Russia’s decision to recognize two separatist regions of Ukraine and send in troops to the area was sending oil towards $100 a barrel early Tuesday, with gold also surging in price.

‘Brent reached a new cycle high yesterday as Russia-Ukraine geopolitical tensions grew further,’ commented Danske Bank.

‘The market puts a premium on oil due to the risk that Russian oil exports will be hit by sanctions. However, oil is also following the broad ’super cycle’ like trend higher in commodity prices, which owes to strong global demand. Hence, even if the tensions should de-escalate, oil prices will not necessarily drop much.’

Stock markets were lower around the world. The dollar was higher against the pound and euro, but down against the safe-haven Japanese yen.

‘We’re seeing clients aggressively short-selling global equity indices this morning, targeting declines of 5% to 10% over the coming days, amid concerns of a deteriorating situation in Ukraine,’ commented Marc Kimsey, an equity trader at Frederick & Oliver.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: down 0.9% at 7,413.89

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Hang Seng: down 2.8% at 23,488.64

Nikkei 225: closed down 1.7% at 26,449.61

S&P/ASX 200: closed down 1.0% at 7,161.30

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US financial markets closed Monday for Presidents Day.

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EUR: down at $1.1300 ($1.1338)

GBP: down at $1.3572 ($1.3607)

USD: down at JP¥114.69 (JP¥114.83)

Gold: up at $1,911.22 per ounce ($1,896.42)

Oil (Brent): up at $97.68 a barrel ($95.19)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Tuesday’s key economic events still to come

1000 CET Germany Ifo business climate index

1100 GMT Ireland wholesale price index

0900 EST US monthly house price index

0945 EST US flash manufacturing purchasing managers’ index

0945 EST US flash services PMI

1000 EST US consumer confidence index

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EU foreign ministers will adopt sanctions Tuesday against Russia over its recognition of Ukrainian separatist regions and further deployment of troops on its neighbour’s territory, the bloc’s foreign policy chief Josep Borrell said. ‘Of course our response will be in the form of sanctions, whose extent the ministers will decide...I’m sure there will be a unanimous decision’ required for the measures, Borrell told reporters in Paris, adding that he expected the move ‘this afternoon’.

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Moscow said on Tuesday that Russian Foreign Minister Sergei Lavrov was still ready for talks with US Secretary of State Antony Blinken, after President Vladimir Putin ordered troops into Ukraine’s two separatist regions. ‘Even during the most difficult moments...we say: we are ready for negotiations,’ foreign ministry spokeswoman Maria Zakharova said in remarks aired on YouTube. ‘We are always in favour of diplomacy,’ she told the Soloviev Live YouTube show. She spoke after Putin recognised the independence of the former Soviet state’s separatist-held Donetsk and Lugansk regions paving the way for the deployment of a potential invasion force. Lavrov had said on Monday that he was set to meet with Blinken on Thursday in Geneva to address soaring tensions over Ukraine.

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Russia has revealed its true intentions with its order to deploy what it says are peacekeeping troops to eastern Ukraine’s separatist-held regions of Luhansk and Donetsk, Germany said at an emergency UN Security Council meeting. ‘Russia has repeatedly insisted that it was not party to the [Ukraine] conflict. Today it unmasked itself and shows that it always has been,’ Germany’s UN ambassador Antje Leendertse told the council. ‘With our allies and partners we will take firm and adequate measures in response to Russia’s breach of international law that will have serious economic, political and geostrategic consequences,’ Leendertse said. Kiev called for Moscow to reverse its recognition of the separatist territories.

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The UK government recorded a public finance surplus in January as the economy continued to reopen, figures from the Office for National Statistics showed. January is typically a month when income tax payments come in, namely from receipts of self-assessed taxes, so this often leads to a surplus. UK public sector net borrowing - excluding public sector banks - was a surplus of £2.9 billion in January, swinging from a deficit of £16.8 billion in December and a £2.5 billion deficit in January of last year. However, the surplus was lower than the £3.5 billion market forecast. The figure comes as UK Chancellor Rishi Sunak faces pressure to reverse planned increases in National Insurance contributions in April.

