London stocks had extended gains by midday on Wednesday despite ongoing concerns about the Ukraine crisis, with heavyweights BP and Shell sharply higher as oil prices surged, and strong results from Persimmon helping to underpin the housebuilding sector.
The FTSE 100 was up 1% at 7,401.46, while oil prices surged above $110 a barrel as the war in Ukraine threatens supply and ahead of an Opec meeting later in the day.
Neil Wilson, chief market analyst at Markets.com, said: “Russia is starting a new phase of the campaign, bringing a lot more force to bear and shelling civilian areas. This poses the risk that the West will encounter growing pressure to sanction Russian oil and gas exports, with all that would entail.
“Centrica said it is urgently seeking to end its natural gas supply agreement with Gazprom – self-sanctioning already well underway. Exxon Mobil followed Shell and BP to say it will exit Russia, leaving $4bn in assets in doubt. We are seeing this with the container ships too, and banks. Moreover oil traders are already starting to try to secure alternatives.
“We should note that rising oil prices are a windfall for the Kremlin and Russia’s terms of trade – the ratio of its export to import prices – is at its highest since oil prices fell in 2014. This is one of the reasons why Western governments might play this card – the cognitive dissonance of squeezing Russia on all fronts with sanctions while still funding their war machine by buying oil and gas may not survive for long. The other reason will be mounting pressure from their electorates as bombing on civilians increases, leading to more deaths and distressing scenes for the TV screens.”
In equity markets, oil giants Shell and BP were the top performers on the FTSE 100 amid surging oil prices.
Persimmon followed close behind 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 and Barratt also up.
Hiscox rallied 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 even as 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.
On the downside, Russian steelmaker Evraz, Anglo-Russian precious metals miner Polymetal and gold miner Petropavlovsk – which has operations in Russia – all reversed earlier gains to trade sharply lower. Polymetal was also in focus after the release of its full-year results.
Coco-Cola HBC suffered heavy losses, with traders pointing to its significant exposure to Russia.
Royal Mail was knocked 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.
Market Movers
FTSE 100 (UKX) 7,401.46 0.97%
FTSE 250 (MCX) 20,739.51 1.17%
techMARK (TASX) 4,373.65 -0.01%
FTSE 100 – Risers
Shell (SHEL) 2,063.75p 5.78%
BP (BP.) 376.70p 5.49%
Persimmon (PSN) 2,436.00p 4.91%
Taylor Wimpey (TW.) 147.15p 4.18%
Mondi (MNDI) 1,528.00p 4.09%
Ashtead Group (AHT) 5,030.00p 4.08%
Aveva Group (AVV) 2,510.00p 4.06%
Barratt Developments (BDEV) 588.00p 4.03%
ITV (ITV) 109.75p 3.93%
Rightmove (RMV) 690.80p 3.88%
FTSE 100 – Fallers
Evraz (EVR) 76.60p -25.52%
Coca-Cola HBC AG (CDI) (CCH) 1,667.50p -5.92%
Polymetal International (POLY) 250.00p -3.44%
Royal Mail (RMG) 376.60p -2.89%
Reckitt Benckiser Group (RKT) 6,156.00p -2.46%
BT Group (BT.A) 179.05p -2.45%
Associated British Foods (ABF) 1,755.00p -2.42%
United Utilities Group (UU.) 1,058.00p -2.40%
Severn Trent (SVT) 2,845.00p -2.07%
BAE Systems (BA.) 731.40p -1.98%
FTSE 250 – Risers
Weir Group (WEIR) 1,654.50p 8.81%
Reach (RCH) 183.00p 8.28%
Vistry Group (VTY) 1,021.50p 8.03%
Apax Global Alpha Limited (APAX) 195.00p 6.32%
Man Group (EMG) 204.10p 5.89%
Syncona Limited NPV (SYNC) 173.20p 5.87%
Trainline (TRN) 194.70p 5.64%
Harbour Energy (HBR) 426.20p 5.60%
CMC Markets (CMCX) 240.50p 5.48%
Ascential (ASCL) 330.80p 5.28%
FTSE 250 – Fallers
Petropavlovsk (POG) 4.00p -19.52%
TBC Bank Group (TBCG) 1,134.00p -3.74%
Network International Holdings (NETW) 210.10p -3.71%
Pennon Group (PNN) 1,009.00p -3.44%
Workspace Group (WKP) 748.00p -2.73%
Liontrust Asset Management (LIO) 1,322.00p -2.51%
Playtech (PTEC) 645.50p -2.42%
C&C Group (CDI) (CCR) 201.00p -1.95%
PureTech Health (PRTC) 215.00p -1.83%
Lancashire Holdings Limited (LRE) 439.00p -1.79%
