London close: FTSE ends up as utility stocks rally

Tue 05 Apr 2022

LONDON (SHARECAST) - (Sharecast News) - London stocks ended in the black on Tuesday, underpinned by a solid performance from utilities, as investors mulled an EU ban on Russian coal imports and the latest reading on the UK services sector.
The FTSE 100 closed up 0.7% at 7,613.72.

Earlier, the European Union proposed a raft of new sanctions against Moscow in response to accusations of war crimes by its forces in Ukraine. The European Commission's proposed penalties included a ban on imports of Russian coal and a halt on bilateral trade worth approximately €20bn annually.

Coal, wood, cement, liquors and seafood worth a total of €9.5bn per year were all among the affected goods, alongside vodka and rubber.

Russian ships and trucks would also be banned from entering the European Union and work on possible sanctions on oil was also ongoing, the Commission said.

That would come on top of an already existing ban on air traffic with Russia.

CMC Markets analyst Michael Hewson said: "It is becoming ever clearer that Russia is likely to become increasingly more isolated as sanctions get tightened and widened further, with the prospect that inflationary pressure in the global economy will remain more persistent in the coming months."

On home shores, the latest survey from S&P Global/CIPS showed that services activity surged in March as pandemic restrictions were removed but the war in Ukraine hit business confidence.

The headline services purchasing managers index rose for the third month to 62.6 from 60.5 a month earlier. The rate of expansion was the strongest for 10 months and the second strongest since May 1997.

Orders rose strongly in March with travel, leisure and entertainment businesses reporting especially healthy demand as Covid-19 restrictions were lifted. Jobs were created at the fastest rate since October 2021, pushing up salaries.

The UK's dominant business sector expanded despite fast-rising prices for its services. Output charges rose at the fastest pace since the survey began in July 1996 and many respondents said they had not yet passed the full impact of higher operating costs on to customers.

The outlook was less buoyant as Russia's invasion of Ukraine and the resulting economic uncertainty sent optimism down for the second month running to its lowest since October 2020. Respondents also said the effect of rising inflation on household budgets put a break on growth expectations.

Tim Moore, economics director at S&P Global, said: "UK economic growth continued to surge higher in March after an Omicron-induced slowdown at the turn of the year. Service sector companies led the way as business activity expanded at the fastest pace since the post-lockdown recovery seen last May.

"However, the near-term growth outlook weakened as the war in Ukraine and global inflation concerns took a considerable toll on business sentiment."

In equity markets, utilities were the top gainers, with United Utilities, SSE and Severn Trent all higher ahead of the publication of the UK government's new energy security strategy later this week.

IP Group also rose after it said that portfolio company First Light had achieved a world first in nuclear fusion.

Cruise operator Carnival advanced after it reported the best ever week for bookings in the company's history.

Homeserve was up after it said it had traded in line with expectations during its fiscal year with steady policy retention rates in the UK and US.

On the downside, Cybersecurity firm Darktrace slid as JPMorgan Cazenove initiated coverage of the shares at 'underweight', saying the path to sustainable profitable growth was unclear.

Moneysupermarket was also in the red after a downgrade to 'equalweight' from 'overweight' at Barclays.

Moonpig slumped, reversing earlier gains even as it upgraded its revenue outlook for the current financial year after sales were boosted by consumer behaviour during the Omicron strain of Covid-19.

M&G was knocked lower by a downgrade to 'underperform' at Exane, while Lloyds and Vodafone were also weaker after downgrades at Barclays and Berenberg, respectively.

Market Movers

FTSE 100 (UKX) 7,613.72 0.72%
FTSE 250 (MCX) 21,352.14 0.10%
techMARK (TASX) 4,385.86 0.35%

FTSE 100 - Risers

United Utilities Group (UU.) 1,167.00p 3.55%
National Grid (NG.) 1,208.50p 3.38%
Croda International (CRDA) 8,006.00p 3.09%
GlaxoSmithKline (GSK) 1,703.80p 3.09%
SSE (SSE) 1,788.00p 3.00%
Severn Trent (SVT) 3,183.00p 2.78%
Dechra Pharmaceuticals (DPH) 4,254.00p 2.75%
London Stock Exchange Group (LSEG) 8,360.00p 2.70%
Hargreaves Lansdown (HL.) 1,045.50p 2.65%
B&M European Value Retail S.A. (DI) (BME) 561.60p 2.48%

FTSE 100 - Fallers

Airtel Africa (AAF) 138.30p -3.96%
Melrose Industries (MRO) 122.30p -3.85%
Endeavour Mining (EDV) 1,902.00p -3.01%
Smiths Group (SMIN) 1,389.00p -2.97%
CRH (CDI) (CRH) 2,980.00p -2.93%
Ashtead Group (AHT) 4,695.00p -2.82%
Barratt Developments (BDEV) 519.60p -2.62%
Howden Joinery Group (HWDN) 772.00p -2.38%
Smurfit Kappa Group (CDI) (SKG) 3,319.00p -2.18%
Coca-Cola HBC AG (CDI) (CCH) 1,553.00p -1.86%

FTSE 250 - Risers

Syncona Limited NPV (SYNC) 168.80p 5.90%
Baltic Classifieds Group (BCG) 155.00p 5.73%
IP Group (IPO) 93.45p 4.12%
Trustpilot Group (TRST) 149.40p 4.11%
Carnival (CCL) 1,396.50p 4.10%
Frasers Group (FRAS) 688.00p 3.93%
Hammerson (HMSO) 33.08p 3.89%
Tullow Oil (TLW) 57.75p 3.87%
Elementis (ELM) 123.10p 3.62%
Pennon Group (PNN) 1,113.00p 3.44%

FTSE 250 - Fallers

Darktrace (DARK) 424.60p -5.85% Group (MONY) 179.30p -5.18%
TI Fluid Systems (TIFS) 186.20p -4.90%
Moonpig Group (MOON) 226.60p -4.79%
Mitie Group (MTO) 53.90p -3.41%
Ferrexpo (FXPO) 182.00p -3.09%
FDM Group (Holdings) (FDM) 1,074.00p -3.07%
Polymetal International (POLY) 338.00p -2.87%
Countryside Partnerships (CSP) 271.00p -2.80%
Crest Nicholson Holdings (CRST) 269.00p -2.75%
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