London stocks finished in positive territory on Wednesday as market participants tried to stay on top of the latest developments in the Russian invasion of Ukraine.
The FTSE 100 ended the session up 1.36% at 7,429.56, and the FTSE 250 was ahead 1.34% at 20,775.82.
“Stock markets are up for a change as traders are feeling cautiously optimistic ahead of Ukraine-Russia talks,” said Equiti Capital market analyst David Madden.
“We have seen continued violence today, but it was reported that both sides are due to take part in negotiations.
“It is entirely possible that nothing will come of the talks, but the fact the discussions are taking place has projected a glimmer of hope.”
Madden noted that equity markets had suffered greatly in recent sessions, in turn presenting buying opportunities, although Wednesday’s bulls were “far from aggressive”.
“The FTSE 100 is firing on all cylinders as the index is benefiting from the reports of political talks, and the booming energy sector is giving the British market an extra edge.
“BP and Shell are both up over 4% as the oil market is extending its recent gains.”
Russian officials said during the afternoon that they were ready to hold further talks with Ukraine, although it remained to be seen if any talks would actually go ahead.
According to Reuters, Kremlin spokesman Dmitry Peskov said there were contradictions in the information regarding negotiations.
Peskov also said that Russia needed to come up with a harsh, though-out and clear response to the measures imposed by the West in order to undermine the Russian economy.
On Tuesday, Ukraine president Volodymyr Zelenskyy said Moscow needed to stop its bombing of cities in his country before talks could continue.
A spokesperson for Zelenskyy later told Bloomberg that a second round of talks could indeed take place on Wednesday.
Oil prices continued their march northwards through the European day, with Brent crude last up 4.78% at $109.99 per barrel, and West Texas Intermediate ahead 4.07% at $107.62.
That came even as the Organisation of Petroleum Exporting Countries and its non-member allies (together, OPEC+) approved a further increase in their combined production, saying that the surge was not the result of market fundamentals, but of “geopolitical developments”.
At their ministerial meeting, energy ministers from the oil producing cartel said they would increase their production by 400,000 barrels per day in April, as per previously-announced plans.
“It was noted that current oil market fundamentals and the consensus on its outlook pointed to a well-balanced market, and that current volatility is not caused by changes in market fundamentals but by current geopolitical developments,” they added.
Overnight, the International Energy Agency – representing the United States and other big energy-consuming nations – said it would release 60 million barrels of oil from emergency stockpiles in response to rocketing prices for the thick black stuff.
On the corporate self-sanction front, UK energy firm Centrica said it would exit its gas supply agreements with its Russian counterparts, mainly gas giant Gazprom.
“We are working through the details of how best to do this, additionally we will ensure we are compliant with all relevant sanctions,” Centrica boss Chris O’Shea said in a statement to Reuters.
Centrica was following in the footsteps of oil majors BP and Shell in their decision to walk away from activities in Russia, in protest for the invasion of Ukraine.
The global list of companies cutting ties with the Russian regime was growing as well, with Apple, Airbus, Boeing and ExxonMobil all responding to Moscow’s unprovoked invasion of Ukraine.
Apple, which has previously attracted criticism for not making any political statements for fear of losing sales, broke its silence and said it would pause all product sales in Russia.
“We are deeply concerned about the Russian invasion of Ukraine and stand with all of the people who are suffering as a result of the violence,” Apple said in a statement overnight.
Apple Pay and other services had been limited, and Russian state media outlets RT and Sputnik News were no longer available for download from the Apple Store outside Russia.
Away from the war in Ukraine, the average price of a house in the UK topped £260,000 for the first time, according to fresh industry data.
The latest Nationwide House Price Index showed annual UK house price growth of 12.6% in February, up from 11.2% in January, and the strongest rate since June last year.
It was also well above consensus, with most analysts expecting the rate of growth to soften to around 10.8%.
As a result, the average house price on a non-seasonally adjusted basis was now £260,230, up from January’s £255,556, while the annual increase of £29,162 was the largest ever since the start of Nationwide’s monthly index in 1991.
“Housing market activity has remained robust in recent months, with mortgage approvals continuing to run above pre-pandemic levels at the start of the year,” said Robert Gardner, Nationwide’s chief economist.
“A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.
“The continued buoyancy of the housing market is a little surprising, given the mounting pressure on household budgets from rising inflation, which reached a 30-year high of 5.5% in January, and since borrowing costs have started to move up from all-time lows in recent months.”
Shop price inflation, meanwhile, continued to rise in February, hitting its highest rate for more than a decade.
According to the latest BRC-NielsenIQ Shop Price Index, overall shop price inflation rose 1.8% year-on-year in February, or by 0.5% month-on-month, while annual shop price inflation was 1.5% in January.
The BRC said February’s figure was the highest rate of inflation since November 2011.
Annual food inflation was unchanged at 2.7%, the highest rate since September 2013, while non-food inflation rose to 1.3% from 0.9% in January.
“Food inflation remained the key driver behind higher prices, particularly for fresh food, which has been impacted by poor harvests both in the UK and globally,” said Helen Dickinson, chief executive of the BRC.
“Meanwhile, the increase from last month is a result of rising prices for non-food products, particularly health, beauty and furniture.”
