17th Feb 2022 17:13
(Alliance News) - Stocks in London ended lower on Thursday as risks linked to the Ukraine situation continued to weigh on market sentiment.
In the latest developments, the US stepped up warnings of an imminent Russian invasion of Ukraine on Thursday, despite Moscow's continued denials and announcements of troop withdrawals from near the border.
Adding to the already fierce tensions, Ukraine and Moscow-backed separatists traded accusations of intensifying shell fire across their frontline, with Western officials saying Moscow was looking to create a pretext for an invasion.
The threat of an invasion is "very high, because they have not moved any of their troops out. They've moved more troops in," US President Joe Biden told reporters at the White House.
The FTSE 100 index closed down 66.41 points, or 0.9%, at 7,537.37. The mid-cap FTSE 250 index ended down 271.35 points, or 1.2%, at 21,557.59. The AIM All-Share index ended down 6.94 points, or 0.6%, at 1,072.23.
The Cboe UK 100 index ended down 0.9% at 747.60. The Cboe 250 closed down 1.4% at 19,253.25, while the Cboe Small Companies ended 0.1% higher at 15,584.83.
In mainland Europe, the CAC 40 stock index in Paris ended down 0.3% and the DAX 40 in Frankfurt closed 0.7% lower.
At the United Nations, where the Security Council was set for a heated meeting on the crisis, the US envoy said Washington wanted to make clear that risk of a war in Europe was growing.
Russia meanwhile responded to previous US security proposals aimed at defusing the crisis, insisting it was not planning any invasion but making clear that it felt its key demands were being ignored. Further, Russia also expelled the number two US diplomat in Moscow, the US State Department said, condemning what it called an "unprovoked" action.
"The back and forth between Russia and Ukraine is weighing on sentiment in the markets. Lingering tensions and concerns that Russia will maintain a heavy military presence on its border with Ukraine has prompted dealers to sell stocks. In recent weeks, there have been instances where the prospect of an outright invasion seemed more likely, but in the past 24 hours we seem to have been stuck in no man's land, and seeing as traders despise uncertainty, equity benchmarks are under pressure," said Equiti Capital analyst David Madden.
"The mood is likely to remain fragile until the Russian government makes a noticeable withdrawal of military personnel and hardware. Reports of artillery fire in eastern Ukraine have apparently left two Ukrainian soldiers wounded, this update underlines the political uncertainty in the region," Madden added.
In the FTSE 100, Reckitt Benckiser ended the best performer, up 5.9%, after the household goods firm pointed to a margin improvement in the year.
Reckitt said revenue in 2021, lapping tough comparatives, fell 5.4% to GBP13.23 billion from GBP13.99 billion. At constant currency, the decline was 0.3%. However, this topped company-compiled consensus of GBP13.18 billion.
Excluding the contribution of its former Infant Formula & Child Nutrition business in China, Reckitt's annual revenue fell 2.1% to GBP12.85 billion from GBP13.13 billion, though beat expectations of GBP12.80 billion. At constant currency rates, revenue by this measure was up 3.3%.
Reckitt back in June agreed to sell the business to Primavera Capital Group for USD2.2 billion. The disposal was completed in September.
The Nurofen painkiller maker swung to a pretax loss of GBP260 million for the year from a GBP1.87 million profit in 2020, due primarily to a huge loss on disposal. Reckitt declared an unchanged annual dividend. It expects 1% to 4% net revenue growth in 2022.
Precious metals miner Fresnillo closed up 4.3% tracking spot gold prices higher.
The safe-haven metal stood at USD1,895.50 an ounce at the London equities close, advancing against USD1,862.20 late Wednesday.
The precious metal has received a boost from Russia-Ukraine tensions, falling bond yields and accelerating inflation, ThinkMarkets analyst Fawad Razaqzada noted.
Standard Chartered reversed an earlier decline to close up 1.7%, as the emerging markets-focused lender delivered doubled annual profit and a bolstered payout.
