Stocks in London ended lower on Monday as the ongoing invasion of Ukraine continues to raise prices in commodities of gold and oil, which is fostering fears of accelerating inflation and increased costs of living.
As the civilian death toll mounts in Ukraine, the IMF and World Bank are warning about the consequences the conflict and the tough sanctions imposed on Russia will have on the global economy, which is still trying to regain its footing from the Covid-19 pandemic.
US Secretary of State Antony Blinken said Sunday that the White House and allies were in talks about banning oil imports from Russia following its invasion of Ukraine.
But German Chancellor Ola Scholz on Monday cautioned against banning Russian oil and gas, saying doing so could put Europe's energy security at risk.
The FTSE 100 index shed 27.66 points, or 0.4%, at 6,959.48. The mid-cap FTSE 250 index lost 217.90 points, or 1.1%, at 19,169.78. The AIM All-Share index ended down 12.92 points, or 1.3%, at 958.15.
The Cboe UK 100 index ended down 0.4% at 694.85. The Cboe 250 closed 1.4% lower at 16,830.68, and the Cboe Small Companies lost 1.5% at 13,933.90.
In mainland Europe, the CAC 40 in Paris closed down 1.3%, while the DAX 40 in Frankfurt lost 2.0%.
‘From streaming services to flat pack furniture, payment providers to a simple pair of jeans, Russia is slowly being cut off from much of the world. But the success of sanctions, self-sanctioning and ethical stances comes with a kick back. Inflation, already running hot is set to get hotter, the cost-of-living crisis keener. Filling up a car at the moment is guaranteed to make motorists wince and weather forecasts warning of a cold front are likely to fill many people with despair as they anxiously watch their energy meters tick round,’ said Danni Hewson of AJ Bell.
‘Few people would argue against sanctioning Russian energy supplies on moral grounds but doing so would force sky high prices even higher, perhaps even resulting in supply shortages and the German Chancellor for one is opposed to the move. But it's not just oil and gas causing concern. Metals are a huge Russian export, metals crucial to our big switch to EVs and becoming more expensive every day. But what is the alternative? Investors are struggling to price in what's next, volatility looks set to remain a constant and nerves will be tested,’ Hewson added.
In the FTSE 100, Russia-focused Evraz and Polymetal International ended the best performers, up 42% and 10% respectively, but remain down 86% and 85% year-to-date. In the FTSE 250, Russian gold miner Petropavlovsk ended the best performer, up 33%, but is down 87% so far in 2022.
Polymetal said six board members, including its chair, have departed en masse, as the London-listed Russian gold miner grips with the fallout from the invasion of Ukraine. Chair Ian Cockerill is among the six board members to step down.
Ollie Oliveira, Tracey Kerr, Italia Boninelli, Victor Flores and Andrea Abt, all non-executive directors, also have left effective immediately. Oliveira is Polymetal's senior independent director.
The exodus means Polymetal's only remaining directors are Independent Non-Executive Director Giacomo Baizini, Non-Independent Non-Executive Director Konstantin Yanakov, and Chief Executive Vitaly Nesis, an executive director. Polymetal itself gave no reason for the departures.
Russian steelmaker Evraz has lost another member of the board. It said Sandra Stash has resigned as non-executive director, effective immediately. On Friday, Evraz said James Rutherford, who also is chair of Egyptian gold miner Centamin, had resigned.
The conflict in Ukraine and harsh international sanctions on Moscow have sent Russian assets tumbling, while prices of the country's exports such as precious metals, oil and gas have surged as the global economy contends with inflationary pressures.
Oil majors BP and Shell closed up 3.8% and 8.1% respectively tracking spot oil prices higher.
Brent oil was quoted at $123.22 a barrel at the equities close, advancing from $114.52 at the close Friday, but slipping after earlier having neared a 14-year high of $140.
In the FTSE 250, Clarkson closed up 7.5% after the shipping services provider swung to a profit in 2021, following a recovery in shipping markets, leading the company to lift its payout to shareholders.
For 2021, the London-based company recorded a pretax profit of £69.1 million versus a £16.4 million loss in 2020. Revenue increased 24% to £443.3 million from £358.2 million.
Clarkson lifted its final dividend to 57p, up 5.6% from 54p the year before. That brought its total annual payout to 84 pence, a 6.3% increase from 79p paid in 2020.
At the other end of the midcaps, Oxford Instruments ended the worst performer, down 22%, after suitor Spectris called off talks with the scientific tools maker for a potential takeover, blaming the market uncertainty caused by Russia's attack on its neighbour.
Oxford Instruments confirmed at the end of February it had received a takeover offer proposal from Spectris worth about £1.8 billion.
Spectris shares closed up 4.0%.
‘Oxford Instruments is a quality company and the strategic and financial rationale for a combination of our businesses is highly compelling,’ Spectris Chief Executive Andrew Heath said. ‘However, with the invasion of Ukraine, the world has changed since our proposed offer was made regarding a combination of our businesses, bringing a high degree of uncertainty to the economic outlook around the world. While we believe this combination is a great opportunity for both companies, the timing is no longer right and we have brought our discussions to a close.’
Oxford Instruments noted the proposal was ‘unsolicited’ and still believes it has a ‘clear and compelling’ strategy to achieve growth on its own.
The dollar was higher across the board. The pound was quoted at $1.3128 at the London equities close, down sharply from $1.3215 at the close Friday.
The euro stood at $1.0860 at the European equities close, down from $1.0915. Against the yen, the dollar was trading at JP¥115.45 in London, up from JP¥114.76 late Monday.
Stocks in New York were sharply at the London equities close.
The DJIA was down 1.3%, the S&P 500 index down 1.6% and the Nasdaq Composite down 2.0%.
Gold stood at $1,978.34 an ounce at the London equities close, appreciating against $1,961.27 late Friday. The precious metal hit an intraday high of $2,002.63 - its highest level since August 2020.
The economic events calendar has German industrial production at 0700 GMT and eurozone GDP at 1000 GMT.
The UK corporate calendar on Tuesday has annual results from gold miner Fresnillo, investment manager M&G and insurer Direct Line.
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