Across the pond, US job growth was more robust than expected last month, even as smaller sized firms shed workers, the results of a closely-followed survey revealed.
According to consultancy ADP, private sector payrolls in America grew by 475,000 in February – besting economists’ forecasts for an increase of 310,000 by a comfortable margin.
The US central bank, meanwhile, looked likely to go ahead and begin to tighten policy when it next met, despite the “high uncertainty” around the war in Ukraine.
In prepared remarks posted to the Federal Reserve’s website, chairman Jerome Powell said: “The near-term effects on the US economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain.
“Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways.
“We will need to be nimble in responding to incoming data and the evolving outlook.”
In equity markets, oil giants Shell and BP were up 4.84% and 4.95%, respectively, amid the surging oil price environment.
Persimmon was ahead 2.07% after the housebuilder said it remained confident for the current year despite rising interest rates, as strong demand boosted annual sales.
Peers followed suit, with Taylor Wimpey rising 2.19% and Barratt Developments up 2.41%, while Vistry was 5.54% firmer after well-received annual results.
Hiscox rallied 5.69% after the insurer said it swung to a full-year profit, with gross written premiums boosted by continued positive rate momentum in all three divisions and strong customer growth in the retail segment.
Aviva gained 0.93% even after the insurer reported a 28% fall in annual profits, reflecting lower operating earnings from discontinued operations and also announced the £385m acquisition of Succession Wealth.
Weir Group jumped 10.39% after it said both full-year revenue and operating profits had ticked up thanks to a double-digit increase in orders.
Daily Mirror publisher Reach was in the black by 5.33%, having tumbled a day earlier after it warned that higher newsprint inflation would mean that 2022 profit would decline.
Ascential, the owner of Cannes Lions, surged 8.08% after it reported a rise in full-year earnings and revenue following growth in all four of its segments.
On the downside, Russian steelmaker Evraz plunged 39.23% and gold miner Petropavlovsk plummeted 54.89% amid the ongoing, bloody invasion of Ukraine.
Coca-Cola HBC was off 5.75%, with commentators pointing to its significant exposure to Russia as well.
Royal Mail was knocked 7.43% lower by a downgrade to ‘sell’ from ‘hold’ at Liberum, which pointed to a margin squeeze risk from pay inflation.
The broker also cut its price target on the shares to 355p from 470p.
Office space provider Workspace was 3.9% weaker after it agreed to buy commercial property investment company McKay Securities for £272m.
Market Movers
FTSE 100 (UKX) 7,429.56 1.36%
FTSE 250 (MCX) 20,775.82 1.34%
techMARK (TASX) 4,390.43 0.37%
FTSE 100 – Risers
Polymetal International (POLY) 306.90p 18.54%
Rolls-Royce Holdings (RR.) 98.23p 6.77%
Melrose Industries (MRO) 142.15p 6.26%
Prudential (PRU) 1,136.50p 6.21%
Whitbread (WTB) 2,844.00p 5.29%
Shell (SHEL) 2,041.55p 4.95%
BP (BP.) 374.40p 4.84%
ITV (ITV) 110.10p 4.78%
InterContinental Hotels Group (IHG) 5,088.00p 4.75%
Aveva Group (AVV) 2,521.00p 4.52%
FTSE 100 – Fallers
Evraz (EVR) 60.00p -41.66%
Royal Mail (RMG) 359.00p -7.43%
Coca-Cola HBC AG (CDI) (CCH) 1,670.50p -5.75%
Flutter Entertainment (CDI) (FLTR) 9,132.00p -3.43%
Fresnillo (FRES) 702.80p -3.04%
BAE Systems (BA.) 724.00p -2.98%
Associated British Foods (ABF) 1,746.00p -2.92%
Reckitt Benckiser Group (RKT) 6,175.00p -2.76%
Entain (ENT) 1,560.00p -2.65%
Kingfisher (KGF) 294.90p -2.61%
FTSE 250 – Risers
Weir Group (WEIR) 1,678.50p 10.39%
Syncona Limited NPV (SYNC) 177.60p 8.56%
Ascential (ASCL) 339.00p 8.08%
Apax Global Alpha Limited (APAX) 198.00p 7.96%
Hiscox Limited (DI) (HSX) 949.20p 5.69%
Vistry Group (VTY) 991.40p 5.54%
Bytes Technology Group (BYIT) 478.60p 5.49%
IMI (IMI) 1,481.00p 5.41%
Reach (RCH) 179.60p 5.33%
CMC Markets (CMCX) 239.50p 5.26%
FTSE 250 – Fallers
Petropavlovsk (POG) 2.00p -59.76%
Baltic Classifieds Group (BCG) 134.50p -6.27%
Network International Holdings (NETW) 205.70p -5.73%
TBC Bank Group (TBCG) 1,116.00p -4.92%
Cineworld Group (CINE) 35.42p -4.27%
Templeton Emerging Markets Inv Trust (TEM) 150.20p -4.19%
Workspace Group (WKP) 739.00p -3.90%
Moonpig Group (MOON) 242.60p -3.42%
Currys (CURY) 88.80p -3.33%
Premier Foods (PFD) 104.60p -2.99%
