Week ahead: Fears over Russia-Ukraine escalation to loom over City

An intensification in the Russia-Ukraine war will drive investors’ moves this week in the City.

The capital’s premier FTSE 100 index had a torrid time last week, losing nearly seven per cent of its value, its worst week since March 2020 when the UK was plunged into lockdown.

Traders were spooked by the potential economic fallout of Moscow stepping up its assault on Kyiv, leading them to dump risky assets and pour into safe havens, such as government bonds and gold.

Commodity prices are expected to continue their surge since the conflict started. Oil prices shot up last week, sparked by traders shunning Russian products, spurring demand for alternative supplies’ inventories rising and pushing up prices.

Brent Crude was hovering close to $120 a barrel.

Gas prices have also been propelled by anxiety over the security of energy supplies if Moscow decides to respond to Western sanctions by squeezing gas flows into Europe.

Beyond the Russia-Ukraine war, fresh GDP figures released on Friday are predicted to be meager as a result of Plan B curbs whacking economic activity in the UK.

“After a material upside surprise in December GDP, we expect the economy to flatline in January,” Sanjay Raja, senior UK economist at Deutsche Bank, said.

Services output is projected to come in weak.

Retailers and financials dominate the corporate agenda in the City this week.

Domino’s Pizza and online furniture maker Made.com update markets on Tuesday, while fund manager Legal & General and insurer Prudential post finals on Wednesday.