- FTSE 100 up 55 points
- Energy stocks lead the gainers
- Service sector firms see price hikes
4:50pm: FTSE closes higher while Europe lags
Defensive energy stocks pushed the FTSE 100 higher by the close, with London's blue-chip index extending its gains, adding 55 points or 0.72% to 7,614.
While markets in Europe had a slightly softer tone after it was announced that the EU was proposing a mandatory phaseout of Russian coal imports, CMC Markets UK chief market analyst Michael Hewson said the FTSE's outperformance came ahead of the UK government's new energy security strategy later this week, with SSE shares hitting a new record high, while National Grid and United Utilities shares also moved higher.
"It is becoming ever clearer that Russia is likely to become increasingly more isolated as sanctions get tightened and widened further, with the prospect that inflationary pressure in the global economy will remain more persistent in the coming months," Hewson said.
On Wall Street by London’s close, the Dow Jones Industrial Average was 57 points, or 0.16% lower at 34,865, while the broader S&P index shed 0.5% and the tech-laden Nasdaq Composite fell 1.68% as traders awaited the publication of the latest Federal Reserve minutes.
3.52pm: UK market outperforms Europe
Leading UK shares are outperforming their European peers, helped by a rise in energy companies ahead of the government's new strategy for the sector to be published on Thursday.
The FTSE 100 is up 17.4 points or 0.23% at 7576.32, but Germany's Dax is down 1.1% and France's Cac is off 1.84% as Europe imposes further measures against Russia.
Among the energy companies, National Grid PLC (LSE:NG.) is the biggest riser in the leading index, up 3.46%, while SSE PLC (LSE:SSE) has added 2.71%.
Water companies are also benefiting from their status as havens in times of uncertainty, with United Utilities Group PLC (LSE:UU.) up 2.88% and Severn Trent PLC (LSE:SVT) ahead by 2.13%.
Airtel Africa PLC (LSE:AAF) is the biggest faller, down 4.72% amid uncertainty about the financial impact of a directive from the Nigerian government to telecoms operators in the country.
Customers were told to link their National Identification Numbers with SIM registrations by yesterday to maintain a full service, and Airtel said it had collated the information for 73% of its active customers accounting for 79% of its revenues from the country.
There is a final opportunity for customers to comply with the ruling, but Airtel Africa said: "The impact on the business in terms of customer numbers and revenues is uncertain. However, our experience of adopting similar procedures in other countries suggests that SIM consolidation is likely to occur in response to implementation, potentially reducing any financial impact."
3.17pm: Cautious start for US markets
US shares started muted and mixed as the cautious market mood continues and traders await the publication of Federal Reserve minutes on Wednesday.
The Dow Jones added around 58 at 34,980, while the S&P 500 added around a point to stand at 4,583.
The tech heavy Nasdaq dropped around 39 points at 14,449.
The minutes from the last US central bank policy meeting will be closely pored over to see if there are any clues as to the trajectory of interest rate rises and the chances of the US going into a recession.
Back in the UK, the FTSE 100 is now up 16.01 points or 0.21% at 7574.93.
2.28pm: Leading shares ahead - slightly
The FTSE 100 has edged into the green after spending much of the day so far in negative territory.
Ahead of the Wall Street open, the leading index is now up 2.7 points at 7561.62.
Among the risers are utilities. National Grid PLC (LSE:NG.) is up 2.4% at 1197p despite Bernstein analysts rating it market perform and cutting their price target from 1105p to 1100p.
SSE PLC (LSE:SSE) is 2.28% better at 1775.5p as Bernstein issued an outperform rating and lifted its price target from 1850p to 1950p.
2.20pm: Musk to join Twitter board
Twitter shares are up 8% in pre-market trading, on news that Elon Musk is joining the board.
On Monday Musk revealed a 9.2% stake in the social media platform, making him its largest shareholder.
That prompted all sorts of theories about his plans, given he has been a harsh critic of the business, with some expecting a possible bid (he could afford it out of his own pocket, being the world's richest man.)
Now Twitter chief executive Parag Agrawal has tweeted (yes) that he was excited to share that Musk was in fact heading for the company's boardroom.
He’s both a passionate believer and intense critic of the service which is exactly what we need on @Twitter, and in the boardroom, to make us stronger in the long-term. Welcome Elon!
