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FTSE recovers as Putin sticks with Crimea

FTSE recovers as Putin sticks with Crimea

(Update) Stock markets reversed earlier losses, with Britain's FTSE 100 rising 0.9%, or 58 points, to 6,626 after Russian president Vladimir Putin said he didn't plan to seize any other regions of Ukraine after Crimea.

Global markets have zig-zagged among the recent tensions which have today seen Putin sign a treaty making Crimea part of Russia.

The FTSEurofirst 300 rose around 1% as markets staged a small relief rally after Putin's comments.

'With Russia pausing at Crimea, markets can at least turn back to more familiar matters, such as earnings surprise and changes in future cash flow, said David White of Spreadex.

10.21: Asos, Xaar, Speedy all plummet as FTSE stalls

A trio of investor favourite UK stocks took a tumble on Tuesday morning, as financial updates from Asos, Xaar and Speedy Hire all disappointed investors.

The poor corporate news flow, coupled with ongoing worries about the situation in Ukraine – where according to reports, Russian president Vladimir Putin has formally informed parliament of Crimea's request to join Russia – meant that share indices across Europe fell after a strong start to the week yesterday. Britain’s FTSE 100 dropped back 0.2% to 6,552.

Some individual companies fared much worse than London’s benchmark index.

Online fashion company Asos fell 14% to £54.51 as it blamed the weakness of the Australian dollar and Russian rouble for a 26% rise in revenues in the first two months of 2014, compared with 38% in the previous four months.

Xaar, a favourite of fund managers including Axa Framlington’s Nigel Thomas, dropped 11% after the producer of inkjet printing heads announced the departure of chief executive Ian Dinwoodie in 2015.

The news of Dinwoodie’s departure came alongside 2013 pre-tax profits of £40.1 million, up 123%.

Andy Douglas of Jefferies remained upbeat: ‘Whilst the CEO departure and near-term risks exist/modest earnings growth is likely, we believe Xaar is very well positioned, in a market that offers very attractive long-term growth opportunities’.

Shares in Speedy Hire plummeted 17% lower after an unexpected trading update in which the plant hire group again downgraded its expectations for 2014, knocked by problems in both its UK and international divisions.

The update did not make for good reading, said David O’Brien, an analyst at Cantor. ‘The issues in the international business go far deeper than management has previously alluded to, with greater work required. We wonder whether or not this business has a viable part within Speedy Hire longer term?’

Speedy Hire shares are still ‘expensive’ said Sam Thomas of Cantor, who rates them a sell.

Some financial updates were better received. On paper Sainsbury's first fall in sales for nine years, alongside a warning of a slowdown in the grocery market, was disappointing, but shares rose nearly 3% to 320p as the 3.1% fall in like-for-like sales in the 10 weeks to 15 March, was roughly what was expcted.

Sainsbury’s figures also came against a very tough comparison from the prior year, noted Graham Jones of Panmure Gordon. The analyst added: ‘We continue to believe JS has a stable and successful business model, but it is operating in an increasingly competitive market and we think it is inevitable that margins will suffer in 2015E.’

Investors are looking ahead to the US Federal Reserve’s policy meeting starting on Wednesday. In Janet Yellen’s first meeting as chair of the central bank she is expected to announce a further $10 billion cut to the scale of monthly asset purchases. Updates on industrial production and inflation are also due from the US in the coming week.

In the UK all eyes will be on chancellor George Osborne’s Budget on Wednesday, as well as the minutes from the Bank of England’s March monetary policy meeting and labour market figures.

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