London stocks were mixed again at the close on Wednesday, with the top-flight index helped along by well-received results from Barclays, while investors kept an eye on developments in the Russia-Ukraine crisis.
The FTSE 100 ended the session up 0.05% at 7,498.18, while the FTSE 250 was 0.72% weaker at 20,841.52.
Sterling remained below the waterline against its major trading pairs, last falling 0.18% on the dollar at $1.3560, and slipping 0.13% from the euro to €1.1982.
“The news that Ukraine is implementing a 30-day state of emergency didn’t appear to undermine the more bullish mood in the morning session, however this changed in the afternoon session, when the DAX, which had been leading today’s move higher, saw all of its gains wiped out in 30 minutes after reports that Ukraine was experiencing a DDOS attack, in what could be a precursor to an invasion,” said CMC Markets chief market analyst Michael Hewson.
“The Ukrainian government then released the details of its state of emergency, which starts at midnight tonight, calling up all its reservists, as well as imposing restrictions on movement throughout the country, in a sign that it expects to see an imminent escalation, pulling European markets down as we head into the close, with the FTSE 100 trying to hang on to at least some of its gains.
“This change of tone perfectly encapsulates the clear and present danger of headline risk with respect to market ebb and flow, as investors nervously eye Russia’s next move.”
Foreign secretary Liz Truss said earlier that the government would stop Russia from selling sovereign debt in London in response to the crisis.
The Foreign Office first announced on Tuesday it had an “unprecedented package of further sanctions ready to go” should there be more “aggressive acts” against Ukraine by Russia.
“As part of this, should Russia not de-escalate, the UK will shortly introduce legislation which will, among other steps, prevent Russia from issuing sovereign debt on UK markets,” it added.
But touring media outlets on Wednesday morning, Truss looked to confirm that the ban would go ahead.
She told Sky News: “We’ve been very clear that we’re going to limit access to British markets.
“We’re going to stop the Russian government raising sovereign debt in the United Kingdom.”
At the same time, it was reported the government was preparing to discuss the imposition of potentially tougher financial sanctions on Russia with key institutions in the City.
According to the Financial Times, City minister John Glen was chairing the meeting during the afternoon.
It was understood that representatives from a number of banks will attend, including Citi, Barclays, JPMorgan and NatWest, along with the Prudential Regulation Authority and the London Metal Exchange.
Prime minister Boris Johnson is also expected to dial into the call.
On Tuesday, Johnson imposed sanctions on five Russian banks and three individuals after Vladimir Putin sent tanks into two rebel-held regions of eastern Ukraine. Johnson said it was the first tranche of a “barrage” of sanctions that the UK was prepared to impose.
Elsewhere, Bank of England governor Andrew Bailey insisted earlier that both workers and companies needed to show restraint in the face of surging inflation.
Households were currently facing a deepening cost of living crisis, with inflation – currently at a 30-year high – expected to peak at 7.25% in April, according to the BoE, while wages were failing to keep pace.
In February, the Office for National Statistics said employees’ regular pay, excluding bonuses, grew by 3.7% in the final quarter of 2021.
Once inflation was taken into account, however, real wages fell by 0.8%.
Last month, Bailey came under fire from both unions and the government for saying workers shouldn’t ask for pay rises, despite the cost of living squeeze, in a bid to curb inflation.
Appearing before the Treasury Committee on Wednesday, Bailey sought to defend his comments.
He told Labour committee member Angela Eagle: “I’m not saying people should not take pay rises. My concern is the second round effects: that if everybody tries to get ahead of the shock that we’ve had from outside, then we will get the second round effects and it will get worse.
“There is very clearly an upside risk there. The upside risk comes through from the second-round effects.”
And he warned: “The least well-off will come off worse in the process if we don’t have restraint.”
Across the pond, mortgage applications in the United States sank 13.1% in the week ended 18 February to the lowest level since December 2019, according to the Mortgage Bankers Association.
Applications to refinance a mortgage declined 15.6%, while ones to purchase a home dropped 10.1% as fixed 30-year mortgage rates increased one basis point to 4.06%.
The fall marked the biggest seen since April 2020 and came amid rising interest rates, low inventory and high purchasing prices.
Back in London equity markets, investment platform Hargreaves Lansdown rose 2.51%, after slumping a day earlier on the back of its half-year results.
