Stocks in London ended lower on Thursday, as US inflation remains at fever high levels, while peace talks between Russia and Ukraine conclude without progress, sapping earlier investor hopes.
The FTSE 100 index closed down 91.63 points, or 1.3%, at 7,099.09. The mid-cap FTSE 250 index closed down 113.65 points, or 0.6%, at 19,955.55. The AIM All-Share index closed down 3.17 points, or 0.3%, at 983.55.
The Cboe UK 100 index closed down 1.1% at 705.11. The Cboe 250 finished down 0.3% at 17,540.02, and the Cboe Small Companies lost 0.4% at 14,335.47.
In mainland Europe, the CAC 40 stock index in Paris closed down 2.8% and DAX 40 in Frankfurt ended down 2.9%.
Investors digested news that Russian Foreign Minister Sergei Lavrov and Ukrainian counterpart Dmytro Kuleba made no progress on a ceasefire in a face-to-face meeting in the Turkish resort of Antalya.
‘The war in Ukraine has once again dominated market sentiment and war and inflation are now intrinsically intertwined and yet despite concerns about those soaring prices the ECB has held firm on its decision not to raise rates. But how far will prices rise, how long can households cope and will governments have to step in to do more,’ said Danni Hewson of AJ Bell.
In the FTSE 100, Spirax-Sarco Engineering closed up 4.4% after the steam systems manufacturer said annual profit rose sharply, aided by a sales performance that topped pre-virus levels.
In 2021, pretax profit surged 31% to £314.5 million from £240.1 million. Revenue grew 13% to £1.34 billion, from £1.19 billion in 2020. It also topped 2019's sales figure of £1.24 billion.
Spirax-Sarco declared an annual dividend of 136.0 pence, up 15% from 118.0p in 2020.
At the other end of the large-caps, Evraz ended the worst performer, down 13%, as the Russian steelmaker denied involvement in supplying Russia to aid in Ukraine invasion. It confirmed that it supplies long steel to infrastructure and construction sectors only.
In addition, Evraz clarified that Russian billionaire Roman Abramovich has 29% holding in the company but denied any direct control by him.
Abramovich on Thursday was sanctioned by the UK government for his links to Russian President Vladimir Putin. Branded a pro-Kremlin oligarch, Abramovich was targeted with an asset freeze and a travel ban on Thursday after ministers came under sustained pressure to target him over Moscow's ongoing invasion of Ukraine.
The updated sanctions list, which hits seven new elite individuals, said Abramovich has had a ‘close relationship for decades’ with Putin, which the Chelsea football club owner has previously denied.
The move came as the UK Financial Conduct Authority temporarily suspended the listing of Evraz earlier on Thursday. The FCA said it suspended the FTSE 100-listed shares of the steel maker and miner ‘in order to protect investors pending clarification of the impact of UK sanctions’.
In response, Evraz considers that the UK financial sanctions on Abramovich will not apply to the company.
Among London mid-caps, Hill & Smith gained 9.1% after it reported significantly increased annual profit due to a strong recovery from the pandemic-related disruption in 2020.
In 2021, the Solihull, England-based infrastructure company generated a pretax profit of £50.9 million, up 43% from £35.5 million reached in 2020. This was on a revenue rise of 6.7% to £705.0 million from £660.5 million the year before.
Hill & Smith credited this to a strong recovery in 2021, with all three of its divisions delivering strong revenue and profit growth.
The company declared a final dividend of 19.0 pence per share, delivering a total dividend of 31.0p. This reflects a 16% increase from the 26.7p paid the year prior.
Spirent Communications rose 8.7% after the telecommunications company reported growth in annual profit after navigating all of 2021's challenges.
Pretax profit in 2021 came in at $103.6 million, increasing 8.1% from $95.8 million in 2020. The rise in profit was supported by strong revenue growth, which was up 10% to $576.0 million from $522.4 million.
Spirent declared a final dividend of 4.37 US cents per share, bringing the total annual payout to 6.76 cents. This was 12% higher than 2020's 6.04 cents.
On AIM, boohoo closed up 19% after the online fashion retailer warned that high return rates will continue to hit sales, though it expects annual profit to be in line with market forecasts.
The company said its fourth quarter net sales grew 7% annually, or 48% on a two-year basis. It meant that for the year, net sales climbed 14% yearly and by 61% on pre-virus times.
For the year ended February 28, boohoo expects to report group adjusted earnings before interest, tax, depreciation and amortisation of £125 million. It is an outcome that would be in line with guidance and market expectations, though down 28% from £173.6 million a year earlier.
The pound was quoted at $1.3125 at the London equities close, down from $1.3165 at the close Wednesday.
The euro stood at $1.1007 at the European equities close, down from $1.1070 late Wednesday, after the European Central Bank kept interest rates on hold.
The central bank kept the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50%, respectively.
The Russian invasion was a ‘watershed for Europe’, the ECB said, reaffirming a pledge to ‘take whatever action’ to stabilise the economy.
The outbreak of the conflict has given a fresh push to inflation in the euro area, which sat at an all-time high of 5.8% in February.
The soaring figures, well above the ECB's 2.0% target, have caused concern amongst members of the 25-member governing council, with calls to end the bank's highly accommodative monetary policy. On Thursday, the central bank confirmed the end of its pandemic emergency bond-buying programme this month.
Notably, however, the ECB signalled that it may give itself a little more time before rising interest rates, as the war in Ukraine and surging inflation cloud the economic outlook.
In its latest policy announcement, the ECB dropped its usual mention of raising rates ‘shortly after’ the end of stimulus bond-buying schemes, saying instead that rate adjustments would now come ‘some time after’ the end of asset purchases.
In addition, the ECB cut its growth forecast for 2022 to 3.7% from 4.2% previously predicted, as it expected a recovery to be slowed down by the impact of Russia's invasion of Ukraine on the eurozone economy.
Against the yen, the dollar was trading at JP¥116.05, up from JP¥115.77 late Wednesday.
Stocks in New York were firmly in the red at the London equities close after US inflation rose to historic levels in February, amid the escalating crisis in Ukraine.
The DJIA was down 1.2%, the S&P 500 index down 1.4% and the Nasdaq Composite down 2.0%.
The annual inflation rate in the US in February accelerated at its fastest pace since January 1982, the Bureau of Labor Statistics reported.
On an annual basis, the US consumer price index rose 7.9% in February, picking up pace from January's increase of 7.5%. Month-on-month, US CPI rose 0.8% in February after rising 0.6% in January.
The Federal Reserve is poised to raise interest rates next week for the first time since slashing them to zero at the start of the pandemic to get a handle on inflation.
Brent oil was quoted at $112.45 a barrel at the equities close, down sharply from $121.55 at the close Wednesday.
Gold stood at $1,995.65 an ounce at the London equities close against $2,000.80 late Wednesday.
The economic events calendar on Friday has Germany inflation readings and UK monthly GDP estimates at 0700 GMT.
The UK corporate calendar on Friday has annual results from building products supplier SIG and a trading statement from housebuilder Berkeley Group.
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