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(Alliance News) - Stocks in London were sliding backwards into the weekend with the early gains seen on Friday reversing as the session dragged on.
"European markets initially had a more positive tone today, ahead of the weekend as the negativity from yesterday started to be replaced by cautious optimism that there will be no further negative developments ahead of next week's meeting between US Secretary of State Anthony Blinken, and Russian Foreign Minister Sergey Lavrov," CMC Market analyst Michael Hewson said.
"Unfortunately, the early gains soon disappeared on reports that separatist leaders in Eastern Ukraine were evacuating their citizens in the region into Russia for their own safety. Despite today's attempts to rebound it's still been a negative week for the FTSE100, while markets in Europe look set to finish a choppy week pretty close to where they were two weeks ago."
Russia on Friday said it was withdrawing more tanks and other armoured vehicles from areas near Ukraine's border after running war games that had raised concerns in the West.
The West has accused Moscow of massing tens of thousands of troops both on Crimea and near Ukraine's borders and warned of an imminent Russian attack. In response to the first announcements of the pullbacks however, Washington said there was no meaningful reduction in troop numbers and said Russia was actually increasing forces around the border.
The FTSE 100 index closed down 23.75 points, or 0.3%, at 7,513.62 on Friday - closing the week down 1.9%. The mid-cap FTSE 250 index closed down 194.99 points, or 0.9%, at 21,362.60, adding to the week's 3.1% slide. The AIM All-Share index ended down 12,21 points, or 1.1%, at 1,060.02, finishing the week down 2.3%.
The Cboe UK 100 index closed down 0.2% at 746.20. The Cboe 250 ended down 0.9% at 19,080.47, and the Cboe Small Companies was down 0.4% at 15,516.27.
In mainland Europe, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt closed down 1.5%.
Hewson added: "The main drags on the FTSE100 have been banks, and the oil and gas sector, as the first weekly decline in Brent crude this year weighs on the sector."
NatWest lost 2.4% despite returning to profit in 2021.
The state-backed bank swung to a pretax profit of GBP4.03 billion, slightly above the GBP4.02 billion expected by analysts, from a loss of GBP481 million the year before, benefiting from an impairment release of GBP1.28 billion versus an expense of GBP3.13 billion. The 2021 profit figure neared 2019's result of GBP4.23 billion.
Natwest laid out plans for a GBP750 million share buyback in the first half of 2022 and said it will consider further repurchases as part of its capital distribution approach. This was alongside a final dividend of 7.5 pence, more than double 3.0p the year before.
CMC's Hewson added: "Despite beating expectations on profits, NatWest Group shares have slipped towards the bottom of the FTSE 100, and is amongst the worst performers this week, perhaps on the basis that it could struggle to match the performance of the last 12 months, in 2022. The numbers were flattered enormously by the adding back of GBP1.28 billion in loan losses reserves from 2020, nonetheless there was plenty to cheer from shareholders, of which the UK government is the main one."
Barclays gave back 0.8% and Lloyds lost 0.1%. Bucking the trend was Asia-focused Standard Chartered - which finished atop the FTSE 100, adding 3.7%. Friday's gain added to Thursday's 1.7% rise.
The bank on Thursday had reported pretax profit for 2021 of USD3.35 billion, more than doubled from USD1.61 billion a year prior.
Brent oil was trading at USD92.85 a barrel, rising from USD92.65 late Thursday. BP shed 1.6%,
while peer Shell gave back 0.6%.
Oanda's Craig Erlam said: "Reports of the US and Iran nearing a new nuclear deal couldn't have come at a better time and oil prices are slipping at the prospect of more than a million barrels of crude re-entering the market. In the absence of a deal, we could already be talking about triple-figure oil prices."
The analyst, however, did note the risk of a Russian invasion remains heightened so "there's plenty of potential for oil prices to head higher once more if troops do cross the border".
Back in London, Reckitt Benckiser, added 2.0% to extend Thursday's 5.9% rally. The hygiene and household goods firm on Thursday posted a full-year loss but beat expectations on the revenue front, with the firm looking towards a margin improvement in the year ahead despite inflationary pressures.
CMC's Hewson said: "Markets appear to be encouraged by the positive outlook for its margins, and the company’s ability to pass on price rises."
In the US, the Dow Jones was down 0.6%, the S&P 500 down 0.7% and the Nasdaq Composite down 1.2%. Financial markets will be closed in the US on Monday as the country celebrates Presidents Day.
TD Ameritrade analyst JJ Kinahan said: "There are some risks going into a holiday weekend and potential news from the Federal Reserve today. In fact, there's a debate that investors may be more fearful of the Fed than it is of the tensions around Russia and Ukraine. Ahead of the three-day President's Day weekend, investors may see a lower volume day or at least see volumes diminish as the day matures and traders take off early."
With "strong inflation" running far above the US central bank's target, it will be "appropriate" to raise the benchmark borrowing rate in March, New York Federal Reserve Bank President John Williams said Friday.
Raising rates off zero and "steadily moving... back to more normal levels" while also reducing the Fed's massive bond holdings will help bring inflation back down to around three percent by the end of the year, Williams said in a speech delivered virtually to New Jersey City University.
He added that he is confident the economy will continue to recover even as the Fed removes the stimulus the central bank provided during the Covid-19 pandemic.
It was another clear signal about the Fed's intentions in the face of a wave of prices increases that has spread through the economy, and comes from the official who serves as vice chair of the policy-setting Federal Open Market Committee.
Gold was quoted at USD1,893.40 an ounce on Friday, lower than USD1,895.50 on Thursday. Fellow safe haven the Japanese yen also retreated. Against the yen, the dollar rose to JPY115.11 from JPY115.02.
Sterling was quoted at USD1.3584 Friday evening, soft against USD1.3620 at the London equities close on Thursday. The euro traded at USD1.1334 on Friday, dipping from USD1.1370 late Thursday.
In the economics calendar next week, Monday will have a slew of PMI data, with Japan reporting early in the morning, followed by Germany, eurozone, and the UK. On Tuesday, there is US housing price index with PMI data, too.
On Thursday, there is local producer prices as well a initial jobless claims in the US. Early Friday morning there is Japan consumer prices and German GDP and personal consumption expenditures in the US.
In the local corporate on Monday, ahead of a busy earnings week, there is half-year results from Wilmington, Dechra Pharmaceuticals, Finsbury Food and Sylvania Platinum, while Bank of Cyprus will issue full-year results.
By Paul McGowan; paulmcgowan@alliancenews.com
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