— Parag Agrawal (@paraga) April 5, 2022
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "This may lead to some nervousness about Mr Musk getting too much influence about the way Twitter is run, with a view to bolstering his own personal brand and that of his companies’.
"Although his involvement has already sparked a share surge with expectation that it could lead to higher levels of participation on the platform, over the longer term Twitter investors will want to see that high levels of governance are adhered to, otherwise the independence of Twitter could be questioned, and the risk is that users may start to drift away.
"Mr Musk has also made no secret of his desire to launch a social media platform of his own so this new role will put him in an ideal position to glean knowledge about the opportunities and risks of a possible future venture.”
1.27pm: Inflation jumped to 7.7% across OECD area
Year-on-year inflation in the OECD area rose to 7.7% in February 2022, compared with 7.2% in January 2022, and just 1.7% in February 2021, reaching its highest rate since December 1990.
The OECD said the increase reflected in part a surge in inflation in Turkey, which jumped from 48.7% in January to 54.4% in February.
Even excluding Turkey, inflation in the OECD area rose to 6.3%, up from 5.8% in January 2022.
As will be no surprise to anyone, energy and food prices were the biggest factor. Excluding both, year-on-year inflation in the OECD area increased to 5.5%, from 5.1% in January 2022.
In March the UK consumer price index rose to 6.2% and is on course to reach some 8% later this year.
12.04pm: Russia's economy weakens
Russia's economy is coming under pressure from sanctions and Western companies withdrawing their business, according to the latest snapshot from S&P Global.
According to its latest survey, the country's composite PMI - which includes manufacturing and services - dropped from 52.1 in February to 38.1 last month, signalling contraction.
Meanwhile the US government has put more pressure on the country by preventing Russia from making debt payments of US$600mln in dollars through US banks.
11.45am: Weaker opening expected on Wall Street
US stocks were seen opening modestly lower on Tuesday as oil prices resumed gains on expectations of fresh sanctions on Russian exports as hostilities in Ukraine continue.
Reports of atrocities committed by Russia in Ukraine are adding to overall market nervousness. Reaction from the West will be closely watched as further sanctions will likely drive inflationary pressures at a time when commodity prices are already at elevated levels.
Futures for the Dow Jones Industrial Average dipped 0.2%, while those for the S&P 500 were down 0.2%, and contracts for the tech-heavy Nasdaq-100 were also 0.2% lower.
“EU leaders will reportedly meet tomorrow, and the additional sanctions could include more action on Russian oligarchs, more exports restrictions, an eventual port ban on Russian ships, and a potential ban on Russian energy exports,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“If leaving the Russians without Big Macs, Starbucks coffees, or Nike shoes hasn’t been effective in discouraging Putin from ending the war in Ukraine, banning the Russian energy imports should make a difference, yet it would also mean a severe energy crunch in Europe, and a big hit to economic growth.
“But, not everyone is scared. Lithuania has become the first European country to announce a total ban on Russian gas imports, and the possibility of other nations joining Lithuania in banning Russian oil and gas gives a boost to oil bulls,” she added.
Benchmark oil prices futures were higher, shrugging off some of the falls seen last week in the wake of news that the US will release up to 1 million barrels of oil a day from its vast reserves. Brent crude futures were up 1.1% to $108.69 a barrel, while WTI crude futures were 1.1% higher at $104.42 a barrel.
On Wednesday, the Federal Reserve’s minutes from its March meeting at which interest rates rose for the first time since 2018, will be in focus. Investors will be looking out for signs that interest rates in the world’s biggest economy are about to rise rapidly, with bond markets pricing in a 50 basis-point increase at the next rate-setting meeting in early May.
Elsewhere, shares in Twitter were up around 3% in premarket deals, having risen 27% on Monday following news that Elon Musk has taken a 9.2% stake in the company.
Back in the UK, and the FTSE 100 continues to hover in negative territory, down 10.67 points or 0.14% at 7548.25.
10.57am: FTSE 250 edges higher but Darktrace drops
The FTSE 100 is still in the red, as investors worry about the situation in Ukraine after the attrocities committed in Bucha and probably elsewhere.
The leading index is down 15.26 points or 0.2% at 7543.66.
