Market report

Markets cautious on troops reports | Inflation hits 5.5%

5pm: Markets subdued on Ukraine outlook

Trading in London ended on a subdued note as doubts re-emerged over the withdrawal of Russian forces from the Ukraine border.

The FTSE 100 index closed down 5.14 points at 7,603.78 while the mid-cap FTSE 250 index ended 23.57 points lower..

The CAC 40 stock index in Paris ended down 0.2% and the DAX 40 in Frankfurt closed 0.3% lower.

Among FTSE 100 stocks, precious metal miners Fresnillo and Polymetal International ended the best performers, up 5.1% and 3.7% respectively.

Oil majors BP and Shell ended up 1.6% and 2.0% respectively, tracking spot oil prices higher.

Brent oil was quoted at $96 a barrel at the equities close, up sharply from $92.50 at the close Tuesday.

Aside from geo-political pressures, consumer-facing stocks were hit by higher inflation. JD Sports fell 1.7%, Next 1.2% and Mitchells & Butlers 1%.

7.05am: Inflation rises

The cost of living rose again in January as the impact of rising energy bills and higher pay fed into the monthly data.

Clothing, footwear and furniture all increased in price, helping to push inflation to 5.5%.

It is expected to hit 7% in April, putting pressure on the Bank of England to raise interest rates again after lifting base rate to 0.5% earlier this month.

Suren Thiru, head of economics at the British Chambers of Commerce, said: “Inflation should peak at over 7% in April as reversal of the hospitality VAT cut and the energy price cap rise enters the calculation. However, the current Russia-Ukraine tension could keep inflation higher for longer by triggering a further surge in wholesale energy costs.  

“Increasing inflation means that a March interest rate rise is expected. However, tightening monetary policy too quickly risks undermining confidence and the wider recovery and will do little to curb the global factors behind the current inflationary surge. 

“More needs to be done to limit the unprecedented rise in costs facing businesses, including financial support for those struggling with soaring energy bills and delaying April’s National Insurance rise.” 

Global markets

Stocks on Wall Street and in Europe rebounded on Tuesday while oil prices fell after Russia indicated it was withdrawing some troops from exercises near Ukraine and President Vladimir Putin said he saw room for further discussion with the West.

President Joe Biden later said a Russian attack on Ukraine remained possible and that the United States would defend every inch of NATO territory.

Oil prices tumbled more than 3% as they retreated from a seven-year high. US crude futures fell $3.39 to settle at $92.07 a barrel, while Brent futures settled down $3.20 at $93.28 a barrel.

Major stock indices rose on both sides of the Atlantic, with tech stocks leading the rally on Wall Street. The major European markets posted gains of more than 1%.

The Dow Jones Industrial Average was 1.22% higher, the S&P 500 added 1.58% and the Nasdaq Composite advanced 2.53%.

Japan’s Nikkei climbed 2.22%, Hong Kong’s Hang Seng rose 1.24% and the Shanghai Composite moved up 0.46%.

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