(Alliance News) - Stocks in Europe rose tentatively Tuesday morning, shaking off Wall Street's slump on Monday, but trading remained highly susceptible to headlines from the war in Ukraine.
Commented Alastair George, chief investment strategist at research house Edison: "We would now highlight that it is in both Putin's and Russia's interest for the war to be stopped. The timing of such a move is necessarily uncertain but we believe investors should be on guard for Putin abruptly standing down Russian forces in Ukraine.
"This would lead to a rapid reversal of negative sentiment towards risk assets and significant falls in energy and food prices. With implied volatility in European equity markets already matching the highs of March 2020, it is already too late to 'panic-sell', in our view."
Gold and oil prices continued to surge, forcing investors to re-evaluate the outlook for the global recovery, amid warnings of 'stagflation', meaning soaring inflation combined with low growth or recession.
Richard Hunter, head of Markets at interactive investor, said: "Reverberations from the possibility of a ban on Russian oil sent the price of black gold higher once more, and up by 63% in 2022 alone.
"The implied effect on inflation tempered any possibility of the buying of growth stocks, with the Nasdaq taking another lurch lower by almost 4% - and down by 18% in the year to date – sending that index into bear market territory since its recent November high. The Dow Jones also suffered from an evaporation of appetite, now down by 9.7% in the year to date and in correction territory, joining the S&P 500, which has lost 11.9% this year."
In the US on Monday, the Dow Jones Industrial Average closed down 2.4% on Monday, the S&P 500 down 3.0%, and the Nasdaq Composite down 3.6%.
Early Tuesday in London, the FTSE 100 index was up 24.85 points, or 0.3%, at 6,984.33. The mid-cap FTSE 250 index was up 210.03 points, or 1.1%, at 19,379.81. The AIM All-Share index was up 4.50 points, or 0.5%, at 962.65.
The Cboe UK 100 index was up 0.4% at 697.97. The Cboe 250 was up 1.4% at 17,070.11, and the Cboe Small Companies up 0.5% at 14,000.81.
Hunter added: "While there remains an element of defensiveness within the [FTSE 100] index, the more broad-brush writedowns have yet to find a natural floor and are unlikely to do so until such time as there is some clarity or even a resolution to the conflict."
In mainland Europe, the CAC 40 in Paris was up 2.1% and the DAX 40 in Frankfurt up 1.3%.
Brent oil was quoted at USD125.77 a barrel on Tuesday morning in London, up from USD123.22 late Monday, to where the price had retreated after having neared a 14-year high of USD140.
London's oil majors Shell and BP advanced 6.9% and 4.1%, respectively.
Gold stood at USD2,001.70 early Tuesday, sliding back from nearly hitting USD2,020 earlier in the session, but the safe-haven metal remains up from USD1,978.34 late Monday.
Pushing the FTSE 100 into the green was Russian-linked miners Evraz and Polymetal International, surging 63% and 13% respectively. Despite their strong recovery over the past few days, Evraz is still down 84% in 2021 and Polymetal 85%.
Mid-cap gold miner Petropavlovsk, which also has operations in Russia, was up 81%.
Fresnillo gained 4.3%. The Mexican precious metals miner said it was able to produce silver just below guidance in 2021, but gold production was ahead. That, together with higher prices, resulted in a rise in annual revenue.
For 2021, pretax profit improved 11% to USD611.5 million from USD551.3 million, as revenue grew to USD2.70 billion from USD2.43 billion.
Silver production was flat on the year before at 53,095 ounces, while gold production slipped 2.4% to 751,203 ounces.
Fresnillo declared total dividends for 2021 of 33.9 US cents, up 31% from 25.8 cents in 2020.
Chief Executive Octavio Alvidrez said: "Looking ahead we remain alert to potential on-going challenges that are outside our control, not least possible further regulatory reform, inflationary pressures and of course the threat of new covid variants. Lower production and recovery rates at Herradura and the continuing workforce shortages at Saucito caused by the new labour reform - as well as the impact of recent geotechnical instability in the Saucito area - are also likely to add to the pressures we may face in 2022.
