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London open: FTSE rises as travel shares recovery; Prudential pleases
London equity markets rose in early trade on Wednesday as travel shares bounced back, while solid results from the likes of Prudential and Legal & General also lent a hand.
At 0850 GMT, the FTSE 100 was up 1.8% at 7,087.94, while Brent crude was trading just over $130 a barrel after the US announced a ban on imports of Russian oil, with the UK also set to phase out imports by the end of the year.
Neil Wilson, chief market analyst at Markets.com, said: “European stock markets are enjoying a bounce this morning – some sense that the recent moves were oversold, valuations attractive…bear market rally as stagflation is coming.
“One could point out that while the West was worrying about asinine stuff like pronouns, dreaming up a gazillion new genders, apologising for just about anything, including to the victims of 17th Century witch hunts, and seeking ways to decarbonise our economies – whatever the cost, Russia was getting on with being a bit of a powerhouse in terms of producing the actual stuff that people actually need.
“This matters now because the West is cutting off all this supply, and it doesn’t have a ready replacement. And so, when people say Russia’s economy is tiny, ‘it doesn’t matter’, they miss the point that it was tiny compared to some la-la-land way of looking at how much stuff is ‘worth’. In a world when hard assets are king, Russia has some aces. But it needs to deploy them, and that is getting harder and harder.”
In equity markets, Anglo-Russian precious metals miner Polymetal was the top performer on the FTSE 100 after saying there had been no disruption to its operations in Russia and Kazakhstan despite sanctions imposed on Russia after its invasion of Ukraine.
Russian steelmaker Evraz also shot higher after saying it had not been affected by international sanctions imposed on Russia.
Asia-focused insurer Prudential was among the gainers as it reported a rise in annual operating profit driven by new business amid the Covid pandemic. Adjusted operating profit increased 16% to $3.23bn and beat the consensus of $3.19bn.
Legal & General was up after it posted a jump in 2021 profit and lifted its dividend as it benefited from a post-pandemic economic recovery and an easing of restrictions.
Electrocomponents rallied after it said in an update that revenue and adjusted operating profit margin were tracking ahead of expectations following a strong performance over the last nine weeks.
Network International was also a high riser after it said full-year profit surged more than 900%.
Travel-related shares were also in the black, with BA owner IAG, Wizz, easyJet, Tui and Carnival all sharply higher.
On the downside, miners slumped, with Rio Tinto, Glencore, Antofagasta and Anglo American all weaker.
Gambling company 888 was also on the back foot despite posting record full-year results.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Evraz Plc | +14.62% | +11.40 | 89.36 |
| 2 |  |
Carnival Plc | +7.75% | +84.60 | 1,176.80 |
| 3 |  |
Easyjet Plc | +7.54% | +33.70 | 480.70 |
| 4 |  |
Tui Ag | +6.25% | +12.50 | 212.60 |
| 5 |  |
International Consolidated Airlines Group S.a. | +6.12% | +7.42 | 128.70 |
| 6 |  |
Prudential Plc | +5.99% | +61.50 | 1,089.00 |
| 7 |  |
Lloyds Banking Group Plc | +5.54% | +2.33 | 44.29 |
| 8 |  |
Smurfit Kappa Group Plc | +5.03% | +147.00 | 3,067.00 |
| 9 |  |
Whitbread Plc | +4.89% | +119.00 | 2,555.00 |
| 10 |  |
Smith (ds) Plc | +4.80% | +14.20 | 309.90 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Fresnillo Plc | -4.16% | -33.60 | 774.80 |
| 2 |  |
Glencore Plc | -2.74% | -13.05 | 463.15 |
| 3 |  |
Rio Tinto Plc | -2.58% | -152.00 | 5,735.00 |
| 4 |  |
Antofagasta Plc | -1.84% | -28.00 | 1,490.00 |
| 5 |  |
Bae Systems Plc | -0.82% | -6.20 | 748.20 |
| 6 |  |
Bp Plc | -0.58% | -2.20 | 377.80 |
| 7 |  |
Shell Plc | -0.47% | -9.50 | 2,030.00 |
| 8 |  |
Bhp Group Limited | -0.41% | -11.00 | 2,669.00 |
| 9 |  |
Anglo American Plc | -0.40% | -15.50 | 3,817.00 |
| 10 |  |
Admiral Group Plc | -0.24% | -6.00 | 2,458.00 |
Europe open: Shares rebound from sell-off despite US ban on Russia oil
European shares rebounded strongly at the open on Wednesday, as investors went bargain hunting for companies battered by the recent sell-off in the wake of Russia’s invasion of Ukraine.
The pan-European Stoxx 600 index was up rose 2.24% with the French, German and Spanish bourses all outperforming with rises of more than 3%.
Investors are eyeing the US decision to ban Russian oil and gas imports, with the UK mulling a similar move. Brent oil prices were up to $129 a barrel.
They are also looking ahead to the European Central Bank’s monetary policy meeting on Thursday for signals as to how policymakers are approaching inflation and the conflict in Ukraine.
In equity news, Adidas shares gained 6.7% as the German sportswear company’s earnings were well received. The company said it expects a sales recovery in its China business but warned of up to €250m hit from halting business in Russia.
Polymetal International shares surged more than 44% after the Anglo-Russian miner said that all of its operations in Russia and Kazakhstan have continued undisrupted, and said targeted sanctions against it are unlikely.
Belgian automobile distribution company D’Ieteren Group fell 7% after its full-year earnings report.
