European markets have made a steady start to the week, despite events in Ukraine and a sharp sell-off for China-focused shares.
The Hang Seng index lost more than 4% in Hong Kong after officials in China’s tech-hub city of Shenzhen imposed a new week-long lockdown to combat the spread of Covid-19.
Oil prices, meanwhile, continue to fall back on hopes that Opec and other producers can ramp up supplies to offset the disruption caused by Russian sanctions.
FTSE 100 Live Monday
Oil price extends losses, FTSE 100 higher
China tech stocks hit by Shenzhen lockdown
Bank of England set to hike interest rates
Positive start to the week on the FTSE 100
16:33 , Oscar Williams-Grut
The FTSE 100 is up 38 points, or 0.5%, as we head into the close, propelled higher by housebuilders and banks. Housebuilders are benefiting from a report over the weekend suggesting the bill for fixing the cladding crisis may be lower than expected, while banks are rallying on expectations of a rate rise later this week.
Signs of progress in peace talks between Russia and Ukraine are providing a positive backdrop to the day’s trade.
Danni Hewson, AJ Bell financial analyst, said: “Investors have eased their way into the new week buoyed by ‘hard’ peace talks between Russia and Ukraine. Even hard talks are better than no talks and markets have responded accordingly. “
That’s all from us on the blog today, join us again tomorrow.
10-year Treasuries rally as oil futures plummet: US markets open
14:58 , Simon Hunt
The S&P opened 0.7% higher in the first minutes of trading, led by an 18% rise in Moderna shares, after the company announced the first phase of trials of its HIV mRNA vaccine.
Companies with the greatest exposure to China fared worse, amid a lockdown in Shenzhen as the country persists with its zero-covid strategy.
Crude oil futures paired back gains from last week, dropping 7.3%.
Meanwhile, US 10-year Treasuries nudged up to an 18-month high amid speculation of interest rate changes by the Federal Reserve on Wednesday.
Apple shares drop on China factory shutdown
13:16 , Oscar Williams-Grut
Foxconn’s two plants in the Chinese city are big makers of iPhones, including the latest 13 model, but have had to halt production amid efforts by officials in China to lockdown the city’s 17.5 million strong population.
Rio Tinto bids for full control of Mongolian copper mine
12:51 , Bradley Gerrard
Rio Tinto has made a $2.7 billion (£2.1 billion) bid to take full control of a vital copper mine project in Mongolia.
The FTSE 100 mining giant has tabled an offer to buy the rest of its important Turquoise Hill subsidiary. If successful, the bid would give Rio sole responsibility for the Oyu Tolgoi project in Mongolia, which is expected to be one of the biggest copper mines in the world once it reaches full capacity in 2028.
Rio CEO Jakob Stausholm said this deal would “simplify the ownership structure” of the mine and “further strengthen Rio Tinto’s copper portfolio”, something seen as increasingly compelling given the metal’s importance in developing cleaner energy sources.
Read the full story.
Cake Box CFO departs after accounting issues
12:24 , Simon Hunt
The finance chief of Cake Box is to resign after accounting errors prompted a plunge in the firm’s share price.
Pardip Dass, who co-founded the Enfield-based business, will step down at the end of March “to pursue other interests,” the company said.
David Forth, who has held senior positions at AB Foods and Eddie Stobart, will step in as interim CFO.
Shares in the egg-free cake maker have dropped 35% since mid-January, when a finance blogger identified “an erroneous £2 million entry within the cash flow statement.”
Dass said: “I am extremely proud of what we have achieved at Cake Box, from first beginning to franchise the business model, to listing the business on AIM.
“After a decade with the business, now is the right time to move on following an orderly handover to David. I remain passionate about Cake Box and a supportive shareholder, and wish my dedicated colleagues all the very best for the future.”
Read the full story.
Boost for Astra cancer drugs
11:36 , Bradley Gerrard
One of AstraZeneca’s blockbuster drugs can now be used for specific types of breast cancer patients after the firm secured new US approvals.
Lynparza, which earned more than $2.7 billion in revenue for the firm in 2021, can now be used to treat patients in the US with a specific mutation that occurs in roughly 5-10% of the 2.3 million breast cancer patients worldwide.
The approval by the US Food and Drug Administration comes after AstraZeneca’s OlympiA Phase III trial, which showed a reduction of recurrence, second cancers, or death by 42% compared to a placebo.
Lynparza, which is already used by patients with other cancers including advanced ovarian and fallopian tube, will be used on breast cancer patients that have been treated with chemotherapy either before or after surgery.
At the same time, another of AstraZeneca’s high-earners, Fasenra, which brought in nearly $1.3 billion of revenue in 2021, is a step closer to being approved for patients who suffer from chronic swelling of the sinuses (rhinosinisitis) with nasal polyps.
The FDA has requested additional clinical data, and AstraZeneca said it is currently conducting a second Phase III trial to provide new data for the regulator.
Housebuilding stocks lifted by cladding estimate
10:39 , Graeme Evans
Housebuilding stocks today rallied on hopes that the bill for cladding remediation work on medium-rise blocks will be much less than the £4 billion first thought.
Persimmon shares rose 5% and Taylor Wimpey lifted 3% in the FTSE 100 index after a report in the Sunday Telegraph said a review commissioned by the House Builders Federation had put the potential cost at closer to £1 billion.
As well as the findings of the PwC study on behalf of the Federation, there are signs that contributions towards the final settlement will come from a wider group than just the listed housebuilders.
