London open: Stocks fall as Russia-Ukraine crisis escalates

London stocks fell in early trade on Tuesday as the crisis between Russia and Ukraine escalated.

At 0850 GMT, the FTSE 100 was down 0.6% at 7,437.31, after Russian president Putin ordered troops into two breakaway states in eastern Ukraine run by Moscow-backed separatists.

The UK government was preparing to sign off on a package of "significant" sanctions against Russia as a result.

On home turf, figures released earlier by the Office for National Statistics showed the UK had its first monthly budget surplus since the start of the pandemic but rising inflation caused debt interest payments to surge.

Public sector accounts excluding public sector banks showed a surplus of £2.9bn in January. The surplus was less than the £3.5bn forecast by economists and the government's fiscal watchdog.

The ONS said the figure represented £5.4bn less borrowing than a year earlier and an £8.6bn increase in tax receipts to £91.6bn. Government spending rose £0.5bn to £76.3bn as rising inflation caused debt interest payments to increase £4.5bn to £6.1bn.

Interest payments were higher than the £3.6bn predicted by the Office for Budget Responsibility, the government's fiscal forecaster.

Bethany Beckett, a UK specialist at Capital Economics, said: "With inflation set to keep rising until April, higher debt interest costs are likely to mean borrowing keeps overshooting the OBR’s forecast in the coming months. We expect the combination of higher inflation and interest rates to keep pushing borrowing above the OBR’s forecast in the coming months."

In equity markets, Hargreaves Lansdown slid after the investment platform reported a 20% decline in interim pre-tax profit and a smaller-than-expected increase in assets under management.

Coca-Cola HBC was also weaker even as the bottling company posted a rise in full-year profit and revenue.

Wood Group tumbled after the energy services provider said it expected to take a one-off $100m charge relating to its Aegis Poland contract as it estimated a bigger loss for the legacy Amec Foster Wheeler project.

HSBC lost ground despite saying that annual profit more than doubled as lower bad debts more than made up for reduced revenue. Pre-tax profit for the year to the end of December rose to $18.9bn from $8.8bn a year earlier as revenue dipped 2% to $49.6bn.

On the upside, Smith & Nephew jumped to the top of the FTSE 100 as it reported higher full-year profits and revenue and announced the appointment of a new chief executive.

Shell and BP gushed higher as oil prices rallied amid the threat of sanctions against Russia, with Brent crude futures topping $97.75 a barrel.

Victoria Scholar, head of investment at Interactive Investor, said: "The intensifying crisis between Russia and Ukraine has raised concerns about the supply disruptions that would ensue as sanctions look set to cripple Russia, the world’s second largest oil exporter and the world’s top natural gas producer.

"If Putin continues his aggression and the threat of war becomes a reality, oil prices could easily push beyond $100 towards $120 a barrel to fresh highs not seen since 2014. Not only are geopolitical tensions supporting the uptrend but the fundamentals of supercharged demand post Covid coupled by constrained supply from OPEC+ continue to support more bullish price action ahead."

InterContinental Hotels was in the black after it said annual profits more than doubled on the back of a strong final quarter in the US and China as economies recovered from the Covid pandemic.

Chilean miner Antofagasta rose after it posted growth in full-year profit and revenue thanks to higher copper and molybdenum prices.

Market Movers

FTSE 100 (UKX) 7,437.31 -0.63%
FTSE 250 (MCX) 20,897.67 -0.95%
techMARK (TASX) 4,281.77 -0.44%

FTSE 100 - Risers

Smith & Nephew (SN.) 1,203.50p 2.08%
Shell (SHEL) 1,974.00p 1.53%
Antofagasta (ANTO) 1,408.50p 0.90%
BP (BP.) 391.65p 0.84%
InterContinental Hotels Group (IHG) 4,928.00p 0.82%
Avast (AVST) 622.00p 0.68%
Auto Trader Group (AUTO) 629.60p 0.67%
Ocado Group (OCDO) 1,308.00p 0.62%
Sage Group (SGE) 683.20p 0.59%
Rentokil Initial (RTO) 484.60p 0.50%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 1,116.50p -13.98%
Coca-Cola HBC AG (CDI) (CCH) 2,201.00p -4.92%
Evraz (EVR) 255.90p -4.16%
Abrdn (ABDN) 224.00p -4.11%
Mondi (MNDI) 1,857.50p -2.88%
Polymetal International (POLY) 1,042.00p -2.66%
Anglo American (AAL) 3,490.50p -2.34%
International Consolidated Airlines Group SA (CDI) (IAG) 155.66p -1.99%
Royal Mail (RMG) 406.10p -1.98%
CRH (CDI) (CRH) 3,510.00p -1.96%

FTSE 250 - Risers

Oxford Biomedica (OXB) 725.00p 3.72%
Centamin (DI) (CEY) 97.16p 2.84%
Harbour Energy (HBR) 352.80p 2.38%
Energean (ENOG) 987.50p 1.91%
Capricorn Energy (CNE) 211.60p 1.83%
Moonpig Group (MOON) 265.60p 0.99%
Games Workshop Group (GAW) 7,420.00p 0.95%
Spectris (SXS) 3,164.00p 0.76%
FDM Group (Holdings) (FDM) 887.00p 0.68%
Diversified Energy Company (DEC) 114.40p 0.53%

FTSE 250 - Fallers

Wood Group (John) (WG.) 196.80p -12.69%
Petropavlovsk (POG) 11.82p -10.86%
Ferrexpo (FXPO) 245.20p -7.47%
Wizz Air Holdings (WIZZ) 3,884.00p -4.00%
Syncona Limited NPV (SYNC) 191.40p -3.82%
Chrysalis Investments Limited NPV (CHRY) 169.00p -3.70%
Jupiter Fund Management (JUP) 209.40p -3.41%
Fidelity China Special Situations (FCSS) 279.50p -3.29%
Herald Investment Trust (HRI) 1,870.00p -3.11%
BlackRock Smaller Companies Trust (BRSC) 1,674.00p -2.90%