Barclays was ahead 3.06% after the bank said annual profits more than doubled, boosted by economic recovery and the release of provisions for bad loans during the Covid pandemic.
It reported a record annual pre-tax profit of £8.4bn, up from £3.1bn in 2020.
Student accommodation operator Unite Group rallied 2.85% after saying it swung to a full-year profit and striking an upbeat note on the outlook.
Cybersecurity firm Darktrace gained 2.44% after it agreed to buy attack surface management company Cybersprint for €47.5m.
On the downside, precious metals miner Hochschild Mining fell 0.59% despite reporting a rise in full-year core earnings as production bounced back and silver prices increased.
Rio Tinto edged 2.16% lower even as the Anglo-Australian miner declared a massive final dividend as profits surged on the back of rising commodity prices.
Luxury car maker Aston Martin Lagonda reversed earlier gains to tumble 8.7% by the close, despite posting a narrowing of its full-year losses as sales surged.
B&Q owner Kingfisher was under the cosh by 5.62% after Societe Generale downgraded the shares to ‘sell’ from ‘hold’.
“While inflation and buoyant demand are expected to be supportive, rising interest rates could hurt Kingfisher’s UK business,” SocGen said.
Veterinary pharmaceuticals group Dechra Pharmaceuticals was in the red by 0.1%, even after Liberum upped the stock to ‘hold’ from ‘sell’ and lifted the price target following share price weakness.
Market Movers
FTSE 100 (UKX) 7,498.18 0.05%
FTSE 250 (MCX) 20,841.52 -0.72%
techMARK (TASX) 4,327.43 0.14%
FTSE 100 – Risers
Hikma Pharmaceuticals (HIK) 2,010.00p 3.42%
Barclays (BARC) 195.98p 3.06%
Hargreaves Lansdown (HL.) 1,122.50p 2.51%
Antofagasta (ANTO) 1,437.50p 2.42%
Smith & Nephew (SN.) 1,296.00p 2.25%
Ocado Group (OCDO) 1,326.00p 1.96%
SSE (SSE) 1,611.00p 1.80%
Lloyds Banking Group (LLOY) 52.20p 1.73%
Admiral Group (ADM) 3,022.00p 1.35%
Unilever (ULVR) 3,844.00p 1.34%
FTSE 100 – Fallers
Evraz (EVR) 246.00p -12.55%
Kingfisher (KGF) 295.60p -5.62%
Royal Mail (RMG) 390.00p -3.03%
JD Sports Fashion (JD.) 155.85p -2.96%
CRH (CDI) (CRH) 3,465.00p -2.89%
International Consolidated Airlines Group SA (CDI) (IAG) 157.02p -2.88%
Rio Tinto (RIO) 5,568.00p -2.16%
B&M European Value Retail S.A. (DI) (BME) 585.40p -2.04%
Airtel Africa (AAF) 149.40p -2.03%
Halma (HLMA) 2,240.00p -1.84%
FTSE 250 – Risers
Petropavlovsk (POG) 13.70p 3.71%
Petershill Partners (PHLL) 216.50p 3.60%
Oxford Instruments (OXIG) 2,025.00p 3.21%
Rank Group (RNK) 154.40p 3.21%
Unite Group (UTG) 1,019.00p 2.85%
TP Icap Group (TCAP) 123.90p 2.64%
Wood Group (John) (WG.) 192.55p 2.46%
Darktrace (DARK) 352.20p 2.44%
JTC (JTC) 797.00p 2.31%
HGCapital Trust (HGT) 412.50p 2.10%
FTSE 250 – Fallers
Aston Martin Lagonda Global Holdings (AML) 1,002.50p -8.70%
Wizz Air Holdings (WIZZ) 3,644.00p -8.63%
Syncona Limited NPV (SYNC) 183.40p -6.52%
Mitie Group (MTO) 53.90p -4.60%
Oxford Biomedica (OXB) 699.00p -4.38%
Apax Global Alpha Limited (APAX) 189.40p -3.91%
Indivior (INDV) 271.20p -3.79%
Genuit Group (GEN) 511.00p -3.42%
Impax Environmental Markets (IEM) 397.50p -3.40%
Dunelm Group (DNLM) 1,254.00p -3.39%
