FTSE 100 gained gingerly to 7,461 on Thursday with rising oil prices as investors awaited the outcome from key NATO and G7 meetings.
Commodity prices are surging with wheat and oil rising on the day. Precious metals gold and silver prices are also gaining.
Brent Crude increased 0.2% to $121 a barrel impacting the mining and energy sectors.
“Brent Crude oil at $122 per barrel is going to be a tough one for businesses to stomach as energy costs go through the roof,” says Russ Mould, Investment Director at AJ Bell.
“The cost of running factories, moving trucks and powering computers will put a squeeze on profit margins which means corporate earnings expectations may have to be reduced unless we see a significant reduction in inflationary pressures.”
With the rising price of oil, BP and Shell gained 1.2% and 0.8% on Thursday.
“It isn’t all bad news as a higher oil price is good for BP and Shell on the UK stock market, thereby giving a lift to the FTSE 100 index, up 0.2% to 7,478,” said Mould.
Russian energy supplies are currently being discussed between President Biden and the G7 which is likely to have a further impact on commodity markets.
I’m on my way to Europe to rally the international community in support of Ukraine and ensure Putin pays a severe economic cost for his war of choice. pic.twitter.com/4UJpyitOko
— President Biden (@POTUS) March 23, 2022
FTSE 100 Risers
The possibility of increased sanctions on Russia’s energy exports and rthe ising prices of precious metals are having a positive effect on global miners.
Fresnillo shares strengthened by 2.6% to 744p while Rio Tinto shares gained 1.5%.
M&G shares were trading up 1.7% to 219p as the company started a share buyback programme of £500m.
Similar to M&G, British American Tobacco shares increased 1.3% to 3,233p after the purchase of 485,000 shares at 25p each.
In the banking sector, HSBC was amongst the gainers with a 1.2% increase to 516p.
United Utilities Group shares rose 1.4% to 1,060p with investors seeking defensive shares.
AstraZeneca saw shares gain 0.65% despite unoptimistic results from their CALLA Phase III trial with Imfiniza.
FTSE 100 Fallers
Next saw its shares lose 3.8% to 6,141p as the company reduced its growth outlook for 2022 following the £85m loss expected from the withdrawal of online sales in Russia and Ukraine and rising inflationary pressures impacting consumer spending in the coming months.
Next did however report strong revenue growth of 34% and pre-tax profits increasing 140% to £823m in 2022.
“For a company that has a habit of under-promising and over-delivering, the market has shown disappointment at Next’s downgraded sales guidance for its current financial year,” said Russ Mould.
“Next’s most recent full year period showed a business enjoying significant success. The company put it down to consumers splashing the cash they saved during the various Covid-related lockdowns.
“The key point of disappointment is reduced sales guidance for overseas territories, which is not simply the result of closing its Ukraine and Russian website operations. However, it has lifted guidance for likely sales from UK shops, which is a pleasant surprise given the direction of travel for UK retail – namely so much more business is going online.
“It seems inevitable the coming months may be more challenging given inflationary pressures are intensifying, and household bills are becoming much higher.
IAG was the FTSE 100 top faller as the travel stock continue to feel the pinch from pressures on household spending.