Share prices in Europe were rebounding on Friday, after a later turnaround by Wall Street on Thursday, as traders and investors calculated that the sanctions imposed on Russia for its war against Ukraine will not create a financial crisis.
While the latest measures from Washington target Russia's two largest banks and see controls on high-tech items aimed at crippling its defence and aerospace sectors, US President Joe Biden has not cut off oil exports.
The first Russian military units have entered Kiev, the Ukrainian Defence Ministry said, as the second day of Moscow's invasion brought with it renewed airstrikes and fighting along various battle lines across Ukraine. Russian ‘saboteurs’ were in the Obolon district in the north of the capital, the ministry announced via Facebook.
Ukrainian President Volodymyr Zelensky slammed Western countries for not coming to Ukraine's support.
‘We're defending our country alone. The most powerful forces in the world are watching this from a distance,’ he said. ‘Did yesterday's sanctions impress Russia? We hear in the sky above us and on our land that it's not enough.’
The FTSE 100 index was up 152.50 points, or 2.1%, at 7,359.88. The index closed down 291.17 points, or 3.9%, to 7,207.01 on Thursday in its biggest single-day fall since June 2020.
The mid-cap FTSE 250 index was up 410.40 points, or 2.1%, at 20,662.28. The AIM All-Share index was up 14.73 points, or 1.5%, at 1,022.51.
The Cboe UK 100 index was up 2.1% at 732.57. The Cboe 250 was up 1.7% at 18,410.09, and the Cboe Small Companies up 0.1% at 14,823.93.
In mainland Europe, the CAC 40 in Paris climbed 1.4%, while the DAX 40 in Frankfurt was 1.2% higher.
The finance ministers of Germany and France pushed back against criticism that the EU's latest salvo of sanctions on Russia for invading Ukraine do not go far enough. ‘All options are on the table,’ Germany's Christian Lindner told reporters in Paris but emphasised that Russian banks were already ‘completely blocked’ from EU financial markets. France's Bruno Le Maire said the Russian economy was already feeling the impact of the measures.
Some EU member states, especially the Baltics, had pushed for the harshest sanctions possible after Russia's invasion of Ukraine at an emergency summit in Brussels on Thursday. This included the immediate expulsion of Russia from the SWIFT payment system.
‘Whereas elevated uncertainty is rattling markets, a genuine financial crisis in which money or credit markets seize up remains very unlikely, in our view,’ commented Holger Schmieding, chief economist at Berenberg.
In the FTSE 100, Evraz was the best performer, up 17%, after the Russian steelmaker reported a robust financial performance in 2021 as demand increased. The stock was attempting to claw back steep losses having dropped 30% on Thursday and losing two-thirds of is value so far in 2022.
Evraz posted pretax profit of $4.18 billion for 2021, more than three times higher than $1.30 billion in 2020 on total segment revenue of $14.16 billion, up 45% from $9.75 billion. Evraz generated free cash flow of $2.26 billion last year, doubled from $1.02 billion in 2020.
The demerger of Evraz's coal business is expected to complete in late March 2022, the company said.
‘We are conscious of the current geopolitical circumstances. We continue to monitor the situation and will keep you updated regarding any material developments that can influence our business,’ Chief Executive Officer Aleksey Ivanov said.
Pearson was up 11% after the education materials publisher launched a share buyback programme.
Pearson posted pretax profit of £157 million for 2021, more than halved from £354 million in 2020, on total sales that rose marginally to £3.43 billion from £3.40 billion.
Pearson declared a total dividend of 20.5 pence, up 5.1% from 19.5p in 2020. In addition, the publisher said it intends to start a share buyback of £350 million in 2022.
Looking ahead, Pearson said it was confident of further revenue growth, with adjusted operating profit before interest and tax expected to be in line with current market expectations.
Rightmove was up 6.5% after the property portal said it had made a strong recovery from Covid in 2021, with growth in profit and revenue on pre-pandemic levels.
The London-based company reported revenue in 2021 of £304.9 million, up a substantial 48% from £205.7 million in the prior year. Rightmove noted it had granted ‘exceptional Covid customer discounts’ in 2020, the subsequent removal of which was behind the large annual growth. On a pre-pandemic comparative of 2019, revenue was up by 5.4% from £289.3 billion.
