London stocks finished the session in negative territory on Monday, as confusion abounded over whether US president Joe Biden and his Russian counterpart Vladimir Putin had agreed to a summit on Ukraine tensions.
The FTSE 100 ended the day down 0.39% at 7,484.33, and the FTSE 250 was 1.24% weaker at 21,097.19.
Sterling was in a mixed state, last trading 0.15% stronger on the dollar at $1.3610, while it weakened 0.01% against the euro to change hands at €1.2002.
“A conflict in eastern Europe now looks very likely, and as a result markets remain firmly under pressure,” said IG chief market analyst Chris Beauchamp.
“After the losses last week we saw an attempt at a recovery early on in the session, fuelled by hopes of a Putin-Biden summit later in the week, but once cold water was poured on that idea and news came through of an actual clash between Russian and Ukrainian troops the market went firmly back into ‘risk off’ mode.
“US markets are out today due to the holiday, but in all probability the resumption of trading on Wall Street tomorrow will only intensify the selling, as traders there seek to play catch-up and continue reducing their allocations to risk assets like equities.”
In economic news, a closely-watched survey showed private sector output sparking, as looser pandemic restrictions boosted spending on travel, leisure and entertainment.
The IHS Markit/CIPS flash UK composite purchasing managers index was 60.2 in February, up on January’s final reading of 54.2 and the highest reading since June 2021.
It was also well above consensus for 55.3.
Within that, the services business activity index also beat expectations, at 60.8 compared to January’s 54.1, while manufacturing output touched a seven-month high of 56.7, up on 54.5 a month previously, helped by fewer raw material shortages and an easing in global supply chain pressures.
Manufacturing PMI was unchanged at 57.3.
IHS Markit said the survey results showed there had been a “swift rebound” from the impact of Omicron, helped by a strong recovery in consumer spending on travel, leisure and entertainment.
However, costs continued to mount, with faster rises in operating expenses at service sector firms offsetting a slowdown in cost inflation at manufacturing companies.
“With the PMI’s gauge of output growth accelerating markedly, and cost pressures intensifying to the second-highest on record, the odds of an increasingly aggressive policy tightening have shortened, with a third back-to-back rate rise looking increasingly inevitable in March,” said Chris Williamson, chief business economist at IHS Markit.
On the property front, asking prices for UK homes rose by a record 2.3% in February according to property website Rightmove, as the easing of Covid restrictions led to a rebound in demand in London with people returning to office work.
The increase was the biggest monthly jump in 20 years, meaning the average advertised cost of a home came to £348,804.
Asking prices had now risen by 9.5% over the past 12 months.
“This new record means that average asking prices have now risen by nearly £40,000 in the two years since the pandemic started, compared to just over £9,000 in the previous two years,” Rightmove said.
Elsewhere, industry data showed UK retail footfall slumping last week, as severe weather kept shoppers at home.
According to retail consultancy Springboard, footfall to all retail destinations rose 5.5% between Sunday and Thursday.
But as Storm Eunice made landfall, prompting the Met Office to issue a number of rare red alerts, footfall slumped 32% on Friday and 12.6% on Saturday.
As a result, footfall was down 3.8% over the week compared to the previous seven days.
Within that, high streets saw footfall slide 7.2%, while retail parks recorded a 0.1% dip and shopping centres eased 0.5%.
Some of the largest declines were seen in areas worst affected by the weather, with footfall down 9.7% in Wales, 7.8% in the south west and off 5% in the north and Yorkshire.
“Unsurprisingly, footfall was majorly affected by the severe storms, which negated the positive impact at the start of the February school half-term break,” said Diane Wehrle, insights director at Springboard.
“Inevitably high streets felt the greatest effects of the weather, with a slightly stronger result in shopping centres – the vast majority of which offer shelter from the elements – and in retail parks, which are easy to access by car.”
In equity markets, Petropavlovsk – which operates gold mines in Russia – tumbled 17.02% by the end of trading.
Anglo-Russian precious metals miner Polymetal was iff 8.47%, and Russian steelmaker Evraz was 6% weaker as well, weaker after Moscow said there were no firm plans in place for a summit between Putin and Biden.
CMC Markets analyst Michael Hewson said the shares were down “on the basis they could well be on the frontlines of any sanctions imposed in the event of a Russian invasion”.