The London-based bank reported pretax profit for 2021 of USD3.35 billion, more than doubled from USD1.61 billion a year prior, but missing analyst expectations of USD3.84 billion by 13%. Net interest income slipped 0.7% to USD6.80 billion from USD6.85 billion, beating the USD6.78 billion analyst consensus, as low interest rates scuppered growth. Adjusted net interest margin narrowed to 1.21% from 1.31%.
StanChart ended 2021 with a CET 1 ratio of 14.1%, edging down closer to the company's minimum target of around 14.0% for 2021. StanChart noted that an imminent USD750 million share buyback programme is expected to reduce its CET 1 ratio by around 30 base points.
StanChart missed analyst forecasts for dividends, having proposed a final dividend of 9 US cents per share. This matched 2020's final dividend, when 9 cents was the maximum allowed under regulatory guidance at the time. This brought StanChart's total annual payout to 12 cents, up 33% on the prior year's 9 cents.
At the other end of the large-caps, Russian steelmaker Evraz ended the worst performer, down 7.5%, amid Russia-Ukraine tensions.
British Airways parent International Consolidated Airlines lost 4.1% in a negative read-across from continental rival Air France-KLM. Hungarian airline Wizz Air was the worst performer in the FTSE 250, down 7.4%.
The Franco-Dutch carrier said its net loss narrowed by more than half last year but would need more capital strengthening measures due to the pandemic. The stock closed down 7.8% in Paris.
Elsewhere, in London John Menzies surged 24% at 579.29 pence after the aviation services provider's takeover suitor said it has agreed to buy a 13% stake in the company at a significant premium.
John Menzies on Tuesday repeated its rejection of a takeover approach from Agility Public Warehouse Co KSC, saying the terms "fundamentally undervalue Menzies and its future prospects". Agility on Monday had argued its latest cash proposal of 510p per John Menzies share would give "full and fair" value for shareholders.
In the latest twist, NAS said Agility Strategies Holding Ltd, an entity under common control with and acting in concert with NAS, has agreed to buy 12.1 million shares in John Menzies, representing just over a 13% stake, at a price of 605p per share.
Consequently, any firm offer for John Menzies will be made at a price of not less than 605p per share, being more than double its closing price of 290p on February 2. This 605p marks a 19% premium to NAS's previous 510p approach.
The dollar was lower across the board. The pound was quoted at USD1.3620 at the London equities close, up from USD1.3577 at the close Wednesday.
The euro stood at USD1.1370 at the European equities close, firm from USD1.1367. Against the yen, the dollar was trading at JPY115.02, down from JPY115.48.
Stocks in New York were firmly in the red at the London equities close as tensions between Russia and Ukraine flared up again.
The DJIA was down 1.2%, the S&P 500 index down 1.4% and the Nasdaq Composite down 1.6%.
Bucking the trend, Walmart was up 2.0% in New York after the retailer set out plans for a USD10 billion share buyback in the year ahead as it swung to a fourth quarter profit.
With 'other' losses shrinking to USD725 million from a hefty USD5.59 billion a year before, the Bentonville, Arkansas-based firm swung to net profit of USD3.63 billion from a loss of USD2.01 billion. Diluted earnings per share of USD1.28 turned from a loss of USD0.74 a year prior.
Brent oil was quoted at USD92.65 a barrel at the equities close, down sharply from USD96.00 at the close Wednesday, on growing hopes that talks on the Iran nuclear deal could soon bear fruit.
Tehran's top negotiator Ali Bagheri Kani said an agreement was "closer than ever" and while Washington and Paris were a little more circumspect, the comments raised the possibility that Iranian crude could return to the market soon.
"Positive developments in the US-Iran nuclear negotiations are helping to calm oil prices," explained Claudio Galimberti at Rystad Energy. "Although not a done deal yet, prices are sliding on news of progress and broad consensus in the talks as it could ultimately see up to 900,000 barrels a day of crude added to the market by December this year."
The economic events calendar on Friday has Japan inflation readings overnight and UK retail sales figures at 0700 GMT.
The UK corporate calendar on Friday has annual results from state-backed lender NatWest Group and warehouse property investor Segro.
By Arvind Bhunjun; [email protected]
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