Signs that Russia was preparing for a final all-out assault on Ukraine was hurting equities prices early Tuesday, while Brent oil was sent back above $100 a barrel.
Satellite images show a vast military column amassing just north of the Ukrainian capital Kyiv, where residents are braced for a Russian assault. The Russian army tells them they can ‘freely leave’ on one highway going south as it hints of attacks on civilian areas.
The FTSE 100 index was down 3.44 points, or 0.1%, at 7,454.81 early Tuesday. The mid-cap FTSE 250 index was down 76.71 points, or 0.4%, at 21,004.34. The AIM All-Share index was down 1.88 point, or 0.2%, at 1,038.48.
The Cboe UK 100 index was down 0.2% at 741.24. The Cboe 250 was down 0.3% at 18,695.78, and the Cboe Small Companies down 0.4% at 14,750.50.
In mainland Europe, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was down 0.2%.
In the FTSE 100, Russian steelmaker Evraz was the best performer, up 5.0%, attempting to claw back hefty losses incurred in the wake of Russia's invasion of Ukraine. The stock remains 70% lower over the past month alone.
AstraZeneca was up 2.9% after the Anglo-Swedish drugmaker agreed to develop an antibody-based therapy with Swiss biotechnology firm Neurimmune in a deal valued up to $760 million.
At the other end of the large-caps, Flutter Entertainment was the worst performer, down 9.8%, after the Paddy Power parent company swung to a pretax loss in 2021.
For 2021, revenue increased 37% to £6.04 billion from £4.41 billion in 2020 but swung to a pretax loss of £288 million from a £1.1 million profit, after taking a £543 million charge for non-cash amortisation from acquired intangibles.
Looking ahead, Flutter expects revenue growth to accelerate as 2022 progresses, reflecting the phasing of sports margin comparables and safer gambling measures taken in 2021.
‘Despite a somewhat challenging year, the group's continued expansion will in time produce results and a comprehensive and proactive strategy should aid Flutter's preparedness for eventual legislation’ in the UK to regulate gambling, said Russell Pointon of research house Edison.
In the FTSE 250, Reach was the worst performer, down 20% after the newspaper publisher warned the damage caused by rising inflation in 2022 is expected to be higher than in recent years.
For 2021, pretax profit was £73.3 million, up from £400,000 in 2020 on revenue of £615.8 million, up from £600.2 million in 2020. Operating profit rose to £146.1 million from £133.8 million.
Looking ahead, Reach said: ‘The business is transitioning to become more digitally driven and the ongoing cost base reshaping will in part help fund continued investment. However, the impact from inflation, which began to affect the business towards the end of 2021, has now intensified, particularly in print production.
‘This has primarily been reflected in the cost of newsprint (paper for printed products), which having previously been impacted by rising distribution costs and supply challenges, now also reflects the significant increase in energy prices. As a result, the gross impact of inflation in 2022 is expected to be higher than in recent years.’
Panmure Gordon kept Reach at 'buy', saying the company's trading outlook points to revenue stability. ‘While the geopolitical environment is ringing alarm bells and inflation is causing
a cost headache for corporates, Reach is well on track to commercialise its digital potential and fundamentally change the value of the business,’ said analyst Johnathan Barrett.
In Asia on Tuesday, the Japanese Nikkei 225 index closed up 1.2%. In China, the Shanghai Composite ended up 0.8%, while the Hang Seng index in Hong Kong gained 0.2%. The S&P/ASX 200 in Sydney closed up 0.7%.
Japan's manufacturing sector saw softer expansion in February, figures from IHS Markit showed on Tuesday, as lower production levels and stagnating new orders weighed.
The headline au Jibun Bank Japan manufacturing purchasing managers' index slipped to 52.7 points in February from 55.4 in January, meaning Japan's manufacturing sector has improved for the 13th month in a row - albeit at a slower pace in February.
In addition, there was a slight improvement in business conditions across China's manufacturing sector in February, according to the latest IHS Markit survey.
The headline seasonally adjusted purchasing managers' index rose to 50.4 in February from 49.1 at the start of the year. The rate of improvement was softer than the long-run series average of 51.0.
Production has now risen in three of the past four months, though this month's increase was only slight, being only just above the neutral reading of 50.
The pound was quoted at $1.3420 early Tuesday, up slightly from $1.3415 at the London equities close Monday.
The euro was priced at $1.1210, down from $1.1243. Against the safe-haven yen, the dollar was trading at JP¥114.98 in London, lower against JP¥115.27.
Brent oil was quoted at $100.21 a barrel on Tuesday morning, up sharply from $97.65 late Monday. Gold stood at $1,912.18 an ounce, firm from $1,900.27.
In Tuesday's economic calendar, there are manufacturing PMI numbers from the UK at 0930 GMT and the US at 1445 GMT.
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