"In addition, the extension to the timeline for the tie-in to the national grid of both the Juanicipio plant and the Pyrites plant mean that we now expect lower contributions than previously anticipated from these operations during 2022."
M&G was 9.8% higher as it said it has delivered on all its demerger commitments, allowing it to unveil a new GBP500 million share buyback.
The wealth manager said the buyback will begin shortly.
M&G ended 2021 with GBP370.0 billion in assets under management & administration versus GBP367.2 billion at the same point the year prior.
Its Asset Management unit booked GBP2.0 billion in net inflows, resulting in AuMA to rise to GBP156.7 billion from GBP144.4 billion. Its Retail & Savings unit, however, recorded GBP8.3 billion in net outflows following a GBP9.6 billion asset transfer to Rothesay Life PLC as part of the firm's Heritage business run-off. Retail & Savings AuMA fell to GBP211.1 billion from GBP221.6 billion.
Excluding its Heritage sell-off, net client inflows were GBP600 million in 2021.
M&G declared total dividends of 18.3 pence in 2021, up slightly from 18.2p in 2020.
High street bakery chain Greggs does not expect "material profit progression" in 2022 as it faces cost pressures "more significant" than initial expectations.
Greggs shares were down 9.4% early Tuesday.
"Despite these near-term pressures, we continue to believe that the opportunities for Greggs have never been more exciting. Our investment over recent years has left the business well-placed to move quickly as the economy recovers and we drive our ambitious plans to become a larger, multi-channel business," Chief Executive Roger Whiteside said.
For 2021, Greggs swung to a pretax profit of GBP145.6 million compared to the GBP13.7 million loss seen in 2020.
Revenue surged to GBP1.23 billion from GBP811.3 million in 2020 and were up from 2019's revenue of GBP1.17 billion, which was pre-pandemic.
Greggs declared a total dividend of 57.0p, after withholding its shareholder payout in 2020.
In first nine weeks of 2022, like-for-like sales in company-managed shops are up 3.7% compared to the same period in 2020, and up a sharp 44% against the lockdown-affected period in 2021.
Whiteside added: "In a second year dominated by disruption due to Covid, our teams once again coped magnificently with unprecedented and rapidly-changing conditions. We set out at the beginning of the year to show that we could not only cope with Covid, but emerge from this crisis both stronger and better as a business. Our results and achievements in 2021 show that we achieved both those ambitions."
Commenting on the results, Ross Hindle, an analyst at research house Third Bridge, said: "Overall, the UK food-to-go market remains depressed with commuter footfall stubbornly below pre-Covid levels. Despite difficult trading conditions, Greggs has been able to punch above its weight thanks to a recipe of competitive pricing, clever location strategy, and their JustEat delivery partnership."
He added: "Investors will be studying how Greggs manages its cost increases, which could turn out to be double-digit, in order to protect its margins in the months ahead."
Domino's Pizza notched up a hike in annual profit and said it expects sales growth to ramp up in 2022 despite inflation and recruitment woes.
The takeaway chain reported pretax profit of GBP109.7 million for the year that ended December 26, up from GBP98.9 million the previous year. On an underlying basis, profit rose 13% to GBP113.9 million as like-for-like sales rose 11%, excluding so-called split territories.
It announced plans to hand back a further GBP46 million to shareholders, on top of the GBP80 million share buyback in 2021.
But it flagged challenges with soaring cost pressures and ongoing recruitment difficulties.
The group said it would look to "turbocharge" its pizza collection business, which it said would help as it battles against staffing troubles and rising wages.
The stock was down 4.8%.
The pound was quoted at USD1.3123 early Tuesday, marginally soft on USD1.3128 at the London equities close Monday.
The euro was priced at USD1.0912, up from USD1.0860. Against the yen, the dollar was trading at JPY115.54, down slightly from JPY115.45.
In Asia on Tuesday, the Japanese Nikkei 225 index closed down 1.7%. In China, the Shanghai Composite ended 2.4% lower, while the Hang Seng index in Hong Kong was down 1.5% in late trade. The S&P/ASX 200 in Sydney closed down 0.8%.
Still to come Tuesday, the economic events calendar has eurozone GDP at 1000 GMT.
By Paul McGowan; paulmcgowan@alliancenews.com
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