FTSE 100 Live: Stock markets rally despite stagflation fears, oil falls back
European stock markets have rallied after strong corporate results boosted appetite for cheap looking shares.
Today’s rise came despite no let-up in stagflation worries after the US ban on Russian energy imports kept Brent crude at $125 a barrel.
Frankfurt’s Dax rose by more than 4% after results from Adidas and Deutsche Post, while banks and consumer-focused stocks were sharply higher in London.
FTSE 100 Live Wednesday
Huge rally for stocks around the world after days of heavy selling
Brent crude retreats from earlier $130 a barrel
Legal & General profits above £2bn for first time
Huge rally for stocks
16:47 , Oscar Williams-Grut
A big day for stock markets: the FTSE 100 has just closed up around 2.6% in London, while the DAX in Frankfurt gained a staggering 7% and the CAC 40 in France rose 6.5%. Major markets on Wall Street are all up over 2%.
The rally has to be seen in the broader context, however. Markets have endured days of heavy selling, meaning stocks are still below where they were prior to the invasion of Ukraine. The FTSE 100 is now just back to where it was on Friday morning, for example, and is still down 6.6% so far this month. The DAX is more than 10% down since the start of March.
Neil Wilson at Markets.com said today’s rally came amid “some sense that the recent moves were oversold, valuations attractive”. Oil has also come down from recent highs -- 4% lower to around $122 a barrel today -- which seems to have helped sentiment.
In London, Polymetal International topped the FTSE 100 after reassuring investors that it was not impacted by sanctions and was continuing to operate largely as normal. The Russian gold miner gained an astonishing 52%.
That’s all from us on the blog today, join us again tomorrow.
L&G boss calls for ‘greater flexibility’ investing retirees’ cash
16:19 , Oscar Williams-Grut
The boss of savings and investment giant Legal & General wants the Government to overhaul investment rules to make it easier for British pension funds to back fast-growing tech businesses.
Nigel Wilson told the Standard: “If we’re not careful, [investment] will just come from America, from people’s 401Ks [the American savings product]. We would rather it come from UK pensions.”
L&G already invests in startups but can find it more difficult to invest in bigger businesses that are growing fast but still private.
Wilson said money managers needed “greater flexibility” to invest in growth businesses and called on the Chancellor to “nudge” existing rules at the upcoming Spring Statement to make it easier. Legal & General manages £1.4 trillion of cash, much of it pension savings.
British American Tobacco cuts investment in Russia - but keeps factories open
14:52 , Oscar Williams-Grut
Cigarette giant British American Tobacco has said it will stop investing in Russia but stopped short of a full boycott.
A spokesperson said: “We are deeply concerned about the conflict in Ukraine. The safety and wellbeing of our people there and across the region is our first priority. We have full local establishments of 1,000 people in Ukraine and 2,500 in Russia. Our thoughts are with them all at this incredibly difficult time.
“In Ukraine, we have suspended all business and manufacturing operations and are providing all the support and assistance we can to our colleagues, including relocation and temporary accommodation. Our businesses bordering Ukraine are providing assistance to the humanitarian relief effort.
“In Russia, we have a full establishment of our people right across the country, including substantial local manufacturing. Our business in Russia continues to operate. As a key principle we have a duty of care to all our employees at this extremely complicated and uncertain time for them and their families. We have suspended all planned capital investment into Russia and will focus on our portfolio of locally produced tobacco products – including our heated tobacco products.
“Furthermore, we are scaling our business activities appropriate to the current situation, including rationalising our marketing activities. This fast-moving and complex situation demands us to constantly assess a wide range of factors and considerations. We are complying, and will continue to comply with, all international sanctions related to this conflict in full.”
Gatwick trims losses
13:47 , Oscar Williams-Grut
Gatwick bosses hope to return to profitability this year after a second consecutive huge dive into the red in 2021.
The airport made a pre-tax loss of £370.6 million last year, down from £465.5 million in 2020. Despite passenger numbers being at their lowest since 1977, the easing of travel restrictions last summer meant that Gatwick was able to operate profitably at the EBITDA level in the second half of the year.
Chief executive Stewart Wingate said passenger levels were recovering strongly in the early months of 2022 and are forecast to reach 30.6 million for the year as a whole — or 66 per cent. He said Gatwick could operate profitably at those volumes.
The airport is reopening its South Terminal on March 27 with 4000 to 5000 staff being recruited to handle increased numbers of passengers.
Amber Rudd-advised Net Zero SPAC set for London listing
12:47 , Oscar Williams-Grut
A brave special purpose acquisition vehicle which aims to invest in low-carbon technologies said today it was looking to raise £175 million on the London Stock Exchange.
