- FTSE 100 ends 19 points higher
- Demonstrations planned at P&O sites
- AstraZeneca hits all-time high
4.50pm: Footsie finishes well
The FTSE 100 index finished higher on Friday, capping its best weekly performance since November 2020 even after rate hikes in the UK and the US and with the conflict in Russia/Ukraine conflict still rumbling on.
At the close, the UK blue-chip index was 19.39 points, or 0.3% higher at 7,404.73, fractionally below the session peak of 7,406.13 and well above the session low of 7,318.90.
Chris Beauchamp, chief market analyst at online trading platform IG commented: “After the huge gains seen this week for many indices, it is not surprising that a sense of exhaustion has descended across markets. Both the FTSE 100 and the Dax have rebounded impressively from their lows for the month, but with little on the calendar today and not much in the way of headlines there has been little to drive trade in either direction.”
“But for now there doesn’t seem to be much of an appetite to sell the bounce. Stocks may actually take the lack of newsflow as a positive, and certainly next week is rather sparse on the event front as well,” he continued.
Noting that oil prices held steady as IEA calls for emergency measures, Beauchamp added: “Oil prices look to be on the up again, although in a much more measured fashion now the initial shock of the Ukraine war has worn off.
“After yesterday’s bounce both Brent and WTI have paused, while the IEA is asking countries to look at ways they can rapidly cut back on consumption. But it will be a relatively slow process, and demand is still likely to tick higher while supply still remains relatively constrained. The slow ratcheting up of pressure from higher oil prices looks to have a way to go yet.”
3.20pm: Ukraine war to hit Russian inflation
Russian inflation is set to be higher than previous estimates in 2022 and 2023, as the economic impact of war hits the country.
Its central bank, however, will not allow it to spiral, according to the central bank governor Elvira Nabiullina in a statement today.
"Relative price adjustments cannot happen all at once. This means that inflation will remain elevated for some time, but we will not allow inflation to spiral," she said.
"It is currently very difficult to give specific figures for the forecast. Inflation this year and, most likely, next year will be higher than previous estimates. GDP will decline in the next quarters," she said.
The Central Bank plans to unveil its new macroeconomic forecast at a pivotal meeting on April 29.
"The key uncertainty is external trade conditions amid increased sanctions pressure," she said.
The Central Bank' current official forecast, made at the beginning of February, is for 5%-6% inflation in 2022 and 4% in 2023.
Analysts polled by the Central Bank in early March expect that inflation reach 20% in 2022, and GDP could fall by 8%. The survey was conducted from March 1-9 and the data was published on March 10.
2.44pm: An overconfident market?
"Investors are opting for caution at the end of another strong rebound week, with equity markets a little lower as we near the close," said Craig Erlam, senior market analyst at OANDA, as the Footsie climbs back towards the open, down only 11 points.
"The rebound we've seen over the last couple of weeks has been nothing short of extraordinary. So much so that I don't think it's unfair to suggest we're seeing an unhealthy amount of complacency creeping into the markets."
"I'm not sure what exactly is more appealing about equity markets right now. The aggressive tightening cycles of multiple central banks around the world? Sky-high inflation? Soaring commodity prices? Or is it slight relief at negotiations while Putin continues to commit atrocities in Ukraine without any regard for life or the slightest concern about the consequences of his actions?"
"I understand that markets probably fell too far against the backdrop of immense uncertainty and no light at the end of the tunnel but when it comes to Putin and negotiations, I can't help but think we should take apparent progress with a pinch of salt. Instead, investors appear to be taking everything at face value which brings me back to the complacency warning above."
"This year promises to be incredibly challenging for households and businesses and without the central bank backstop propping up markets, there's a risk that equity markets won't just rally relentlessly and be back in record territory before you know it, as before. Old habits die hard and "buy the dip" has been the mantra of the last decade. Time will tell whether it will be so rewarding going forward."
2.20pm: Dilemma for UK government
The UK government faces a labour and benefits problem ahead of the upcoming spring statement, according to analysts, as it aims to get to grips with the fallout from Covid.
A joint Social Security Advisory Committee (SSAC) Report included recommendations over savings limits so more people can access Universal Credit, increasing the threshold from £16,000 to £25,000, among other recommendations.
Myron Jobson, a senior personal finance analyst at interactive investor commented, “It has been a case of ‘out of the frying pan and into the fire’ for many of those who experienced a dramatic fall in income because of the pandemic, and now face further financial hardship amid the soaring cost of living.”
“The fact that the savings threshold, which disqualifies individuals with £16,000 or more in savings from receiving Universal Credit, hasn’t increased since 2006 means that a growing number of people are being caught by the limit which has become progressively less generous relative to prices and earnings.”
