Market movers: FTSE 100 is only winner, oil, Apple, house prices

UK stocks remain more resilient than European counterparts, reports interactive investor’s head of investment Victoria Scholar. Read her round-up of stock markets, oil prices and the day’s other big financial news.

EUROPEAN MARKETS

It has been a softer open for European markets, with autos and banks underperforming while basic resources and oil & gas are leading the gains, driving by surges within the commodities complex.

While most European bourses are in the red, the FTSE 100 once again is the best performer, thanks to its favourable leaning towards energy and mining. Airline stocks are underperforming with Wizz Air Holdings (LSE:WIZZ) down sharply after the US followed other countries to ban Russian flights from its airspace.

Russia-linked EVRAZ (LSE:EVR) is surging more than 20% at the top of the FTSE 100, while Polymetal International (LSE:POLY) is similarly bouncing back amid a period of wild swings in both directions for stocks tied to Russia since the conflict broke out, driven by a combination of panic selling and opportunistic buying.

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OIL

The International Energy Agency agreed to release 60 million barrels of oil in response to Russia’s invasion of Ukraine. However, the move did little to stem the surge in oil, with Brent crude and West Texas Intermediate (WTI) both trading above $110 a barrel, extending gains by around 7% on Wednesday.

After the US and Saudi Arabia, Russia is the third-largest oil producer globally, with the addition of these strategic reserves paling into insignificance compared to the geopolitical supply shock from the war between Russia and Ukraine.

Having initially rallied to $100 a barrel less than week ago, oil is up another 10%, with $120 a barrel the next potential target if Russia continues its aggression. OPEC+, which gets set to meet later today is likely to keep its policy unchanged, drip feeding 400,000 barrels per day for March, despite attempts by the West to reduce oil prices to curb the risk of spiralling inflation.

APPLE, FORD, EXXON MOBIL

Some of America’s biggest consumer brands like Apple Inc (NASDAQ:AAPL), Ford Motor Co (NYSE:F), Harley-Davidson Inc (NYSE:HOG), Google (Alphabet Inc Class A (NASDAQ:GOOGL)) have joined the chorus of corporates which are severing ties with Russia to punish Moscow for its military actions against Ukraine amid pressure from both consumers and investors.

Meanwhile, oil giant Exxon Mobil (NYSE:XOM) is following in the footsteps of Shell (LSE:SHEL) and BP (LSE:BP.) by discontinuing operations in Russia.

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Russia’s economy is likely to have already suffered a double-digit economic contraction on the back of Western sanctions, a slump in the rouble and corporate exits with more economic pain ahead. Russian stocks abroad have plunged by more than 70% already with its equity index, the MOEX still closed amid fears of a collapse. The only lifeline for Russia’s economy right now is the surge in commodities, with rising prices for some of its key exports including oil, gas, wheat and gold.

UK BRC SHOP PRICE INDEX

UK shop prices rose at the fastest rate in a decade, according to the British Retail Consortium, with food costs leading the gains as inflation bites. Retail price inflation hit the highest level since November 2011 rising by 1.8% in February up from 1.5% in January. Fresh food, health, beauty, and furniture price increases all contributed to the rise in inflation, creating significant pressure for households and businesses.

Amid a backdrop of Russia-Ukraine tensions prompting surging commodity prices, this is yet another indication of the seriousness of the inflationary pressures as rising prices for essential goods exacerbate the cost-of-living crisis for families in the UK. There is a vicious cocktail of geopolitical uncertainty, the energy price cap hike, record job vacancies and poor harvests globally that are all contributing to a lower overall level of affordability in the economy.

The Bank of England may be forced to pick up the pace of its rate hiking timeline. However, the monetary policy committee is treading a fine line as it looks to stem the spread of inflation without adding to the economic pressures and inadvertently causing a recession.

JUST EAT TAKEAWAY.COM

Just Eat Takeaway.com NV (LSE:JET) reported a net loss of €1.03 billion sharply widening from a loss of €151 million in 2020 on revenues up 33% to 5.3 billion euros. However, the company ensures investors it is rapidly progressing towards profitability.

After a very strong performance at the height of the pandemic amid lockdowns and home working, the business has struggled to uphold momentum after restaurants and cafes reopened and travel restrictions eased off.

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Last month, the company delisted from the Nasdaq in an attempt to trim costs, highlighting the competitiveness of the space, with a host new entrants particularly in grocery delivery on the back of a rise of Q-commerce demand.

NATIONWIDE

Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “There is no stopping house price growth in the UK it seems, fuelled by the ongoing demand-supply mismatch for property. For first-time buyers, runaway house prices mean they’d have to make quite a bit of money or save for a very long time, to be able to afford a home. The ongoing cost of living crisis exacerbates matters, with many struggling to absorb rising prices and build up wealth to buy a home. Their plight is compounded by the stark lack of supply of homes, especially for family homes, which has prevented existing homeowners from moving up the property ladder and free up existing inventory for the new wave of first-time buyers.

“Low deposit mortgages offer little respite because many wannabe homeowners simply wouldn’t be able to afford the monthly repayment burden on the home loan they would need, leaving them in a position of having to build a bigger deposit to buy.

“However, the harsh reality is rising rents, runaway inflation which outstrips wage growth, and a lack of affordable housing has priced many out of the market. Those who can afford to buy a property might question whether it is a sensible time to buy with house prices at record highs. Many will be hoping house prices will dip, but no one can say for sure when this will happen. For those planning to live in the property for a long period of time, it shouldn’t matter too much if house prices dips in the short term. The key is making sure you can afford the monthly mortgage repayments.”