The negotiations between the industry and government about who will pay to remedy unsafe cladding on medium-rise buildings have weighed heavily on valuations in the sector, despite continued resilient trading performances.
Liberum said: “The UK housebuilders face a challenging 2022 as consumers come under pressure from rising costs but would benefit from a rapid and milder than expected solution to cladding.”
The broker has “buy” recommendations on all nine housebuilding stocks in its coverage, with potential upsides of more than 50% for Redrow and Vistry in the FTSE 250 index. Their shares today rose 14.2p to 562.8p and 25.4p to 994p respectively.
Further developments could come next week after housing secretary Michael Gove called for a solution by the end of March.
Alongside the housebuilders, banks were also higher on hopes for a margin-enhancing rise in interest rates by the Bank of England later this week. Lloyds Banking Group rose 1.9p to 47.4p but remains off the 54p seen a month ago.
Phoenix Group, one of the UK’s biggest retirement savings firms, rose 8.8p to 634.8p after it raised its dividend for the first time amid the impact of last year’s Standard Life acquisition. The FTSE 100 company delivered a record profit of £1.2 billion.
HL Select fund manager Steve Clayton called the figures a “pivotal moment”, with new business now more than offsetting the natural decline of the legacy books upon which the group has been built.
AstraZeneca shares, meanwhile, rose 105p to 9380p after a key regulatory approval for breast cancer drug Lynparza in the US.
Rates set to jump this week
10:04 , Simon English
TWO of the most powerful central banks in the world are poised to put up interest rates this week as they battle runaway inflation – but there are warnings that could just cause further turmoil to economies battered by the Ukraine war.
With Chancellor Rishi Sunak under pressure to come to the aid of households about to be biffed by soaring energy prices, the Bank of England and the US Federal Reserve seem certain to raise borrowing costs.
On Wednesday the Fed is expected to put rates up by 0.25 points, its first increase since the pandemic began.
On Thursday, the Bank could put rates up by 0.5 points in one go, taking base rate to 1%. While that is still low by historical standards, it represents a sudden jump likely to unnerve businesses looking to borrow or invest.
Markets think rates will go to 2.25% in the UK and 2.5% in the US by next year.
read more here
FTSE 250 index up 1%, miners lower
08:54 , Graeme Evans
The FTSE 100 index is up 12.75 points to 7168.39, with heavily sold ITV and GKN owner Melrose Industries on the recovery trail.
They rallied 3% and 5% respectively and were joined on the blue-chip risers board by housebuilders and financial stocks, including Persimmon and Barclays.
The fall in commodity prices put pressure on mining stocks, with Anglo American and Glencore down by more than 2.5%. Tech-focused Scottish Mortgage Investment Trust also dropped 2% amid heavy selling for China growth stocks overnight.
The FTSE 250 index rose 1% to continue its recent outperformance, led by gains of 5% for easyJet and Cineworld.
Russia debt payments due on Wednesday
08:32 , Graeme Evans
The suspension of trading on the Moscow stock exchange has been extended until March 18, by which point it will have been shut for three weeks.
Interest payments worth $120 billion on two Eurobonds are also due on Wednesday, with Russia seen at risk of being in default if it chooses to settle in roubles rather than dollars. Ratings agency Fitch has already said a sovereign default is imminent.
Deutsche Bank commentator Jim Reid said that Wednesday could mark the start of the 30-day grace period that issuers have before a default is officially triggered.
He added: “Thirty days still gives time for there to be a negotiated end to the war and therefore this probably isn’t yet the moment where we see where the full stresses in the financial system might reside.
“There has already been a huge mark to market loss already anyway with news coming through or write-downs. However this is clearly an important story to watch.”
Shenzhen lockdown hits China shares
08:06 , Graeme Evans
A new Covid-19 lockdown in Shenzhen has hit Asia financial markets particularly hard because the southern China city is home to several major technology and logistics firms.
Foxconn and Huawei have manufacturing facilities in the city and Asia-focused investors are worried about the potential for disruption across the wider supply chain.
The lockdown and suspension of public transport in the city of 17.5 million residents will last until Sunday and will be accompanied by mass testing of residents. The moves follow the discovery of 66 new Covid-19 cases.
Technology and high-growth stocks were at the forefront of today’s selling as the Hang Seng dropped more than 4.5% in Hong Kong and the Shanghai Composite fell 2.5%.
Brent crude falls, focus on central banks
07:43 , Graeme Evans
Commodity prices continue to ease after Brent crude futures fell more than 2% to below $110 a barrel this morning.
Oil peaked at $130 a barrel last week but has eased back on hopes of additional supplies from the United Arab Emirates and other key oil producers in an effort to offset the disruption of Russian sanctions.
The FTSE 100 index rose almost 2.5% across last week in its best performance in almost a year, with London’s top flight set to add another 15 points to 7170 this morning.
Today’s resilience comes despite a poor session for Asian markets after a Covid-19 outbreak triggered the start of a week-long lockdown in the Chinese tech hub city of Shenzhen.
Shares in technology and other high-growth stocks fell sharply to leave the Shanghai Composite down by more than 2% and the Hang Seng more than 4% lower in Hong Kong.
Events later in the week have the potential to increase market volatility, particularly if Russia fails to make two debt payments on Wednesday.
Central banks will also be in focus, with the US Federal Reserve and Bank of England set to consider interest rate rises on Wednesday and Thursday respectively.