Shares bounce on China support, US interest rates set to rise, Russian default looms

European markets trading sharply higher on the day that US policymakers announce an increase in interest rates from their pandemic low.

The expected quarter point hike by the Federal Reserve comes with inflation running at 7.9% and set to go higher.

The mood was also helped by a recovery for Chinese tech stocks after lockdown restrictions in the southern city of Shenzhen had earlier forced shares significantly lower.

FTSE 100 Live Wednesday

• China shares rebound on Beijing support

• Federal Reserve decision on rates due later

• Russian default looms

• Nickel trading return hits technical issue

Stocks firmly higher amid hopes for peace deal

15:57 , Oscar Williams-Grut

Stock markets around the world are firmly higher this afternoon on hopes that a peace deal between Ukraine and Russia is within reach.

Ukrainian leader Volodymyr Zelensky’s concession that his country is unlikely to be able to join Nato appears to have unlocked peace talks.

Russian foreign minister Sergey Lavrov welcomed Zelensky’s comment and said “the business-like spirit” starting to surface in the talks “gives hope that we can agree on this issue”, AP reported.

“A neutral status is being seriously discussed in connection with security guarantees,” Lavrov said on Russian channel RBK TV. “There are concrete formulations that in my view are close to being agreed.”

The FTSE 100 is up almost 1.5%, or 100 points, in afternoon trade, extending gains seen earlier in the sessions that were driven by hopes of Chinese stimulus.

Young’s boss Dardis retiring

15:49 , Oscar Williams-Grut

Patrick Dardis is stepping down as chief executive of pub group Young’s after six years at the helm

Dardis, 60, who has been with the brewery group for 20 years, will relinquish his role at the 220 year old firm at this year’s AGM in July. He will be succeeded by Simon Dodd, who is the current chief operating officer.

Dardis will remain on the group’s board and stay on until he retires at the end of September to oversee the transition to Dodd. He will then remain available for his notice period through to the end of March 2023.

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Sales soar at Zara-owner Inditex

15:30 , Oscar Williams-Grut

The parent company of Zara has posted bumper results for the 12 months just gone, overcoming disruption from Omicron as it bounced back from store closures.

Spain’s Inditex, which also owns brands like Pull&Bear and Massimo Dutti, said revenues jumped 35.8% to €27.72 billion (£23.3 billion) for the year to January 31.

Executive chairman Pablo Isla said: “After two years of the pandemic, this set of results demonstrates the incredible ability to adapt to any circumstances, which characterises the people who work here, borne from their commitment and talent.”

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Foxtons pressured to sell itself

15:03 , Mark Banham

London estate agent Foxtons is facing pressure to put the for sale sign above its own door.

Minority shareholder Converium Capital, a Canadian investment fund, wants Foxtons to explore a sale of the business.

The Montreal-based investor has accused Foxtons of underperforming.

In a letter sent to chairman Nigel Rich, Converium said Foxtons ought to have “risen to its potential” as the London property market started to rebound following the twin threats of Brexit and Covid-19.

The letter was sent by Michael Rapps, managing partner at Converium, and reported by the Financial Times.

Foxtons went public at 267p per share in 2013. Since then, the estate agent’s stock has fallen by close to 90%. It was changing hands at 32.9p today.

Shareholders could expect to be rewarded with as much as 100p per share in a sale, Converium argued.

Foxtons declined to comment.

The agent came under fire last year for awarding its chief executive Nic Budden a short-term bonus of £389,300 while its share price fell. It received £4.5 million in furlough cash and around £2.5 million in business rates relief to help it through the pandemic.

Apple partner Foxconn restarts Shenzen factory

13:45 , Oscar Williams-Grut

Apple iPhone supplier Foxconn has restarted some production at its factories in the Chinese province of Shenzhen.

Earlier in the week the company had been forced to shut down following a local outbreak of Covid-19 and the enforcement of a one-week lockdown of the city’s 17.5 million strong population.

The Taiwanese company, also known as Hon Hai Precision Industry Co, said today it had adopted a “closed loop” production system to insulate employees from infection.

