- FTSE 100 closes 63 points lower
- BP slips as oil drops
- Royal Mail hit by strike threat
4.50pm: FTSE loses 63 points at the close
The FTSE 100 finished the day in the red at 7,516 points, a 0.8% loss.
Markets felt the effect of broad consolidation against the backdrop of gradual progress on Ukraine, fluctuating energy prices and inverting yield curves, said Craig Erlam, senior market analyst, UK & EMEA, OANDA.
"There's plenty out there at the moment to make us nervous but at the same time, glimmers of hope after a nightmare start to the year," Erlam explained. "Talks between Ukraine and Russia are moving at a snail's pace and it's worth taking positive steps with a pinch of salt, but the noises coming from Turkey are as promising as we've seen."
3.51pm: Footsie at lows for the day after US markets head lower
A decline on Wall Street after the latest strong US inflation figures has push leading UK shares to their lows for the day.
The FTSE 100 is currently down 49.86 points or 0.66% at 7528.89, having earlier climbed to 7595.
Investors are also nervous about the continuing conflict in Ukraine, while a falling oil price has also removed one of the supports for the market.
Royal Mail PLC (LSE:RMG) is the biggest faller, losing 4.89% as it faced industrial action over reports it plans to sack workers and rehire them at lower rates.
Next PLC (LSE:NXT) is down 4.02% after Deutsche Bank slashed its price target - although it retained a buy recommendation.
Vodafone Group PLC (LSE:VOD) was also hit by an analyst report, falling 3.01% as Exane BNP gave the mobile phone group an underperform rating.
BP PLC (LSE:BP.) has fallen 1.5% after Brent crude dropped 4.44% to US$108.41 a barrel on reports the US is set to release 180mln barrels from its strategic reserves to try and contain the surging price.
Opec+ however stuck to its production targets despite calls for it to increase output further than it was planning.
3.05pm: US inflation sends markets lower
Wall Street shares started lower on Thursday - the last day of the first quarter. This was contrary to earlier expections, once US inflation roared into view again.
The Dow Jones Industrial Average plunged around 65 points at 35,228, while the S&P 500 dropped around 29 points at 4,602.
The tech-laden Nasdaq index lost around 177 points to stand at 14,442 in early deals.
The personal consumption price index - a favourite measure of inflation for the Federal Reserve, climbed in the USA to 6.4% in the 12 months ended in February this year, up from 6.2% in January, official figures showed. It is the steepest increase since January, 1982.
The more well-known consumer price index (CPI) rose by an even higher 7.9% in the 12 months ended in February.
It all adds to the issue of interest rate rises from the US central bank this year and in the foreseeable.
Today is the last trading day of March and the first quarter. US stocks have rallied in the second half of the month, with the S&P 500 and Nasdaq on pace to finish the month of March up about 5% each and the Dow up nearly 4%.
But over the first quarter as a whole, the Dow and S&P 500 are both down about 3% and the Nasdaq is off more than 7%. For all three averages, this will be the first negative quarter since the first quarter of 2020, which saw the start of the pandemic in the US.
The weakness on Wall Street has pushed the FTSE 100 lower.
The UK blue chip index is now down 30.35 points or 0.41% at 7548.4.
1.47pm: Opec to add 432,000 barrels a day in May
As the US is reportedly ready to release 180mln barrels of oil from its reserves, Opec+ has decided to stick to its plans to make modest increases to production.
Following today's meeting, the group - Opec members plus other oil producers including, yes, Russia - have agreed a modest increase to output.
It said it would add 432,000 barrels a day, up from the 400,000 of previous months.
The decison came despite the uncertainties over the war in Ukraine and will do little to bring down high oil prices.
Its next meeting will be on 5 May.
1.40pm: US inflation indicator and weekly jobless claims rise
Back with the US economy, and some mixed signs for the Federal Reserve to ponder.
A key measurement of inflation, the core personal consumption expenditures index (excluding food and energy) rose from 5.2% in January to 5.4% last month, but this was lower than the forecast 5.5%.
But food and energy costs are of course surging at the moment. So including those, the index jumped from 6% to 6.4%, albeit in line with expectations.
US PCE Core Deflator (Y/Y) Feb: 5.4% (est 5.5%; prev 5.2%)
- PCE Deflator (Y/Y) Feb: 6.4% (est 6.4%; prev 6.1%; prevR 6.0%)
- PCE Core Deflator (M/M) Feb: 0.4% (est 0.4%; prev 0.5%)
- PCE Deflator (M/M) Feb: 0.6% (est 0.6%; prev 0.6%; prevR 0.5%)
— LiveSquawk (@LiveSquawk) March 31, 2022
Meanwhile weekly jobless claims have come in higher than expected.