New Energy One Acquisition, headed by Indian angel investor Sanjay Mehta and veteran energy banker David Kotler, has Eni, the Italian major, on board and Amber Rudd, a former cabinet minister for energy and climate change, alongside as an adviser.
NEOA said it is looking to invest in the likes of green ammonia, carbon capture, and clean fuels.
The intended float comes as the Government’s zero-carbon agenda is under pressure from spiking energy prices and living costs.
12:16 , Oscar Williams-Grut
National Express’ takeover of rival Stagecoach has been gazumped by a Germanasset management.
A £595 million approach tabled today by DWS Infrastructure, part of German asset management firm the DWS Group, is driving the proposed £1.9 billion merger off the road.
The new bid at 105p a share has been unanimously approved by the Stagecoach board, which withdrew support for the National Express bid that valued Stagecoach at £445 million.
Mothercare and tobacco giant Imperial join Russia boycott
11:51 , Oscar Williams-Grut
The corporate boycott of Russia over war in Ukraine gathered pace today as Mothercare and tobacco giant Imperial Brands today became the latest businesses to quit Russia over the war in Ukraine.
Mothercare said it was immediately suspending all operations in the country, forgoing half a million pounds in profits per month. It has 120 stores in Russia, accounting for around 25% of sales. Its stock dropped 1.5p to 12p.
Golden Virginia maker Imperial Brands said it would halt production at its factory in Volgograd and was ceasing all sales and marketing activity in Russia. Local employees will continue to be paid for now.
Consumer stocks in focus as markets rally
10:35 , Graeme Evans
European markets were swept higher today as investors braved the uncertainty over soaring energy prices to fish for cheap-looking stocks.
The FTSE 100 index rose 2% or 139.5 points to 7103.61, with heavily sold Lloyds Banking Group and NatWest among a clutch of 30 blue-chip companies rebounding by 5% or more.
The appetite for risk was helped by reassuring corporate results, including from Asia-focused Prudential and Germany’s Adidas and Deutsche Post.
The Dax in Frankfurt jumped by more than 4% as sportswear giant Adidas lifted its dividend by 10% on the back of its optimism for further strong growth this year. The update helped JD Sports Fashion to rise 5% or 6.95p to 138.7p in London.
Prudential shares bounced from their 17-month low, rising 61.5p to 1089p after outgoing boss Mike Wells said the reshaped insurer started 2022 with a strong balance sheet and capital position.
Blue-chip newcomer Electrocomponents also lifted shares by 9%, reversing recent big falls, after its guidance that profits for the year to this month should beat City forecasts.
The FTSE 250 surged 3.4% or 659.18 points to 19,876.80, having touched bear territory this week after falling 20% from its September high. Airline constituents easyJet and eastern Europe-focused Wizz jumped 10% and Cineworld improved 8% or 2.45p to 32.4p.
The buying of consumer-focused stocks came at the expense of the energy sector, despite yesterday’s US ban on Russia oil keeping Brent crude near to $125 a barrel.
FTSE All-Share oil services business Hunting fell 13.5p to 284.5p, having risen 25% in the past week on the prospect of an increase in demand from US shale operators.
L&G boss calls for tweaks to investment rules
10:25 , Oscar Williams-Grut
The boss of savings and investment giant Legal & General wants the Government to overall investment rules to make it easier for British pensions to back fast-growing tech businesses.
Nigel Wilson told the Standard: “If we’re not careful, [investment] will just come from America, from people’s 401Ks. We would rather it come from UK pensions.”
Wilson called for the Chancellor to “nudge” the existing rules at the upcoming Spring Statement to make it easier for money managers like L&G, which manages £1.4trn, to put retirement cash into so-called ‘scale-up’ businesses.
The comments came as L&G announced profits above £2bn for the first time in its 186-year history.
Russian businesses reassure on sanctions
10:06 , Oscar Williams-Grut
London listed Russian businesses were forced to reassure investors of their future today as the corporate boycott over war in Ukraine gathers pace.
EVRAZ, Polymetal and Petropavlovsk all released statements this morning said they believed they were unaffected by sanctions despite significant Russian shareholders and operations.
Roman Abramovich owns just under a third of steel giant EVRAZ, while Russian bosses Alexander Abramov and Alexander Frolov own another third. The board said they “cannot be certain as to whether such individuals are ‘connected with Russia’ for the purposes” of sanctions but would assume they were not until told otherwise.
