- FTSE falls 291 points
- Invasion spooks investors, bolsters fixed income
- BAE Systems the day’s top performer
4:45 pm: FTSE 100 closes sharply lower as Russian attacks Ukraine
The FTSE 100 fell to a hard close Thursday as Russia invaded Ukraine by land, sea and air in the biggest attack on a European state since World War II.
Russia’s highly risky move caused global energy prices to jump, sending investors fleeing for the safety of fixed-income assets.
At the close, the UK blue-chip index had dropped by 291.17 points, or 3.88% to 7,207.01
Richard Hunter, head of markets at interactive investor, said Russia’s move only adds to the “brittle” environment for stocks in the face of rising inflation and interest rates.
"The negative baton is being passed from market to market globally, with another weak opening in the US now leaving the Dow Jones down by 11% in the year to date, the S&P500 by 13.4% and the Nasdaq by 19%,” he said. “The turmoil has also sent the FTSE100 into negative territory for the first time this year, with a further leg down following Wall Street’s open, leaving the UK’s premier index down by 1.7% in 2022.”
He added: “If there is a glimmer of hope among the volatility which has become a feature of this year even without the latest developments, it is that there will have been certain sectors caught in this crossfire which will have simply been oversold. Such businesses, whose fundamentals will not have changed overnight, will potentially lead the charge as and when sentiment improves. For the moment, however, matters need to stabilise at a macro level before any sort of market recovery can be entertained. It is impossible to call the bottom in markets such as these and difficult to anticipate positive catalysts, but turmoil such as this can provide buying opportunities."
The top gainer was BAE Systems PLC (LSE:BA.), which increased by 5.1% to 631.60p.
4.05pm: UK market at day's low
Leading shares are at their low for the day as investors try and come to terms with Russia's attacks on Ukraine, much anticipated as they were.
The FTSE 100 has slumped 262.93 points or 3.51% to 7235.25 , on course for its biggest one day drop since late November last year when the Omicron variant was identified.
It is also its lowest level since late December.
Russian miners Polymetal International PLC (LSE:POLY), down 35.2%, and Evraz PLC (LSE:EVR), 28.29% lower, are unsurprisingly the top two fallers in the blue chip index, as the conflict is likely to lead to increased sanctions from the West.
Three companies reporting results picked the wrong day for it.
Lloyds Banking Group PLC (LSE:LLOY) is down 11.82% as its profits disappointed, while Rolls-Royce Holdings PLC (LSE:RR.) has lost 11.11% as chief executive Warren East announced he was leaving.
WPP PLC (LSE:WPP) is also among the day's losers, off 10.95% despite returning to profit in 2021.
There were some shares on the way up.
With gold and silver prices climbing as investors sought havens, precious metals miner Fresnillo PLC (LSE:FRES) is up 5.96%.
BAE Systems PLC (LSE:BA.) is 1.15% better after its figures and because, well, it is a defence company.
Shell PLC (LSE:SHEL, NYSE:SHEL, EURONEXT:SHELL) is benefiting from the surge in the oil price to more than US$100 a barrel on supply concerns, adding 0.96%.
But BP PLC (LSE:BP.) has dropped 4.36% courtesy of its links with Russia's Rosneft (AIM:ROSN).
Michael Hewson, chief market analyst at CMC Markets UK, said: "In what has been a sobering and dark day for Europe, the day we all feared arrived today as the Russian military rolled into Ukraine in the early hours of this morning, sending equity markets sharply lower, as investors struggled to project forward what is likely to come next.
"The FTSE100 has fallen sharply to its lowest level since 20th December, and the DAX to a one year low, as concerns about the economic consequences of today’s events prompt a wholesale flight to safety, as money flows into the US dollar, gold, and government bond markets.
"While Brent crude prices have risen as high as $105, European natural gas prices have surged by over 40% today, as concerns about supply disruptions rise.
"It seems highly unlikely that Russian forces will stop until the whole of Ukraine has been annexed, as Europe looks at its worst security and humanitarian crisis since the second World War, as the dark cloud of war hangs over Europe.