The number of Americans seeking unemployment benefit for the first time rose to 202,000 last week from 188,0000 previously. Last week's figure was itself revised upwards by 1,000.
Analysts had been expecting a smaller rise to 196,000.
12.31pm: Putin backs down on rouble payments for gas
Russia's President Putin has apparently backed down in his demands that "unfriendly" nations pay for the country's gas in roubles.
Today was the deadline for the move to happen, prompting concerns that Russia could cut off gas supplies to Europe if there was a standoff.
But now officials from both Germany and Italy have indicated that Putin said customers could continue making payments in euros.
11.46am: Firm start forecast for US markets
US stocks are expected to open higher on Thursday amid reports that the US may soon release oil from its vast reserves to calm nervous markets and fight inflation.
Benchmark oil prices tumbled on the news, going some way to allay concerns that commodity-led inflationary pressures may yet be contained despite Russia’s invasion of Ukraine now in its second month.
Futures for the Dow Jones Industrial Average were flat but those for the S&P 500 were up 0.1%, while contracts for the tech-heavy Nasdaq-100 were 0.4% higher.
Benchmark Brent crude futures were down 5.5% to $105.27 a barrel while WTI crude futures were down 6.2% to $101.18 a barrel.
“Crude slipped lower, with WTI taking a $100 handle for a time, as the White House indicated it would release as much as 180 million barrels from its Strategic Petroleum Reserve. It would be the largest ever release, the third in six months, and amount to almost two days of global oil demand,” said Neil Wilson, chief market analyst at Markets.com. “This is large enough to make a dent, but releases never alter longer-term imbalances.”
With much hanging on whether the US will indeed release oil reserves of as much as 1 million barrels a day, all eyes will be on US President Joe Biden’s speaking engagements. Some news reports suggest that an announcement could come today.
Oil prices have been a key talking point for markets since Russia’s invasion of Ukraine started in late February and benchmark oil prices jumped from levels around $90 a barrel before the war broke out to highs over $130 a barrel. Sanctions on Russia’s oil exports and supply constraints have been fuelling large oil price fluctuations.
Expectations that the US Federal Reserve will lift interest rates quickly to fight inflation continue unabated in the background.
“Meanwhile reports indicate Fed officials are becoming concerned about a wage-price spiral – the exact thing several weeks ago they said they saw no evidence of. But it’s exactly what we were warning about; it’s the natural order once inflation expectations become unhinged,” added Wilson.
Later come the latest weekly US jobless claims data. In data out Wednesday, ADP private payrolls rose stronger than expected by 455,000 in March, suggesting that the crucial US non-farm payrolls, due out on Friday, will also come in strong, adding to the case for higher interest rates in the world’s biggest economy.
“The Federal Reserve raised interest rates for the first time since 2018 as it seeks to combat spiraling inflation that saw US CPI hit 7.9%. The Fed’s new, median dot plot calls for 7 hikes this year to 1.9%, with members penciling in 2.8% further out, which would take the Fed funds rate above neutral,” Wilson concluded.
Back in the UK, and the FTSE 100 has taken no encouragement from the expected positive start on Wall Street.
The leading index is currently down 19.53 points or 0.26% at 7559.22, close to its low for the day.
11.25am: Mid-cap outperforms as financial firms lifted by Brewin takeover
If the FTSE 100 is still in negative territory - which it is - then the mid-cap index is doing a little better.
The FTSE 250 has edged up 24.55 points or 0.12% to 21,297.02.
It has been helped by a surge in the shares of Brewin Dolphin Holdings Plc (LSE:BRW), up 61.32% after the investment advisor agreed to be taken over by Royal Bank of Canada.
The deal has put the spotlight on other mid-cap investment and wealth management firms.
Rathbones Group PLC (LSE:RAT, OTC:RTBBF) has risen 11.45%, Quilter PLC (LSE:QLT) has climbed 3.45% and AJ Bell PLC (LSE:AJB) is 3.06% better.
Elsewhere in the FTSE 250, Trainline PLC (LSE:TRN) is up 21.19% after the ticket seller agreed to a deal on commission rates with the Rail Delivery Group.
AJ Bell investment director Russ Mould said: "There will be a sigh of relief in Trainline’s camp regarding the proposed changes to its commission rates...
“Trainline’s slice of the pie looks like it will go from 5% to 4.5% which in the grander scheme of things is not a bad deal. The rail sector has been through very difficult times during COVID-19, and it would have been easy to slash commission rates to the bone, leaving Trainline in a pickle."
