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(Alliance News) - London's FTSE 100 markedly underperformed European counterparts to trade lower midday Thursday, as conflicting reports about a Russian troop pullback in Ukraine unnerved markets.
The FTSE 100 index was hurt by share price declines for Russian steel maker Evraz, emerging markets-focused lender Standard Chartered, and oil majors Shell and BP, the latter two hit by falling crude prices.
The FTSE 100 index was down 50.63 points, or 0.7%, at 7,553.15. The mid-cap FTSE 250 index was down 92.59 points, or 0.4%, at 21,736.35. The AIM All-Share index was down 0.64 of a point, or 0.1%, at 1,078.53.
The Cboe UK 100 index was down 0.6% at 749.86. The Cboe 250 was down 0.5% at 19,426.29, and the Cboe Small Companies was up 0.5% at 15,633.07.
In mainland Europe, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was flat.
Russia on Thursday announced more troop pullbacks from the Ukrainian border, as Washington insisted that Moscow is still building up forces for a potential invasion of its pro-Western neighbour.
After previously announced withdrawals earlier this week, the US, NATO and Ukraine all said they had seen no evidence of a pullback.
The Russian defence ministry said that units of the southern military district were returning to bases from Moscow-annexed Crimea and that tank units of the western military district had departed on a military train for their bases 1,000 kilometres away.
It did not provide details on the specific amount of troops or equipment involved.
The dollar was weaker on Thursday, though with the drumbeat of possible war and certainty of central bank tightening, the greenback may yet steal a march.
"The US dollar spiked during early Thursday trading, following reports of a flare up in tension between Ukrainian and Russian forces, only to give away the gains shortly afterwards, as the episode proved to be insignificant. With the political impasse continuing in Eastern Europe, traders took some time to look at the latest FOMC minutes, which came out yesterday," ActivTrades analyst Ricardo Evangelista commented.
"The minutes revealed that the Fed's monetary policy committee overall stance is perhaps less hawkish than dollar bulls had expected, with the disappointment leading to moderated dollar weakness. However, the greenback could easily regain the front foot, as any escalation in geopolitical uncertainty is likely to reignite its safe-haven appeal."
Policymakers at the US Federal Reserve envisage a faster pace of interest rate increases during the course of 2022, according to minutes from January's meeting released Wednesday.
During the January 25 to 26 meeting, minutes showed members of the Federal Open Market Committee thought "a faster pace of increases...would likely be warranted" compared to the prior tightening cycle.
The pound was quoted at USD1.3610 midday Thursday, up from USD1.3577 at the London equities close on Wednesday. The euro stood at USD1.1365, flat on USD1.1367. Against the Japanese yen, the dollar was trading at JPY115.07, down from JPY115.48.
Thursday's US economic calendar has the latest jobless claims figure at 1330 GMT.
Ahead of the release, New York stock market futures were lower. The Dow Jones Industrial Average and the S&P 500 are called down 0.5% and the Nasdaq Composite down 0.7%.
Gold rose to USD1,883.98 an ounce midday Thursday from USD1,862.20 on Wednesday. Gold drew close to the USD1,900 an ounce mark, a threshold it has not surpassed since June.
The precious metal has received a boost from geopolitical risks, falling yields and accelerating inflation, ThinkMarkets analyst Fawad Razaqzada commented.
"Indeed, the number one source of support for gold is rising price levels around the world as investors seek to protect their purchasing powers from being eroded by depreciating fiat currencies. Inflation has reached multi-decade highs around the world, and a record high in eurozone. Although soaring inflation has raised concerns about policy tightening from the Fed and other major central banks, this has been offset by the fact real yields have fallen sharply, boosting the appeal of non-interest-bearing assets like gold," Razaqzada explained.
Gold, which has an inverse relationship to the dollar, pushing higher as the greenback weakens, is seen as a hedge against inflation.
Oil prices, meanwhile, gave up some gains on Thursday. A barrel of Brent oil fetched USD92.82 midday Thursday, down sharply from USD96.00 at the London equities close on Wednesday.
"Hopes a deal between the West and Iran could be salvaged put pressure on oil prices and saw [FTSE 100] index heavyweights BP and Shell fall," AJ Bell analyst Danni Hewson commented.
Iran has just days left to accept a deal on its nuclear programme at talks in Vienna, France warned on Wednesday, while Tehran's chief negotiator promised that an agreement was closer than ever.
The Vienna talks, which involve Iran as well as Britain, China, France, Germany and Russia directly, and the US indirectly, resumed in late November with the aim of restoring the 2015 deal.
In London, Shell shares fell 2.3%, while BP was down 1.5%.
Evraz was the worst blue-chip performer, declining 6.4%. The steel maker largely operates in Russia and oligarch Roman Abramovich has roughly a 29% stake in the company. The stock has halved in value so far in 2022.
Standard Chartered fell 3.9% on annual results that disappointed market forecasts. It reported pretax profit for 2021 of USD3.35 billion, more than doubled from USD1.61 billion a year prior, but missing analyst expectations of USD3.84 billion by 13%.
At the other end of the large-cap index, Reckitt Benckiser rallied 5.0%. It posted a full-year loss but beat expectations on the revenue front, with the firm looking towards a margin improvement in the year ahead despite inflationary pressures.
Hygiene and household goods firm Reckitt said revenue in 2021, lapping tough comparatives, fell 5.4% to GBP13.23 billion from GBP13.99 billion. At constant currency, the decline was 0.3%. However, this topped company-compiled consensus of GBP13.18 billion.
Elsewhere in London, John Menzies shares climbed 25% to 583.51 pence, giving the aviation services firm a market capitalisation of GBP536.3 million. Its suitor said it has agreed to buy a 13% stake in the company at significant premium.
In the latest twist in a takeover tussle, National Aviation Services said Agility Strategies Holding Ltd, an entity under common control with and acting in concert with NAS, has agreed to buy 12.1 million shares in John Menzies, representing just over a 13% stake, at a price of 605p per share.
Consequently, any firm offer for John Menzies will be made at a price of not less than 605p per share, being more than double its closing price of 290p on February 2. This 605p marks a 19% premium to NAS's previous 510p approach.
A 605p offer would value Menzies at GBP556.0 million.
National Aviation Services itself is a subsidiary of Kuwait's Agility Public Warehouse. The Menzies board has so far rejected Agility's takeover proposals, saying they undervalue the company.
Back among London's large caps, Burberry shares climbed 1.5%, on a positive read across from Paris-listed luxury goods peer Kering.
Kering, which owns brands such as Balenciaga and Gucci, reported net income of EUR3.18 billion for 2021, a 48% rise from EUR2.15 billion in 2020 and a 38% increase from EUR2.31 billion in 2019.
Kering posted record revenue of EUR17.65 billion. This was up 35% from EUR13.10 billion the previous year and up 11% from EUR15.88 billion the year before that.
Shares in the company surged 6.7% in Paris, the best large-cap performer there.
Elsewhere in European, Nestle rose 0.2% in Zurich.
Nestle – the maker of everything from coffee to pet food and plant-based meat – said net profit bounced by 3% to CHF16.9 billion, about USD18.3 billion, last year. Total sales rose 3.3% to CHF87.09 billion as restaurant sales improved and price hikes accelerated in the last quarter under inflationary pressure.
AJ Bell's Hewson added: "Strong results from Swiss food group Nestle showed it's not impossible for consumer goods firms to prosper in the current environment. While inevitably there was some impact from rising input costs, if your proposition is sharp enough, and you run an efficient enough operation these can be mitigated, at least to an extent."
By Eric Cunha; ericcunha@alliancenews.com
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