- FTSE 100 index ends 37 points higher
- Energy stocks lifted by oil price rise
- US indexes lower in morning session
4.50pm: Commodity boost for Footsie
The FTSE 100 index ended higher on Monday, even as US stocks struggled to make progress, with higher commodity prices doing the trick for the main London index.
At the close, the UK blue-chip index was 37.66 points, or 0.5% higher at 7,442.39, more than midway between the session peak of 7,464.95 and the day’s low of 7,402.60.
Chris Beauchamp, chief market analyst at online trading platform IG commented: “A recovery for metals prices and further strong gains for oil on the first day of the new week has driven the FTSE 100 higher, bolstered by mining stocks and oil names. The drumbeat of conflict in Ukraine provides a firm foundation for commodity prices to keep moving higher, giving the FTSE 100 a boost even as other indices struggle for direction in early trading.
“After the surge of last week markets are quiet, but with a speech from Jerome Powell still on the calendar today there is a sense of powder being kept dry. Powell’s comments last week about the economy being able to take more rate hikes put a bit of fight into the buyers last week so it will be interesting if he repeats the line.”
Beauchamp added: “Last week’s attempt to reach escape velocity for equities seemed to mark a turning point after weeks of declines and volatility. But the bounce might well founder given the lack of heavyweight news this week; earnings season looks to be the next big hurdle for stocks, and while it is too early to get a real sense of how the war is affecting earnings, some colour on this topic in the post-release calls is fairly likely, giving markets a bit of a sneak peek into the future.”
3.45pm: FTSE 100 climbs 34 points
“It’s been a subdued start to the week for markets in Europe, with the rise in oil prices helping to boost the FTSE 100 by way of decent gains for BP and Shell, pushing the index to its highest levels since 2nd March,” said Michael Hewson, chief market analyst at CMC Markets UK.
“The DAX, on the other hand, is lagging, after the Bundesbank said that Russia’s invasion of Ukraine had the potential to measurably hurt the German economy and make any economic performance in the second quarter much weaker than expected due to higher energy prices.”
“Sentiment around events in Ukraine continues to keep markets on edge after the Ukrainian government rejected an ultimatum by Russia to surrender the port city of Mariupol or face the consequences.”
“Chilean copper miner Antofagasta is higher after announcing that it would be exiting its Pakistan business, Reko Diq, receiving the sum of around $900m in the process.”
“Ted Baker shares have continued their recent run higher, with another solid day of gains on speculation that a bid could well be forthcoming from US private equity firm Sycamore, who were reported to be considering making a cash offer for the business late last week.”
“The rise in oil prices is not good news for travel and leisure with easyJet and Ryanair both under pressure, while IAG is also lower.”
3.30pm: Oil back on the rise
Oil prices have climbed 7%, with Brent crude trading at nearly US$114.80.
The price rise comes as the EU mulls a decision on whether to ban imported Russian oil.
With regards to fuel, Rishi Sunak is considering a slashing of fuel duty.
The reported reduction, however, will still leave Sunak with tens of billions to ease the cost of living crisis.
Sunak’s plans to ease pain at petrol pumps by cutting fuel duty is set to cost £2.5bn - but would only represent a fraction of the possible £75bn war chest available to the Chancellor as tax revenues soar.
The Treasury is said to be mulling a 5p per litre reduction in fuel duty after prices at the pump soared to their highest level on record last week.
Read: Govt cut to fuel duty is 'drop in the ocean', calls for petrol station regulator
3.04pm: Fertiliser reaches all-time high, aluminium price rises
Aluminium prices hiked over 5% on Monday following Australia’s ban to Russia on exported materials required to make the metal.
The country implemented an instant ban on alumina and aluminium ore exports to Putin’s nation, which caused it to reach US$3,554 per tonne – its highest price in 11 days.
“While the ban could be seen more as a symbolic sign, as Russia anyway struggled to sell its aluminium, the news is likely to be taken positively by the market,” Carsten Menke, Julius Baer analyst, said.
Meanwhile, fertiliser prices surged to a new all-time high as supply from Russia (the world’s largest exporter) declined rapidly.
Increased prices should raise food prices further and/or decrease global food production, farmers said.
The skyrocketing of natural gas prices, which is vital for fertiliser production, played a part, as well as Russia banning exported ammonium nitrate for two months in February.
Prices already soared 30% since the turn of the year and have overtaken 2008 levels when a food and energy crisis pushed up prices during the last recession.
