Fear of a nuclear catastrophe caused by fighting at a huge power plant in Ukraine sent investors scrambling for safe havens early Friday, ahead of the key US jobs report later in the day.
The FTSE 100 index was down 116.56 points, or 1.6%, at 7,122.29 early Friday. The mid-cap FTSE 250 index was down 259.70 points, or 1.3%, at 19,820.61. The AIM All-Share index was down 13.17 points, or 1.3%, at 991.47.
The Cboe UK 100 index was down 1.5% at 709.13. The Cboe 250 was down 1.8% at 17,415.09, and the Cboe Small Companies down 0.5% at 14,496.53.
In mainland Europe, the CAC 40 in Paris and the DAX 40 in Frankfurt were both 2.0% lower.
Russian forces seized control of Europe's largest nuclear power plant on Friday after a battle with Ukrainian troops that caused a fire and fears of a catastrophic accident.
The Ukrainian nuclear regulator said that the fire had been extinguished and no radiation leak had been detected, with site staff still able to work at the Zaporizhzhia site.
‘The Zaporizhzhia NPP site has been seized by the military forces of the Russian Federation,’ the State Nuclear Regulatory Inspectorate of Ukraine said, in a statement.
‘The fire was extinguished by the Ukrainian State Emergency Service units. Information on the dead and injured is absent.’
Earlier, fighting had erupted between Russian invasion forces pushing towards the city of Zaporizhzhia and Ukrainian defenders, causing a blaze at the plant and global alarm.
Swissquote Senior Analyst Ipek Ozkardeskaya said risk appetite ‘remains limited’ due to the escalation of fighting in Ukraine - and a potential nuclear disaster.
Ozkardeskaya said: ‘Investors are unlikely to open or to hold a long position without putting a hedge on it. This is why we shall continue seeing a solid demand in the safe-haven gold in the coming days, as the price of an ounce consolidates above the $1,930 mark this morning.’
Gold stood at $1,939.40 an ounce, higher from $1,928.05 late Thursday. Brent oil was quoted at $110.21 on Friday morning, down from $113.62 late Thursday, but hit an intraday high of $119.84 yesterday.
‘Commodities perform well in the actual war-shaken market environment...given that the disruptions to the Russian and Ukrainian supply push the commodity prices higher, from grains to industrial metals. However, if the things get bad enough to push investors to close their positions, then the US dollar would be, by far, the best hedge,’ Ozkardeskaya added.
The pound was quoted at $1.3308 early Friday, down from $1.3341 at the London equities close Thursday.
The euro was priced at $1.1012, down from $1.1047. Against the yen, the dollar was trading at JP¥115.41, lower against JP¥115.63.
In London, Russian steelmaker Evraz was 21% higher on Friday morning, fighting back after a torrid week of losses, benefiting from the surging commodity prices and news late Thursday it will avoid being suspended from the London Stock Exchange. The stock is down 64% over the past five days and 87% in the past month.
LSEG on Thursday announced the suspension of listings of 27 Russia-linked firms after sanctions were imposed due to the nation's invasion of Ukraine. The exchange had already blocked a division of Russian bank VTB last week in the wake of the sanctions.
The exchange announced more suspensions on Friday, including of the global depositary receipts of Etalon Group PLC, PJSC Magnit and Sistema PJSFC.
Absent from the list of suspensions have been Evraz and gold miner Polymetal International, which continue to trade in London despite outcry from politicians.
Despite the good news, Polymetal was down 3.7% after JPMorgan downgraded the firm to neutral.
Both companies were demoted from the FTSE 100 as part of the latest index review changes after collapsing in value since Russia launched its attack on Ukraine.
On Friday, Evraz said James Rutherford, the chair of Egyptian gold miner Centamin, has resigned as a non-executive director, having only joined the Evraz board in June of last year.
Morgan Advanced Materials was leading London midcaps, up 8.7%, after it said it swung back to profit in 2021 despite a ‘challenging’ year.
For 2021, pretax profit was £104.3 million, compared to the £1.8 million loss in 2020, on revenue that grew 4.4% to £950.5 million from £910.7 million.
Morgan Advanced declared a total annual shareholder payout of 9.1 pence, up from 5.5p in 2020.
Chief Executive Pete Raby said: ‘In spite of the challenges, we have made good progress as a business, with further implementation of our strategy and progress against our long-term goals. This resulted in strong growth and saw margins at their highest point in more than 20 years.’
For 2022, the firm is guiding for revenue growth of 4% to 7%.
‘This is a terrific set of numbers supported by a realistic outlook,’ commented broker Peel Hunt, as it repeated its 'buy' recommendation. ‘Morgan is very cheap on a 9x 2022E PE and a 4% yield with no debt.’
Hammerson was up 1.6%. The shopping centre owner said it cut its pretax loss to £408.0 million in 2021 from £1.74 billion in 2020, in a year of ‘fundamental change’.
The narrowed loss was aided by a £457.5 million revaluation loss on its managed properties, which had been £1.44 billion in 2020. Hammerson also recorded a £171.3 million loss from joint ventures in 2021, compared to an £880.2 million loss in 2020.
Gross rental income fell to £241.6 million from £286.9 million. It declared a final dividend of 0.2 pence, unchanged from the year before.
‘Since the beginning of 2021, we have made fundamental changes in our business, realigning our portfolio with £623 million of disposals, significantly strengthening the balance sheet, re-setting our organisation and putting in place a clear strategy for value creation focused on our prime urban estates,’ Chief Executive Rita-Rose Gagne said.
Hammerson's shopping centres include the Bullring in Birmingham, Brent Cross in London, and Cabot Circus in Bristol.
At the other end of the FTSE 250, Mitie was down 5.9%.
The UK competition regulator has launched an investigation into whether the outsourcing firm has broken competition law in relation to a procurement process for immigration removal centre contracts run by the Home Office.
The Competition & Markets Authority said it had launched a probe on Tuesday over ‘suspected anti-competitive conduct’ related to the ongoing process to find firms to operate certain services at Heathrow and Derwentside immigration removal centres.
The regulator added that ‘no assumption should be made at this stage’ that competition law has been infringed. Mitie confirmed it has engaged with the tender process for the immigration removal centre contracts and said it expects to be ‘fully exonerated’ through the CMA investigation.
The investigation was launched into the Mitie Group, Mitie Care and Custody and PAE entities.
Mitie told shareholders it withdrew from the tender process for the Derwentside centre due to rules stopping one firm from winning both contracts. It added that it remains engaged in the process for the Heathrow contract, though its Care & Custody arm.
In Asia on Thursday, the Japanese Nikkei 225 index closed down 2.2%. In China, the Shanghai Composite ended down 1.0%, while the Hang Seng index in Hong Kong lost 2.5%. The S&P/ASX 200 in Sydney closed down 0.6%.
Still to come on Friday, the economic calendar has EU retail trade at 1000 GMT and the all-important US monthly jobs report at 1330 GMT.
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