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Shares drop in Europe after explosion in Polish border village

Evening Standard logo Evening Standard 11/16/2022 August Graham
London skyline © PA Wire London skyline

The share market in London dropped on Wednesday after the war in Ukraine strayed into Nato territory as an explosion in a Polish border village killed two people.

European markets opened lower after the news. It had first been unclear what caused the explosion, with reports of a potential missile on Tuesday evening.

As the evening wore on, evidence in photos from the site suggested that the event might have been caused by an air defence missile, potentially launched by Ukraine.

The country had been trying to stave off a massive onslaught of around 100 missiles from Russian forces.

On Wednesday both Poland and Nato said the evidence suggested that the explosion was an accident, and while Ukraine was likely to have launched the missile, it was acting in self-defence, so was not to blame.

“Despite the clarification from the Polish president, as well as Nato, tensions have remained high, with concerns over an escalation still very much front of mind,” said CMC Markets analyst Michael Hewson.

“A higher-than-expected UK inflation number was also a reminder if any were needed that continued sticky inflation was likely to be a significant drag on future earnings potential, not only in the UK, but also in Europe where it is just as high, and in a lot of cases much higher.”

In London the FTSE 100 closed down by a quarter of a per cent, dropping 18.25 points to finish the day at 7,351.19.

It joined European cousins in the red. Germany’s Dax lost 1% of its value and the Cac 40 dropped around 0.5%.

In New York the S&P 500 was also down 0.5% while the Dow Jones eked out a small 0.1% rise shortly after markets in Europe had closed.

The pound rose 0.2% to buy a little under 1.19 dollars and fell 0.2% to around 1.14 euros.

Mr Kipling maker Premier Foods saw its shares slip on Wednesday despite higher profits and revenues as it highlighted continued pressure on consumers.

The food manufacturer said revenues went up by 6.2% in the half-year to October 1 to £419 million as customers ate more at home.

Nevertheless, shares finished 2.6p down at 108.4p as it flagged the “challenging” backdrop.

Elsewhere, Sage Group was one of the day’s top performers after the software business revealed “strong momentum”.

It also lifted its annual dividend by 4.1% as revenues climbed by 5.4% to £1.95 billion over the year to September. Shares moved 55.4p higher to 811.2p at the close of play.

BAE Systems shares also had a good session after guidance was lifted by analysts at Deutsche Bank.

The company rose by 31.2p to 769.8p as it also benefited from reports that the UK Government sent the defence contractor a letter of intent to build new production lines to increase supplies of artillery shells.

The biggest risers on the FTSE 100 were Sage, up 55.4p to 811.2p, BAE Systems, up 31.2p to 769.8p, Haleon, up 8.95p to 288.05p, Experian, up 73p to 2,924p, and Reckitt, up 112p to 5,784p.

The biggest fallers on the FTSE 100 were Ocado, down 44.2p to 726p, Rightmove, down 25.4p to 540p, Rolls-Royce, down 4p to 87.22p, IAG, down 6p to 133.26p, and Hargreaves Lansdown, down 38p to 871.2p.

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