Rouble collapses to record low as Russia doubles interest rates to 20pc – live updates
The rouble has collapsed to a fresh record low against the dollar after the West rolled out fresh sanctions against Russia and President Vladimir Putin put his nuclear forces on high alert.
The Russian currency dropped almost 30pc to 119 per dollar in early trading. The opening of the Moscow Exchange has been delayed and the Russian central bank raised interest rates to 20pc in a desperate bid to prop up the economy.
It came after the US and Western allies agreed to banish Russia from the Swift international payments platform and took measures against its central bank, while the EU has banned Russian airlines from its airspace and is sending weapons to Ukraine.
Global markets are now braced for a tumultuous day of trading. Oil benchmark Brent crude jumped above $102 a barrel and gas prices surged almost 40pc, while US and European stocks markets are set to plunge at the open.
08:21 AM
Rouble steadies in Moscow trading
The rouble tumbled more than 15pc against the dollar and euro as markets opened in Moscow, but central bank intervention helped it recover from record lows.
The currency was trading at 95.48 to the dollar – down more than 15pc from Friday’s close – with the central bank’s sale of foreign currency helping to limit losses.
It had crashed 30pc to a record low of 120 against the dollar earlier in the day in electronic trading.
Russia has raised its key interest rate to 20pc and introduced a raft of new measures in a bid to prop up the currency and prevent a run on banks.
But the Government has said it will cut off Russia’s central bank to prevent Moscow from undermining the impact of sanctions.
08:14 AM
European stocks sink into the red
The sell-off is spreading across Europe this morning as traders brace for turbulence.
The FTSE 100 is down 1pc, but it’s faring better than some of its peers across the continent. Germany’s Dax and the French CAC index have both dropped more than 2pc.
08:10 AM
BP slumps 7pc after Rosneft stake exit
BP shares have slumped 7pc at the open after the oil giant was forced to ditch its stake in Kremlin-controlled energy firm Rosneft.
The FTSE 100 company said it will sell its 20pc stake in Rosneft, warning it could take a hit of up to $25bn (£18.7bn) from the move.
Read more: BP abandons stake in Russian oil giant Rosneft
08:03 AM
FTSE 100 drops 1pc
The FTSE 100 has dropped more than 1pc at the open as tougher sanctions and Putin’s nuclear threat rattle markets.
The blue-chip index tumbled just over 1pc to 7,417 points, extending last week’s losses.
07:58 AM
Kwasi Kwarteng: Fracking isn’t the answer to energy crisis
Kwasi Kwarteng has waded into the debate over energy security as the escalating crisis roils markets.
The Business Secretary said additional UK production wouldn’t help to ease the surge in wholesale gas prices and dismissed fracking as a solution.
Instead, he said it was crucial to shift towards renewable energy sources as the continent tries to reduce its reliance on Russian gas.
The wholesale price of gas has *quadrupled* in UK and Europe.
Additional UK production won’t materially affect the wholesale market price.
This includes fracking – UK producers won’t sell shale gas to UK consumers below the market price. They’re not charities.
(4/9)
— Kwasi Kwarteng (@KwasiKwarteng) February 28, 2022
07:52 AM
ECB freezes Sberbank operations as it warns lender ‘likely to fail’
The ECB has frozen Sberbank’s main businesses in the bloc after regulators determined they were likely to fail.
The Single Resolution Board, which handles European lenders that run into trouble, suspended payments, enforcement and termination rights to three Sberbank divisions until the end of March 1.
That came after the ECB determined that Austria-based Sberbank Europe and its subsidiaries in Croatia and Slovenia probably won’t be able to pay their debts or other liabilities as they fall due.
The central bank said Sberbank Europe and its subsidiaries “experienced significant deposit outflows as a result of the reputational impact of geopolitical tensions”.
It added: “This led to a deterioration of its liquidity position. And there are no available measures with a realistic chance of restoring this position at group level and in each of its subsidiaries within the banking union.”
07:45 AM
Energy firms boost Chinese stocks
Chinese markets have closed higher this morning, spurred on by gains for energy and commodity firms as the deepening crisis drives up prices.
The Shanghai Composite index closed 0.3pc higher at 3,462.31, reversing an earlier drop of as much as 0.75pc. The blue-chip CSI300 index rose 0.2pc after earlier slipping as much as 0.9pc.