Meanwhile the leading index is currently down 10.73 points or 0.14% at 7568.02.
10.21am: Leading shares turn negative
In what looks like a repeat of Wednesday, leading shares have now dipped into the red after a cautious but positive start.
The FTSE 100 is down 9.06 points or 0.12% at 7569.69 having earlier reached 7595.
But if things continue to follow yesterday's pattern, the index should be in positive territory by the close.
Among the fallers, Vodafone Group PLC (LSE:VOD) is down 3.03% as Exane BNP put an underperform rating on the telecoms business.
Companies going ex-dividend continue to have an influence on events, notably Taylor Wimpey PLC (LSE:TW.) which is down 3.41% and Phoenix Group Holdings PLC (LSE:PHNX) which has lost 2.87%.
9.11am: UK growth may have risen but worse is to come, say analysts
More on the slightly better than expected UK growth figures for the final quarter of last year.
Despite the uptick, analysts point out that growth was partly due to increased health activity amid the omicron wave.
It also came before the invasion of Ukraine and before the full force of the cost of living crisis had hit.
Danni Hewson, AJ Bell financial analyst, said: “It might seem odd, but omicron actually provided a substantial boost to UK economic growth in the last three months of 2021. People rushed out to get their booster jabs and they tested to make sure they could see friends and family. Whilst people did cut back on socialising in bars and restaurants as confidence waned, the rush to buy Christmas gifts had already seen a surge in activity for white van man, employment agencies were hives of activities as people took advantage of the vibrant labour market and travel agents were finally back in business...
“But even in the dying days of 2021 inflation was already packing a punch. Household’s disposable income fell, people started to dip into savings as a way to offset those inflationary pressures, put simply people were having to pay more for what they wanted.
“And the erosion of that cushion is worrying. How long can it help households deal with rising prices, what of those households that weren’t able to build up that cushion to begin with. With the expectation that this year will deliver the biggest fall in living standards since the 1950’s alarm bells are clanging... the squeeze has only just begun, the pressures households were experiencing last year will be nothing compared to what is to come.
“But if the glass was half empty there are still good things to find in the data. UK PLC has been working hard to claw its way back from the COVID-19 cliff top and for the first time in decade British businesses were earning more cash abroad than foreign businesses were earning in the UK and with so much disruption to supply chains it’s interesting to note that the trade deficit has narrowed."
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, also reckons whatever positivity can be taken from the data will be short lived.
She said: ‘’The latest reading on quarterly UK GDP is a bit like assessing the fitness before being sideswiped by a severe cold. Although growth was marginally upgraded for the October to December period to 1.3%, it came before the full impact of omicron hit and well before commodity chaos was unleashed by the invasion of Ukraine.
"On the face of it, it could be viewed as a snapshot that the economy was in slightly better shape to withstand the impact of a fresh round of pummelling. However, the fact that the rise in output in the fourth quarter was driven by visits to GP surgeries and test and trace activities rather than an increase in industrial or manufacturing output doesn’t add that much to a picture of better resilience.
"There is a worrying trend in terms of household finances with people are clearly eating into savings quickly faced with rising prices. The household saving ratio decreased to 6.8% compared to 7.5% in the third quarter, and if financial buffers continue to decrease at that rate, there will be little left by the Autumn when people will be hit with another bill shock in terms of rising energy prices.
8.40am: Ex-divs fall but Brewin Dolphin surges after takeover news
Apart from the oil companies, a number of companies have also lost ground, as their shares went ex-dividend.
These include Phoenix Group Holdings PLC (LSE:PHNX), down 2.59%, Taylor Wimpey PLC (LSE:TW.), off 1.85% and Smith & Nephew PLC (LSE:SN), 0.4% lower.
Among the risers is Pearson PLC (LSE:PSON), up 2.62% after Wednesday's fall as Apollo Global Management (NYSE:APO) decided not to proceed with its unwelcome bid.
In the FTSE 250 Brewin Dolphin Holdings Plc (LSE:BRW) has surged 60.69% to 511p after Royal Bank of Canada (TSX:RY) agreed to buy the investment adviser for £1.6bn or 515p a share.
8.23am: BP and Shell among the early fallers.
Leading shares have made another cautious but positive start, as investors once more try to take stock of what is happening in Ukraine.
The FTSE 100, after adding 42 points on Wednesday, has edged up 15.33 points or 0.2% at 7594.08 in early trading.
Richard Hunter, head of markets at interactive investor, said “The more recent market rebound rally has taken another pause for breath amid diminishing hopes of progress in peace talks between Russia and Ukraine.