“The SSAC estimates that had the limit kept pace with the rise in prices since 2006, the threshold would be close to £23,500 now. This just doesn’t seem right and is something that the Chancellor might seek to address in his Spring Statement next week. Many consumers have been forced to raid their emergency cash pots to stay financial afloat amid rising prices”
“The government faces a tricky task of balancing the need to provide ample financial support to the nation’s most vulnerable, especially amid the once in a generation type financial squeeze, while encouraging people to move into work, where possible.”
“The latest official labour market statistics revealed that vacancies reached a new record high, but there was also a rise in the number of people out of work and not looking for a job. While a mismatch between skills and jobs has undoubtedly contributed to a spike in vacant posts, the increase in people not looking for a job raises important questions around motivation to work and what can be done to change this.”
“While recent labour market statistics paint a picture of a competitive job market as employers seek to fill vacancies, for many, securing a job with meaningful career progression remains desperately out of reach after two years of lost opportunities during Covid. There is a clear need for re-training and re-skilling opportunities, not just for Universal Credit claimants but for also for those whose savings debar them from benefits.”
1.42pm: Government looking into P&O sackings
The UK government is exploring whether P&O’s decision to sack 800 staff was lawful, a spokesperson for the Prime Minister confirmed.
“We take this issue very seriously, and we are already looking very closely at the actions that this company has taken to see whether they acted within the rules,”
“Once we have concluded that then we will decide what the ramifications are.”
1.14pm: Fresnillo about to boom?
Gold tends to rally in times of certainty, and analysts over at stockbroker Frederick & Oliver argue that Footsie listed Fresnillo PLC (LSE:FRES) may be on the cusp of a boom shortly.
It points out that the gold and mining company is notorious for posting gains during times of uncertainty, benefitting from a surge in gold prices as investors look to store value.
During Brexit, shares rocketed nearly a 100% to 2000p in just over a month following the vote in 2016.
It did one better in 2020, when during the start of the Covid pandemic, it rallied by nearly 200% from 450p to 1350p.
Current geopolitical climates and soaring inflation, CFD believes, is an ideal environment for Fresnillo to surge again.
12.34pm: AstraZeneca flirts with all-time high
AstraZeneca PLC (LSE:AZN) briefly touched an all-time high this morning of 9,650p, cementing its place as the second-largest company by market cap on London’s blue-chip index behind Shell PLC (LSE:SHEL, NYSE:SHEL).
The drugs and pharmaceutical company is currently valued at £148.1bn, compared to Shell, which is worth slightly more at £148.9bn.
Shares likely bounced before retreating on the back of more good news for the company, following approval from the UK’s drug regulatory body for its Covid prevention drug, Evusheld.
It had received approval in the US, France, and other countries, with the US government already ordering 1.7mln doses.
11.59am: US preview
A sell-off mood has swept back into London and across Europe, though the Footsie is the lease badly affected, as often in recent weeks.
US stock futures are also pointing towards Friday falls, snapping a three-session rally, on renewed concerns that the war in Ukraine will weigh heavily on the global economy.
Dow Jones and S&P 500 futures are down around 0.6%, while those for the tech-laden Nasdaq-100 are down 0.75%
US investors are braced for a highly volatile session, said Ipek Ozkardeskaya, senior analyst at Swissquote, "as it’s the triple witching day, where a large number of options are set to expire, and there is an unusual amount of near-the-money options that could exacerbate the trading volumes and cause high volatility before the weekly closing bell.”
Wall Street has been in a buoyant mood over the past three days and the S&P 500, having risen nearly 5%, may be heading for its best weekly performance in over a year although nervousness over the situation in Ukraine continues.
Talks between Russia and Ukraine do not seem to be leaving to an imminent ceasefire, with investors also likely to be keeping an eye out for what emerges from President Biden’s scheduled call with Chinese counterpart Xi Jinping.
On the corporate front, meme-stock favourite GameStop tumbled 7% in premarket trading after the company posted a loss overnight.
Elsewhere, FedEx (NYSE:FDX) (FedEx (NYSE:FDX)) fell 3% after it reported lower shipping volumes and said profit margins were coming under pressure.
In crypto news, Bitcoin is consolidating under $41,000, with analyst Marcus Sotiriou at GlobalBlock, noting that the percentage of long-term holders in the market is continuing to increase.
"On-chain data from Glassnode shows us this, as the illiquid supply shock ratio is rising dramatically. This ratio shows us the proportion of supply that is being absorbed by entities with a low statistical history of spending their BTC.