"While the EU and the US have said they will hit back with further sanctions, it is highly unlikely that this will change Putin’s calculus, given that the nuclear option of shutting Russia out of energy markets and Swift isn’t yet on the table, due to concerns over the collateral damage it might do to Western economies, with the EU seemingly opposed to such a move.
"While this might be a justifiable concern it doesn’t really compare to what might happen if Russia carries on and threatens the borders of the Baltic States, or Poland, who are NATO allies, who will no doubt require aid to deal with an unfolding humanitarian crisis, as Ukrainian civilians flee westwards."
3.07pm: US stocks follow Europe's negative lead
European markets have been sent tumbling by news of the Russian attacks on Ukraine, and now Wall Street has followed suit.
The Dow Jones Industrial Average is down 2.31% at 32,366.02 while the S&P 500 has lost 1.9% and the Nasdaq Composite has fallen 1.88%.
Some of the worst hit companies were Apple and JP Morgan Chase, losing 4% and over 4.5%, respectively.
VanEck Russia ETF– a US-traded security that invests in Russian companies - was down by more than 22%.
Meanwhile the FTSE 100 is 258.61 points or 3.45% lower.
Richard Hunter, head of markets at interactive investor, said: “The escalation of tensions arising from the Russian action has pulled the rug from markets, adding to an already brittle environment in the face of rising inflation and interest rate concerns.
"The negative baton is being passed from market to market globally, with another weak opening in the US now leaving the Dow Jones down by 11% in the year to date, the S&P500 by 13.4% and the Nasdaq by 19%. The turmoil has also sent the FTSE100 into negative territory for the first time this year, with a further leg down following Wall Street’s open, leaving the UK’s premier index down by 1.7% in 2022...
"If there is a glimmer of hope among the volatility which has become a feature of this year even without the latest developments, it is that there will have been certain sectors caught in this crossfire which will have simply been oversold. Such businesses, whose fundamentals will not have changed overnight, will potentially lead the charge as and when sentiment improves.
"For the moment, however, matters need to stabilise at a macro level before any sort of market recovery can be entertained. It is impossible to call the bottom in markets such as these and difficult to anticipate positive catalysts, but turmoil such as this can provide buying opportunities."
1.40pm: US GDP grows as expected and jobless claims fall
Elsewhere and slightly overshadowed by events in Ukraine, the US economy grew as expected in the fourth quarter.
GDP rose by 7% on an annualised basis, in line with forecasts and up from the initial estimate of 6.9%.
Meanwhile US weekly jobless claims have come in slightly better than expected.
The number of Americans seeking unemployment benefits for the first time last week fell to 232,000 from 249,000 the previous week, itself revised up by 1,000.
Analysts had been forecasting a figure of 235,000.
US Initial Jobless Claims Feb 19: 232K (est 235K; prev 248K; prevR 249K)
- US Continuing Claims Feb 12: 1476K (est 1580K; prev 1593K; prevR 1588K)
— LiveSquawk (@LiveSquawk) February 24, 2022
1.27pm: Sunak and Johnson promise significant further sanctions
In a speech to the nation UK prime minister Boris Johnson said further sanctions would be discussed today following the attack on Ukraine.
He said: "In concert with our allies we will agree a massive package of economic sanctions designed in time to hobble the Russian economy.
"And to that end we must also collectively cease the dependence on Russian oil and gas that for too long has given [President] Putin his grip on Western politics."
Meanwhile UK chancellor Rishi Sunak has said the new sanctions on Russia will be "significant".
Speaking in London, he said: "We must apply severe economic costs to these actions and you can expect significant further sanctions to be brought forward."
1.11pm: Polymetal attempts to calm nerves
Polymetal International PLC (LSE:POLY) continues to be the biggest faller in the FTSE 100, despite the gold and silver miner responding to the attack on Ukraine.
It said all its operations in Russia and Kazakhstan continued as usual and the sanctions so far announced by the West have not affected the company.
