London stocks slipped on Tuesday as investors nervously awaited a fresh wave of Western sanctions on Russia, this time potentially targeting the major energy producer’s key oil sector.
This was offsetting any boost from an upbeat UK services purchasing managers’ index for March, which charged ahead following the removal of pandemic restrictions and a return to office working.
The FTSE 100 index was down 14.47 points, or 0.2%, at 7,544.45. The mid-cap FTSE 250 index was down 14.23 points, or 0.1%, to 21,315.66. The AIM All-Share index was up 4.46 points, or 0.4%, at 1,059.72.
The Cboe UK 100 index was down 0.3% at 750.80. The Cboe 250 was up 0.1% at 18,806.24, and the Cboe Small Companies was flat at 15,540.55.
The EU and US are currently preparing more sanctions against Russia on oil or coal after allegations that Russian forces carried out war crimes when dozens of bodies were discovered near Kiev.
The Europeans are under pressure to hit Moscow in the crucial energy sector and stop paying out the huge proceeds from gas, oil and coal that are helping Russia pay for the war.
‘I don’t want to preview but indeed there are discussions on what can be done in an area of energy like coal and oil,’ said EU Executive Vice President Valdis Dombrovskis as he arrived for EU minister talks in Luxembourg.
In mainland Europe, the CAC 40 in Paris was down 1.0%, while the DAX 40 in Frankfurt was down 0.5%.
‘The overall environment remains hard to read as investors’ focus keeps being torn between lingering tensions with Russia, the prospect of an economic downturn brought by flattening yield curves and the sudden hawkish switch from the Fed. On top of this, a Covid resurgence in Asia and Europe could dent demand for a bunch of industries, sparking higher market volatility,’ said ActivTrades analyst Pierre Veyret.
In the FTSE 100, Airtel Africa was down 2.5% after the telecommunications provider said it has adopted regulatory SIM card measures at its Nigeria telecommunications unit, though the financial impact of the move is uncertain.
Under a directive announced by the Nigerian Communications Commission back in December 2020, operators were required to ensure all their subscribers provided a valid National Identification Number to update SIM registration records.
The Africa-focused telecommunications provider on Tuesday said that so far, it has collated NIN records for 73% of its Nigeria active customer base, accounting for 79% of revenue at the unit.
By nation, Nigeria was Airtel’s largest revenue contributor in the first half ended September 30. The Nigeria arm generated revenue of $896 million, up 25% yearly. Airtel’s total interim revenue was $2.27 billion.
Lloyds Banking Group was down 2.0% after Barclays cut the lender to ‘equal weight’ from ‘overweight’.
In the FTSE 250, IP Group was up 3.8% after the intellectual property commercialisation company said its stake in its portfolio company First Light Fusion is set to double after the company achieved fusion.
IP noted First Light’s achievement of fusion with a projectile approach; the first of its kind, which has been independently validated by the UK Atomic Energy Authority. IP Group said its 27% holding in First Light was valued at £57.3 million at December 31, and it now expects the value to double by around £57 million, or around 5 pence per share.
At the other end of the midcaps, Darktrace was the worst performer, down 5.0%, after JPMorgan started coverage on the cybersecurity provider at ‘underweight’.
Moneysupermarket.com Group was down 4.5% after Barclays downgraded the price comparison website to ‘equal weight’ from ‘overweight’.
Crest Nicholson was down 1.5% after the housebuilder said it intends to sign the pledge committing the housebuilder to high-rise building remediation, saying it was ‘in the best interests’ of the company.
The Chertsey, Surrey-based firm said it would be taking further steps to support those living in affected buildings. As a result of making these new commitments, it said it would need to record a further exceptional charge in its financial statements.
The pledge will cost the company between £80 million and £120 million, the midcap housebuilder explained. Its board ‘does not consider this to present a risk to current or future operations,’ the firm said.
Large-cap peer Persimmon joined Crest Nicholson in signing the UK government building safety pledge. The York-based firm continues to believe a £75 million provision will be sufficient for the rectification works. The stock was down 0.1%.
Barratt Developments and Taylor Wimpey were among the worst blue-chip performers, down 3.2% and 2.2% respectively.
Elsewhere, Go-Ahead Group was up 4.6% after the transport operator said it will reinstate its pre-Covid dividend policy as it set out medium-term plans to boost revenue and profit.
The public transport operator will return to paying a dividend equivalent to between 50% and 75% of underlying earnings per share. As such, it intends to recommend a dividend of not less than 50 pence in respect of the financial year ending July 2022.
It revealed payout plans alongside a new strategy, ‘The Next Billion Journeys’.
Go-Ahead is targeting annual group revenue of around £4 billion in the medium-term, which it said would be up by around 30%, and operating profit of at least £150 million. For the 2021 financial year, Go-Ahead posted adjusted operating profit of £115.5 million.
Oil prices extended gains Tuesday on the prospect of further sanctions on Russia for alleged ‘atrocities’ in some occupied Ukrainian cities. Brent was quoted at $108.46 a barrel, up from $107.45 late Monday.
Gold stood at $1,928.53 an ounce, soft from $1,930.80 late Monday.
The pound was quoted at $1.3132 at midday on Tuesday, up from $1.3121 late Monday after data from S&P showed the UK service sector activity accelerated in March at its fastest pace since May 2021.
The S&P Global-CIPS UK services PMI rose for the third month running to reach 62.6 points in March, up from 60.5 in February. The reading was higher than the preliminary estimate of 61.0.
S&P said UK service providers signalled a strong increase in business activity during March, and the rate of expansion accelerated to its fastest for 10 months. Survey respondents widely noted that the removal of pandemic restrictions and return to offices had led to a sharp rebound in customer demand, it noted.
The euro was priced at $1.0966, down from $1.0996 late Monday.
On the continent, the eurozone’s private sector growth faded in March, figures showed, after hitting a five-month high the month prior.
The ‘main impetus’ for March’s growth came from the services economy, S&P Global noted. Eurozone factories saw progress slow in March.
The S&P Global services purchasing managers’ index inched up to 55.6 points in March, from 55.5 in February. The composite PMI, calculated using the services and manufacturing scores, slipped to 54.9 in March, from 55.5 in February.
Germany’s services sector saw its best expansion for six months in March, figures from S&P Global showed, though inflation hit a record high and growth in the wider private sector slowed. The S&P Global services PMI rose to 56.1 points in March, from February’s tally of 55.8. March’s number, further above the 50.0 neutral threshold, was the best since September.
Against the yen, the dollar was trading at JP¥122.95 in London, up from JP¥122.70.
New York was pointed to a lower open ahead of PMI readings at 1445 BST.
The Dow Jones Industrial Average was called down 0.2%, the S&P 500 down 0.3%, and the Nasdaq Composite down 0.3%, based on futures trading.
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