The FTSE 100 fell on Monday as geopolitical risk aversion returned to equities after an attack on a Russian concert hall raised fears of an escalation in Russia’s aggression against Ukraine.
Although Russia has not yet made any suggestions it would retaliate, Russia’s comments that the attackers were heading towards Ukraine have raised fears Putin will use the Moscow attack as an excuse for escalation in the war, which is now in its third year with no sign of resolution. Ukraine denied any involvement.
Oil prices ticked higher, and European stocks declined. The FTSE 100 was down 0.1% at the time of writing in a broad selloff that sent most industry sectors lower.
“Heightened tensions between Ukraine and Russia have brought a halt to the rally in equity markets seen last week,” said Russ Mould, investment director at AJ Bell.
“Investors were nervously watching proceedings from the side lines, particularly as oil prices crept up once again, including a 0.5% rise in Brent Crude to $85.84 a barrel. The commodity price has been strengthening amid concerns about tighter global supplies and a falling US rig count which implies less exploration and production activity.
“Asian markets were mostly down on Monday, including a 1.2% drop in the Nikkei 225 amid notable weakness in the real estate and healthcare sectors.”
Kingfisher disappoints
Kingfisher was the FTSE 100’s top riser after the DIY retailer failed to construct a recovery in 2023/24, hampered by the ongoing cost of living crisis and weakness in Europe. The company started Monday deep in the red before staging a monumental turnaround as the sessions progressed.
Kingfisher shares were 2.4% higher at the time of writing.
“As is often the case, profit warnings have come in threes for B&Q-owner Kingfisher. The company is being held back by its overseas operations and investors can only hope the progress the group has recently made with its UK business can be replicated in France and Poland,” Russ Mould said.
“The company and the wider DIY sector did well during the pandemic as one of the few elements of physical retail able to continue trading. Pent-up demand for home improvements during lockdown, driven by people being stuck indoors and wanting to enhance their environment, was a strong driver of growth.”
As Russ Mould mentioned, profit warnings tend to come in threes, and investors may now be confident the worst is behind Kingfisher.
Ocado was the top faller as the risk-off sentiment hit the food technology company. Ocado shares were 4% lower at the time of writing.