- FTSE 100 closes up a shade
- US stocks lower
- M&G wanted after announcing share buyback programme
4.50pm: FTSE closes ahead - just
FTSE 100 closed just in the green on Tuesday, clawing back losses, but was still off 7,000 as market uncertainty continues to dominate amid the Russia-Ukraine war.
Britain's blue chip benchmark finished up around four points, or 0.07%, at 6,964.
"The day has seen markets repeatedly attempt to stabilise, with some buying developing despite the news of UK and US sanctions on Russian oil exports," said Chris Beauchamp, the chief market analyst at spread-better IG.
"While there seems little prospect that the rest of Europe will follow suit, the move has brought inflation and supply concerns back to the forefront. Markets look to be in more of a consolidation mode than was the case yesterday, but no one as yet seems to be in any hurry to buy the dip."
It comes as President Biden confirmed a complete US ban on imports of Russian oil, gas and coal, while Downing Street said it plans to ban Russian oil imports, but not gas, by the end of 2022.
The EU also unveiled a broad plan to plan to wean the bloc off Russian gas and said the case for accelerating the clean energy transition "has never been stronger".
"There will be consequences: high gas prices, even more inflation and retaliation from Russia. Gold is teasing its record highs, stocks are reeling. Volatility isn’t going anywhere until Putin ends the invasion of Ukraine," said Fawad Razaqzada, market analyst at ThinkMarkets.
4.00pm: Bulb rescue cost to taxpayer huge
The British taxpayer will pay around £3bn to rescue energy supplier Bulb from collapsing.
£1.7bn was agreed to be paid in November but this figure soared on Russia's continued invasion, which sent oil prices flying to their highest levels on record.
The country’s former seventh-largest energy provider had approximately 1.7mln household customers and was the first energy company to use the special administration regime, which meant its operations could continue at the expense of the taxpayer.
The government and industry experts anticipate Bulb to request a few hundred million pounds in extra funding to meet customers’ needs.
An industry executive believes the cost of bailout would “easily” hit £2.5bn, with £3bn or more not out of the question at all.
(Read more on the Bulb story here)
3:25pm: European markets reprieve only temporary
European markets get a boost but the joy is only expected to be short lived, according to Craig Erlam, a senior market analyst at Oanda.
“European stock markets had been given an unexpected boost on Tuesday following reports that the bloc is close to an agreement on fresh joint bond sales to fund major projects.”
“It was reported that the joint bond sale will fund energy and defence spending across the EU following the Russian invasion of Ukraine.”
“While the short-term solutions will probably be focused on diversifying its supply, there will likely be a significant acceleration in its push towards green energy in the longer term.”
“The size and make-up of the package could be announced in the coming days which will highlight just how seriously the EU is about transitioning away from Russia in light of recent events.”
“Unfortunately, these reports will only likely bring temporary reprieve in equity markets, a day after they were tipped into bear market territory. “
“There still remains considerable uncertainty around the Russian invasion of Ukraine and commodity markets are continuing to see some extraordinary moves as a result.”
3:06pm: UK will announce plans on reducing reliance on Russian oil and gas this afternoon
The UK government will underline its approach to reducing its reliance on Russian oil and gas later today.
NEW: Understand the U.K. government will make an announcement today on how it intends to reduce Russian oil and gas imports over time
Announcement expected around 4pm
— Alex Wickham (@alexwickham) March 8, 2022
2.50pm: US stocks retreat on open
Wall Street’s main indices have generally opened on the back foot, despite analysts’ expectations of a tentatively positive start to trading in America on Tuesday.
The Dow Jones index was stagnant, while the Nasdaq and S&P 500 eased 0.39% and 0.24% lower, respectively.
2.29pm: Homeowners take advantage of cheaper fixed mortgage rates
UK household owners cashed in on cheaper fixed remortgage rates in the last quarter of 2021, according to data, as inflation puts a squeeze on the cost of living.
Nearly a third of the mortgages paid out to owner-occupiers were remortgages, the highest share since the start of the pandemic.
£27.3bn worth of remortgages were also agreed for the coming months, the largest amount in three years.
