 3.5% gain for precious metals miner Polymetal International PLC.
8.40am: Starting in the red
The FTSE 100 traded down 114 points or 1.6% after the first 40 minutes of the morning’s trade, to change hands at 7,124.
As expected, the latest overnight reports from Ukraine further bristled the spines of investors as they woke up to nuclear headlines.
Boris Johnson warned this morning that Russia’s actions “could now directly threaten the safety of all of Europe” after infantry broke through Ukrainian lines and shelling caused fires to break out at Europe’s biggest nuclear power station.
“Risk assets lurched lower once more following reports of an attack on a nuclear plant in Ukraine, while commodities continued their rise amid the inflationary impacts of the conflict,” said Richard Hunter, Interactive Investor's head of markets.
“The scarcity of positive catalysts at present presents another dilemma for investors, particularly those with a shorter timeframe,” Hunter added.
“Haven investments have been of interest, and for those with a steelier disposition the commodities space has also attracted buying attention.
“However, for most investors the current twin perils of geopolitical tensions and persistent inflation have led to levels of inactivity which are unlikely to improve until such time as the fog clears.”
The fires at the Zaporizhzhia nuclear plant have been put out, according to local reports.
With no tangible sign of any moves towards a ceasefire and the nuclear fire underlining the recklessness of the invading forces and potential wider affects in Europe, traders were moving further out of risk assets.
6:45am: FTSE 100 seen falling after nuclear power station attack in Ukraine
The FTSE 100 is expected to continue falling sharply on Friday after reports that a large nuclear power station in Ukraine caught fire after a Russian attack.
London's main equity index is seen falling 80 points, according to spread-betting platforms, a day after falling over 190 points to 7,238.85.
It came after Russian President Vladimir Putin vowed to destroy and conquer the whole of Ukraine, with financial markets in North America and Asia falling overnight and this morning.
The fire at the Zaporizhzhia nuclear plant, the largest in Europe, is "doubly incomprehensible and reckless" given Russia’s experience with nearby Chernobyl and the potential impacts on Russia itself from any potential fallout, said market analyst Micahel Hewson at CMC Markets, and looks set to trigger another poor start for European markets.
"US markets on the other hand have been holding up better this week, although they finished largely in the red yesterday, and also look set to open lower later this afternoon," Hewson said.
"The tightening of the sanctions ratchets this week, while proving to be effective on inflicting economic damage on Russia, is also likely to inflict significant economic damage on Europe as well, given its much heavier reliance on Russian gas imports.
"As we look to today’s European open further weakness looks increasingly likely, as the price of Russia’s actions in Ukraine make themselves felt on an economic, as well as a humanitarian basis in eastern Europe."