"This ratio has been in a constant uptrend since May 2021 and has risen almost vertically over the past couple of weeks. This adds confluence to the idea of long-term holders accumulating Bitcoin at these prices, hence suggesting a bullish market structure for the medium-long term."
11.11am: Claw-back loses grip
The FTSE 100 almost clawed back all its losses before the fingernails slipped off the cliff and its dropped 52 points (0.7%) to 7333.
Reasons are not entirely apparent - yet, though all European indices are tumbling.
Sterling has dropped but only 0.2%, oil prices have picked up for a second day, with a barrel of Brent up 1% to US107.69.
Compliance with oil production cuts by OPEC+ rose to 136% in February from 129% in January, Reuters reported, as the cartel, which includes Russia, continues to under-deliver on its output targets.
As the newswire explained, a high compliance rate indicates that the group is producing below its output targets.
OPEC+ was said to be producing 1.1mln fewer barrels per day than its March target, the International Energy Agency said earlier this week, despite calls by the US, UK and other nations for output to be increased.
Reports of "slim progress" in peace talks between Russia and Ukraine have increased worries about prolonged energy disruption.
If Europe bans Russian oil and gas imports immediately, the UK will suffer an economic hit of £70bn and enter a recession, Rishi Sunak has told colleagues (read more).
In other commodity news, nickel prices on the LME dropped by the maximum allowed for a third day after rocketing 250% last week on the back of Russia bottleneck worries and some dodgy hedging strategies.
After halting trading, LME's reopening was plagued with glitches for a third straight day, according to reports, with at least three trades said to have been put through at a price below the lower bound set by the exchange.
The trades outside of the limit will be cancelled, according to an LME spokesperson.
This morning’s price of $36,915/t is 23% lower than the closing price on the 7th of March and 64% lower than the all-time high hit of $101,365/t hit on the 8th, pointed out analyst John Meyer at SP Angel.
"The situation is extremely damaging to the LME as a trading market for consumers, producers, financiers and speculators with the added risk of contracts being disallowed by the exchange."
10.30am: Calmer?
“Investors have been subjected to significant forces this week," said Russ Mould, investment director at AJ Bell. "Heightened geopolitical tension, rising interest rates in the US and UK, and China’s pledge to stabilise markets have all been on the agenda and served to shake equities.
“Fortunately, the week looks like it will end on a calmer note with minimal movement in Europe and a nice tick-up for the main indices in China, India and Japan."
9.42am: On the slide
London's blue chips are sliding lower as the morning gets into its stride amid a jumble of stories about Ukraine and Russia, and with further fallout from the P&O sackings.
Although European shares are a bit more defensive in early trading market analyst Neil Wilson at Markets.com, notes that stocks are on to finish the week higher "as investors seem to be riding out some of the key war, sanctions risks.
"At the highs this morning the FTSE 100 was only around 80pts below where it was before Russia invaded Ukraine. European stocks are on course for their best week since Nov 2020 despite all the tumult, but also because it’s been a much calmer commodity story. Investors are adjusting and getting comfortable with what’s out there and what the risks are…but I stick to the view that this is only the start and it remains a bear market rally."
Following reports overnight from the Ministry of Defence that Russia’s advances in Ukraine may be stalling due to logistical problems and Ukrainian counterattacks, we also hear this morning that US president Joe Biden will warn China's Xi Jinping that he will face “costs” if Beijing provides too much help for Russia.
Biden will hold a video call with Xi at 1pm GMT today, offering “an opportunity for President Biden to assess where President Xi stands,” according to the White House press secretary.
Back home, following yesterday's decision by the owner of P&O Ferries to make 800 of its workers redundant, as well as cancelling its ferry services for the coming few days, has been met with fierce criticism.
Unions are holding demonstrations in Dover, Hull and Liverpool today, with Mick Lynch, general secretary of the RMT union, saying: “We need to send a message to ruthless employers and the government alike, that when working people are treated so abysmally, there is a militant response from the trade union movement.
“This example of gangster capitalism which our members in P&O have been subjected, is what lies ahead for other workers up and down the country if we do not all take a stand.”
Speaking in a television interview, government minister James Heappey said the sackings are an “absolutely horrendous way” to treat staff and that the Department for Transport is “seeing what they can do to make the situation better”.
He told Sky News: “As much as we disagree with it, I fear that for those workers, they’ve been badly let down by their employer."
9.01am: FOMO fail
Most European and Asian markets are in the red this morning, with yesterday's "everything up" mood that lifted stocks, bond prices, oil and many commodities, seemingly gone.
