LONDON MARKET CLOSE: FTSE 100 overcomes Ukraine, inflation uncertainty

(Alliance News) - The FTSE 100 ended a positive week with cautious gains, despite ominous data on Friday pointing towards some difficult months ahead for UK consumers.

The FTSE 100 index closed up 15.97 points, or 0.2%, at 7,483.35, registering a gain for the week overall of 1.1%.

The FTSE 250 ended up 63.02 points, or 0.3%, at 20,956.21, down 0.9% for the week-to-date. The AIM all-Share closed down 0.34 of a point at 1,036.02, ending week overall up 0.1%.

The Cboe UK 100 ended up 0.1% at 744.91, the Cboe UK 250 closed up 0.3% at 18,512.78, and the Cboe Small Companies ended up 0.6% at 15,136.42.

In European equities on Friday, the CAC 40 in Paris finished flat, while the DAX 40 in Frankfurt ended up 0.2%.

"European stock markets are making modest gains at the end of the week but broadly remain in consolidation, as has been the case throughout," said Craig Erlam, senior market analyst at Oanda.

"We appear to have hit a point in which the initial shock of the Ukraine invasion has passed and markets have corrected back to a point where the economic risks are deemed to be priced in," said Erlam. "In the absence of any significant developments, equity markets have come to a relative standstill and could remain that way until we see some progress."

US President Joe Biden came up-close to the war in Ukraine Friday after forging a new set of measures with Europe designed to place a tighter squeeze on Russia's tottering, energy-rich economy.

With US help, the EU intends to cut down its heavy reliance on Russian oil and natural gas, while stopping short of demands by Ukrainian President Volodymyr Zelensky to impose a total embargo and so deprive Putin of billions to fund his war machine.

Germany, Moscow's biggest customer in Europe, said it would halve Russian oil imports by June and end all coal deliveries by the autumn.

Brent oil was quoted at USD120.08 a barrel at the London equities close Friday, up from USD118.85 late Thursday. The commodity has had a stellar week, rising 11%, amid concerns over possible EU sanctions on Russia.

However, another spike in energy prices has also heightened inflation fears. Worries over rising prices were reflected in GfK's latest UK consumer confidence monitor, which fell five points to minus 31 in March as consumers confront a "wall of worry" amid 30-year-high levels of inflation.

It is the fourth month in a row that the survey's headline figure has dropped, to a level last seen in October and November 2020 when Covid numbers were rising. Confidence in personal finances over the next 12 months fell four points to minus 18 – 28 points lower than this time last year.

Business sentiment tanked in Germany amid worries over the Ukraine conflict. According to Ifo, the business climate index for Germany plummeted by 7.7 points to 90.8 points in March, down from 98.5 in February.

"Companies in Germany are expecting tough times," observed Ifo President Clemens Fuest.

And in Italy, a consumer confidence survey conducted by national statistics office Istat decreased to 100.8 points in March, the lowest reading since January 2021, from 112.4 points in February. It significantly missed market forecasts of 108.3, amid surging energy bills and uncertainty.

Both the pound and euro were subdued on Friday as traders digested the downbeat data. The pound was quoted at USD1.3185 at the London equities close Friday, flat compared to USD1.3187 at the close on Thursday, and the euro stood at USD1.0987, down against USD1.1002 at the same time on Thursday.

Against the yen, the dollar was trading at JPY122.06, down compared to JPY122.16 late Thursday as the Japanese yen steadied at the end of a dire week.

"The Japanese yen has been absolutely battered this week, hitting a six year low against the US dollar and is likely to fall further towards JPY125.00, prompting questions about possible Bank of Japan intervention to slow its decline," said Michael Hewson, chief market analyst at CMC Markets.

Stocks in New York had slipped from early gains by the London equities close, with the Dow Jones flat, the S&P 500 index down 0.1%, and the Nasdaq Composite down 0.9%.

In London, retailers advanced despite some disappointing UK data for the sector. According to the Office for National Statistics, retail sales declined 0.3% month-on-month in February, following a 1.9% hike in January from December. The figure for February was below FXStreet cited consensus of a 0.6% rise.

Annually, retail sales rose 7.0% in February, slowing from growth of 9.4% in January. FXStreet-cited consensus had forecast a 7.8% yearly rise for February.

Next shares rose 1.7% after Societe Generale raised the retailer to 'buy' from 'hold'. Next had fallen 3.3% on Thursday after cutting annual guidance.

JD Sports Fashion rose 2.3% and Frasers rose 0.9%.

Meanwhile, housebuilders were at the bottom of the blue-chip index, spooked by the downbeat UK consumer confidence data. Persimmon shares fell 4.4%, Taylor Wimpey declined 3.6% and Berkeley Group fell 3.1%.

Airtel Africa fell 8.9% after Singapore Telecom International sold 60 million ordinary shares in Airtel Africa at a price of 140 pence per share, raising gross proceeds of GBP84 million. JP Morgen Securities said Airtel Africa will not receive any proceeds from the placing.

Mid-cap stock Homeserve rose 8.3%, adding to Thursday's 15% climb, after Brookfield Asset Management said one of its private infrastructure funds is in the "early stages" of considering a possible offer for Homeserve. Brookfield has until April 21 to either announce a firm offer for Homeserve or walk away.

However, said it has not received a takeover approach from Brookfield.

Gold miner Petropavlovsk fell 16% after noting the recent inclusion of Gazprombank on the UK sanctions list, a Russian bank with which it has "substantial commercial and financial relationships".

The UK added Gazprombank to its sanctions list on Thursday in response to Russia's ongoing invasion of Ukraine.

Petropavlovsk warned it has a USD200 million term loan and a USD86.7 million revolving credit facility with Gazprombank. Petropavlovsk has an interest payment of USD560,000 due on Friday under the Gazprombank term loan, but is currently prohibited from making this payment due to sanctions.

Gold was quoted at USD1,955.60 an ounce at the London equities close Friday, down against USD1,964.88 at the close on Thursday.

Monday's economic calendar is quiet, with traders likely to focus on comments from Bank of England Governor Andrew Bailey who speaks in Brussels at 1200 BST. Daylight savings time comes into effect in the UK and Europe over the weekend.

The UK corporate calendar on Monday has full-year results from Octopus Renewables Infrastructure Trust, Dialight and RTC Group.

By Lucy Heming; lucyheming@alliancenews.com

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