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BROKER RATING CHANGES

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Jefferies cuts Severn Trent to ’underperform’ (hold) - price target 2,480 (2,810) pence

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Jefferies cuts United Utilities to ’hold’ (buy) - price target 1,000 (1,170) pence

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Jefferies cuts Pennon to ’underperform’ (hold) - price target 900 (1,190) pence

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COMPANIES - FTSE 100

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InterContinental Hotels Group said trading improved significantly in 2021 as vaccination rates rose and travel restrictions were lifted around the world. For 2021, IHG swung to a pretax profit of $361 million from a loss of $280 million in 2020 on total revenue that was up 21% to $2.91 billion from $2.39 billion. IHG declared a total dividend 85.9 US cents for 2021, having paid out nothing the year before. ‘With the strong financial improvements delivered in 2021, including more than doubling our operating profit from reportable segments and substantially reducing our net debt, the board is pleased to be recommending the reinstatement of a dividend. The signs are encouraging that we are nearing the end of the pandemic, and we are confident in the strength of IHG’s enterprise, market positioning and ability to drive attractive levels of long-term, sustainable growth,’ said Chief Executive Officer Keith Barr.

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Coca-Cola HBC said ‘effective execution’ in a volatile environment drove a strong recovery in 2021. The soft drinks bottler reported 2021 net sales revenue of €7.17 billion, up 17% from €6.13 billion in 2020, with net profit of €547.2 million, up 32% from €414.9 million. Coca-Cola HBC declared a €0.71 dividend, up 11% from 2020. It raised its payout ratio target to 40% to 50% from 35% to 45% previously, saying this reflected its positive long-term outlook. Chief Executive Officer Zoran Bogdanovic said: ‘Revenue growth management actions focused behind both premium and affordable offers, as well as pricing and ongoing productivity improvements have enabled us to continue investing behind our strategic priorities, including in capabilities development, whilst achieving Ebit margin expansion.’ Comparable earnings before interest and tax rose 24% to €831.0 million in 2021 from €672.3 million in 2020. Ebit margin expanded to 11.2% from 10.8% and comparable Ebit margin to 11.6% from 11.0%. ‘We are encouraged by the momentum we see in the business. We expect 2022 to be a year of strong sales supported by ongoing volume momentum, pricing actions and beneficial category mix. While mindful of inflationary headwinds and other risks, our track record and continuous focus on efficiencies give me confidence in delivering another year of Ebit growth.’

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Smith & Nephew reported a rise in annual revenue as the medical devices maker launched a share buyback programme. For 2021, Smith & Nephew posted a trading profit of $936 million, up 37% from $683 million in 2020 on revenue of $5.21 billion, up 14% from $4.56 billion. Pretax profit was $586 million, more than doubled from $246 million. Smith & Nephew declared a final dividend of 23.1 US cents. It also made a new commitment to return surplus cash to shareholders in the form of a regular annual buyback, expected to be between $250 million and $300 million in 2022. Looking ahead, Smith & Nephew is targeting underlying revenue growth of 4% to 5% for 2022. Smith & Nephew also said it has appointed Deepak Nath as its new CEO, succeeding Roland Diggelmann, who will step down by mutual agreement. Nath will take up the role on April 1 and Diggelmann will leave on March 31. Nath joins from Siemens Healthineers where most recently he was president of the German company’s Diagnostics business segment.

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COMPANIES - FTSE 250

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John Wood Group warned it will take a $100 million exceptional charge against 2021 results, related to Aegis Poland, a legacy Amec Foster Wheeler project. The Aberdeen, Scotland-based consulting and engineering firm said $20 million of that will be in cash to complete the project, with the rest being non-cash charges for ‘expected recovery from the customer and the legal costs needed to achieve such recovery’. John Wood will delay its annual results from the originally scheduled March 8 in order to allow for the audit process related to the project. However, the company said that its underlying results for 2021 and outlook for 2022 remain unchanged from the trading update it provided in January.

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COMPANIES - MAIN MARKET AND AIM

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Online retail platform THG refuted a newspaper report that suppliers of beauty products are restricting supply due to concerns over aggressive discounting. The Telegraph on Saturday said brands such as Dermologica, owned by Unilever, have reduced supply to protect pricing. THG said Dermologica has placed no restrictions on its trading relationship with THG Beauty, nor is looking to do so. THG noted it has had a 10-year relationship with Dermalogica that ‘remains very positive’. THG said it is ‘not aware of any other key supplier to THG Beauty who has or who intends to reduce supply or take any similar steps in relation to THG Beauty.’ THG shares fell 10% on Monday and were down 2.9% early Tuesday.

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Tuesday’s shareholder meetings

Aberdeen Diversified Income & Growth Trust PLC - AGM

Montanaro European Smaller Cos Trust PLC - GM re share issue

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