“Property owners realised that the era of cheap mortgages deals was coming to an end, so now was the time to get a new fixed-rate deal while they were still around,” according to Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown.
“Overall mortgage lending fell towards the end of the year, but we already know this was a blip because January figures have revealed buyers are still keen.”
“Despite the recent rises, mortgage rates are still incredibly low, and with lockdown savings burning a hole in some people’s pockets, there are still compelling reasons to buy.”
Banks and building societies have pulled more than 500 mortgages from sale in the last month, according to Moneyfacts, a financial information service, with interest rates set to rise.
Those who didn’t cash in on the cheaper, fixed-rate mortgages may be left reeling further as inflationary pressures look set to batter household disposable income.
Inflation is predicted to rise to 8% in spring, causing disposable income to fall by 4%, or an average of £1,000 per year per household, its lowest levels since 1975.
2.00pm: US ban on Russia is coming
Bloomberg is reporting that President Joe Biden is set to go ahead with banning US imports of Russian oil, with an announcement expected as earlier as today.
The news has driven the price of Brent crude up slightly, now at US$124.21 per barrel.
That price is likely to go up even further once an official announcement has been made.
The team at Bloomberg (@annmarie + co) reporting that President Biden is set to ban US imports of Russian oil as soon as today WITHOUT the participation of European allies. pic.twitter.com/17zAzenKCg
— Jonathan Ferro (@FerroTV) March 8, 2022
According to the American Fuel and Petrochemical Manufacturers trade association, around 61% of America's oil came from neighbouring Canada in 2021, significantly higher than the 3% that came from Russia in the same year.
Europe, although reportedly consulted by the US on its decision, will not be imposing any sanctions itself for the being time, given it is much more reliant on Russian energy than its ally across the pond.
Imports from Russia accounted for about 40% of EU gas consumption in 2021, according to the International Energy Agency.
1.35pm: Up and down FTSE
The FTSE 100 has swung back into negative territory after looking to many that it was firmly on the rise.
On an extremely volatile day for markets, which has seen several fluctuations between red and green, the blue-chip index was 0.5%, or 36 points, down during Tuesday afternoon’s changing of hands.
The Anglo-Russian metal miner Polymetal International PLC (LSE:POLY) led the fallers with a 10% drawback, while Ocado Group PLC (LSE:OCDO) and Rightmove PLC (LSE:RMV) were not far behind.
On the contrary, M&G PLC (LSE:MNG), Evraz PLC (LSE:EVR), and ITV PLC (LSE:ITV) were the most notable to buck the index’s trend, advancing 14%, 13%, and 8.7% respectively.
Meanwhile, the FTSE 250 index was soaring with a 0.7%, or 125 points, hike.
1.13pm: M&G attractive on share buyback programme
M&G PLC (LSE:MNG) shot up 15% to 204.5p as it announced a £500mln share buyback programme alongside its full-year results.
The London-based global investment manager was second on the FTSE 100 climbers on Monday afternoon, beaten only by Evraz PLC (LSE:EVR), which is a Russian-based and Abramovich-owned steel and mining company that is bouncing back from the hammering Russian stocks took since the country invaded Ukraine 13 days ago.
Meanwhile, in M&G's results, adjusted operating profit before tax of £721mln in 2021 was down from £788mln in 2020, partly due to lower benefits from changes to longevity assumptions.
Assets under management and administration increased 0.8% year on year to £370bn, including strong net client inflows of almost £6bn from the Institutional Asset Management franchise and continued improvement in Retail Asset Management flows, the pensions firm said.
12.45pm: EU urges Britain to pay £2bn on import fraud failings
Britain was told to pay a £2bn fine to the EU’s member states following import fraud failings whereby undervalued goods were allowed to enter the market.
The EU’s top court and European Commission said a colossal number of customs duties, with fake invoices and low-value declarations, for Chinese footwear and textiles were allowed into the UK and Northern Ireland.
The Commission blamed Britain for failing to follow warnings and implement required controls between 2011 and 2017.
The Court of Justice of the European Union agreed with the ruling but insisted the estimated £2.2bn plus extra VAT losses must be recalculated.
12.20pm: Scottish Mortgage falls again
Scottish Mortgage Investment Trust PLC (LSE:SMT) was one of the index’s biggest fallers again, mirroring the movement of the tech-heavy Nasdaq.