This meant authorities allowed it to restart operations at one of its two sites in the region.

Foxconn’s two plants in the Chinese city are big makers of iPhones, including the latest 13 model.

C&C warns of rising prices as Fever-Tree battles ‘dramatic’ costs

13:20 , Oscar Williams-Grut

The cost of a night out — or even a night in — is set to rise as inflation hits the drinks industry.

Drinks manufacturer and distributor C&C Group, whose brands include Bulmers and Magners cider and Scottish lager Tennent’s, today warned it would have to increase prices to combat rising inflation on raw materials.

C&C has introduced an €18 million (£15.1 million) cost-cutting drive and is focused on liquidity management and net debt reduction, it said, but will still have to raise prices. The company was already facing a hit from pandemic shutdowns in the hospitality industry.

In a separate update, high-end mixers manufacturer Fever-Tree said it faced “significant uncertainty” over costs after a “dramatic” increase in commodity prices since the start of the war in Ukraine.

It is “employing a range of mitigating actions” to combat inflation but cut its earnings guidance in response to rising costs.

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12:55 , Oscar Williams-Grut

The Gym Group is increasing prices in response to soaring energy costs that are set to add £2 million to its utility bills this year.

The low-cost gym, which charges as little as £15.99 a month, said it expected to raise prices in the seond half of the year. There was no word on the level of price rises.

Chief executive Richard Darwin said: “We are confident our high-margin, low-cost business model and our yield optimisation strategy will help mitigate the impacts of the current inflationary environment.”

Membership soared by more than 170,000 last year to reach 718,000 as the UK emerged from lockdown. That was well above pre-pandemic levels.

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12:22 , Oscar Williams-Grut

Russia is on the verge of defaulting on its government debt for the first time in decades today as a key deadline for interest payments arrived.

The City was braced for Moscow to fail to make payments on its bonds for the first time since 1998.

$117 million of repayments are due today but Russia was widely expected to struggle after sanctions left hundreds of billions held by the Kremlin at overseas banks out of reach.

Carl Hammer, head of fixed income research at SEB, said: “Russia is under severe economic pressure and both domestic rules and sanctions from Western countries make payments in foreign currency more difficult.”

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China shares bounce after recent turmoil

10:37 , Graeme Evans

Beijing’s speedy response to stock market turmoil led to a big relief rally today as shares in China tech giants including Tencent and Alibaba rebounded more than 20%.

The supportive comments from China officials included a pledge to address the uncertainty caused by a recent regulatory clampdown on internet firms.

The Chinese tech index soared by a record 20% and the Hang Seng in Hong Kong jumped 9%, reversing a big chunk of the losses seen after a Covid-19 lockdown in the tech-hub city of Shenzhen sparked fears over wider supply chain disruption.

The positive sentiment spread to London, where the FTSE 100 index improved by a bigger-than-expected 1% or 67.19 points to 7242.89.

The biggest top flight rise came from Baillie Gifford’s Scottish Mortgage Investment Trust, whose top ten portfolio includes stakes in both Tencent and Alibaba. Shares jumped 7% or 63.6p to 942.2p but remain a quarter below where they were at the start of the year.

Confidence improved towards a number of Asia-facing stocks after gains of 4% or more for insurer Prudential, luxury goods group Burberry and lender Standard Chartered.

In the FTSE 250 index, Fidelity China Special Situations rebounded 10% and Aston Martin Lagonda added 6% after falling yesterday on fears over slower China demand.

The second tier benchmark continues to outperform, rising 2% or 444.50 points to 20,702.16 on a busy day of corporate results. Star performers included Computacenter, with its shares up 144p to 2780p after a 20% rise in annual profits to £248 million.

Restaurant Group also performed well in the All-Share after the Wagamama and Frankie & Benny’s chain said it traded ahead of the market in the first two months of the year. Losses for 2021 narrowed significantly to £32.9 million as shares rose 4.3p to 74p.

Avast takeover faces possible competition probe

09:28 , Oscar Williams-Grut

The £6 billion merger of cyber security firms Avast and NortonLifeLock has hit a stumbling block after the UK’s competition watchdog expressed concerns about the deal.