It said: "The rapid deterioration in the situation in Ukraine has led to a material increase in possibility of additional and more severe sanctions to be imposed by the EU, the UK and the US. The scope and impact of these new potential sanctions (and any potential counter-sanctions) is yet unknown, however they might affect key Russian financial institutions as well as mining companies
"Polymetal believes that targeted sanctions on the company remain unlikely. Contingency planning has been initiated proactively to ensure business continuity, including selection of key equipment suppliers, liquidity management, debt portfolio diversification and securing sales channels.
"Polymetal reiterates its production and cost guidance for 2022 and confirms release of its 2021 financial results on the 2nd of March 2022."
The attempt to calm nerves does not seem to have helped. Its share are currently down 39.94%.
12.58pm: European market slide accelerates
The market falls are getting worse.
The FTSE 100 is now down 245.38 points or 3.27% at 7252.80.
In Europe Germany Dax has dropped 5.38% and France's CAC has fallen 4.94%.
12.26pm: Markets await US GDP and jobless claims data
The economic data doesn't stop just because there's a war on, and there are some key US indicators due.
There is a revision to the fourth quarter GDP figure, which initially came in at 6.9% and ahead of forecasts of 5.5% as companies rebuilt their stock ahead of the Thanksgiving and Christmas periods.
Analysts expect a slight increase in the update to around 7%.
Meanwhile weekly jobless claims are forecast to fall from 248,000 to 225,000.
11.52am: US markets forecast to follow Europe lower
US stocks are expected to sharply lower after President Vladimir Putin ordered the start of military operations in eastern Ukraine and Russian forces commenced a multi-pronged attack on a number of cities in its neighbouring country.
Futures for the Dow Jones Industrial Average sank 2.5% in Thursday pre-market trading, while those for the broader S&P 500 index fell 2.53% and the tech-heavy Nasdaq shed 3.15%.
Safe-haven gold gained more than 3% to its highest level in over a year while Brent Crude Oil (LSE:BRENT) (Brent Crude Oil (LSE:BRENT)) rose above $100 for the first time since 2014 as energy prices surged on the offensive by Russia, one of the largest exporters of oil and gas.
US markets also ended Wednesday with sharp losses as the S&P 500 plunged deeper into the correction territory amid fears of the Ukraine-Russia war.
At the close, the S&P 500 lost 1.84% to 4,226, while the Nasdaq suffered heavy losses of 2.57% to 13,037. The Dow Jones declined by 1.38% to 33,132.
Ipek Ozkardeskaya, senior analyst at Swissquote, said: “The combined revenue exposure of the S&P500 to Russia and Ukraine is only about 1%. It’s not much. Yet the rising energy and commodity prices are a growing threat for US equities as they will put further upside pressure on inflation and force the Federal Reserve’s hand to act more aggressively to tame the inflation.".
Back in the UK, the FTSE 100 has fallen further, and is now down 218.31 points or 2.91% at 7279.87.
11.12am: Retail sales rise in February - CBI
Shoppers returned to the high street in February as COVID-19 restrictions eased, but selling prices continued to rise and the Ukraine conflict is likely to have an effect on future performance.
Retail sales volumes were above seasonal norms in February at +16%, according to the latest CBI Distributive Trends survey. The figure represents the weighted difference between the percentage of retailers reporting an increase and those reporting a decrease.
That compares to a figure of -23% in January. But sales are expected to be just average in March at -1%%.
Retail selling prices continued to grow rapidly in the year to February (+75% from +77% in November) with a slight acceleration expected next month (+81%).
Internet sales declined in the year to February (-11% from -2% in January), only the second time they have fallen in the survey's history.
Martin Sartorius, principal economist at the CBI, said: “The easing of COVID-19 restrictions – including the end of work-from-home guidance – has, unsurprisingly, encouraged shoppers to return to the high streets.
“There are other challenges facing retailers, however. Conflict in Ukraine means energy prices and transport costs will rise further, adding more pressure on retailers’ operating costs and biting into households’ spending power.”
10.54am: Gas prices soar on supply fears
Gas prices as well as oil are soaring amid fears the conflict in Ukraine could disrupt energy supplies to Europe.
European prices jumped by around 40% while the UK day ahead contract rose 38% to £225 per mega watt hour.