Shares fell 2.34% to 834p, with the tech-focused trust losing nearly half its value over the last six months.
The Nasdaq lost 482 points yesterday, down 3.62%.
11.54am: US preview
US stocks are expected to open tentatively higher after soaring commodity prices added to inflation concerns, sending benchmark indices lower as the war between Russia and Ukraine escalates.
Futures for the Dow Jones Industrial Average rose 0.28% in Tuesday premarket trading, while those for the broader S&P 500 index gained 0.35% and the tech-heavy Nasdaq was just 0.07% higher.
Stocks closed with sharp losses on Monday as the prospect of sanctions on Russian exports sent the price of oil soaring.
The Dow Jones sank 2.37% to 32,817, while the Nasdaq shed 3.6% to 12,831 and the S&P 500 dropped 2.95% to 4,201, its sharpest daily decline since May 2020.
Other commodities have also been affected. The London Metal Exchange (LME) suspended trading in nickel after the metal briefly crossed $100,000 a ton early on Tuesday over concerns about Russian supply disruptions. Safe-haven gold added more than 3% to trade above $2,006 an ounce.
“Markets are continuing their steady but sharp declines in the absence of either a resolution to the conflict or a return of risk appetite,” commented Richard Hunter, head of markets at interactive investor. "Reverberations from the possibility of a ban on Russian oil sent the price of black gold higher once more, and up by 63% in 2022 alone.”
Hunter said the implied effect on inflation tempered any possibility of the buying of growth stocks, with the Nasdaq taking another lurch lower on Monday, taking year-to-date losses to 18%.
“The Dow Jones also suffered from an evaporation of appetite, now down by 9.7% in the year to date and in correction territory, joining the S&P500 which has lost 11.9% this year,” Hunter added.
11.25am: Shell u-turns away from Russia after criticised weekend deal
Shell PLC (LSE:SHEL, NYSE:SHEL) has just announced its intention to withdraw from Russian oil and gas, ending all future spot purchases of Russian crude oil.
Shares were up slightly to 1984p, with the oil and gas company one of the few winners over the last few weeks, benefitting rising petrol prices and cementing itself at the top of the FTSE 100.
The company has, however, seemingly u-turned, only days after making the “difficult decision” of buying heavily discounted crude oil over the weekend.
Chief executive Ben van Beurden apologised for the decision to purchase 100,000 metric tonnes of oil, adding in a statement it will “stop all spot purchases.”
He said that the company will also be making changes to its supply chain to remove Russian volumes.
Operations concerning service stations, aviation fuels and lubricants will also no longer be going forward in Russia either.
Although the purchase did not violate any Western sanctions, the decision had received widespread criticism.
The West is yet to impose any restrictions on Russian oil and gas, with German chancellor Olaf Scholz pushing back calls to impose any bans with the threat of stagflation looming.
Russia has warned against any sanctions on oil, with the Russian deputy prime minister threatening that the price could surge even further to US$300 per barrel, as well as potentially imposing its own ban on gas into Europe.
BP is taking a less severe approach to the Russian oil problem.
The company said it will continue buying Russian oil and gas under its existing contracts, although it won't make any new deals for energy supplies from the country.
(Read more on the Shell story here.)
10:59am: Nickel surges 250% over concerns of Russian output
The London Metal Exchange temporarily paused nickel trading late Monday night after the commodity skyrocketed over 250% in the previous two days.
An emergency rule change was implemented after prices soared to an unseen US$100,000-per-tonne.
The rule changes allowed traders to delay delivery obligations on Nickel, but this was not enough to stop the surge.
BOOM!!! Nickel prices surge above $100,000 a tonne on a huge metal short-squeeze. The London Metal Exchange has given a unit of China Construction Bank Corp. extra time to pay $$$$ in margin calls it missed Monday. Do follow @jfarchy for more and read this https://t.co/4lO5xbW3ph pic.twitter.com/BWaJodhiGC
— Javier Blas (@JavierBlas) March 8, 2022
The metal used in electric vehicle batteries and stainless steel experienced its biggest ever price spike, of 90%, on Monday.
