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FTSE closes higher as stocks whipsaw
Volatility continues is stock markets: the FTSE 100 had closed a chunky 1.5% higher at 7439 but is still just back where it was on Tuesday morning and share prices swing wildly.
Polymetal International is a prime example. The Russian gold miner has suffered 20% plus daily falls for much of the last week but ended today at the top of the FTSE 100 after a strong set of results and plans to payout 50% of its underlying earnings through a $246 million dividend. The stock gained 18.5% on the news but is still set to be dumped out of the FTSE 100.
Elsewhere, BP and Shell both gained more than 4% thanks to soaring oil prices. Banks caught a bid after US Federal Reserve chief Jerome Powell said the central bank was pushing ahead with plans for a March rate rise despite the war in Ukraine. And industrial stocks and airlines also found favour.
That’s all from us on the blog today, join us again tomorrow.
Asos pulls out of Russia
Asos has announced it is following the likes of Nike and Apple by cutting business links with Russia.
A spokesperson for the company said: “ASOS’ priority is the safety of its colleagues and partners in Ukraine and Russia. Immediately following the invasion, ASOS suspended sales in Ukraine as it became impossible to serve customers there.
“Against the backdrop of the continuing war, ASOS has decided that it is neither practical nor right to continue to trade in Russia, and has, therefore, today suspended our sales there. Our thoughts are with the people of Ukraine and all those affected in the region.”
House builders and oil stocks boost FTSE
The FTSE 100 is firmly higher in afternoon trade, up about 0.9% at typing time.
The index is being boosted by buoyant housing stocks after good results from Persimmon, Vistry and Rightmove, and strong house price data. Oil majors are also rising as the price of the black stuff soars. BP and Shell are both up over 4%.
Govt £2bn windfall from higher petrol prices
Who is cashing in from higher petrol and oil prices?
Well, oil companies. Speculators. And the UK government, says a note out from Fair Fuel.
“Punitive” pump prices are worth £2 billion a year in extra VAT to the Treasury, it has calculated.
Robert Halfon MP. Vice Chair of Fair Fuel, said: “Record fuel prices are just un-affordable and are having a huge impact on inflation. The Government need to look at either reducing VAT on fuel or reducing fuel duty. We also need a FairFuelUK Pumpwatch monitor to ensure that prices are in line with wholesale oil prices.”
Just Eat vows more UK investment
The boss of Just Eat Takeaway.com has vowed to plough more cash into the “competitive” UK market to take on 10-minute grocery delivery services despite mounting losses.
CEO Jitse Groen said the business was “almost break even” in the UK in December but was not targeting profits for now.
“We’re still in a competitive situation in the UK so we’ll invest quite some capital in the expansion of the UK position,” he said. “We do that out of choice.”
Read more about how Just Eat performed in 2021 and how it’s doing now.
Gas and oil spikes as traders boycott Russian supply
The price of natural gas spiked to a near all-time high today amid warnings Russia’s escalation of hostilities in Ukraine poses a threat to global energy security.
Benchmark UK gas futures reached 464p a therm in early trading — double Monday’s price — amid what one analyst called “blind panic” in the market.
British Gas owner Centrica’s decision to cut ties with Russian energy giant Gazprom prompted other traders to reassess their positions, leading to a scramble for alternative suppliers.
Martin Young at Investec said: “Fear comes into it. People are looking to reposition where they get their gas.”
Read the full story.
Sberbank quits Europe
European operations of Russia’s biggest bank are being shut down and sold after a run on deposits.
Sberbank said it would withdraw from Europe after “abnormal cash outflows”. The lender was placed on sanctions lists by US and UK authorities following the invasion of Ukraine.
The Croatian and Serbian branches of Sberbank are being taken over by local rivals and the Russian lender’s Austrian business is to be wound up, EU authorities said today.
It follows “a rapid deterioration in their liquidity situation” that left the banks on the brink of collapse.
Sales jump at Hotel Chocolat
British chocolate brand Hotel Chocolat racked up a 40% increase in revenue from £101.9 million to £142.9 million in the second half of 2021.
Becoming more globally ambitious – not only in terms of territory but also multi-category – has been leading the brand back to success.
The British chocolatier had a strong sales growth across the UK, US and Japan. The database of its UK active customers grew by 38%, taking it to 2.3 million. The US saw a 119% spike in the number of chocolate lovers. Sales in Japan rose 131%.
Hotel Chocolat’s gross profit increased by 56% year-on-year to £24.1million.
Co-founder and CEO Angus Thirwell said: “It’s a climb back to the profitability we need to have in order to keep going with our investments into British manufacturing, recruiting lots of new talent into technology, manufacturing or multi-channel retailing.”
Pay fears hit Royal Mail shares
The dumping of Royal Mail shares continued today as investors took fright at the potential cost of inflation-linked pay rises for thousands of posties.
The FTSE 100-listed deliveries firm fell another 5%, taking losses since the summer to 40%, after a “sell” note from City firm Liberum highlighted the threat to margins ahead of annual pay negotiations with the Communication Workers Union (CWU).
About 67% of Royal Mail’s UK operating cost base is accounted for by people costs, which will take a significant hit if the union is successful this month in securing a pay deal near the current 7.8% rate of the retail price index.
Liberum analyst Gerald Khoo cut his earnings forecasts for 2023 and 2024 to reflect his concern that price increases or productivity improvements will not be enough to offset wage inflation.
He pointed out: “Historically, the best rates of productivity improvement achieved by the UK business have been 2-3% per annum. It has struggled to deliver that of late.”
Royal Mail shares fell 18.3p to 369.5p, which compares with Khoo’s new 350p target. The company was promoted to the FTSE 100 in June, but is now set to lose its place in the quarterly reshuffle based on Tuesday night’s closing prices.
Other big fallers in the top flight included bottling business Coca-Cola HBC, which continues to come under pressure due to its operations in Russia and Ukraine. Its shares fell 6% or 106p to 1666.5p, but the wider FTSE 100 rose 46.57 to 7379.82 due to higher prices boosting several commodity-based stocks including oil giant Shell.
The FTSE 250 index improved 163.55 points to 20,665.21, led by a rise of 7% for Weir Group following a reassuring set of annual results from the mining technology business.
With a record order book and its markets “buoyant”, Weir forecast strong growth in revenues and profits for this year. Much will depend on geopolitical events, but the Glasgow-based firm pointed out its assets in Ukraine and Russia accounted for 2% of the group.
On AIM, Vertu Motors rose 6% or 3.4p to 61p after the retailer produced the latest in a long line of earnings upgrades. It also announced a share buy-back programme worth £3 million.
Commodity stocks boost FTSE 100
The FTSE 100 index has risen 0.8% to 7387, bucking the downward trend seen elsewhere in Europe.
The impact of rising commodity prices were a big factor in London’s resilience, with shares in Shell and Rio Tinto among 3% higher.
Russian precious metals miner Polymetal also recovered by 7% at one point after annual results included a dividend of 52 cents a share worth $246 million (£185 million) in total.
Persimmon shares were 5% higher after strong annual results and a 2% rise in sales rates in the opening weeks of 2022.
Plans by insurer Aviva to return £4.75 billion to shareholders contributed to a rise of 6.7p to 413.3p, but Royal Mail fell 2% after Liberum downgraded the stock to “sell”.
The FTSE 250 index rose 138 points to 20,638, with Lloyd’s of London insurer Hiscox up 7% after its annual results.
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