A huge spike in oil prices and some opportunistic bargain hunting was lending some support to the FTSE 100 early Monday, but stock markets otherwise were a sea of red, as Russian continued it all-out military assault on its neighbour.
Russian forces pummelled Ukrainian cities from the air, land and sea on Monday, with warnings they were preparing for an assault on the capital Kyiv, as terrified civilians failed for a second day to escape besieged Mariupol.
The relentless fire has pushed more than 1.5 million people across Ukraine's borders as refugees, though many others are displaced internally or trapped in cities being reduced to rubble by Russian bombardment.
Ipek Ozkardeskaya, senior analyst at Swissquote, said it was an ‘ugly’ start to the week.
The FTSE 100 index was down 169.32 points, or 2.4%, at 6,817.82 early Monday. The mid-cap FTSE 250 index was down 824.90 points, or 4.3%, at 18,562.78. The AIM All-Share index was down 21.82 points, or 2.3%, at 949.25.
The Cboe UK 100 index was down 2.3% at 681.77. The Cboe 250 was down 4.8% at 16,245.86, and the Cboe Small Companies down 1.5% at 13,936.78.
In mainland Europe, the both CAC 40 in Paris and the DAX 40 in Frankfurt slumped 4.5%.
Berenberg economist Holger Schmieding said: ‘Putin's probably futile attempt to establish by brute force a new Russian empire on the basis of a crumbling petro-economy poses the most serious threat to global security since the Cuban missile crisis of October 1962.
‘As Putin wages war on Ukraine, surging prices for energy, foodstuffs and raw materials are driving inflation to the highest levels in 40 years in Europe and beyond. Prices for these items may not have peaked yet. European industry may face further shortages of some key inputs. Amid grave uncertainty, European risk markets have every reason to sell off.’
Adding to the downbeat mood, China said it has cut its economic growth target for next year to ‘about 5.5%’, but it seeks to increase military spending by 7.1% as the annual People's Congress kicked off in Beijing on Saturday.
In a speech at the start of the annual session of the People's Congress in the Great Hall of the People in Beijing, Prime Minister Li Keqiang prepared the nation for a difficult year economically. Last year, growth of ‘more than 6%’ had been projected.
In Asia on Monday, the Japanese Nikkei 225 index closed down 2.9%. In China, the Shanghai Composite ended 2.2% lower, while the Hang Seng index in Hong Kong ended down 3.9%. The S&P/ASX 200 in Sydney closed down 1.0%.
In London, Russian-linked miners Evraz and Polymetal International surged 50% and 49%, respectively, as the pair avoided any sanction from the London Stock Exchange Group, allowing bargain hunters to swoop in. Both Evraz and Polymetal remain down 40% and 29% in the past five days.
Fellow miners were keeping the losses in the FTSE 100 in check, with Anglo American up 5.8%, Frensillo 5.1%, Glencore 4.2%, Antofagasta 3.0% and Rio Tino 3.1%.
Gold stood at $1,996.30 an ounce early Monday, up 1.8% from $1,961.27 late Friday. Aluminium and copper prices set record highs on Monday. Aluminium reached $4,026.50, the first time the lightweight metal had breached $4,000 per tonne. Copper's new record stood at $10,845 per tonne.
Commodities have been red hot since Russia's assault on its neighbour. Nickel prices have rocketed by more than 25%.
London's oil majors also were benefiting from surging commodity prices. Brent oil was quoted at $127.58 a barrel on Monday morning, surging dramatically from $114.52 late Friday and earlier having neared a 14-year high of $140.
Shell advanced 5.8% and peer BP gained 2.4%.
British Airways-owner, International Consolidated Airline Group slumped 10% with travel stocks taking a hit. Wizz Air fell 14%, easyJet gave back 12% and cruise operator Carnival dropped 10%.
In M&A news, Oxford Instruments fell 25% after Spectris ended discussions over the proposed £1.8 billion takeover of Oxford, due to market uncertainty following the invasion of Ukraine.
A takeover proposal from FTSE 250-listed precision instruments supplier Spectris had been confirmed by fellow London midcap Oxford Instruments last Monday, with a deadline of March 28 for a firm offer or withdrawal.
However, Spectris now has said in light of the ‘significant uncertainty in global economic conditions’ as a result of the war in Ukraine, the potential takeover is no longer in the interests of its shareholders.
Discussions between the parties have now been terminated.
‘Oxford Instruments is a quality company and the strategic and financial rationale for a combination of our businesses is highly compelling...While we believe this combination is a great opportunity for both companies, the timing is no longer right and we have brought our discussions to a close,’ said Spectris Chief Executive Andrew Heath.
Spectris was marginally lower in London.
At the top of the FTSE 250, Clarkson was up 5.9% after the shipping services firm swung to a profit in 2021 and upped its shareholder payout, following a recovery in the shipping markets.
For 2021, it recorded a pretax profit of £69.1 million versus a £16.4 million loss in 2020. Revenue increased 24% to £443.3 million from £358.2 million.
Clarkson upped its annual dividend to 84 pence from 79p a year prior.
Chief Executive Andi Case said: ‘We are positive about the future of the shipping industry. The outlook for Clarksons remains strong, and we believe the business will continue to benefit from its market-leading position.’
Clarkson ended 2021 with a forward order book of $165 million, up from $116 million at the same point a year earlier.
The pound was quoted at $1.3179 early Monday, down from $1.3215 at the London equities close Friday.
The euro was priced at $1.0876, down from $1.0915. Against the yen, the dollar was trading at JP¥114.93, up against JP¥114.76.
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