Yesterday's mood served as a reminder, said Marc Ostwald, chief economist and global strategist at ADM Investor Services, "that TINA and FOMO are very much alive and kicking, despite all the recent volatility and the high level of uncertainty about the economic outlook, aside from the obvious point that there is going to be even more inflation.
"The fact that some of the biggest moves came in High Yield bonds and unprofitable (i.e. loss making) tech sector companies unprofitable also highlights just how indiscriminate the move was (notwithstanding RV considerations), and again has many of the hallmarks of a vicious market rally, which appears to be being chased very hard by retail money."
Looking at London's small and mid cap news this morning, stockbroker Cenkos Securities PLC has shot up 15% after saying it has made a strong start to the current year as well as unveiling 2021 results that showed robust growth across all its key financial metrics (read more here).
Shares of Essentra PLC edged higher after the components maker revealed it had swung to a profit last year and also said it has made a strong start to the current year, shrugging off supply chain challenges (more here).
8.33am: Indecision bugging the Footsie
The FTSE 100 opened indecisively on Friday, starting higher before immediately sliding into the red.
After almost half an hour, London's blue-chip index was down eight points at 7377.
Leading London's blue-chip fallers is Pearson PLC (LSE:PSON), retreating after being lifted by hopes of a private equity bid earlier in the week.
Declines for travel-related shares, principally BA owner IAG (International Consolidated Airlines Group (LSE:IAG)) and Rolls-Royce (Rolls-Royce Holdings PLC (LSE:RR.)), and commodity stocks were also weighing, with Shell PLC (LSE:SHEL, NYSE:SHEL), BP PLC (LSE:BP.) and their mining cousins all on the back foot.
Top of the leaderboard was Polymetal International PLC, the Russia-focused gold miner, as it restocked its boardroom after the mass resignations last week (read more on the story here).
Elsewhere Ted Baker PLC (LSE:TED) was striding high after private equity group Sycamore Partners Management said it was sizing up the clothes brand as a potential acquisition (read more).
Markets are making “more measured progress as some of the investing dust clouds begin to clear", says Richard Hunter, head of markets at Interactive Investor, though Ukraine remains one large cloud.
“Some uncertainty has been lifted with the path of interest rates becoming clearer on both sides of the pond. In addition, there is something of a 'glass half-full' attitude emerging since, even after the projected rises, rates will still be low by historical standards. It remains to be seen whether the proposed rate rises will be sufficient to stifle inflation in the nearer term, but the purpose and clarity of thinking from the central banks is nonetheless being well-received by investors."
He said the FTSE “remains a relative beacon of light on the global investment stage", though up just 0.1% in the year to date.
“Amid the volatility to the beginning of the year, the index has somewhat come back into vogue due to the relatively defensive nature of the index at a time when investors have sought safety rather than breakneck growth."
6.33am: Slightly upwards
London’s blue-chips look set to grudgingly follow US stocks higher this morning.
The FTSE 100 is expected to open 12 points higher at 7,397 – a rise that pales into insignificance compared to US gains yesterday’s but looks a bit more impressive when added to yesterday’s 94 point gain.
The Dow Jones industrial average jumped 418 points to 34,481 and the S&P 500 advanced 54 points to 4,412 yesterday as US investors continued to react to the Federal Reserve’s decision to hike interest rates.
In Asia this morning, the Nikkei 225 is 182 points to the good at 26,835 after the Bank of Japan left its reference interest rate unchanged but Hong Kong’s Hang Seng index is 100 points off at 21,401.
Oil prices are back on the rise this morning, with Brent crude US$2.45 (2.74%) more expensive at US$109.12 a barrel after reports of a sale of Russian crude oil to India and continued fears over potential shortfalls in supplies.
If you are more concerned about the price of beer than the price of oil then you might want to tune into this morning’s interim’s results from pubs operator JD Wetherspoon PLC (LSE:JDW), where chairman and founder Tim Martin is sure to have something to say about life, the universe and everything.
Investors will be keen to see how much business picked up once the lockdown restrictions were lifted.
The ending of previous lockdowns has seen the release of pent-up demand but there is a danger that as the British public gets used to drinking at home – Martin has a view about that as well, you’ll be surprised to hear – and as beer prices rise, the expected pick-up might not be as hearty as publicans hoped.
Around the markets
- Sterling: US$1.3172, up 0.24 cents
- 10-year gilt: 1.568%, up 6.35 basis points
- Gold: US$1,934.00 an ounce, down US$9.20
- Brent: US$109.12 a barrel, up US$2.45
- Bitcoin: US$40,788, up US$71
- Ethereum: US$2,807, unchanged