War in Ukraine and related sanctions has created “certain frictions,” the company said, but it insisted day-to-day operations were continuing as normal.
Polymetal, the gold miner with pits in Russia and Kazakhstan, said its mines were continuing as normal but sales of gold from Russia had been impacted. The company still intends to pay its recently announced $246 million dividend but admitted Russian capital controls made it “unclear” whether it would be able to get cash to foreign investors.
Gold miner Petropavlovsk, 49.9% owned by Russians, said its operations and trade in precious metals were so far unaffected by events. No one connected to the company has been sanctioned but it is closely reviewing the situation.
Shares in all three businesses have collapsed over 80% since Russia invaded Ukraine but but rallied today.
Prudential boss departs on upbeat note
09:25 , Graeme Evans
Prudential boss Mike Wells today presented his last set of annual results, having completed the insurer’s strategic repositioning to focus solely on Asia and Africa.
Profits from continuing operations in 2021 rose 16% to $3.2 billion (£2.4 billion) after an 8% rise in sales to $4.2 billion (£3.2 billion), despite new business levels in Hong Kong being impacted by the continuing border closure.
Sales growth in the period was driven by businesses in mainland China, India, Malaysia, the Philippines, Singapore and Thailand.
Wells, who is stepping down after seven years in the role, said the Pru started 2022 with a strong balance sheet and capital position.
He added: “The timing of the opening of the Hong Kong border remains uncertain and Covid-19 will continue to have an impact. The current conflict in Ukraine could have wider implications for global economic and market conditions as well as geopolitical relations.
“However, we believe our multi-channel approach and focus on quality business and operating efficiency is the right strategy for dealing with volatile operating conditions.”
Shares rose 6% or 61.5p to 1089p, but remain a long way from the 1500p seen in November.
Travel stocks lead market rebound
08:48 , Graeme Evans
European stock markets have recovered some of their recent losses, despite the ongoing concerns that sustained high oil prices will curb global economic growth.
Benchmarks in Paris and Frankfurt jumped 4% and London’s FTSE 100 index rose by as much as 2% to as high as 7120, with travel-focused stocks at the forefront of the rebound after gains of more than 5% for hotels group InterContinental and British Airways owner IAG.
Insurers Prudential and Legal & General rose 6% and 3% respectively in the wake of their annual results. FTSE 100 newcomer Electrocomponents also lifted 7% after its guidance that profits for the financial year to March 31 should be ahead of City forecasts.
The FTSE 250 index has fallen by more than 20% since September but jumped 2.3% today, driven by gains of 8% for easyJet and holidays group TUI. Eastern European airline Wizz Air surged 13%.
UBS raises commodity price forecasts
08:05 , Graeme Evans
From energy to metals and agriculture, UBS sees more pain to come after raising its price forecasts across the commodities sector today.
Its wealth management team said: “The global commodity market was already facing a supply challenge before the onset of the Russian-Ukraine conflict. Now, disruption to supplies arising from the war will exert even more pressure on supply.”
UBS regards $125 a barrel for Brent crude as a “soft cap” and warns that a prolonged war could send Brent above $150 a barrel.
It has also lifted its thermal coal forecasts by $50 a metric tonne on concerns over Russian coal exports, which account for almost 20% of the seaborne market, and as European utilities consider coal as an alternative to Russian gas supply.
Russia is the biggest exporter of refined aluminium, with its market share for Class 1 nickel used for electric vehicle battery production at nearly 20%. UBS now expects aluminium prices to surpass $4,200/mt this year, with nickel also elevated as demand for battery production amid the tight market is worsened by disrupted Russian supplies.
Yesterday, the London Metal Exchange suspended trading in nickel after the price doubled on Tuesday, following a 70% increase on Monday.
Russia and Ukraine together account for 28% of global wheat exports and 16% of world corn exports, prompting the bank to further increase its June-end forecasts.
FTSE 100 set to open higher
07:41 , Graeme Evans
Brent crude traded above $130 a barrel after the US imposed an immediate ban on Russian energy imports and the UK promised to do the same on oil by the end of this year.
The Brent price, which is up from around $90 a barrel prior to Russia’s invasion of Ukraine, lifted a further 2% to about $131 a barrel this morning.
Despite fears about potential demand destruction, investors took the latest oil market developments in their stride after falls of just over 0.5% for the Dow Jones Industrial Average and the S&P 500.
The FTSE 100 was broadly unchanged last night and is expected to open 84 points higher at 7050, according to CMC Markets.
Gold consolidated its recent gains to stand at about $2,050 an ounce, having surged to near to a record high on the back of its appeal as a safe haven asset.