But the FTSE 250 is outperforming, albeit not what you might call significantly. It is currently up 0.15% at 21,362.
It is being held back by a couple of fallers following analyst comments.
Darktrace PLC (LSE:DARK) has dropped 6.36% to 422.3p after JP Morgan began coverage of the cyber security business with an underweight recommendation and a 400p price target.
Meanwhile Moneysupermarket.com (LSE:MONY) is 3.7% lower at 182.1p. Analysts at Barclays moved from overweight to equalweight and cut their price target from 260p to 220p.
9.52am: Service sector price rises are the biggest for 26 years
UK service providers saw an exceptionally strong increase in business activity during March and the rate of expansion accelerated to its fastest for 10 months, said S&P Global/CIPS.
The removal of pandemic restrictions and return to offices had led to a sharp rebound in customer demand.
But business expectations for the year ahead dropped for the second month running and were the lowest since October 2020.
Weaker optimism was - unsurprisingly - mainly linked to the war in Ukraine and subsequent economic uncertainty.
Severe cost pressures also weighed on confidence and led to a rapid rise in output charges. The rate of prices charged inflation was the steepest since the index began in July 1996.
The strong service sector performance was the main reason for the strength in the overall composite index, with manufacturing production increasing at the slowest pace since October 2021.
Tim Moore, economics director at S&P Global, said: “UK economic growth continued to surge higher in March after an Omicron-induced slowdown at the turn of the year. Service sector companies led the way as business activity expanded at the fastest pace since the post-lockdown recovery seen last May. There were widespread reports citing a boost to business and consumer spending from the roll back of pandemic restrictions. Survey respondents commented on stronger demand arising from the return to offices, alongside a resurgence in the travel, leisure and entertainment sectors.
"However, the near-term growth outlook weakened in March, with optimism dropping to its lowest since October 2020 as the war in Ukraine and global inflation concerns took a considerable toll on business sentiment
"Service providers experienced the second-fastest rise in business expenses since this index began in 1996, driven by higher wages, energy bills and fuel prices. Soaring costs meant that output charges were increased to the greatest extent for more than 25 years in March.
"Many survey respondents commented that the full extent of the recent spike in their operating costs had yet to be passed on to customers."
Earlier the Eurozone also reported a rise in private sector activity, although as with the UK, business confidence fell back.
Eurozone #PMI data released today pointed to a strong expansion in private sector activity over March (#PMI at 54.9), helped by robust growth across services. However, business confidence fell to a 17-month low amid a record surge in inflation. Read more: https://t.co/jUMwvbX6xV pic.twitter.com/GAhev7OAFx
— IHS Markit PMI™ (@IHSMarkitPMI) April 5, 2022
9.38am: Boost for UK service sector
The UK services sector grew more strongly than expected in March.
The S&P Global/CIPS services PMI came in at 62.6, better than the initial reading of 61.
The composite PMI - manufacturing and services - was the highest since June 2021 at 60.9.
UK S&P Global/CIPS Services PMI Mar F: 62.6 (est 61.0, prev 61.0)
- UK S&P Global/CIPS Composite PMI Mar F: 60.9 (est 59.7; prev 59.7)
— LiveSquawk (@LiveSquawk) April 5, 2022
???????? UK Services #PMI rose for the third month running to 62.6 in March (Feb: 60.5) to signal a marked expansion in services activity driven by easing #COVID measures. However, a record increase in selling charges sought to dampen business confidence. More: https://t.co/K4fpTNzs4p pic.twitter.com/s1airmuVO0
— IHS Markit PMI™ (@IHSMarkitPMI) April 5, 2022
The news has done little for the FTSE 100, which is down 17.52 points or 0.23% at 7541.4.
9.19am: Weakest March for 24 years for new car sales
New car registrations have recorded their weakest March since 1998, before the UK went to two annual number plate changes, amid warnings the Ukraine crisis could make things even worse.
The final figures for the month from the Society of Motor Manufacturers and Traders show a 14.3% to 243,479 units, as supply chain shortages constrained deliveries.
But as expected, it was the best ever month for battery electric vehicles with 78.7% growth to 39,315 units, while all electrified vehicles account for one in three registrations.
The March decline means first quarter registrations fell by 1.9% despite rollback of pandemic restrictions.
