UK stocks fell on Thursday morning as investor sentiment was weakened by Polymetal International (POLY) and Evraz (EVRgb) shedding positions on the FTSE 100 index following a sustained crash in their share prices in because of their exposure to Russia and Ukraine.
Fitch Ratings recently warned Western European banks that the fallout from Russian sanctions will also affect the quality of their assets.
European equities echoed the same pessimistic sentiment, with the Euro Stoxx 50 index falling slightly following the closure of the European branch of Russian bank Sberbank.
Investor sentiment fell further when the SWIFT payment system recently decided to exclude seven major Russian banks, which it said will be in effect from March 12.
Overnight in Asia, Hong Kong’s Hang Seng Index (HK50) rose, as did the US S&P 500 Index (US500).
Why are stocks down today?
Mining giants leave the FTSE 100 index: Mining companies Polymetal International and Evraz are to be relegated from the FTSE 100 index to the mid-cap FTSE 250 following the quarterly review of the FTSE Russell indices.
Promoted from the FTSE 250, construction materials group Howden Joinery Group (HWDN) and West African-focused gold producer Endeavor Mining (EDV) will take their place in the blue chip index.
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- What does that mean: The mining industry has been one of the most affected sectors since the start of the pandemic. The near collapse of China’s Evergrande Group (3333) also had a huge impact on the global industry.
However, the recent rally in commodities – particularly the surge in copper and gold prices – has given investors considerable hope that things may be looking up now. This announcement has thus raised serious concerns about the sector once again facing a slump due to the Russian-Ukrainian conflict.
Stock markets: highlights
- The FTSE 100 (UK100) index fell 0.04% to 7,426.5 points.
- The Euro Stoxx 50 (EU50) index fell 0.07% to 3,817.8 points.
- The German DAX index (DE40) rose 0.69% to 14,000.1 points.
- The French CAC 40 index (FR40) rose 0.02% to 6,499.2 points.
- The main sectors in the UK were mining and financials, while consumer services and consumer staples were affected.
- US futures on the S&P 500 fell 0.05% to $4,379.50.
- The Chicago Board Options Exchange (CBOE) Volatility Index, or VIX (VIX), a measure of expected swings in US stocks, fell to 30.74.
- The US Dollar Index (DXY) fell to 97.59.
- The index of US 10-year bond yields fell to 1.880%.
Main buyers: United Kingdom and Europe
- The main UK equity gainers were Rio Tinto (RIO), Glencore (GLEN) and Antofagasta (ANTO).
- Rio Tinto extended its gains after paying the second-highest dividend on the FTSE 100 index.
- Glencore shares rallied after the company revealed plans for a battery recycling plant in the UK.
- Antofagasta shares gained after record profits as copper prices continued to rally.
- Among the best performing companies in Europe are Bayer (BAYN) and BASF (BASd).
- Shares of Bayer rose as the company announced its full-year profit for 2021 and pledged to focus more on growth.
- BASF shares edged higher after the company donated to the Ukraine crisis.
Main losers in equities: UK and Europe
- The main losers in UK stocks were Polymetal International (POLY) and media company ITV (ITV).
- Shares of Polymetal International slumped further following the company’s exit from the FTSE 100 index.
- Shares of ITV fell despite rising profits and the company announcing plans to double digital sales in the near future.
- The worst performers in Europe were Banco Bilbao Vizcaya Argenatario SA (BBVA) and Kering (KER).
- BBVA shares fell after the company provided a loan to Bogotá to bolster its health services.
- Kering shares fell after the company announced the possibility of acquisitions in the near future.