The FTSE 100 tumbled, with shares in Russian and Ukrainian companies hardest hit
The Russian bear has stirred and sent the bulls running for cover.
Shaken by the threat of conflict between Russia and Ukraine, investors dumped equities in favour of safe-havens, pushing the FTSE 100 down 101.35 points to 6,708.35, a 1.5pc loss that was its biggest since late January. The second-tier FTSE 250 plunged 351.16 to 16,374.84.
Those moves were mirrored by stock markets around the world, with the Dow Jones Industrial Average off more than 1pc in the US by the time the FTSE closed, and stocks across Europe all sharply lower.
In London, companies with strong links to either Ukraine or Russia were among the hardest hit. Ferrexpo (Frankfurt: FEX.F – news) , the Ukraine-focused iron ore producer, lost 11.6, or 7.6pc, to 141.4p in the FTSE 250 as investors shied away from exposure to the troubled country. The fact that the miner’s chief executive is a member of the Ukrainian parliament did not help sentiment towards the shares.
Conferences and events group ITE dropped 37, or 13.1pc, to 244.8p amid worries about its focus on Russia, which accounts for 65pc of profits, according to Canaccord Genuity (Other OTC: CCORF – news) analyst Simon Davies.
“Mounting tension in Ukraine is creating increasing risk for ITE, given its core focus on Russia and the [former Soviet Republics],” he said, and cut his recommendation on the shares to “hold”. “In the short term, the biggest risk to ITE’s profit forecasts is the further weakening of the ruble,” he added.
Similarly, Bank of Georgia declined 270p to £20.50, an 11.6pc fall. The lender is the biggest in the Black Sea country, which went to war with Russia in 2008.
Lenta , the St Petersburg-based hypermarket group that floated in London on Friday, continued to suffer from its association with Russia. Depositary receipts in the retailer the country’s second-largest hypermarket company slid 140 cents to $ 8.45, adding to the 15-cent fall it suffered on its debut last week.
The sell-off did not stop there, with the prospect of sanctions against Russia weighing on other London-listed companies with significant operations in the country. Gold producer Petropavlovsk (LSE: POG.L – news) shed 10¼ to 82¾p, steelmaker Evraz (LSE: EVR.L – news) – part-owned by oligarch Roman Abramovich – declined 8.9 to 61.15p and Siberian oil group Ruspetro (LSE: RPO.L – news) slid 2¼ to 20¾p.
Oil major BP , which holds a 19.75pc stake in Rosneft, lost 11½ to 492.9p. Shares in Rosneft lost ground in tandem with other Moscow-listed companies today, wiping almost $ 850m off the value of BP’s holding in the state-backed company.
Meanwhile, fund managers Schroders (Stuttgart: PYX.SG – news) , down 124p at £25.89, and Aberdeen Asset Management (Other OTC: ABDNF – news) , off 16.9 at 373.7p, retreated amid concern fighting in Ukraine would spark turmoil across financial markets.
Russian aggression was also behind the biggest of just six risers in the FTSE 100. Boosted by a 1.9pc jump in the spot price of safe-haven gold, Africa-focused yellow metal producer Randgold Resources (Dusseldorf: RGR1.DU – news) advanced 206p to £49.53 and Fresnillo (Berlin: FNL.BE – news) , the Mexican precious metals miner, added 18½ to 970p.
It was the same story in the FTSE 250, where African Barrick Gold (LSE: ABG.L – news) , 14.1 higher at 295.3p, and Centamin , up 1.1 at 56.1p, were among the session’s best-performing mid-caps.
Gold was not the only commodity that was driven higher on the day. Natural gas prices spiked amid growing concern that conflict in Ukraine a key transit route for the fuel would disrupt supply to Europe.
Drax Group (LSE: DRX.L – news) , which is converting its North Yorkshire power plant to run on biomass from coal, is expected to be a beneficiary of higher prices. Its shares rose 1½ to 807½p.
James Brand, an analyst at Deutsche Bank (Xetra: DBK.DE – news) , estimated that a 5pc rise in UK gas prices would add about 6pc to Drax’s equity value.
Away from Russia, developments in China drew traders’ attention. Weaker than expected factory activity data from the world’s biggest metals consumer dragged on London’s mining sector. Anglo American (LSE: AAL.L – news) fell 52½p to £14.78½ and Rio Tinto (Xetra: 855018 – news) closed 82p cheaper at £33.50½.
Analysts at Citigroup (NYSE: C – news) also weighed on the latter, by cutting their iron ore price forecast for this year by $ 7 per tonne to $ 113. As a result, the analysts downgraded Rio the world’s second-largest iron ore producer to “neutral”.
Despite the threat of war, investors also had the rather more mundane, but necessary, task of casting their eye over corporate updates.
Intertek , the inspection and testing group, added 29p to £29.70 after reporting full-year pre-tax profits of £281.8m, up 9.8pc.
Cable manufacturer HellermannTyton (Frankfurt: A1T69V – news) , which floated last year, posted a maiden set of annual results that beat analyst expectations, sending its shares 8.1 higher to 322.7p.
A 23.3pc increase in 2013 pre-tax profits to £325.7m at Amlin ensured the insurer closed up 12½ at 462.4p.
But Smiths News , the magazine and newspaper distributor, tumbled 27¾ to 177¾p on a weak trading update. The performance of Bertrams, its book wholesaling business, was “very disappointing”, analysts at Shore Capital told clients.
Away from company results, bookmaker William Hill (Other OTC: WIMHF – news) , one of a number of companies at risk of relegation from the FTSE 100 in Wednesday’s quarterly index review, slid 19.1 to 378½. The reshuffle will be based on market values at tomorrow’s close.
Finally, British American Tobacco (LSE: BATS.L – news) , off 39½p at £32.10½, was in focus amid talk cigarette-maker Reynolds American (NYSE: RAI – news) , in which BAT holds a 42pc stake, might bid for rival Lorillard (NYSE: LO – news) .