Commercial property landlord Hammerson reversed earlier gains to close down 2.27%, after confirming it was in talks over the possible sale of its Victoria Gate and Victoria Quarter shopping centres for £120m as it looked to strengthen its balance sheet after the Covid pandemic.
Dechra Pharmaceuticals slipped 0.48% despite lifting its dividend and posting a jump in first-half profit and revenue.
On the upside, AstraZeneca advanced 3.97% after it said data from a late-stage trial had shown that its Enhertu drug helped patients with a type of breast cancer to live longer.
NatWest Group managed gains of 1.24% after Berenberg, which rates the stock at ‘buy’, said the bank’s earnings outlook was bright.
“While the bank’s cost guidance is, in isolation, somewhat disappointing, we believe this will be more than offset by improvements in NatWest’s revenue guidance,” it said
“Updated guidance on the benefit to NatWest from rising interest rates also increases our conviction that consensus expectations of the bank’s revenue growth are too low – our underlying 2023 revenues are 4% above consensus.”
Berenberg added that NatWest was “undervalued”.
Deal news was in focus outside the FTSE 350, with Clipper Logistics up 13.26% after saying it had agreed to be taken over by US rival GXO in a £943m deal.
John Menzies was also in the spotlight, falling 0.51% after Kuwait’s National Aviation Services sweetened its takeover proposal for the UK airport services company, valuing it at about £559m.
Market Movers
FTSE 100 (UKX) 7,484.33 -0.39%
FTSE 250 (MCX) 21,097.19 -1.24%
techMARK (TASX) 4,300.51 -0.41%
FTSE 100 – Risers
AstraZeneca (AZN) 9,150.00p 3.97%
Hargreaves Lansdown (HL.) 1,299.00p 1.60%
Fresnillo (FRES) 695.60p 1.60%
Sage Group (SGE) 680.80p 1.59%
B&M European Value Retail S.A. (DI) (BME) 591.20p 1.47%
Anglo American (AAL) 3,574.00p 1.36%
NATWEST GROUP PLC ORD 100P (NWG) 237.00p 1.24%
Reckitt Benckiser Group (RKT) 6,340.00p 1.07%
Associated British Foods (ABF) 1,930.00p 1.02%
Rio Tinto (RIO) 5,694.00p 0.65%
FTSE 100 – Fallers
Polymetal International (POLY) 1,070.50p -8.47%
Evraz (EVR) 267.00p -5.72%
Coca-Cola HBC AG (CDI) (CCH) 2,318.00p -4.54%
Scottish Mortgage Inv Trust (SMT) 969.00p -4.53%
Ashtead Group (AHT) 4,621.00p -3.14%
SEGRO (SGRO) 1,229.50p -2.84%
JD Sports Fashion (JD.) 161.55p -2.50%
Smurfit Kappa Group (CDI) (SKG) 3,971.00p -2.38%
BT Group (BT.A) 191.30p -2.38%
Aveva Group (AVV) 2,460.00p -2.34%
FTSE 250 – Risers
Petershill Partners (PHLL) 212.50p 9.09%
JTC (JTC) 791.00p 6.32%
Syncona Limited NPV (SYNC) 199.00p 5.29%
Moneysupermarket.com Group (MONY) 201.00p 3.61%
Energean (ENOG) 969.00p 3.58%
Auction Technology Group (ATG) 906.00p 2.72%
Darktrace (DARK) 332.80p 2.72%
Ultra Electronics Holdings (ULE) 3,068.00p 1.72%
LXI Reit (LXI) 138.00p 1.47%
Volution Group (FAN) 499.50p 1.41%
FTSE 250 – Fallers
Petropavlovsk (POG) 13.26p -17.02%
TBC Bank Group (TBCG) 1,382.00p -7.87%
Discoverie Group (DSCV) 770.00p -6.33%
Oxford Biomedica (OXB) 699.00p -5.41%
Moonpig Group (MOON) 263.00p -4.85%
Molten Ventures (GROW) 679.00p -4.77%
Trainline (TRN) 207.60p -4.68%
Pagegroup (PAGE) 583.50p -4.42%
TUI AG Reg Shs (DI) (TUI) 259.60p -4.20%
888 Holdings (888) 242.00p -4.20%