It’s unlikely to be a similar story in Europe, however. The FTSE 100 is poised to drop 1.6pc at the open, while the Stoxx 50 index is pointing 3.4pc lower.
07:36 AM
Equinor joins BP in Russia exit
Norway’s biggest energy company Equinor has joined BP in withdrawing from Russia in response to the crisis.
Both firms have told investors to brace for a hefty financial impact. Equinor, which is 67pc state-owned, said the decision to pull out from joint ventures in Russia will dent the book value of its assets in the country and spark impairments, but it didn’t put a figure on the hit.
BP has estimated that its exit from Rosneft could spark a writedown of as much as $25bn (£18.7bn).
07:33 AM
Bank of China’s Singapore arm ‘stops financing’ Russian oil traders
Bank of China’s Singapore operation is said to have stopped financing deals involving Russian oil and Russian companies, in a sign Beijing may not step in to support its strategic partner.
It follows reports from Reuters that major buyers of Russian oil were struggling to open letters of credit from Western banks to cover purchases or find ships willing to transport Russian oil.
Meanwhile, Bloomberg reported that European banks Societe Generale and Credit Suisse have halted the financing of commodities.
07:26 AM
BP abandons stake in Russian oil giant Rosneft
BP will be in the spotlight when markets open this morning after the oil giant was forced to cut-ties with Kremlin-controlled energy firm Rosneft.
Here’s more from James Titcomb:
The FTSE 100 oil giant will offload its 20pc stake in Rosneft, previously valued at $14bn (£10bn), and abandon its two seats on the board following pressure from the Government.
Bernard Looney, its chief executive, will step down from Rosneft’s board, as will Bob Dudley, the former BP boss, as it exits a three-decade venture in Russia.
The company said it is likely to take a significant financial hit from the sale.
It said it would also sell its investments in three joint ventures with Rosneft, while Mr Looney will separately resign from the board of the Russian Geographical Society. Separately, Norway said late on Sunday that its $1.3 trillion sovereign wealth fund would sell its Russian interests, around 0.2pc of its assets, which are worth around $2.8bn including stakes in Sberbank and Gazprom.
BP’s chairman Helge Lund called Russia’s invasion of Ukraine an “act of aggression which is having tragic consequences across the region”. He said the company’s stake in Rosneft was “no longer aligned with BP’s business and strategy”.
07:23 AM
Stocks set to crash as Western sanctions bite
Stocks across Europe are set to tumble at the opening bell after the latest round of sanctions, while surging energy prices fuel yet more inflation fears.
The FTSE 100 is poised to drop 1.6pc, while futures tracking the pan-European Stoxx 50 index plunged 3.4pc.
Tough new sanctions, nuclear threats from Putin and a renewed rally in energy prices are all weighing on sentiment this morning.
On the FTSE there’ll be a particular focus on BP, after the biggest foreign investor in Russia said it was abandoning its stake in state oil company Rosneft at a cost of up to $25bn (£18.7bn).
07:13 AM
Oil and gas prices surge as sanctions fuel energy crisis
Oil and gas prices soared further this morning as a fresh wave of sanctions threw energy and commodity markets into disarray.
Benchmark Brent crude jumped more than 7pc before easing back slightly to trade above $103 a barrel. It had hit almost $106 last week amid fears the conflict could disrupt supplies to Europe.
Meanwhile, European gas prices surged 39pc to €125 per megawatt-hour. The UK equivalent leapt 25pc.
Russia’s invasion of Ukraine has rattled markets in everything from oil and gas to wheat and nickel, piling more inflationary pressure on the global economy.
Traders now fear a new raft of sanctions – including banning some Russian banks from the Swift payments system – could further disrupt the market.
07:03 AM
Russia raises interest rates to 20pc
The Bank of Russia has raised its key interest rate to 20pc in a desperate effort to shore up its economy.
The interest rate will increase from 9.5pc, while the central bank also introduced mandatory hard-currency revenues sales for exporters and banned brokers from selling securities by foreigners.
Earlier today the regulator announced a temporary sales freeze on the Moscow Exchange, without specifying which securities the ban applies to.
It marks Moscow’s efforts to mitigate the impact of sanctions and prevent a run on banks.
06:58 AM
Russia braces for run on banks
There Kremlin is battling to stave off a run on Russian banks this morning after the weekend brought a tidal wave of new sanctions and the rouble collapsed to a record low.