Rightmove said the growth in revenue from 2019 was led by higher average revenue per advertiser, which was up by 9% on two years prior. This was partly offset by a decline in New Homes revenue.
Pretax profit rose by 67% to £225.6 million from £134.8 million in 2020. However, when compared to 2019, profit before tax saw a more modest increase of 9.5% from £213.6 million.
The company declared a 4.8 pence final dividend, up from 4.5p a year ago, taking its total payout for 2021 to 7.8p.
BAE Systems was up 5.0% after JPMorgan raised the defence contactor to 'neutral' from 'underweight'. The company on Thursday had reported strong annual results amid the ongoing confrontation between Russia and Ukraine.
At the other end of the FTSE 100 on Friday, International Consolidated Airlines Group was the worst performers among a handful of stocks in the red, down 0.5%.
The British Airways parent posted a narrowed loss for 2021 and said it expects to fly 85% of its 2019 capacity in 2022.
IAG reported an operating loss of €2.77 billion in 2021, narrowing from €7.45 billion in 2020. Its operating loss before exceptional items narrowed to €2.97 billion from a €4.39 billion, beating consensus estimates for a loss of €3.03 billion.
IAG said the spread of Omicron from late November had a negative short-term effect on its annual operating performance, passenger bookings and cancellations, meaning the group expects a significant operating loss for the first quarter of 2022.
However, IAG anticipates a return to profitability in the second quarter, which should lead to a significantly positive year for operating profit and cash flow.
‘There are so many moving parts with the airline, yet the one thing that is perhaps not moving as fast as it should is the rise in the number of bums on seats. International Consolidated Airlines' British Airways brand has just held a big sale to try to shift more tickets, and it needs to have good Easter and summer periods to try and get more cash flowing into the business to help repair its finances,’ commented AJ Bell's Russ Mould.
Avast was down 0.1%. The cybersecurity firm said it delivered a strong year of top-line organic growth and high levels of profitability.
For 2021, Avast posted pretax profit of $450.3 million, almost doubled from $236.3 million in 2020 on revenue $941.1 million, up from $892.9 million.
Separately, US peer NortonLifeLock said it obtained antitrust clearance from Spain for its acquisition of Avast, but noted the UK antitrust review continues, which is the final condition for the purchase.
Elsewhere in London, On the Beach was up 6.5%. The online travel operator reported a pick-up in sales in its second quarter to date as travel restrictions ease, advancing after a first quarter that was stymied by the emergence of the Omicron virus variant.
The dollar was lower across the board. The pound was quoted at $1.3388 midday on Friday, up from $1.3353 at the London equities close Thursday.
The euro was priced at $1.1181, up from $1.1148. Against the safe-haven yen, the dollar was trading at JP¥115.41 in London, flat against JP¥115.43.
Brent oil was quoted at $98.04 a barrel Friday at midday, down sharply from $104.19 at the close Thursday.
The pullback in oil prices on Friday came after the North Sea benchmark broke through the $100-per-barrel barrier only the previous day.
‘Oil prices dipped following reports that sanctions were not placed on crude oil supply from Russia. However, the risk of more restrictions being placed on energy supply from Russia is likely to make crude oil prices volatile over the next few weeks,’ warned AvaTrade chief market analyst Naeem Aslam.
Gold stood at $1,895.00 an ounce, lower against $1,924.11 late Thursday.
New York was called lower following the late rally on Thursday as investors weighed Western sanctions on Russia.
The Dow Jones Industrial Average was called down 0.6%, the S&P 500 down 0.5%, and the Nasdaq Composite down 0.3%, based on futures trading. The indices closed up 0.3%, 1.5% and 3.3% respectively on Thursday.
US President Biden announced ‘severe’ economic sanctions that will make Putin a ‘pariah’ for invading Ukraine, but conceded a lack of Western unity for enacting an even tougher measure.
In a speech from the White House, Biden said four major banks would be hit with sanctions by Western powers and that export controls on sensitive components would ‘cut off more than half of Russia's high-tech imports.’
‘This is going to impose severe cost on the Russian economy, both immediately and over time,’ Biden said.
The measures, on top of a raft of other sanctions already announced this week, will make Putin ‘a pariah on the international stage’, Biden said.
The US president confirmed that for now there was no attempt to put sanctions directly on Putin, who is widely reported to have amassed a huge, secret fortune during his two decades in power.
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