FTSE 100 Live April 06: Rising interest rates in the United States raise fears of a market stall and a rise in the price of oil

Confidence in construction plummets but orders hold up

Construction orders rose rapidly despite business optimism hitting a 17-month low, according to an S&P Global survey.

Commercial construction saw its highest rate of growth since June 2021 last month, while expansion in residential work was more subdued.

Completion times for construction projects have lengthened in a context of increased supply difficulties and rising raw material prices. Job creation in March was the weakest so far in 2022, according to the PMI survey.

Tim Moore, chief economics officer of S&P Global, said: “Intense inflationary pressures appear to have unnerved some construction companies due to fears customers are cutting spending.”

Avon Protection slips 23%, FTSE 100 lower

An expected increase in defense spending today provided little reassurance to Avon Protection investors after another profit warning from the military headgear supplier.

Shares fell 23% – wiping out gains seen since the Ukraine war – as it warned that supply chain inefficiencies in its helmet business had slowed progress in recovering margins.

Avon remains optimistic about the longer-term outlook, particularly after a notable increase in customer demands following events in Ukraine. It supplies respiratory and head protection products to first responders as well as the military around the world.

Shares more than doubled to 4500p in 2020 but the company lost its place in the FTSE 250 after product testing failed in its body armor division.

The stock fell today from 302p to 1020p, but analysts at Jefferies and Peel Hunt remain favorable based on price targets of 1650p and 1500p.

Peel Hunt said: “It’s clearly disappointing in the near term, but the demand backdrop remains undeniably positive.”

In the FTSE 100 Index, a trade update from Imperial Brands helped shares rebound 3% as cigarette and vaping companies forecast a 2% rise in first-half operating profits.

That was better than the 0.3% expected in the City as Bristol-based Imperial benefited from reduced losses in its next-generation products division.

Shares rose 43.5p to 1659.5p but the broader FTSE 100 index fell 41.55 points to 7572.17 as traders worried about the prospect of a rapid interest rate hike. American interest in fighting inflation.

The FTSE 250 index fell 133.90 points to 21,223.08, with meat producer Hilton Food down 18p to 1,204p despite a 13% rise in annual profits to £67.2m.

Profits hit record high but bumpy road for Lookers

Car dealership Lookers reported record profits but warned war in Ukraine and the high cost of living is expected to weigh on car sales.

The Manchester-based company’s return to profitability, which followed two years of successive losses, was driven by an increase in used car sales, but the company said shortages of semiconductors, the Inflation and supply chain constraints would lead to significant cost pressures in 2022.

Sales of £4.1bn remained down 15% from pre-pandemic levels.

Lookers CEO Mark Raban said, “The business and our customers face some uncertainties in 2022.

“The current crisis in Ukraine and significant increases in the cost of living will put pressure on consumer confidence and disposable incomes.”

In a business update, Lookers said it would prioritize expanding its used car and repair business as part of an updated corporate strategy.

It comes after statistics were released showing March new car registrations fell to their lowest level since 1998. March is usually the most important month of the year for the UK car market.

Shares of Lookers fell 1.6% in early trading.

VTB UK business ready for administration

The UK branch of Russia’s second largest bank is on the verge of collapse after sanctions rendered the business unviable.

VTB, which has a Russian-flagged office opposite the Bank of England, was set to appoint directors today, Bloomberg reported.

The lender does investment banking in London and moved into its high-level headquarters here in 2008.

The company lost $213 million in 2020, accounts for the most recent year are available, largely due to the impact of the pandemic.

The British branch of Sberbank, Russia’s largest bank, started operating on Monday. Both were hit with British sanctions, which made it impossible to continue operations. Banks stopped dealing with the two Russian lenders and trading in shares was suspended on the London Stock Exchange.

VTB could not be reached for comment.

The company has reduced its staff and operations in London in recent years as it focuses on Europe.

Elsewhere, London-listed events company Hyve Group today announced a deal to sell its Russian business for £72million. Management said the sale was driven by “significant moral, legal, compliance and operational challenges.” The division achieved sales of £17million in the last six months.

FTSE 100 stable, Imperial shares up

Imperial Brands shares are 2% higher in the FTSE 100 index after the cigarettes and vaping business took comfort in recent trading.

Among other stocks that are doing well, insurers Legal & General and Prudential rose 1% and homebuilder Berkeley rose 2% after agreeing to sign the government’s paving safety pledge yesterday.

Shares of Royal Mail and Scottish Mortgage Investment Trust were down 2%, while the broader FTSE 100 index traded near its opening mark at 7612.47. The FTSE 250 index improved 49.38 points to 21,406.36.

In the FTSE All-Share, shares of Avon Protection fell 11% after the supplier of military headgear warned of profits despite a recent resumption of investigations since the start of the war in Ukraine.

More and more home builders are signing a safety pledge

More and more home builders have revealed that they must sign the government’s building safety pledge, which means they will take responsibility for addressing fire safety issues in buildings built over 11 meters high over the past 30 years.

Redrow and MJ Gleeson are the latest signatories, following Crest Nicholson, Persimmon, Berkeley Group and Taylor Wimpey yesterday.

Redrow has taken an additional provision of £164m to cover its pledge, on top of the £36m previously earmarked for fire safety in high-rise buildings.

He said: “We will work with tenants to remediate their buildings and, where possible, pursue recoveries from prime contractors, warranty providers and other third parties.”

MJ Gleeson said he was involved in the development of 15 buildings over 11 meters before moving into low cost house building and land development.

Chief executive James Thomson said: “Tenants should not have to pay the costs associated with vital fire safety issues and I support the Government’s efforts to engage industry at large in the rehabilitation of buildings rendered unsafe by vital fire safety issues.

“The housing construction industry has responded positively to this initiative and is taking a proactive role and at significant cost.”

Tech stocks sold off amid fears of rate hikes

Technology and growth stocks saw strong selling on Wall Street last night as traders focused on US plans to tame inflation.

Stocks were spooked by a Federal Reserve policymaker suggesting a half-point hike in interest rates and the start of a balance sheet reduction could be needed next month.

Lael Brainard’s call for a more aggressive stance on monetary tightening helped push the tech-focused Nasdaq down more than 2% and the S&P 500 down 1.3%.

Tech stocks gave up their big gains from the previous session as Tesla fell nearly 5% and Amazon fell 2.6%.

Some clarity on the outlook is expected later when the Federal Reserve releases minutes from last month’s meeting, when it raised rates by a quarter of a percentage point in its first increase since the pandemic.

Comments yesterday from Brainard and his colleague Mary Daly of the San Francisco Federal Reserve Board suggest members are growing increasingly worried about inflation, which is expected to hit 8% later this month.

Michael Hewson, chief market analyst at CMC Markets, said: “The reaction of the US bond markets to comments on the balance sheet reduction was particularly notable given that the basic assumption was that whatever happens with the rates, the balance sheet discussion would be left until the end of the second quarter at least.

The yield on US 10-year bonds jumped sharply last night to well above 2.5%, while the US dollar also rose sharply to a three-week high against the euro.

US stock market futures point to a mixed session later, with the FTSE 100 index expected to open 15 points lower at 7598.