2.35pm: US stocks retreat on open
As expected, US stocks opened lower, unable to mirror London’s blue-chip index in building on last week's gains in early trading.
The Dow Jones was down 200 points, or 0.57%, with the S&P 500 losing 14 points and falling 0.34%.
The Nasdaq index was the biggest faller, down 1.08% and 148 points, although that hasn’t seemed to have impacted Scottish Mortgage Investment Trust, which has remained steady.
2.18pm: P&O in deep water
The 800 or so P&O Ferries staff that were sacked last week were done so via a video call, according to the Rail, Maritime and Transport union (RMT).
To make matters worse for P&O, which has suffered an absolute PR disaster over the last week, the general secretary of RMT, Mick Lynch, has said the company has hired Indian seafarers at £1.81 an hour, significantly below the UK minimum wage, which is £8.91 for people aged 23 and above.
“The news that the seafarers now on ships in British ports are to be £1.81 an hour is a shocking exploitation of those seafarers and another gut-wrenching betrayal of those who have been sacked,” Lynch adds.
“The rule of law and acceptable norms of decent employment and behaviour have completely broken down beneath the white cliffs of Dover and in other ports, yet five days into this national crisis the Government has done nothing to stop it.”
“These ships of shame must not be allowed to sail. The Government has to step in now and take control before it’s too late.”
1.58pm: Oil giants told to invest in net-zero projects
Oil giants, such as Shell and BP, have been urged to reinvestment their mega-profits into net-zero projects by the head of the UK’s Oil and Gas Authority.
Dr Andy Samuel leads the group, which was rebranded as the North Sea Transition Authority, and has said his agency will be “holding North Sea operators to account on emissions.”
BP and Shell are some of today’s biggest risers, both up 3% to 371p and 2,000p.
BP reported its largest profit in eight years of £9.45mln, awarding boss Bernand Looney with a £4.5mln payday.
It also promised to increase its shareholder dividend to 4%, as well as undertaking a £3bn share buyback.
Shell on the other hand reported a profit of US$19.3bn, nearly five times that of the previous year as restrictions over Russian supplies see demand for oil surge, with brent crude back up above US$110 per barrel.
On the topic of oil, the Russian deputy Prime Minister said that the US and UK restrictions on imported oil did little to affect the Kremlin due to the insignificant volumes of supplies.
"We do not supply to England at all, and as for the United States, we supplied 3% of all our exports of oil and 7% of petroleum products exports," he said.
He did add at the meeting with the United Russia Party that it is facing new challenges related to disruption of logistics chains, insurance issues with respect to ships that transport Russian products, as well as financing and payment issues.
"These issues are all being resolved at the moment," Novak said.
1.27pm: Stagflation concerns for retailers?
Footsie companies JD Sports Fashion PLC (LSE:JD.) and Associated British Foods PLC (LSE:ABF) both traded slightly lower, with JD falling 1.79% to 148p and AB Foods down 0.63% to 1,742p.
Both remain a buy with the broker UBS, who commented in a note today that the JD is potentially oversold, while AB Foods' shares seem “appropriately resilient” over growing concerns surrounding stagflation.
12.58pm: Difficult for first time buyers, say analysts
House prices were on the move again, with the Rightmove House Price Index reporting the largest monthly jump in 18 years.
Typical asking prices hit £354,564 in March, up £5,760, or 1.7% compared to February, pushing the annual rate of growth in asking prices to 10.4%.
Myron Jobson, a senior personal finance analyst at interactive investor saying “prices continue to defy expectation, with values hitting the ceiling of what many buyers can afford to pay.”
“Many wannabe homeowners have failed to turn their dream of getting onto the property ladder into a reality as house prices accelerate ever skywards and price them out of the market.”
“Ballooning inflation means that we have to spend more to maintain current levels of expenditure, but there is little wriggle room for first time buyers living on a bare bones budget to bolster their property savings pot.”
“Property prices may appear unsustainable and will eventually have to come down, but would-be buyers will have to face the fact that seemingly every facet of life is getting more expensive.”
“Higher interest rates could take the heat out of the red-hot property market but could also deter first-time buyers worried about mortgage payments. However, with properties in short supply, the current high demand means that property prices could remain elevated for the foreseeable future.”
12.25pm: US preview
US stocks are expected to open lower on Monday, stalling after last week’s rally as waning optimism over successful peace talks between Russia and Ukraine send oil prices higher again.
