Stock markets defy Ukraine war gloom
European stock were in the green as global equities rebounded on Friday after a chaotic trading session on Thursday triggered by Russia’s invasion of Ukraine and new sanctions by western allies against the Kremlin.
The FTSE 100 (^FTSE) has all but wiped out losses from the previous session's sell-off, closing 4% higher to 7,495 on Friday. London's bluechip index plunged 3.8% on Thursday. The mid-cap FTSE 250 (^FTMC) gained 3.3% on close.
Miners were among the FTSE's top risers, with Evraz (EVR.L) soaring as much as 20% and Polymetal International (POLY.L) gaining 16.6%.
There was also strong momentum from energy giants BP (BP.L) and Shell (SHEL.L), rising 3.6% and 2.5% respectively as oil prices retreated. A strong set of results for education giant Pearson (PSON.L) helped drive an 11.6% rise.
As global markets stage a recovery and "risk appetite" increases, the market rally could struggle next week, experts say.
Chris Beauchamp, chief market analyst at IG, says the FTSE 100 has staged an impressive comeback, but "whether this lasts into next week is another question".
"They have been able to weather news of the invasion relatively well, but the weekend provides plenty of scope for headline risk to develop and prompt another leg down on Monday."
Read more: What Ukraine invasion means for consumer prices in the UK
Elsewhere in Europe, France's CAC (^FCHI) rose 3.7% and the DAX (^GDAXI) shot up 3.5% in Germany.
Germany is on the brink of recession after output shrank 0.3% in the fourth quarter. That’s less than the 0.7% initially reported. The Bundesbank warned EU's largest economy could contract in Q1 of 2022 amid coronavirus-related absence of workers across all sectors.
Meanwhile, a rebound in confidence in the eurozone economy is under threat as the shock of war hanging over the continent has clouded outlook.
A sentiment gauge by the European Commission rose to 114 in February from 112.7 the previous month — more than expected. The survey was carried out up to 18 February and doesn't reflect the latest attacks.
Russian forces have been invading deeper into Ukraine, with multiple reports of explosions heard in the capital Kyiv on Friday. Ukrainian president Volodymyr Zelenskyy said he held talks with UK prime minister Boris Johnson to toughen sanctions on Russia and military support.
Held talks with 🇬🇧 PM @BorisJohnson. Reported on the course of 🇺🇦’s defense and insidious attacks on Kyiv by the aggressor. Today 🇺🇦 needs the support of partners more than ever. We demand effective counteraction to the Russian Federation. Sanctions must be further strengthened.
— Володимир Зеленський (@ZelenskyyUa) February 25, 2022
The bloc warned Moscow it could impose more sanctions over the conflict, a day after leaders agreed on a robust package of measures.
"When it comes to the sequencing of packages we have always said we have a massive package prepared and we will be applying this package in a progressive way, responding to concrete actions by Russia, and we are not at the end," an EU official said on Friday.
Sterling (GBPUSD=X) steadied on Friday but it's still headed for its biggest weekly drop in six months as investors flock to safe-haven currencies like the dollar and yen.
The pound was up 0.1% against the dollar to $1.339, after tumbling to a two-month low on Thursday. It declined 0.2% against the euro (GBPEUR=X).
Commodity prices retreated from session highs amid hopes of talks between Russia and Ukraine after oil hit a seven-year high overnight.
Brent crude (BZ=F) fell back below the $100 (£74.66) a barrel, dipping 1.6% to $97.53. The oil benchmark topped $100 a barrel in intraday trading in the previous session, breaching that level for the first time since 2014. US light crude (CL=F) also lost some steam declining to $92.14 a barrel, down 0.7%.
There have also been concerns that the crisis will drive food prices higher after wheat jumped to a 14-year high, soaring 2.8% to $9,605 a bushel, its highest level since 2008. Soybean and corn also rose.
Gold (GC=F) declined 1.2% to $1,903 per ounce after gaining more than 3% on Thursday to $1,969, its highest levels in a year.
The Russian Ruble (RUB=X) hit a record low against the US dollar, after suffering its worst daily performance since the onset of the pandemic in March 2020. It was 1.6% lower to $83.62.
Read more: What is the SWIFT payment system UK wants Russia thrown out from?
Across the pond, US benchmarks were higher after rallying the session before after Russian president Vladimir Putin said the country was open to hold talks with Ukraine.
The S&P 500 (^GSPC) rose 71.51 points or 1.7% to 4,360, while the tech-heavy Nasdaq (^IXIC) edged up 1.1%. The Dow Jones (^DJI) increased 1.8% at the time of London's close.
Beauchamp adds the impending Federal Reserve meeting continues to hold risk appetite in check in US markets.
US president Joe Biden imposed stiff sanctions on Russia for the “premeditated” attack on its neighbour. The United States is sanctioning Sberbank (SBRCY), the country’s largest lender, as well as four other financial institutions, and a broad swathe of Russian elites and their family members.
Read more: How Russia's war on Ukraine is impacting stock prices
Equities stabilised in Asia with investors taking a lead from a rally on Wall Street on Thursday.
Asian stock markets were mixed overnight with the Nikkei (^N225) rising 2% in Japan, while the Hang Seng (^HSI) drifted 0.6% lower in Hong Kong and the Shanghai Composite (000001.SS) was up over 0.6%.