David Stewart, executive director at the Competition and Markets Authority (CMA) , said the merger could lead to “a worse deal for consumers when looking for cyber safety software.”

The firms now have five working days to address the regulator’s concerns or face a full investigation.

Avast shares have slumped 11.8% this morning on the news.

US-based NortonLifeLock, formerly known as Symantec, said it was “surprised” by the watchdog’s ruling.

It said other regulators, including the US Department of Justice, the German Federal Cartel Office and the Spanish National Markets and Competition Commission, had reviewed and cleared the merger. It added it believed the merger could only benefit consumers across the globe.

NortonLifeLock and Avast both offer cyber safety software including antivirus software, privacy software, including virtual private networks and identity protection software.

Nickel trading makes brief return

09:17 , Graeme Evans

Nickel trading on the London Metal Exchange has made a very brief return following its suspension last week due to huge price volatility.

Today’s restart was marred by a technical issue concerning the LME’s new daily limit, meaning only a few seconds of trading were possible.

Nickel opened lower, however, with most of the trades at the limit price of $45,590 a tonne as traders sought to catch up on events after the week-long trading halt. The price had surged more than 50% last week to above $100,000 a tonne.

FTSE 100 up 1.2%, Aston Martin 6% higher

08:34 , Graeme Evans

Scottish Mortgage Investment Trust, whose portfolio includes stakes in China’s Tencent and Alibaba, rallied 6% amid Beijing’s pledge to address tech regulation uncertainty.

The wider rebound for markets in Hong Kong and mainland China overnight also helped Prudential to put back some of its recent losses with a rise of 4%.

The FTSE 100 index stood 1.2% or 85.86 points higher at 7261.56, with others on the front foot including Burberry and InterContinental Hotels after gains of 3%.

Today’s performance leaves the top flight about 1.5% lower over the course of this year, which compares with more than 10% for the S&P 500 and tech-focused Nasdaq index in New York.

The FTSE 250 index surged 1.6% or 323.47 to 20,581.13, led by a 9% rebound for Fidelity China Special Situations and 6% rally for Aston Martin Lagonda.

China lockdown disruption fears ease

08:15 , Graeme Evans

The rebound for shares in Hong Kong and mainland China comes amid hopes that disruption to international supply chains following lockdown measures in the tech-hub city of Shenzhen might not be as bad as first feared.

Apple supplier Foxconn said earlier that it had restarted some manufacturing in the city, having met government demands for staff to live and work in bubble conditions.

There was also some encouragement from Chinese officials after they vowed to keep the region’s stock markets stable, while also pledging to resolve the uncertainty created by Beijing’s recent tech crackdown.

The Hang Seng closed 9% higher in Hong Kong but remains 19% lower over the past month.

Hang Seng recovers, FTSE 100 points higher

07:43 , Graeme Evans

European markets should open sharply higher as traders reflect on a positive session on Wall Street and sharp rebound for the Covid-hit Hang Seng index in Hong Kong.

The Hang Seng lost more than 10% in its previous two sessions after a new round of pandemic restrictions in China’s tech hub city of Shenzhen raised fears of supply chain disruption.

Some of those worries eased today as the Hang Seng jumped 9% and the Shanghai Composite rose 4%, while oil prices were firmer after falling below the $100 a barrel threshold on demand fears yesterday.

Ongoing talks over a ceasefire in Ukraine have also helped Brent to fall back from its recent high of $139 a barrel, although the benchmark was today 2% higher at $102 a barrel.

One of the main events of the session is likely to be one of the most predictable as economists expect the Federal Reserve to raise interest rates from their pandemic low.

The likely quarter point increase comes with US inflation currently running at 7.9% and set to go higher.

Michael Hewson, chief markets analyst at CMC Markets, said: “There are some on the Federal Reserve who are probably in the camp that want to see a 50 basis point rate rise. However considering the Russian invasion of Ukraine and the resultant volatility in global commodity prices we could well see a bit of caution.”

Hewson expects the FTSE 100 to open 110 points higher at 7285.