"Western scepticism over a cooling of Russian aggression seems to have been justified as Ukraine reportedly braces itself for another offensive in the East. Investors remain skittish not only because of the strangulation of energy supplies from one of the world’s largest producers in Russia but also by some of the unintended consequences which are also emerging, such as the acceleration of the need for independent supply chains."
Oil companies, which have been helping to support the market in recent days, have slipped back after the crude price fell.
The US is set to release up to 180mln barrels from its strategic reserve in an attempt to curb surging prices, but an Opec+ meeting today is expected to stick to its existing production targets for May and only edge up output by the planned amount.
With the US news, though, Brent crude has dropped 3.69% to US$109.26 a barrel while West Texas Intermediate - the US benchmark - is down 4.28% at US$103.26.
So BP PLC (LSE:BP.) is down 1.75% while Shell PLC (LSE:SHEL, NYSE:SHEL) is 0.8% lower.
7.47am: UK GDP climbs by 1.3% in fourth quarter
The UK economy grew by slightly more than expected in the fourth quarter of last year, according to the latest government figures.
Meanwhile house prices increased by the largest amount since November 2004, the Nationwide has said.
UK GDP rose by 1.3% in the last three months of 2021, compared to estimates of a 1% rise.
The level of GDP is now 0.1% below where it was pre-coronavirus (COVID-19) in the fourth quarter of 2019, said the Office for National Statistics, revised from the previous estimate of 0.4% below.
Annual GDP in 2021 is now estimated to have increased by a revised 7.4% (previously 7.5%), following a revised 9.3% decline in 2020 (previously 9.4% fall).
Nationwide's latest housing survey showed annual house price growth increased to 14.3% in March, from 12.6% in February.
The price of a typical UK home reached a new record high of £265,312, with prices up by more than £33,000 in the past year. Prices are now 21% higher than before the pandemic struck in early 2020.
Wales remained strongest performing region in the first quarter of 2022, while London remained weakest.
Robert Gardner, Nationwide's chief economist, said: "The housing market has retained a surprising amount of momentum given the mounting pressure on household budgets and the steady rise in borrowing costs. The number of mortgages approved for house purchase remained high in February at around 71,000, nearly 10% above pre-pandemic levels. A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.
“The continued buoyancy of housing demand may in part be explained by strong labour market conditions. The unemployment rate has continued to trend down in recent months (to 3.9% in the three months to January) from already low levels. Wage growth has accelerated, though it is running below inflation.
“The significant savings accrued during lockdowns is also likely to have helped prospective homebuyers raise a deposit...
“Nevertheless, we still think that the housing market is likely to slow in the quarters ahead. The squeeze on household incomes is set to intensify, with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high. Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates."
6.50am: Markets await news on US oil release plan
The FTSE 100 was set for an uncertain start as oil prices dropped overnight on reports the US is set for the largest release from its strategic reserve since its creation in 1974.
US President Joe Biden is poised to authorise the release of up to 180mln barrels of oil, according to the reports this morning.
"If it turns out to be as much as that, it would be significant and so would certainly help to a certain extent to fill the shortfall, but not all of it," said Warren Patterson, head of commodities strategy at ING told Reuters.
The International Energy Agency is holding an emergency meeting Friday to discuss oil supplies in the wake of the Ukraine war.
BP and Shell have been big supports for the London index in recent weeks, but with the crude price down almost 5% at US$107 last night they might be under pressure early.
Financial spread betters were calling the index up nine points an hour before trading, but with Russia resuming its bombing of Kyiv holding that might be a struggle.
Elsewhere, China's official manufacturing PMI fell to 49.5 in March from 50.2 a month ago, indicating an economy in decline with services also contracting.
Covid lockdowns were blamed for the dip, which should be reversed next month predicted economists.
Scheduled UK news is relatively light today.
Ad group S4 Capital PLC (LSE:SFOR), lender Provident Financial (LSE:PFG) look to be the highlights though another stack of ex-dividends will also be a weight on the London indices early on (read more).
6.50am: Early Markets - Asia / Australia
Asia Pacific markets were mostly lower on Thursday as official data showed Chinese factory activity shrunk in March.
China’s manufacturing Purchasing Managers’ Index for March came in at 49.5, lower than February’s reading of 50.2.
The 50-point mark in PMI readings separates growth from contraction.
The Shanghai Composite in China slipped 0.49% while Hong Kong’s Hang Seng index tumbled 1.24%.
Japan's Nikkei 225 fell 0.65%, while South Korea’s Kospi bucked the trend by gaining 0.21%.
Australia’s S&P/ASX200 snapped a seven-day winning streak, falling 0.2%, as losses posted by the technology and energy sectors offset a strong session by the local miners.