LONDON MARKET OPEN: Mood lifts as US and Russia to meet over Ukraine

(Alliance News) - European markets were regaining their poise at the end of a dramatic week with investors once again hopeful of a de-escalation of the Russia-Ukraine crisis.

At the top of London's blue-chip FTSE 100 index was Segro on a results beat, while NatWest shares slipped despite the lender returning to profit in 2021 splashing out cash to investors.

The FTSE 100 index was up 18.39 points, or 0.2%, at 7,555.76 early Friday. The mid-cap FTSE 250 index was down 0.56 of a point at 21,557.03. The AIM All-Share index was down 1.38 points, or 0.1%, at 1,070.85.

The Cboe UK 100 index was up 0.4% at 750.49. The Cboe 250 was flat at 19,253.49, and the Cboe Small Companies up 0.1% at 15,604.33.

In mainland Europe, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.1% early Friday.

Supporting risk sentiment at the end of the week was news that US Secretary of State Antony Blinken and his Moscow counterpart Sergei Lavrov have agreed to meet next week – provided there is no invasion before then.

This helped markets stabilise after nerves caused by US claims that Russia is on the verge of unleashing a massive military attack against Ukraine, dismissing Moscow's claim to be pulling forces back, as artillery fire hit a Ukrainian kindergarten.

In a dramatic, previously unscheduled speech to the United Nations in New York, Blinken said intelligence showed Moscow could order an assault on its neighbour in the "coming days".

On Friday, Russia said it was withdrawing more tanks and other armoured vehicles from areas near Ukraine's border. Separately, it said 10 Su-24 war planes were redeploying from the Moscow-annexed Crimean peninsula to airfields in other regions as part of drills.

"Another military train carrying personnel and military equipment belonging to tank army units of the western military district returned to their permanent bases in the Nizhny Novgorod region after completing scheduled exercises," the Russian defence ministry said in a statement.

The Nikkei 225 index in Tokyo closed down 0.4% on Friday. In China, the Shanghai Composite ended up 0.7%, but the Hang Seng index in Hong Kong ended down 1.9%. The S&P/ASX 200 in Sydney fell 1.0%.

Helping to push up London's FTSE 100 was Segro, shares rising 5.0%.

The industrial property investor reported an adjusted net asset value per share of 1,137 pence at the end of 2021, up 40% from 814p a year before. This beat company-compiled consensus of 998p. Pretax profit for 2021 multiplied to GBP4.36 billion from GBP1.46 billion in 2020.

"2021 was a highly successful year for Segro as reflected in our full year results which include a GBP4.1 billion portfolio valuation uplift and record levels of rental growth. Investor and occupier supply-demand dynamics in the industrial and logistics sector remain very favourable, led by the long-term trends of digitalisation, supply chain resilience and an increasing focus on sustainability," said Chief Executive David Sleath.

Retailers such as Burberry, up 1.0%, and JD Sports Fashion, up 0.7%, rose after data showed the UK retail sector rebounded at the start of 2022 after a disappointing December.

UK retail sales rose 1.9% year-on-year in January after a 4.0% fall in December. This beat expectations of just 1.0% growth, according to FXStreet.

"After a sluggish December where the Omicron wave had a significant impact, retail sales rebounded in January with their biggest monthly rise since the shops reopened last spring," said Darren Morgan, director of Economic Statistics at the ONS.

Towards the other end of the index was NatWest, down 1.7% despite posting a profit for 2021 and unveiling plans to return GBP750 million to shareholders via a share buyback.

Net interest income for 2021 rose 1.7% to GBP7.61 billion from GBP7.48 billion the year before, though a dip in non-interest income meant total income for the year was flat at GBP10.51 billion - slightly below consensus which had stood at GBP10.70 billion.

The lender 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.

The impairment release "principally reflects releases in non-default portfolios and the low levels of realised losses we have seen across the year," the bank said.

Sterling was quoted at USD1.3635 early Friday, firm against USD1.3620 at the London equities close on Thursday.

The euro traded at USD1.1372 early Friday, unchanged versus USD1.1370 late Thursday.

Against the yen, the dollar rose to JPY115.20 from JPY115.02.

The yen eased after data showed Japan's core consumer prices edged up just 0.2% in January, slightly less than expected, though the increase was the fifth monthly rise.

The core consumer price index, which excludes volatile fresh food prices but includes fuel costs, was up 0.2% in January year-on-year, following similar rises from September to December. The advance follows 18 months of declines or stagnation during the depths of the pandemic, but it fell slightly short of economist expectations for a 0.3% rise.

Safe-haven asset gold softened as risk mood improved into the end of the week. The yellow metal was quoted at USD1,892.96 an ounce early Friday, lower than USD1,895.50 on Thursday.

Brent oil was trading at USD92.06 a barrel early Friday, down on USD92.65 late Thursday.

By Lucy Heming; lucyheming@alliancenews.com

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