Here’s more from my colleague James Titcomb:
Russia’s central bank was also reportedly bringing in new measures to prevent a sell-off of Russian securities. According to Reuters, central bank documents showed that it had ordered market players to reject foreign clients’ bids to sell Russian securities from early Monday morning.
The step came after the central bank on Sunday said it would provide unlimited funds to the country’s lenders and dramatically expand eligibility for loans as it was forced to reassure citizens that bank cards would continue to work normally.
Russians were yesterday racing to cashpoints and there were reports of the machines running out of banknotes. Russian economist Vladislav Zhukovskiy said “panic has started”.
He said: “All over the country there are queues at ATMs to withdraw money. Banks are selling the dollar at 100 to 120 roubles! Where are [central bank chief] Elvira Nabiullina and [prime minister] Mikhail Mishustin?”
06:52 AM
UK to cut off Russian central bank
The Government has reiterated its plans to cut off Russia’s central bank as it ramps up financial sanctions against Moscow.
The measures are designed to prevent Russia from deploying its foreign reserves to undermine the impact of sanctions.
They also stop the central bank from using foreign exchange transactions to support the rouble.
Rishi Sunak, Chancellor of the Exchequer, said:
These measures demonstrate our determination to apply severe economic sanctions in response to Russia’s invasion of Ukraine.
We are announcing this action in rapid coordination with our US and European allies to move in lock step once more with our international partners, to demonstrate our steadfast resolve in imposing the highest costs on Russia and to cut her off from the international financial system so long as this conflict persists.
06:47 AM
Moscow Exchange opening delayed
The Moscow Exchange will open forex and money market trading at 10am Moscow time on Monday – that’s three hours later than usual.
The bourse also said it will suspend trading on the forex repo market.
It’s the latest sign of just how much disruption is expected when markets open this morning, as traders react to tougher Western sanctions and a escalation of Putin’s rhetoric.
06:42 AM
Markets braced after ‘terrible’ weekend
Good morning.
Traders are holding their breath this morning ahead of what’s expected to be a torrid day on the markets.
An escalation of sanctions over the weekend – coupled with Vladimir Putin’s chilling nuclear threat – has fuelled uncertainty over how the invasion of Ukraine will progress.
The rouble has plunged to a fresh record low against the dollar, while the opening of the Moscow Exchange has been delayed.
While there’s been a mixed performance for Asian stocks overnight, the FTSE 100 and European stocks look set to plunge at the open.
Wai Ho Leong, an analyst at Modular Asset Management, said “A terrible weekend… hard to make any decisions when the conflict in Ukraine is re-intensifying.”
5 things to start your day
1) BP abandons stake in Russian oil giant Rosneft FTSE 100 company says Ukraine war caused it to ‘fundamentally rethink’ 19.75pc shareholding
2) Sanctions spark Russia bank run fears as country braces for ‘free fall’ in rouble Ban from Swift payments network set to send currency tumbling
3) The West has finally taken the gloves off against Putin, and redeemed our honour Ukraine’s valiant resistance has provoked a moral scramble to be seen and counted in the melee
4) Delays at UK ports double as Brexit red tape slows customs Economists have warned that Russia’s invasion of Ukraine threatens to prolong the disruptions
5) Aeroflot cancels all flights to European destinations after EU bans Russian jets The European Commission announced a block across the entire 27-country bloc on Russian-owned aircraft from entering the bloc’s airspace or landing at their airports on Sunday
What happened overnight
Shares were mixed in Asia but US and European futures were sharply lower as President Vladimir Putin escalated tensions by ordering that Russian nuclear forces be put on high alert.
US futures fell, with the contract for the S&P 500 down 2.5pc and that for the Dow industrials 1.6pc lower. The future for Germany’s DAX dropped 3.2pc and the future for the FTSE 100 lost 1.3pc.
Japan’s Nikkei 225 index recovered from earlier losses to edge 0.1pc higher. The Hang Seng in Hong Kong lost 0.8pc, the Shanghai Composite index was 0.1pc lower, while in Sydney the S&P/ASX 200 gained 0.7pc.
Coming up today
Corporate: BB Healthcare Trust, Bunzl, RHI Magnesita (full-year results); Hays (interim results); Associated British Foods (trading update)
Economics: Chicago Purchasing Managers’ Index (US)
