The FTSE 100 ground out gains on Friday despite ongoing concern around a possible invasion of Ukraine by Russia.

The FTSE 100 was trading 0.4% higher in afternoon trade on Friday as markets looked past Ukraine-Russia tensions to better than expected retail sales and a fairly decent set of figures from Natwest.

“The FTSE 100 ticked higher on Friday as nervousness around a potential all-out conflict in Ukraine persists,” says AJ Bell financial analyst Danni Hewson.

“Better-than-expected retail sales suggest that, for now, the increased cost of living is not preventing Britons from hitting the shops.”

UK retails sales rose at the fastest rate since April in January and spurred investor interest in the FTSE 100’s UK retail and consumer facing companies.

JD Sports were 1.6% higher at the time of writing and Whitbread added 0.9%. Burberry shares also cheered the propensity of Brits to splash their cash gaining 2%.

Although shoppers bounced back from an Omicron-induced lull in December, analysts cautioned the good times may be short lived.

“Retailers will be cheering on signs that shoppers are voting with their feet to support the high street, but plenty of big spenders may slink away in the months to come. The sales uplift in January shows the Omicron recovery is underway but retailers haven’t yet recouped all of December’s losses,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

“At some point lockdown savings will be spent, and the rapid rise in prices on supermarket shelves, energy bills and petrol forecourts, combined with looming tax increases, is highly likely to put a dampener on consumer spending.”

Reckitt Benckiser was the FTSE 100’s top riser as investors continued to buy into the consumer group following a strong set of results this week.

Natwest and UK banks

NatWest shares dipped 2% after they announced a return to profit but failed in increasing their Net Interest Margin, a key measure of banking profitability.

“Natwest has slipped a little bit behind target on cost reduction, thanks to higher inflation, which may be adding to some investor nervousness and the company is yet to see any progress on that key measure of profitability – net interest margin,” said Danni Hewson.

Nonetheless, Lloyds and Barclays shares rallied in anticipation of similarly positive updates in the coming days – without the negativity observed in Natwest’s report.

The FTSE 100 dropped on Thursday as investors turned their attention back to the build up of troops on the Ukrainian border following comments from US officials.

The FTSE 100 dropped 0.6% to 7,555 on Thursday morning after US officials said Russia has sent an additional 7,000 troops to the border with Ukraine. This is at odds with Russian claims they had this week ordered some troops back to barracks.

“The FTSE 100 was lower on Thursday as reports of attacks in Ukraine helped inflame tensions which many thought had been doused by talk of Russian withdrawals earlier in the week,” said Danni Hewson, financial analyst at AJ Bell.

Evraz has become a proxy for equity traders who want to play the short term sentiment around Russia-Ukraine tensions and sent the miners’ shares 6% lower on reports Russia was sending additional troops to the border with Ukraine.

BP and Shell were also a major drag on the index as oil prices fell on reports Iran was pursuing a deal with the West one their nuclear deal which could see Iran’s oil become available on the global market once more.

“Hopes a deal between the West and Iran could be salvaged put pressure on oil prices and saw index heavyweights BP and Shell fall,” said Hewson.

Standard Chartered fell after the banking group released profits that disappointed markets despite embarking on a share buyback programme.

“Standard Chartered is the first out the gate for the UK’s major bank reporting season, and a lot can be learned. Despite a lacklustre response from the market, the group’s announcement of a new buyback should be taken well,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

Standard Chartered shares were down 3.9% at the time of writing on Thursday.

Reckitt Benckiser

Reckitt Benckiser was the FTSE 100’s top riser after the group said they were targeting 1-4% revenue growth in 2022 and had successfully navigated rising prices to maintain margins.

“Investors have unsurprisingly been a little tentative on Reckitt over the past 18 months, given concerns about unwinding tailwinds seen during the pandemic. A sales beat in today’s full year results has been received warmly by markets, with shares up over 4% in early trading,” said Matt Britzman, equity analyst at Hargreaves Lansdown.

The Shell share price has embarked on a very respectable rally from pandemic lows having gained 128% since October 2020 when the bottom fell out of energy markets due to the destruction of demand caused by COVID.

As energy prices recovered on economic reopening, Shell shares began a recovery from the lowest levels the company has traded at since the 1990’s.

The Shell share price has now retraced almost all of the losses since the beginning of the pandemic and investors will rightly be questioning whether now is a good time to buy Shell?

Indeed the question is particularly pertinent given Shell shares’ correlation to oil prices, that trading at $93 per barrel, are near the highest levels since 2014.

Shell shares and oil

The recovery in energy prices has seen Brent Oil steadily march higher towards the $100 mark and provided Shell with the necessary earnings to support a sustained rally through 2021.

Shell produced an adjusted EBITDA of $55bn in 2021, a sharp increase from 2020’s $36.5bn.

The main driver of this was higher realised oil and gas prices.

Whether Shell shares are worth considering at these levels will ultimately come down to the outlook of oil in the short term. Any significant reduction in the price of oil will likely lead to a pull back in the Shell share price and could quickly make the current price of 1,980p look expensive.

However, with energy prices being supported by the geopolitical tensions in Eastern Europe, and the increased demand of reopening economies, one shouldn’t expect dramatic moves in oil prices in the immediate future.

A potential deal between Iran and the West saw oil prices fall marginally and could be eyed by traders as an entry point.

Underpinning support for oil and gas prices is recent lack of investment in production which has started to exposure supply shortages in some areas of the market.

Although Shell is currently a play on the outlook of oil in the short-term, long term holders should look past how oil is trading to the intrinsic value of the Shell brand, their investments in green energy, and their progressive dividend policy that saw a 4% increase in Q4.