London stocks had extended losses by midday on Thursday as it emerged there had been no progress yet in high-level talks between Russia and Ukraine, and as investors eyed the latest policy announcement from the European Central Bank.
The FTSE 100 was down 1.1% at 7,111.31 after Ukrainian Foreign Minister Dmytro Kuleba said no progress had been made in talks with his Russian counterpart Sergei Lavrov on achieving a 24-hour ceasefire, although talks in Turkey were ongoing.
Danske Bank said in a note that it does not expect the Russia-Ukraine conflict to spread to other countries and sees commodity prices broadly moderating over the next six months.
“We expect the Ukrainian and Russian leaders to eventually agree on a truce. We also believe that the Ukrainian government will be forced to painful concessions in the absence of direct military intervention by the West/NATO,” it said.
“In our main scenario, we believe some level of conflict is likely to remain in Ukraine despite a potential truce, and uncertainty will prevail, but the war will not spread to other countries in Europe. In any case, we do not expect sanctions against Russia to be removed any time soon. On the contrary, there is still room for the West to step up sanctions.
“Commodity prices have spiked after the war started. In our view, prices are out of sync with fundamentals and we expect a gradual normalisation as the market learns to cope with the new situation.”
Away from geopolitics, investors were eyeing the latest policy announcement from the ECB, due at 1245 GMT and US inflation data at 1330 GMT. Danske said: “We expect the ECB to continue its path towards entering a ‘neutral’ monetary policy calibration and formally set an end date for the APP programme (in September this year), due to the high inflation pressure, but fall short of giving a firm indication of an upcoming rate hike.”
In equity markets, Anglo-Russian precious metals miner Polymetal went from being the top performer on the FTSE 100 earlier in the session to the worst, while shares in Russian steelmaker Evraz were suspended after Chelsea FC owner Roman Abramovich – who also has a majority stake in the company – was hit by UK sanctions.
Elsewhere, Persimmon, Rio Tinto, HSBC and Micro Focus were all weaker as they traded without entitlement to the dividend.
On the upside, engineering group Spirax-Sarco was a high riser after it predicted strong growth in 2022 as it reported a sharp rise in annual profit and increased its dividend.
Hill & Smith and Spirent Communications were also up after results, but Volution and Capita reversed their earlier gains.
In broker note action, Molten Ventures was boosted by an upgrade to ‘buy’ at Jefferies, while Capital & Counties was higher after an upgrade to ‘overweight’ at Barclays.
Market Movers
FTSE 100 (UKX) 7,111.31 -1.10%
FTSE 250 (MCX) 19,952.63 -0.58%
techMARK (TASX) 4,155.66 -0.39%
FTSE 100 – Risers
Antofagasta (ANTO) 1,571.00p 4.87%
Spirax-Sarco Engineering (SPX) 11,670.00p 3.05%
Glencore (GLEN) 483.95p 2.95%
Hikma Pharmaceuticals (HIK) 1,981.00p 1.17%
Fresnillo (FRES) 758.20p 1.15%
BAE Systems (BA.) 729.80p 1.00%
Mondi (MNDI) 1,421.50p 0.92%
Ferguson (FERG) 11,175.00p 0.90%
Airtel Africa (AAF) 138.60p 0.73%
Anglo American (AAL) 3,780.00p 0.71%
FTSE 100 – Fallers
Polymetal International (POLY) 136.75p -12.17%
Persimmon (PSN) 2,121.00p -9.16%
Melrose Industries (MRO) 116.50p -6.09%
Rio Tinto (RIO) 5,485.00p -5.71%
Burberry Group (BRBY) 1,576.50p -4.54%
HSBC Holdings (HSBA) 468.70p -4.15%
CRH (CDI) (CRH) 3,081.00p -4.05%
Rolls-Royce Holdings (RR.) 90.94p -3.64%
Coca-Cola HBC AG (CDI) (CCH) 1,549.00p -3.19%
Flutter Entertainment (CDI) (FLTR) 8,506.00p -3.05%
FTSE 250 – Risers
Baltic Classifieds Group (BCG) 124.50p 11.66%
Hill & Smith Holdings (HILS) 1,430.00p 10.51%
Spirent Communications (SPT) 246.00p 9.14%
Centamin (DI) (CEY) 105.25p 6.06%
Savills (SVS) 1,195.00p 4.82%
Molten Ventures (GROW) 710.00p 3.65%
Balfour Beatty (BBY) 240.20p 3.62%
Hochschild Mining (HOC) 141.10p 3.37%
PureTech Health (PRTC) 185.80p 3.22%
Ferrexpo (FXPO) 145.50p 3.19%
FTSE 250 – Fallers
Petropavlovsk (POG) 2.30p -28.13%
Volution Group (FAN) 416.00p -10.25%
Wizz Air Holdings (WIZZ) 2,723.00p -6.39%
Micro Focus International (MCRO) 347.20p -6.01%
Darktrace (DARK) 460.80p -5.92%
Chrysalis Investments Limited NPV (CHRY) 164.50p -5.46%
Syncona Limited NPV (SYNC) 166.60p -4.80%
TI Fluid Systems (TIFS) 189.00p -4.26%
TUI AG Reg Shs (DI) (TUI) 216.40p -4.25%
Quilter (QLT) 126.80p -4.16%
