Market snapshot: mixed fortunes for major markets

Plenty are erring on the side of caution and markets remain under pressure, but the FTSE 100 offers some choice for embattled investors.

Investors erred on the side of caution ahead of a three-day weekend in the US and with geopolitical tensions far from resolved.

The newsflow remains uncertain on the latest developments on the Ukraine border, with increased military activity being reported in some areas. At the same time, it appears that a diplomatic solution is still being sought by the major powers, with the possibility of a summit between the US and Russia apparently on the table in an effort to prevent military conflict.

Amid the uncertainty, some investors chose not to maintain positions over a weekend which is extended by today’s Presidents Day holiday. In turn, this will lead to lighter volumes globally and this thinner liquidity is likely to exacerbate price movements given the high fragility of sentiment at the moment.

Concerns around the inflationary and tightening monetary environment have certainly not dissipated, but for the moment these concerns are secondary to the Russia and Ukraine tensions, with markets gyrating on the newsflow.

As such, markets remain under pressure. In the year to date, the Dow Jones has now shed 6.2%, the S&P 500 8.7% and the Nasdaq has again lurched lower, now down by 13.4%.

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Similar pressures are simmering in the UK, although the premier index for the moment remains in positive territory for the year. Aside from the tensions, there is a varied economic calendar this week, which may temporarily distract attention such as the consumer confidence number later in the week. Ahead of the evolving cost of living crisis on the back of factors such as tax rises and the persistently high inflationary environment, this leading indicator should provide an important gauge of current consumer sentiment.

With the FTSE 100 offering some choice for embattled investors, in the form of its range of defensive and relatively inflation-proof stocks, it has become something of an investment destination. The strength of the oil price has also boosted the majors, while a return to value has also seen something of a resurgence in previously shunned sectors such as tobacco, where inelasticity of demand, cash generation and pricing power have reignited investor interest.

Another positive opening in early exchanges, with a broad mark-up of prices across sectors, currently leaves the FTSE 100 ahead by 2.2% in the year to date. This also means that for the moment, and for the first time in recent market history, the index is significantly outperforming its counterparts across the pond.