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Markets stall over gloomy economic outlook and Russian gas cuts

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European markets stalled in the face of soaring gas prices driven by deeper Russian supply cuts, while traders were also unnerved by the International Monetary Fund’s (IMF) “darkening” outlook for the world’s economy.

The FTSE 100 ended the day almost perfectly flat, dipping only 0.02 points at 7,306.28 – having spent much of the day in the green.

Joshua Mahony, senior market analyst at online trading platform IG, said: “European stocks have lagged their UK counterparts today, as Russia continues to manipulate gas flows as a tool to damage economic growth in the region.

“The Kremlin’s claims that another gas turbine has ‘some problems’ provides the basis for further supply restrictions, which in turn will likely push Europe into a recession sooner rather than later.”

The IMF set a gloomy global economic outlook with UK growth forecast at 0.5% for 2023 and at the bottom of the list, only ahead of Russia’s economy which is set to shrink 3.5%.

“The IMF have reiterated the looming economic crisis that faces the world, with the UK in particular looking forward to a bleak 2023”, Mr Mahony added.

“As Rishi Sunak and Liz Truss battle it out over the opportunity to lead the country forward, the IMF have highlighted the potentially poisoned chalice on offer.”

The German Dax decreased 0.82% by the end of the session as its own recession fears grew, while the French Cac declined by 0.43%.

Meanwhile, sterling dipped against the dollar over the IMF’s downgrade for the UK economy.

The pound was down 0.16% against the dollar at 1.202 but was flat against the euro at 1.188 at the close.

In company news, Ben & Jerry’s owner Unilever delivered a sweet update for investors on Tuesday as it hiked its sales guidance after passing price increases onto customers across the world.

The company, which also owns Hellmann’s and Persil, said that the cost of what it buys will increase by billions of pounds this year, but it is solving this pressure by putting up prices.

Shares finished the day 115.5p higher at 4,032p.

Compass, the world’s biggest catering firm, was also among the FTSE’s top performers after it made its second upgrade to sales forecasts this year.

The company predicted revenue growth of 35% for the year – upgrading its previous 30% prediction – after sealing new customers and reporting a strong recovery in business catering since the easing of Covid curbs.

Shares were up 61.5p at 1,906.5p at the close of play.

Elsewhere, DIY retailer Wickes slid after it highlighted fresh signs that people are hanging up their tool belts after months of home improvements during the pandemic.

Wickes dropped by 30.4p to 138.6p as a result, while the update also shook investors in B&Q owner Kingfisher, which hit the foot the of FTSE.

Meanwhile, the price of Brent crude oil decreased by 0.23% to 104.91 US dollars per barrel when the London markets closed.

The biggest risers on the FTSE 100 were Compass, up 61.5p at 1,906.5p, Unilever, up 115.5p at 4,032p, Admiral, up 51p at 1,787.5p, AstraZeneca, up 210p at 11,020p, and Dechra, up 54p at 3,648p.

The biggest faller of the day were Kingfisher, down 22.9p at 245.2p, JD Sports, down 11.15p at 127.75p, Vodafone, down 6.66p at 7,164.65p, Rolls-Royce, down 4.26p at 87.69p, and Hargreaves Lansdown, down 35.8p at 804.4p.

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