It was one of the most extreme price moves ever seen on the 145-year-old exchange.
Fears over Russian supplies following the country’s continued invasion of Ukraine left buyers exposed to a huge, short squeeze in several different commodities.
“Although the brakes have been put on sanctioning Russian commodities exports, already supplies are disrupted as shipping companies avoid ports in the region and metals companies start to reduce their exposure to Russia.
“Those that had bet against the metal’s rise in value, have now been forced to buy at a much higher price, creating a short squeeze,” Susannah Streeter, Hargreaves Lansdown senior investment and market analyst, said.
10.30am: Households set for biggest decline in disposable income
UK inflation is forecasted to rise above 8% this spring, having an adverse effect on household income by 4%, or £1,000 on average per household, the biggest annual decline since the mid-70s.
According to the thinktank Resolution Foundation, UK household disposable income is set for its biggest decline since 1975 as Russia’s continuing invasion of Ukraine sends oil and gas soaring.
Inflation was already at its highest point in 30 years at 5.5% prior to Vladimir Putin’s invasion.
Oil is trading at US$121 per barrel today, retreating from the US$139 it hit yesterday.
Commodities, in general, have rocketed since the invasion, with nickel, the precious metal used in stainless steel and lithium-ion batteries hitting US$100,000 a tonne before easing slightly.
It had ended 2021 at roughly US$20,000 per tonne, but concerns over Russian output has spooked investors and sent the price soaring.
Russia is the third-largest producer of nickel from mines and also the third largest exporter by value.
09:20am: Bargain hunters home in on Russian stocks
London’s index has staged a quick turnaround after a weak start, helped by enthusiasm for Russian stocks from bargain hunters.
The FTSE 100 index was up 20 points (0.3) at 6,994.
The price of Brent crude rose US$1.40 (1.2%) to US$124.60 a barrel as the US and Europe mulled banning Russian oil imports, with the US apparently prepared to go it alone if Europe decides not to do so.
“Investors remain on tenterhooks as the conflict continues to unfold, with the possibility of further sanctions having second-order effects in some sectors,” said Richard Hunter at interactive investor.
Fund manager M&G PLC (LSE:MNG) rose 11.5% to 198.8p after issuing its full-year results. The company is the latest big name to announce a massive share buyback; it plans to buy back up to £500mln of shares.
The only stock stopping it from topping the Footsie leaderboard was Russian steelmaker Evraz PLC (LSE:EVR), which was up 17% at 90p. Another Russia-focused stock on the recovery trail was Polymetal International PLC (LSE:POLY), was up 6.7% at 184.15p.
Results from tool hire firm Ashtead Group Plc (LSE:AHT) hit the spot, sending the shares 3.2% higher to 4,792p.
Among the mid-caps, Greggs PLC (LSE:GRG) fell out of bed, slumping 8.0% to 2,101p as its warned on profits.
“Overall, the UK food-to-go market remains depressed with commuter footfall stubbornly below pre-Covid levels. Despite difficult trading conditions, Greggs has been able to punch above its weight thanks to a recipe of competitive pricing, clever location strategy, and their JustEat delivery partnership,” said Ross Hindle, an analyst at research house Third Bridge.
“In 2021 Greggs drove revenue growth through store expansions, opening some 131 new shops. More shops may have meant more sausage roll sales, but a lack of like-for-like growth is now a concern. With the wow-factor of its vegan offerings now a distant memory, Greggs needs to provide more innovative and broad meal and drink choices, our experts say,” Hindle said.
Talking of footfall, according to the British Retail Consortium (BRC), retail sales in February were up 6.7% on a year earlier, compared to year-on-year growth of 11.9% in January.
“The year-over-year growth rate of the BRC’s measure of total sales values remained high in February because non-essential shops were closed a year earlier, and declined from January’s 11.9% rate partly because sales were higher in February 2021 than in January 2021. Nonetheless, the drop in the growth rate also is severe enough to suggest that sales lack near-term momentum. Indeed, after seasonal adjustment and forecasting the deflator, the BRC’s data are consistent with around a 3% month-to-month decline in the official measure of retail sales volumes, excluding petrol, last month,” said Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.
