Worries over the Ukraine crisis and escalating sanctions cut Wednesday’s relief rally short, with the FTSE 100 ending the session with just marginal gains.
Well-received earnings from lender Barclays helped to offset a drop for Russian steelmaker Evraz.
The FTSE 100 index closed up 3.97 points, or 0.1%, at 7,498.18. The FTSE 250 ended down 151.81 points, or 0.7%, at 20,841.52, and the AIM All-Share closed up 0.29 of a point at 1,031.91.
The Cboe UK 100 ended up 0.1% at 745.55, the Cboe UK 250 closed down 0.7% at 18,684.59, and the Cboe Small Companies ended down 0.3% at 15,157.17.
In European equities on Wednesday, the CAC 40 in Paris ended down 0.1%, while the DAX 40 in Frankfurt fell 0.4%.
Despite an upbeat start to Wednesday’s session, worries over the Ukraine crisis and crippling sanctions didn’t fade for long. Ukraine mobilised its military reserves and Russia evacuated its Kyiv embassy as fears reached fever pitch of a full-scale conflict breaking out in eastern Europe.
Kremlin chief President Vladimir Putin has defied an avalanche of international sanctions to put his forces on stand-by to occupy and defend two rebel-held areas of eastern Ukraine.
In response, Kyiv’s President Volodymyr Zelensky has put Ukraine’s more than 200,000 reservists on notice that they will receive summons to return to their units.
US President Joe Biden on Tuesday announced tough new sanctions targeting financial institutions and Russia’s ‘elites’ for ‘beginning’ an invasion of Ukraine but said there was still time to avoid war. Australia, Britain, Japan and the EU have all also announced sanctions.
‘Overall, the sanctions announced so far have been lighter than feared, causing a slight relief in the broader market sentiment...While the current sanctions will likely have only a limited effect on the Russian economy as a whole, EU, UK and US have made it clear that tougher sanctions can be considered,’ said Danske Bank.
And investors are also bracing for Russia’s retaliation. The Russian foreign ministry on Wednesday said it was preparing a ‘strong response’ to Biden.
Evraz, which counts Russian billionaire Roman Abramovich as a major shareholder, tumbled 13% in London on Wednesday on fears of sanctions.
Stocks in New York were lower at the London equities close, with the Dow Jones down 0.4%, the S&P 500 index down 0.6%, and the Nasdaq Composite down 1.0%.
The US dollar regained its dominant position as the mood turned risk-off. The pound was quoted at $1.3554 at the London equities close Wednesday, falling from $1.3595 at the close on Tuesday.
The euro stood at $1.1313 at the European equities close Wednesday, down against $1.1344 at the same time on Tuesday. Against the yen, the dollar rose to ¥115.06 from ¥114.94 late Tuesday.
Brent oil was quoted at $97.90 a barrel at the London equities close Wednesday, up from $96.70 late Tuesday. Oil prices have been boosted in recent weeks on fears an escalation of tensions over Ukraine could lead to supply disruption.
Safe haven asset gold was quoted at $1,906.84 an ounce at the London equities close Wednesday, up against $1,900.36 at the close on Tuesday.
In London, lender Barclays helped the FTSE 100 edge into the green, with shares ending 3.1% higher. Barclays reported a surge in annual profit, aided by the reversal of credit impairments set aside in 2020 to deal with the fallout from the pandemic, and said it plans £1 billion in share buybacks.
Barclays pre-tax profit improved sharply to £8.41 billion from £3.07 billion in 2020 and came in ahead of market consensus of £8.11 billion. Helping to boost profit was a £653 million credit impairment release, swung dramatically from a £4.84 billion charge in 2020.
Towards the bottom of the index was DIY retailer Kingfisher, falling 5.6% after Societe Generale cut the stock to Sell from Hold.
Rio Tinto fell 2.2%. The miner hiked its dividend to record levels for 2021, following a sharp rise in profit and revenue, driven by significant price rises for major commodities, more than offsetting a decline in output.
For the year, the Anglo-Australian firm reported a pre-tax profit of $30.83 billion, doubled from $15.39 billion the year before, while underlying earnings before interest, tax, depreciation and amortisation rose 58% to $37.72 billion from $23.90 billion. However, consensus expectations had underlying EBITDA coming in at $38.29 billion
Rio Tinto declared a final ordinary dividend of $4.17, and a special payout of $0.62. This brought the group’s total payout to $10.40 per share, up 86% from $5.57 the year before.
At the bottom of the mid-cap FTSE 250 was Aston Martin, tumbling 8.7% despite the luxury car maker narrowing its loss. For 2021, Aston Martin generated revenue of £1.10 billion, up 79% from £611.8 million in 2020, and its pre-tax loss narrowed to £213.8 million from a loss of £466 million.
Looking ahead, the Warwickshire, England-based firm said it was ‘well on its way’ to achieving medium-term targets of 10,000 wholesales, £2 billion revenue and £500 million adjusted earnings before interest, tax, depreciation, and amortisation by 2024/25.
Supply chains globally continue to experience disruption, Aston Martin said, and it is focused on mitigating any hindrances this may have on production.
Central and eastern Europe-focused airline Wizz Air ended down 8.6% on disruption fears as tensions over Ukraine mount.
Elsewhere in London, Ted Baker rose 9.8% after the upmarket clothes retailer reported robust sales growth and improved margins in its fourth-quarter. Sales in its fourth-quarter ended January 29 increased 35% compared to the same period a year before. Sales also rose 18% from those reported in the third quarter.
The UK corporate calendar on Thursday is busy, with full-year results from the likes of lender Lloyds Banking, miner Anglo American, defence firm BAE Systems, jet engine maker Rolls-Royce and British Gas parent Centrica.
Thursday’s economic calendar has US gross domestic product and initial jobless claims at 13.30 GMT.
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