LONDON MARKET EARLY CALL: Lower call as Russia-Ukraine tensions mount

(Alliance News) - Stock prices in London are seen opening lower on Monday amid heightened ...

Alliance News 24 January, 2022 | 7:00AM
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(Alliance News) - Stock prices in London are seen opening lower on Monday amid heightened tensions between Russia and Ukraine, as fears grow of an imminent invasion.

IG futures indicate the FTSE 100 index is to open 19.03 points lower at 7,475.10. The blue-chip index closed down 90.88 points, 1.2%, at 7,494.13 on Friday.

In the US on Friday, Wall Street ended sharply lower, with the Dow Jones Industrial Average down 1.3%, the S&P 500 down 1.9%, and the Nasdaq Composite 2.7% lower.

In Asia on Monday, the Japanese Nikkei 225 index ended up 0.2%. In China, the Shanghai Composite was flat, while the Hang Seng index in Hong Kong was down 1.1%. The S&P/ASX 200 in Sydney closed down 0.5%.

The US has ordered the families of its diplomats to leave Ukraine, as rising fears of a Russian invasion pushed Western officials to meet Monday in a bid to coordinate their response and compile a battery of sanctions against Moscow.

The UK on Saturday alleged that it had information that Moscow was "looking to install a pro-Russian leader in Kyiv".

Tensions have soared in recent weeks as tens of thousands of Russian troops mass on Ukraine's border, along with an arsenal of tanks, fighting vehicles, artillery and missiles.

London said it had seen evidence that several former Ukrainian politicians had maintained links with Russian intelligence services, and that former MP Yevgen Murayev was being considered as a potential leader.

Some of those in contact with Russian intelligence officers were "currently involved in the planning for an attack on Ukraine", the UK Foreign Office said in a statement, though did not release details of the evidence. A US official called the alleged plot "deeply concerning".

Moscow dismissed the claims as "disinformation", and urged London to "stop spreading nonsense".

The accusations come at the end of a week of intense international diplomacy, which concluded with Antony Blinken and Sergei Lavrov, Washington and Moscow's top diplomats, agreeing to keep working to ease tensions.

CMC Markets analyst Michael Hewson commented: "On Friday markets accelerated their falls on reports that the US was considering evacuating the families of its diplomats from the region over the risk of war, a story that was confirmed over the weekend, and which is unlikely to improve matters when markets in Europe open later. There is also the concern that China's determination to pursue a zero-Covid policy when it comes to tackling its own Covid outbreaks could create the potential for much higher prices in the medium and longer term, and potentially well into next year.

"Markets have become accustomed to buying the dips no matter the fundamental backdrop; however recent events appear to be seeing a significant loss of confidence in this mindset, and while European markets haven't seen the levels of selling pressure, the ability to move higher has been tempered by the weakness being seen in the US, with today's European session set to see a lower open."

Beijing city officials on Sunday said all two million residents of a neighbourhood where they identified a small cluster of Covid-19 infections will be tested, less than two weeks ahead of the start of the Winter Olympics.

In an effort to thwart the coronavirus, China is sealing the Olympics inside a tightly controlled bubble cocooning thousands of people and stretching nearly 200 kilometres.

The pound was quoted at USD1.3540 early Monday, down from USD1.3550 at the London equities close Friday.

The euro was priced at USD1.1317, down from USD1.1343. Against the Japanese yen, the dollar was trading at JPY113.80, firm on JPY113.75.

Brent oil was quoted at USD88.50 a barrel on Monday morning, up from USD87.74 late Friday. Gold stood at USD1,838.50 an ounce, higher against USD1,833.20.

The economic events calendar on Monday has PMI readings from Germany, eurozone, the UK and US at 0830 GMT, 0900 GMT, 0930 GMT and 1445 GMT respectively.

Ahead in the economic calendar this week, the US Federal Reserve's interest rate decision is on Wednesday.

The UK corporate calendar on Monday has annual results from Driver Group and a trading statement from Computacenter.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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