10.17am: FTSE down but outperforming, Russian market plunges
Markets across Europe are in decline after the Russian move on Ukraine.
In the UK the FTSE 100 is now down 184.33 points or 2.46% at 7313.85 while the mid-cap FTSE 250 is off a remarkably similar amount, down 2.47% at 20,326.77.
But there are worse declines elsewhere. France's CAC has fallen 3.71% and Germany's Dax has lost 3.84%.
And no surprise which market is the worst performer.
Victoria Scholar, head of investment at interactive investor said: “Unsurprisingly the Russian market is taking the heaviest hit.
"The Russian MOEX equity market is down close to 40%, suffering its worst day on record. Meanwhile the Russian rouble has slumped to a record low against the US dollar with USD/RUB skyrocketing above 85 as the worst-case scenario plays out.
"With the prospect of heavier sanctions and other financial penalties, international investors have lost all confidence in Russian markets and Russia’s economy as President Putin proceeds undeterred with the military operation in Ukraine.”
9.41am: Soaring energy prices will stoke inflation further
The impact of the Russian attack on Ukraine is likely to hit equity markets for longer than people might have thought, says Russ Mould, investment director at AJ Bell.
He said: “The surge in the oil price is terrible news for businesses and consumers, and fundamentally this clarifies one of the key impacts of the Russia/Ukraine war – it will serve to further stoke inflation.
“Not only will energy bills keep going up, but food prices look set to jump even higher. Ukraine and Russia are both big food suppliers and any disruption to supplies will force buyers to seek alternative sources, which could jack up prices.
“Investor sentiment was already fragile because of rising inflation and the upwards direction of travel for interest rates, but confirmation of war and the associated alarming news headlines around the world are likely to see equity markets go through a difficult period for longer than people might have previously expected."
But he added: “The 2.6% decline in the FTSE 100 was bad news for the millions of savers and investors who have money in UK equities, but it is by no means one of the worst days in history for the UK market. It ranked number 186 in terms of the most severe single day falls since records began."
9.10am: UK market off its worst levels
Leading shares are still sharply down after escalation in Ukraine, but off their worst levels.
The FTSE 100 - which actually edged higher on Wednesday despite the growing signs that conflict was coming - is now down 161.36 points or 2.15% at 7336.82.
At its worst the index was as low as 7282.
Neil Wilson at Markets.com said: "There was an air of complacency yesterday as investors hoped that Russia’s incursions would be limited. That fragile hope has been shattered a Russian forces moved in overnight, apparently on all fronts. Putin delivered a TV address calling to “de-Nazify” Ukraine and demanded their forces lay down their arms. He also demanded Ukraine demilitarised...
"The West is following up with more severe sanctions…but it’s hard to think these can work now the die is cast...
"[But] when do the moves look overdone; when do you start nibbling away at some bargains? There is considerable pressure on all risk assets and the broad capitulation will inevitably lead to some babies being thrown out with the bath water…we are probably close to peak ‘fear’ markets wise…unless there is some escalation but it’s hard to see the West getting involved on that front."
Meanwhile despite the surge in the oil price, BP PLC (LSE:BP.) is down 3.93% due to its links with Russia's Rosneft (AIM:ROSN).
8.29am: Sanction fears hit Russian mining groups
Russian miners are inevitably on the slide on the prospect of further sanctions following the attack on Ukraine.
Evraz PLC (LSE:EVR) is the biggest faller in the leading index, down 18.7% while Polymetal International PLC (LSE:POLY) has lost 5.74%.
It is clearly a bad day to release results, for the most part. Following their updates, Rolls-Royce Holdings PLC (LSE:RR.) has fallen 13.51% as chief executive Warren East departs while Lloyds Banking Group PLC (LSE:LLOY) has lost 5.9%. Its full year profits came in at £6.9bn, but this was below expectations of £7.2bn.
And with concerns about the impact of the conflict on travel, British Airways owner International Consolidated Airlines Group (LSE:IAG) has dropped 6.15%.