Futures for the Dow Jones Industrial Average shed 0.3%, while those for the broader S&P 500 index fell 0.1%, and contracts for the tech-heavy Nasdaq-100 were down 0.3%.
Concerns over the economic impact of sanctions on Russia and its likely disruptions to supply chain continue to underpin investor concerns in commodities, bonds, currencies and stock markets.
‘’Optimism is seeping away about progress in talks to achieve a ceasefire in Ukraine and that’s sent the price of oil on the march upwards again amid heightened worries about supply,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“As Ukraine refuses to surrender to Russian forces in Mariupol despite the devastating siege of the city, the chances of a breakthrough in negotiations are fading, with a gulf in position separating the two countries,” she added, referring to the Ukrainian government’s defiance of Russia’s demand to surrender before dawn on Monday.
Brent crude futures were up 3.1% to $111.29 a barrel as tensions remain high, Streeter noted, adding that investors are eyeing key NATO talks later this week aimed at tightening the sanctions screw on Russia while the prospect of a European crude embargo is expected to be put on the table once more.
“With the possibility that more than a million barrels of Russian oil a day will be snubbed, given that the Netherlands and Germany combined received around a quarter of Russia’s crude and light oil exports, demand would shoot up for crude supplies from OPEC+ nations. But the problem is that even now they aren’t coming up with the goods, as the cartel missed a daily production target by more than a million barrels in February, with US oil rigs not yet able to take up the slack,” Streeter concluded
On the corporate front, in pre-market trading, Boeing shares fell more than 6% after a China Eastern Airlines-operated Boeing 737 passenger plane carrying more than 130 crashed in Southern China.
Meanwhile, Nielsen Holdings shares slipped 17% after it rejected a $9 billion takeover offer from a private-equity consortium that it said undervalues the company. But Alleghany shares climbed 25% after Berkshire Hathaway agreed to pay about $11.6 billion in cash for the insurer.
12.01pm: Antofagasta exits Pakistan mining project
Antofagasta’s decision to pull out of the mining project in Pakistan, which had been suspended since 2011 over the legality of the licensing project, has seen its shares climb by 5.72% to 1,720p, making it one of today’s largest risers.
The mining giant exits the Reko Diq copper and gold mine in a £684mln deal, with the project reconstituted under Tethyan Copper Co (TCC), a joint venture controlled by the Footsie firm and Barrick Gold.
A consortium of state-owned Pakistani businesses will buy shares in the TCC group which operates the projects, with the proceeds distributed as it leaves the group.
11.34am: London leads the way
London's blue-chip index is leading the way across the world, offsetting nearly all of the losses incurred since the start of Russia's invasion of Ukraine.
“After bouncing back last week, the FTSE 100 is now within a whisker of clawing back all the losses incurred year to date. This resilient performance has helped to put the UK back on the map for overseas investors looking to diversify their holdings,” says Russ Mould, investment director at AJ Bell.
“To put its performance into context, the FTSE 100’s 0.9% decline so far in 2022 compares to a 10% drop in Germany’s DAX index, a near-9% fall in Hong Kong’s Hang Seng index and a 7% drop in the US S&P 500 index.”
“The new trading week saw the FTSE 100 rise 0.5% thanks to strength in commodity producers. BP and Shell were among the top risers as oil prices continued to creep back up. Brent Crude traded 4.2% higher at $112 per barrel, dashing all hopes of businesses and consumers that this key driver of inflation was losing momentum.”
“The big fall in the oil price between 9 and 16 March may have turned out to be a false dawn in terms of energy costs retreating.”
11.09am: Natual gas continues to soar
Natural gas prices in the UK continued to rise on supply worries as Boris Johnson, who will hold a summit with nuclear industry bosses, aims to further reduce dependence on Russian oil and gas imports
The soaring prices continued after steady flows of Russian gas and increased Norwegian gas failed to compensate for supply cut concerns.
British gas price climbed 1.8%, or 4p, to 230p per therm for day-ahead delivery, while the Dutch April contract increased 0.2% to €101.28.
The ongoing surging prices reflected people’s anticipation and fear of future restricted gas rather than large already seen reductions, according to industry experts.
10.32am: EU to follow US by banning Russian oil
The European Union is said to be considering following the lead set by the US and President Joe Biden and impose its own ban on imported Russian oil.
Oil prices climbed to back above US$110 on the back of the speculation which is gaining traction, but whether the EU decides to go ahead with the decision is another question.
