The FTSE 100 posted minor gains on Wednesday, which would have come as a welcome relief for UK equity investors, given the backdrop of geopolitical risks and rising UK inflation.
Concerns about possible escalation in the Ukraine-Russia war were reignited yesterday after Russia hinted at the use of nuclear weapons in response to missile attacks deep in Russian territory.
However, the spike in risk aversion didn’t last long, and the FTSE 100 was trading comfortably above 8,100 in early trade Tuesday. That said, the choppy nature of trade this week dictated that these gains may not last long, and the FTSE 100 slipped into negative territory as the session progressed.
“After yesterday’s wobble on heightened tensions between Russia and the West, the FTSE 100 was steady in early trading on Wednesday,” said AJ Bell investment director Russ Mould.
“For now, investors seem to have largely shrugged off concerns about the Ukraine war. Moscow said yesterday the Ukrainians had fired US-made long-range missiles into Russian territory after President Joe Biden gave them the green light to do so. However, investors will be watching closely for signs of further escalation.”
All eyes will be on the US and Nvidia earnings later this evening. Although the AI trade has slowed, it is still very important for broader sentiment and an upbeat report from Nvidia has the potential to power global equities higher.
Movers
Sage Group shares soared 18% higher after reporting an 11% jump in revenue and 21% increase in EBITDA. Share buybacks again played a bit part of the gains as investors dived into the latest UK share announcing a very respectable programme.
“Sage’s software produces payslips among other things and perhaps that’s exactly what they’re delivering to shareholders this morning. This update is ticking a lot of boxes – profits up by 21%, margins up and growing, dividend hiked and big share buyback programme announced. What’s not to like to investors?,” said Adam Vettese, market analyst at investment platform eToro.
Beleaguered housebuilder Vistry was bottom of the leaderboard again as shares sank another 6% on news of management shakeup. The builder has made major cost miscalculations, leading to an obliteration of the share price, and shareholders will be demanding action. The change shows Vistry is trying to address the problem but investors seem unimpressed.
Weakness in Vistry weighed on the rest of the housebuilding sector, with Persimmon and Barratt Redrow fell more than 2%.