Tech investor Scottish Mortgage Investment Trust PLC (LSE:SMT) has lost 5.7% in response to the falls on the US Nasdaq market.
8.22am: Fresnillo shines amid the slump
Amid the proverbial sea of red, there are a couple of bright spots.
Precious metals miner Fresnillo PLC (LSE:FRES) is up 5.84% as gold and silver prices jump, while Shell PLC (LSE:SHEL, NYSE:SHEL, EURONEXT:SHELL) is benefiting from the surge in oil prices, up 0.64%.
BAE Systems PLC (LSE:BA.) is 0.53% better after its results, but it is of course also a defence company, which tells its own story.
8.17am: UK market drops sharply but outperforms European indices
On what should have been a day focused on a raft of company results, investors have other things on their minds as Russia launched its attack on Ukraine.
The FTSE 100 has plunged 208.81 points or 2.78% to 7289.37, on track for the biggest fall since 26 November last year when the discovery of the Omicron variant sent markets tumbling.
But it is outperforming European indices, with Germany's Dax down 4.4% and France's CAC 4% lower.
Oil has surged on fears the military action will disrupt supplies just as economies are recovering from the pandemic.
Brent crude has jumped 6.66% (ominous) to US$103.29 a barrel, its highest since August 2014, while West Texas Intermediate is up 6.25% to US$97.44.
Michael Hewson,chief market analyst at CMC Markets, said: "It’s probably not hyperbole to say that Europe is now at its most dangerous juncture since World War 2."
Meanwhile Russia's central bank said it would intervene to prop up the rouble, after the currency slumped to an all time low of 89.60 against the dollar.
6.35am: Markets shaken by Russian military action
FTSE 100 was set to slump in early trades after Russia launched what seems to be a full-scale invasion of Ukraine.
Russian President Vladimir Putin announced the military action at 5.55am Russian time, which was followed almost immediately by shelling and missile strikes said reports from the country.
The reports said there had also been cruise missile attacks on the Ukraine capital Kyiv and further troop mobilisation in the east, on the northern border from Belarus and also in the south.
Ukrainian Foreign Minister Dmytro Kuleba said: "This is a war of aggression. Ukraine will defend itself and will win. The world can and must stop Putin. The time to act is now."
Western countries immediately condemned the attacks. US president Joe Biden said: "President Putin has chosen a premeditated war that will bring a catastrophic loss of life and human suffering,"
Boris Johnson added Russia had chosen a path of bloodshed and destruction by launching this unprovoked attack"
On the markets, oil prices surged to over $100 a barrel, while gold moved above $1,910 an ounce with heavy falls in equity markets in the US and also across Asia.
Spreadbetters were calling the Footsie index around 150 points lower two hours before the open.
Michael James of Wedbush Securities told Reuters that currently there was "very little positive validation for buying anything."
"If anything, President Putin is digging his heels in despite the increased sanctions," said James.
"That's really adding to elevated nervousness about further aggressive actions and what that will mean for commodities and inflation overall.
Ipek Ozkardeskaya, senior analyst at Swissquote added: "It’s panic in the markets. The S&P500 futures are down by almost 2%, the Nasdaq futures slipped 2.5% and the DAX and Eurostoxx futures lost near 4% this morning.
"FTSE futures are down more than 2%, but the British blue-chip index should outperform its European and American peers due to its high commodity exposure".
The Ukraine situation will overshadow what is otherwise a big day for results with Lloyds Bank, Centrica, Rolls-Royce, WPP and BAE Systems all reporting.
6.50am: Early Markets - Asia / Australia
Asian shares plummeted on Thursday as investors watched the escalating situation between Russia and Ukraine.
The Gold price, traditionally a safe haven in times of uncertainty, rose 1.62% and last traded at US$1,941.
Japan’s Nikkei 225 fell 1.81% and South Korea’s Kospi declined 2.61%.
The Shanghai Composite in China slipped 1.90% while Hong Kong’s Hang Seng index slumped 3.03%.
Australia’s S&P/ASX200 shed 3% in one of its worst days of the year, as investors rushed from risk assets to the safety of government bonds and gold.