The idea for EU to ban the import of Russian oil, but not gas, seems to be gaining traction.
The EU gets 45% of its gas imports from Russia, but only 25% of its oil imports. Oil is also easier to replace with other suppliers.
But would Russia respond by turning off the gas tap?
— Dave Keating (@DaveKeating) March 21, 2022
Russian oil imports account for about 25% of all EU oil imports, while gas, which would seemingly be immune to any sanctions at the moment accounts for 45%, with the member states much more reliant on the gas.
That then poses the question whether, in retaliation, Vladimir Putin and Moscow would turn the gas taps off themselves.
To add to the worries, a rebel Houthi attack on a Saudi energy terminal led to a temporary drop in output at the Saudi Aramco refinery.
10.02am: Footsie 100 in the green, but 250 down
Footsie remains in the green so far, up by 34 points, contradicting early predictions the index was set for a slow start today.
On the other hand, FTSE 250 is down almost 118 points, with Baltic Classifieds Group, Network International Holdings and XP Power some of the biggest fallers.
8.43am: Footsie remains strong
Defying early predictions, the FTSE 100 kicked off the new trading week where it left the old one - in the green.
The index of UK blue-chips advanced 31 points to 7,435.78 after Russia averted its first debt default since 1998 on Friday, though for how long with new deadlines looming?
“Ongoing speculation that there is slow progress towards a ceasefire is capping further market losses, although in the meantime commodity prices continue to feel the pressure of an upward squeeze on supply constraints,” said Richard Hunter, head of markets at Interactive Investors.
“The oil price remains notably volatile and is ahead by 39% in the year to date, adding inflationary fuel to a fire which is burning in most global economies.”
Russia-focused Polymetal led the Footsie early on amid hopes (albeit tentative hopes) of a cessation of violence in Ukraine. On the FTSE 250, Petropavlovsk, was up 26%.
The move higher of oilers BP and Shell mirrored the uptick in the crude price as they each advanced around 2% in early trade.
6.55 am: FTSE 100 called lower
The FTSE 100 looks set to dip into the red at the open after last week regaining most of the ground lost since late February when Russia invaded Ukraine.
Indeed, the blue-chip index is within less than 100 points of where it was on the eve of hostilities.
But, as one newswire reported this morning, it will take real progress from here to move world markets higher.
So, while the mood music has been promising for some days – the latest is that Putin and Zelensky will meet face to face to discuss a ceasefire – there needs to be a cessation of violence for stock prices to continue to react positively.
“While markets appear to be focussing on the fact that peace talks are taking place, there is also little evidence that they are actually leading anywhere, given the distance between the two sides in respect of what they will accept, with Ukrainian President Zelensky saying at the weekend that Ukraine wouldn’t give up Lugansk or Donetsk in the east of the country,” Michael Hewson, analyst at CMC Markets.
“These comments would suggest that a ceasefire remains some way away, let alone any kind of resolution, and with the added increasingly hostile rhetoric coming from Russia’s President Putin, the bloodshed looks set to continue.”
Looking ahead, President Joe Biden is meeting NATO members on Thursday and will visit Poland, Ukraine’s nearest European neighbour, and destination for hundreds of thousands of those displaced by the war, on Friday.
Russia, meanwhile, has a US$615mln interest payment to meet this month and US$2bn of debt comes due for repayment in April, so the wider world will soon see whether Moscow is able or even willing to meet these financial obligations.
Overnight it was a dour session for Asia’s main stock markets – with the exception of Japan, which was closed for business.
Here in the UK, it is a big week for economic and business news.
On Wednesday, Chancellor Rishi Sunak announces his budget, while we also have updates from Next, Kingfisher, Wickes and Trustpilot.
Around the markets
- Pound US$1.3156 (-0.17%)
- Bitcoin US$40,861.70 (-1.02%)
- Gold US$ 1,929.00 (-0.25%)
- Brent crude US$111.72 (+3.50%)
6.50am: Early Markets - Asia / Australia
Asian shares were lower on Monday as oil prices rose in the afternoon of Asia trading hours, with international benchmark Brent crude futures up 3.2% to US$111.38 per barrel.
The Shanghai Composite in China dipped 0.05% and Hong Kong’s Hang Seng index fell 0.92%.
South Korea’s Kospi declined 0.77% while markets in Japan were closed for a holiday.
Australia’s S&P/ASX200 slipped 0.2% to 7288.2 points despite a rebound in iron ore prices above US$150 a tonne lifting mining giants.