European suppliers to tech giant Apple such as ASML, ams and Infineon all gained after Apple added 5G connectivity to its low-cost iPhone SE and iPad Air and introduced a faster chip for a new desktop.
German logistics company Deutsche Post jumped 4.9% after reporting a 65% increase in 2021 operating profit.
Italy’s second-biggest bank UniCredit gained 7.4% and French bank BNP Paribas climbed 7.9%, helped by a broad-based rally, even as the banks unveiled their exposure to Russia.
Shares in Asia-focused insurer Prudential rose as the company reported a rise in earnings driven by new business.
Budget carriers Wizz Air and easyJet both rebounded with rises of more than 8%.
US close: Stocks extend losses as Biden bans importation of Russian oil
Major indices recorded more losses on Tuesday as market participants remained cautious following yesterday’s selloff driven by elevated oil prices.
At the close, the Dow Jones Industrial Average was down 0.56% at 32,632.64, while the S&P 500 was 0.72% softer at 4,170.70 and the Nasdaq Composite saw out the session 0.28% weaker at 12,795.55.
The Dow closed 187.74 points lower on Tuesday, extending losses recorded in the previous session after oil prices surged to a multi-year high amid the ongoing Russia-Ukraine war, heightening fears the conflict will slow the US economy and raise inflation.
West Texas Intermediate prices, which ended the previous session 3.2% higher, was up 4.38% late on Tuesday at $124.63 per barrel, while international benchmark Brent crude, which hit its highest price since July 2008 on Monday, was another 4.50% higher at $128.75 a barrel.
The increased commodity prices came as market participants continued to monitor developments of escalated geopolitical tensions between Ukraine and Moscow, with the former stating Moscow was attempting to manipulate the pair’s ceasefire arrangement by allowing Ukrainian civilians to only evacuate to either Russia or Belarus.
The White House also updated president Joe Biden’s schedule to include the announcement of additional steps that Washington will enact to “hold Russia accountable for its unprovoked and unjustified war on Ukraine”. As part of his remarks, Biden banned imports of Russian oil to the country.
Treasury yields were also higher at the end of trading on Tuesday, with the yield on the benchmark 10-year Treasury note at around 1.842% as traders looked to shed bonds amid escalating inflationary concerns.
On the macro front, the National Federation of Independent Business‘ small business optimism index declined for a second consecutive month in February, dropping to 95.7, down from 97.1 in the previous month to the lowest seen since January 2021.
“Inflation continues to be a problem on Main Street, leading more owners to raise selling prices again in February. Supply chain disruptions and labor shortages also remain problems, leading to lower earnings and sales for many”, said NFIB chief economist Bill Dunkelberg.
Elsewhere, the US trade deficit widened to a record high of $89.7bn in January, up from an upwardly revised $82.0bn for December 2021 and ahead of market expectations for a print of $87.1bn. According to the Bureau of Economic Analysis, the heightened deficit comes as a result of an increased goods deficit of $7.1bn to $108.9bn, with soaring energy costs pushing imports to a record high and dragging the services surplus to $19.2bn. Imports increased 1.2% to a new record high of $314.1bn, while exports fell 1.7% to $224.4bn.
Lastly, wholesale inventories advanced 0.8% month-on-month to $799.9bn in January, according to the Census Bureau, bang in line with preliminary estimates and following an upwardly revised 2.6% increase in December. The advance marked the 18th consecutive month of gains, driven by increases in inventories of both durable and nondurable goods. On an annualised basis, wholesale inventories advanced 18.1% in January.
In the corporate space, US retailer Dick’s Sporting Goods reported a record fourth-quarter showing on Tuesday and said it expects to see even more profit momentum following the all-important holiday trading period.
Wednesday newspaper round-up: Rent controls, car makers, Elon Musk
Sadiq Khan has called on ministers to grant him powers to freeze private rents in London, amid a push by Labour over cost of living issues which also saw the party reiterate its call for the scrapping of the planned increase in national insurance contributions. The mayor has previously called on the government to allow him to put in place rent controls in London as a way to ease fast-rising costs, but has been rebuffed by ministers. – Guardian
Car manufacturers are facing soaring costs and supply issues after the price of nickel doubled to record levels in the wake of Russia’s invasion of Ukraine. Prices passed $100,000 (£76,000) a tonne – driven up by buyers racing to cover short positions – before the London Metal Exchange (LME) suspended trading in nickel for the day. – Guardian
Russia has suspended the sale of foreign currencies until September in a scramble to steady its economy, as rating agency Fitch indicated that a sovereign default is imminent. Citizens will not be able to buy foreign currencies in local banks but they will, however, be able to change them into the local ruble unit. – Telegraph
Elon Musk has claimed he was forced to sign a settlement with the US government that kept him in charge of Tesla, saying the deal was necessary for “the immediate survival” of the company. The world’s richest man stepped up his campaign against the Securities and Exchange Commission (SEC) on Tuesday, asking a court to throw out the 2018 deal and accusing the agency of having a “vendetta” against him. – Telegraph
British companies posting messages for International Women’s Day are having their gender pay gaps exposed by a Twitter bot, leading some to delete their posts. Companies such as Ryanair, Barclays and outsourcer Capita, as well as universities and government departments, have been called out by the Gender Pay Gap Bot, which states in its Twitter biography: “Employers, if you tweet about International Women’s Day, I’ll retweet your gender pay gap.” – The Times