The SMMT said that around 20% of total annual registrations are usually recorded in March, so the result was massively disappointing for the sector and underscored the long-term impact the pandemic is wreaking on the industry.
Mike Hawes, SMMT chief executive, said: "March is typically the biggest month of the year for the new car market, so this performance is deeply disappointing and lays bare the challenges ahead.
"While demand remains robust, this decline illustrates the severity of the global semiconductor shortage, as manufacturers strive to deliver the latest, lowest emission vehicles to eagerly awaiting customers.
"Placing orders now will be beneficial for those looking to take advantage of incentives and lower running costs for electric vehicles, especially as the Ukraine crisis could affect supply still further. With increasing household and business costs, government must do all it can to support consumers so that the growth of electric vehicles can be sustained and the UK’s ambitious net zero timetable delivered."
9.04am: Housebuilders under pressure as Crest increases cladding provision
Housebuilders, which were among the leading risers on Monday, are now heading lower on the prospect of having to set aside further payments for fixing cladding on older buildings in the wake of the Grenfell tragedy.
The companies have a deadline of today to sign up to a Building Safety Pledge which commits them to new remediation guidelines.
Crest Nicholson (LSE:CRST), down 1.45%, has just announced it will sign this commitment.
It has already spent £47.8mln on identifying and fixing any legacy buildings which needed materials replaced. Now it said: "As a result of making these new commitments the group will need to record a further exceptional charge in its financial statements.
"This is a complex and judgemental area, and the group will continue to work at speed to refine its latest estimate of these costs. As such the board consider that a charge in the range of £80mln to £120mln currently represents its best estimate of this further liability.
Elsewhere in the sector Taylor Wimpey PLC (LSE:TW.) is down 1.48%, Berkeley Group Holdings PLC (LSE:BKG) has lost 1.33% and Barratt Developments PLC (LSE:BDEV) has fallen 1.27%.
8.18am: Markets make cautious start
Leading shares have slipped back ahead of the latest snapshot of the global economy, and as investors keep a wary eye on developments in Ukraine following the reported Russian atrocities in Bucha.
The FTSE 100 is down 13.38 points or 0.18% at 7545.54.
Richard Hunter, head of markets at interactive investor, said: “Investors remain cautious on growth prospects, as the West considers tightening its stranglehold on the Russian economy.
"The latest bout of public outrage has strengthened the resolve of Western leaders to take further action. Even Germany, which has a high reliance on the import of Russian gas, is looking to refrain from further imports. Meanwhile, as countries consider actions to offset the loss of energy supplies, prices remain well supported, such as an oil price which has popped again and has now risen by 41% so far this year."
Brent is currently up 1.46% at US$109.1 a barrel while West Texas Intermediate has climbed 1.49% to US$1.04.84.
So Shell PLC (LSE:SHEL, NYSE:SHEL) is bucking the downward trend, up 0.5%, while BP PLC (LSE:BP.) is 0.46% better.
7.55am: Car sales drop but electric vehicles surge
UK car sales fell around 14% in March, due to the continuing shortage of semiconductors and the cost of living increases.
Premilinary figures due to be confirmed later are also expected to show a surge in sales of electric vehicles, with the monthly figure forecast to exceed the number of EVs sold in the whole of 2019.
The March sales overall will be seen as particularly disappointing since the month sees new numberplates come in which usually give a boost to business.
6.50am: Footsie set to lose Monday's gain
The FTSE 100 is predicted to slip backwards on Tuesday, ahead of car sales and services industry data due out later.
London’s blue-chip index was called 21 points lower by traders on the IG spread-betting platform, which would precisely wipe out the gains made on the first day of the week.
Overnight, Wall Street was led higher by the growth and tech stocks of the Nasdaq, which jumped 1.9%, ahead of the S&P 500 at 0.8% and Dow Jones at 0.3%.
UK new car registrations data is expected this morning that should reveal how the industry is being affected by supply bottlenecks and the decline in real incomes from the cost of living rising above wage growth.
At 9.30am we will also get the final services and composite PMIs, following manufacturing numbers at the end of last week where output was downwardly revised to its second-weakest level for more than a year.
The preliminary service PMI revealed that the services activity index rose to 61.0 in March, the highest since June, as relaxing Covid restrictions, a return to offices and pent-up demand for travel and hospitality provided a boost.