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FTSE drops after wild swings in oil prices

by LLB Reporter
10th Mar 22 11:00 am

Wild swings in oil overnight reflect the febrile nature of markets right now and also just how little visibility investors have,” says AJ Bell investment director Russ Mould.

The 17% drop in crude prices, after UAE signalled a willingness to increase production, would certainly help to reduce inflationary pressures which had intensified since the start of the war.

However, oil prices then settled a little higher to leave investors unsure if they are coming or going.

“From a Western perspective the war in Russia is very much an economic one and the full ramifications may not be known for quite some time,” said AJ Bell’s Russ Mould.

“In that context it is unsurprising that European stocks followed some bumper gains yesterday with a renewed weakness today.

“National Express chugged higher; investors do not seem too perturbed by the company being beaten to the punch for rival Stagecoach by a German asset manager and National Express’ 2021 results showed a decent recovery in profit and cash flow.

“The return of dividends is coming down the road too, a show of confidence by management in the outlook for the business.

“Property services outfit Savills, always a decent proxy for the wider real estate market, impressed as the market emerged from the deep freeze it endured during the pandemic.

“Less positively the company pointed to considerable uncertainty in the coming 12 months. Even without rampant inflation, conflict and an increase in discretionary costs Savills expects volumes to normalise suggesting 2022 is likely to be a fair bit trickier than 2021.

“Infrastructure group Balfour Beatty showed it’s not all about growth for its own sake as, despite a slight drop in revenue, the market warmed to results which revealed improved cash generation and profit – now ahead of pre-pandemic levels.

“If it is able to, the UK Government is likely to continue prioritising infrastructure projects to help boost productivity and efficiency in the economy.”

 

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