Instability in Russia threatened to cause a heavy sell-off in global equities, though that did not materialise on Monday, as major stock market benchmarks largely kept their poise.
It was still a less-than-stellar for session, however, with the FTSE 100 in London and DAX 40 in Frankfurt closing just below breakeven. It was a similar story early in New York. The CAC 40 in Paris outperformed, however.
In London, a deal for Aston Martin boosted the luxury car maker’s shares. Carnival’s stock went off course, as a warning on costs overshadowed strong quarterly results.
The FTSE 100 index closed down 8.29 points, or 0.1%, at 7,453.58. The FTSE 250 lost 87.66 points, or 0.5%, at 17,974.67, and the AIM All-Share closed down 6.21 points, or 0.8%, at 760.86.
The Cboe UK 100 fell 0.1% to 743.34, the Cboe UK 250 lost 0.2% at 15,783.83, and the Cboe Small Companies rose 0.4% to 13,716.82.
In European equities on Monday, the CAC 40 in Paris rose 0.3%, though the DAX 40 in Frankfurt fell 0.1%.
In New York, the Dow Jones Industrial Average and S&P 500 were both down 0.1%, while the Nasdaq Composite lost 0.2%.
The pound was quoted at $1.2719 late Monday in London, higher compared to $1.2709 at the close on Friday. The euro stood at $1.0913, higher against $1.0888. Against the yen, the dollar was trading at JP¥143.52, lower compared to JP¥143.73.
Russia tried to present a return to business as usual Monday for both the Kremlin and the Wagner mercenary army that challenged President Vladimir Putin’s authority in an aborted weekend mutiny.
Putin did not directly address the dramatic events, but made a video speech to a youth forum dubbed the ‘Engineers of the future’ and praised companies for overcoming ‘severe external challenges’.
Wagner headquarters in Saint Petersburg said it remained open for business, and Russia’s Foreign Minister Sergei Lavrov said the private military firm would continue to operate in Mali and the Central African Republic.
‘Geopolitical events have caused markets to take a ’tread carefully’ approach to start the week. On the back of recent hawkish central bank moves amid high inflation and low growth environments, investors are now also having to factor in the chance of escalation on the geopolitical side of things, which is adding another layer of uncertainty to the equation. And while events in Russia over the weekend seem to have calmed down again for the time being, it has had the effect of putting safe-haven assets back on the radar,’ KCM Trade analyst Tim Waterer commented.
Gold rose as high as $1,937 in the wake of the Russia crisis. It faded to $1,926.27 at the time of the European equities close, however, as market confidence improved. It was up from $1,922.24 late on Friday.
Brent oil was quoted at $74.12 a barrel, up from $73.71. The rising crude price lifted shares in Shell and BP. The oil majors closed up 0.9% and 1.0% in London.
Defence firms were on the back foot despite the turmoil in Russia. BAE Systems lost 2.3% in London, while in Paris, Thales lost 2.6% and Rheinmetall fell 4.1% in Frankfurt.
Housebuilders, which have struggled recently amid UK mortgage market turmoil in the face of Bank of England rate hikes, recovered losses on Monday. Berkeley Group rose 2.0%, among the best blue-chip performers.
Aston Martin jumped 11%. The carmaker said it has entered into a supply agreement with the US’s Lucid Group and amended a separate agreement with Mercedes-Benz.
Aston Martin and Lucid have agreed integration and supply agreements that will provide Aston Martin with access to Lucid’s technology for its battery electric vehicle, including electric powertrains and battery systems.
As a result of the agreement, Lucid will become a 3.7% shareholder in Aston Martin and also receive $132 million in cash from the firm.
Lucid’s stock was up 9.3% in New York.
‘The proposed supply agreement with Lucid is a game changer for the future EV-led growth of Aston Martin. Based on our strategy and requirements, we selected Lucid, gaining access to the industry’s highest performance and most innovative technologies for our future [battery electric vehicle] products,’ said Executive Chair Lawrence Stroll.
Aston Martin also separately agreed to continue its cooperation with Germany’s Mercedes-Benz.
The two companies originally entered the agreement in late October 2020, and it has allowed Aston Martin access to a wide range of Mercedes-Benz’s technology. In exchange, Aston Martin agreed to issue shares to Mercedes-Benz in at least two tranches by July 2024.
The original agreement now has been replaced with a restated commitment to the existing strategic collaboration, allowing Aston Martin and Mercedes-Benz to discuss future access to technology in exchange for cash. Aston Martin will not issue or pay any further consideration shares or related cash top-ups to Mercedes-Benz.
Aston Martin said Mercedes-Benz will remain a long-term strategic partner and 9.4% shareholder.
At the other end of London’s mid-cap index, Carnival plunged 12%, disappointing investors despite decent second-quarter results.
The cruise ship operator reported revenue of $4.91 billion for the second quarter ended May 31, up markedly from $2.40 billion a year earlier.
It reported a net loss of $407 million, narrowed from $1.83 billion.
‘The company saw continued acceleration of demand, with total bookings made during the quarter reaching a new all-time high for all future sailings,’ Carnival said.
Carnival cautioned that for the full-year, adjusted cruise costs excluding fuel per average lower berth day will be slightly higher than expected ‘due to a slower expected ramp down in inflationary pressures than previously estimated’.
Tuesday’s economic calendar has a US consumer confidence reading at 1500 BST.
The local corporate calendar has annual results from money transfer firm Wise. Carex handwash maker PZ Cussons reports a trading statement.
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