“The trio of storms—Dudley, Eunice and Franklin—that battered most of the country mid-way through the month likely drove this decline, though we suspect the recent decline in consumers’ confidence also has played a role. A 3% drop probably is overstating the weakness; the BRC’s data are not a perfect guide to the official figures and historically they have been more closely correlated with store sales—which would bear the brunt of the storms—than non-store sales. Nonetheless, a sharp fall of about 2% seems likely,” he added.
BRC/KPMG retail survey. Masterly understatement. KPMG says this ‘could be a challenging time ahead for some in the sector should consumers choose to cut their spending to manage increasing household bills…’ You think?
— Mark Brumby (@brumbymark) March 8, 2022
8.38am: Fears of a triple-digit fall for Footsie not realised at the outset
London’s traders stepped away from the precipice as the FTSE 100 opened down just 23 points at 6,936.35 instead of losing the 100 or so points predicted ahead of the start of proceedings.
It was carnage after-hours Stateside with the tech sector sustaining the brunt of the punishment, with the major indices falling between 2.4% and 3.6%.
Here in Europe, Putin’s war on Ukraine continues to garner the headlines although Russia appears to be making minimal strategic progress with its push on Kyiv.
The geopolitics emanating from that conflict surrounds oil and gas supplies. Moves from the West to boycott Russian oil and gas has been countered with not-so-veiled threats from Moscow to close the main gas pipeline to Germany, Nordstream One.
Unsurprisingly the uncertainty of supply and demand has maintained the impetus behind already sky-high oil and gas prices, with the former hitting a 13-year high on Monday. Other staples such metals and soft commodities, including wheat and corn, have also followed suit.
Opportunistic buying continued to push up the prices of Russia focused groups Evraz and Polymetal 12.2% and 5.5% respectively. The latter, along with Mexican silver miner Fresnillo, was also chased higher on the back of rising precious metals prices.
Gold once again found itself above US$2,000 an ounce as investors chased traditional haven investments.
6.55am: Triple-digit decline predicted
The FTSE 100 is heading for a big opening fall as oil and gas prices soared to new record highs, with Russia threatening to cut off gas supplies to Europe.
London’s blue-chip benchmark is set to fall 110 points, according to two spread-betting platforms, having been the most impervious major index yesterday, with a 27.66-point fall to 6,959.48.
As European leaders discussed how to wean their nations off Russian energy and the White House was said to be considering a ban on Russian oil, Moscow hit back with a threat to close its main gas pipeline to Germany, Nordstream One.
Deputy Prime Minister Alexander Novak said: “A ban on Russian oil will lead to catastrophic consequences for the global market. The surge in prices will be unpredictable — more than $300 per barrel, if not more.”
Brent crude, which leapt to a 14-year high of US$139 yesterday before falling back, reared back up to almost US$128 per barrel this morning, while natural gas futures jumped to over 500p a therm.
Economist Thomas Mathews at Capital Economics said: “History suggests that large disruptions to oil supply, which a proposed ban on imports of Russia’s oil would probably represent, could weigh heavily on the US stock market.”
Anticipating this, there was a heavy sell-off on Wall Street overnight, with the steepest daily fall in 17 months. The tech stocks of the Nasdaq led the retreat, tumbling 3.62%, the S&P 500 plunging 2.95% and the Dow Jones falling 2.37%.
It’s not just energy prices that are rising, with wheat prices hitting new records topping US$12 a bushel and nickel prices, rising from US$80k to US$100k a tonne in less than an hour to new record highs this morning.
“It is these fears over rising inflation that is causing US yields to push higher, despite concerns about the growth outlook,” said market analyst Michael Hewson at CMC Markets.
“It’s been notable that despite the move into US 10-year bonds at the end of last week, which prompted a sharp fall in 10-year yields, this same pattern hasn’t been reflected in US 2-year yields, which have remained steady.
“This flattening of the yield curve appears to suggest that US investors are worried about higher prices in the short term, which in turn could cause an economic slowdown.”
Around the markets
Pound: flat at US$1.3110
Oil: up 3.36% to US$127.35
Gold: up 0.6% to US$2,010.23
Bitcoin: flat at US$38,236.12