London open: Stocks slide as Russia hit with tougher sanctions

London stocks slid in early trade on Monday after the West imposed tougher sanctions on Russia, which has now put its nuclear forces on high alert.

At 0845 GMT, the FTSE 100 was down 1.1% at 7,404.35, while oil prices jumped to as high as $105 a barrel.

Walid Koudmani, chief market analyst at XTB, said: "While stocks saw some signs of recovery towards the end of last week with Asian, European and US markets recovering some of their losses following the invasion of Ukraine from Russia, stock prices could have a very difficult week ahead as tensions escalate and more sanctions continue to be announced.

"Over the weekend, the European union announced a variety of sanctions on Russia including limiting its access to EU airspace and prohibiting certain banks from utilising the Swift banking system, a move which could have catastrophic effects on the Russian economy and was by some considered to be on the most potentially effective deterrents.

"Investors are taking that into consideration and while the war for Ukraine rages on, this week is set to be one of the most volatile across markets with the prices of stocks and commodities being extremely susceptible to any kind of sanction and geopolitical instability. If the situation continues to escalate, risky assets like stocks and crypto currencies could be seeing another week of losses while investors continue to rush to safe havens like gold and the USD which benefited greatly last week from the shocking turn of events."

Investors will be keeping an eye out for further developments in the Ukraine crisis, with high-level talks due to take place between Kyiv and Moscow later in the day on the Ukraine-Belarus border.

In equity markets, Anglo-Russian precious metals miner Polymetal and Russian steelmaker Evraz tumbled, suffering the heaviest losses on the FTSE 100.

BP lost ground after the oil giant said it will exit its near-20% holding in state-owned oil giant Rosneft in response to Russia’s invasion of Ukraine, at an expected cost of around $25bn.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Just how BP will manage this exit is unclear but it looks like it will be highly difficult for the company to recover anywhere near what was considered to be the full value of the stake, estimated to be $14 billion at the end of 2021 and it will also strip BP of lucrative dividends which were due to pour in from the Russian business."

Primark owner AB Foods was also in the red despite saying it expects half-year sales and adjusted operating profit to be strongly ahead of last year and higher than interims in pre-Covid in 2020.

Travel-related stocks were under the cosh again after the EU announced over the weekend that it was closing its airspace to Russian aircraft, with BA owner IAG, budget airlines Wizz and easyJet and travel firm Tui all sharply lower.

On the upside, defence companies BAE Systems and Babcock, defence technology firm Qinetiq and specialist defence manufacturer Chemring all rallied. Qinetiq was also benefitting from a rating upgrade at JPMorgan.

Market Movers

FTSE 100 (UKX) 7,404.35 -1.14%
FTSE 250 (MCX) 20,799.50 -0.51%
techMARK (TASX) 4,370.33 0.64%

FTSE 100 - Risers

BAE Systems (BA.) 742.20p 12.96%
Hikma Pharmaceuticals (HIK) 2,005.00p 2.70%
Ocado Group (OCDO) 1,362.50p 1.84%
Rightmove (RMV) 659.20p 1.80%
National Grid (NG.) 1,117.80p 1.69%
Bunzl (BNZL) 2,816.00p 1.45%
Anglo American (AAL) 3,795.00p 1.35%
Admiral Group (ADM) 3,001.00p 1.32%
Rio Tinto (RIO) 5,759.00p 1.18%
Rentokil Initial (RTO) 499.80p 1.09%

FTSE 100 - Fallers

Polymetal International (POLY) 480.00p -38.65%
Evraz (EVR) 167.85p -18.54%
Coca-Cola HBC AG (CDI) (CCH) 2,033.00p -4.59%
BP (BP.) 360.75p -4.52%
HSBC Holdings (HSBA) 514.50p -4.44%
Mondi (MNDI) 1,692.50p -4.20%
Prudential (PRU) 1,139.00p -3.72%
Standard Chartered (STAN) 536.80p -3.50%
Melrose Industries (MRO) 145.15p -3.11%
NATWEST GROUP PLC ORD 100P (NWG) 228.00p -3.10%

FTSE 250 - Risers

QinetiQ Group (QQ.) 288.00p 9.51%
Chemring Group (CHG) 298.50p 8.06%
Babcock International Group (BAB) 324.00p 6.85%
Darktrace (DARK) 432.80p 6.29%
Baltic Classifieds Group (BCG) 170.00p 3.03%
Hochschild Mining (HOC) 114.30p 3.00%
BlackRock World Mining Trust (BRWM) 727.00p 2.39%
Ultra Electronics Holdings (ULE) 3,154.00p 2.21%
Howden Joinery Group (HWDN) 826.40p 2.07%
Capricorn Energy (CNE) 219.00p 2.04%

FTSE 250 - Fallers

Petropavlovsk (POG) 8.20p -12.28%
RHI Magnesita N.V. (DI) (RHIM) 2,740.00p -9.03%
Wizz Air Holdings (WIZZ) 3,268.00p -8.22%
Ferrexpo (FXPO) 151.30p -6.27%
easyJet (EZJ) 598.60p -4.66%
Jupiter Fund Management (JUP) 198.00p -4.47%
TUI AG Reg Shs (DI) (TUI) 242.00p -4.12%
Cineworld Group (CINE) 39.61p -3.86%
TBC Bank Group (TBCG) 1,168.00p -3.61%
Wood Group (John) (WG.) 177.65p -3.16%