Vladimir Putin’s demand for gas payments in roubles amounts to a “security threat”, the head of the International Energy Agency (IEA) has warned.
Putin yesterday said “unfriendly” countries would be forced to pay for gas in local currency, sparking fresh fears about supply disruption and pushing up natural gas prices further.
Speaking at a press conference today, IEA boss Fatih Birol said he considered the demands a “security threat made by Russia”, adding that member countries were united in trying to radically reduce reliance on the Kremlin for oil and gas imports.
Germany and Italy have already hit back at Putin’s demands, while Downing Street has said it’s “carefully monitoring” the situation.
Mr Birol said the IEA is now also tasked with overseeing supplies of critical metals such as lithium, in a sign of growing awareness of energy supply chains.
06:17 PM
Wrapping up
It’s time to close the blog, we shall see you tomorrow! Before you go, have a look at the latest stories from the business desk:
06:15 PM
Russian stock market jumps after opening for first time in weeks
Russian shares rallied after the Moscow stock exchange partially reopened following a three-week suspension as it was propped up by the Kremlin to prevent a heavy sell-off. Simon Foy writes:
The MOEX, Russia’s benchmark index, ended the day 4.4pc higher, having jumped as much as 11pc earlier in the day, as Vladimir Putin’s regime imposed a string of measures aimed at preventing another steep slump.
Moscow banned short-selling, restricted foreign investors from dumping their holdings and instructed the country’s wealth fund to inject $10.4bn (£7.9bn) into the market to buy battered Russian stocks.
The measures prevented the exchange going into freefall like it did on the day Russia invaded Ukraine, which sent shares down 45pc – its biggest ever drop ever. However, the reopening was heavily criticised by the West, with the White House branding it a “charade” and a “Potemkin market opening”.
05:56 PM
Brookfield Asset Management mulls acquisition of HomeServe
Brookfield Asset Management is exploring a takeover of HomeServe, the London-listed emergency household repairs provider.
The investment manager said: “There can be no certainty that any offer will be made nor as to the terms on which any such offer might be made.”
It has until April 21 to state whether it intends to make a firm offer under takeover rules. Shares in HomeServe rose 14.6pc, valuing the FTSE 250 group at £2.73bn.
05:39 PM
Michael Grade, critic of the ‘woke brigade’, named Ofcom chairman
Lord Michael Grade has been made the chairman of Ofcom, putting a strident BBC critic and attacker of the “woke brigade” in charge of Britain’s media regulator. Ben Woods has more:
The appointment of the Conservative peer concludes a calamitous search that has dragged on for more than two years after Paul Dacre, the former Daily Mail editor who was Boris Johnson’s preferred candidate, pulled out of the race.
The former BBC chairman will lead the media and telecoms regulator alongside chief executive Dame Melanie Dawes at a time of considerable change, as the watchdog gears up to tackle the tech giants through new online safety laws.
05:22 PM
FTSE 100 back in the green
The FTSE 100 came back into winning territory after being caught out the day before for the first time in a week. It ended the day 0.1pc higher at 7,467.
Fresnillo was one of the day’s best performers after gold prices edged higher, while M&G jumped after the financial firm said it would buy back shares for £500m.
“European markets have struggled for direction today, caught in a corridor of uncertainty just below recent highs, as the various meetings of Nato, EU and G7 leaders gets under way in Brussels,” said CMC Markets analyst Michael Hewson.
“The tone of the various meetings was uncompromising, with Nato agreeing to boost its deployments to the eastern borders of the Nato alliance, while warning President Putin against deploying chemical or other weapons of mass destruction.
05:01 PM
Biden to make announcement on LNG supplies to Europe soon
President Joe Biden will make an announcement “soon” on providing US supplies of liquefied natural gas to help Europe break away from Moscow, said energy secretary Jennifer Granholm.
The crisis should accelerate the ongoing move away from fossil fuels to renewables, she said.
“Everyone was united in condemning, obviously, Vladimir Putin’s war, but also united in seeing how we can do what we can to increase supply, adopt security measures,” Granholm told reporters at the IEA meeting.
Members were committed to “this transition to clean and how we can accelerate it as fast as we possibly can.”
The global community is rallying together in this wartime effort to defeat oil autocrats and energy price shocks. We’ve learned so much from each other, and I’m ready to apply these new insights back home to make the U.S. stronger and more secure. pic.twitter.com/8guHsB9S2r
— Secretary Jennifer Granholm (@SecGranholm) March 24, 2022
04:42 PM
IEA members pledge “radical” cutbacks in imports from Russia
Major oil and gas consumers have pledged “radical” cutbacks in imports from Russia, the International Energy Agency said at the conclusion of its annual ministerial meeting.
All of the IEA’s 31 members, including the US, Japan and Germany, outlined individual policies and plans to immediately reduce their intake following Russia’s invasion of Ukraine, executive director Fatih Birol said. He didn’t specify the intended cuts.
04:26 PM
The Times owner takes £8m hit as it paves the way for newsroom merger
Rupert Murdoch’s Times and Sunday Times have taken an £8m hit from overhauling its newsrooms after some editorial teams were combined to form a single, seven-day-a-week operation. Ben Woods reports:
Times Newspapers Ltd has reported that restructuring costs increased by 15pc to £8.3m, according to its latest accounts, as it merged several editorial desks.
The financial information covers a period before the Culture Secretary, Nadine Dorries, decided last month to abolish undertakings requiring the titles to remain separate.
News UK, the owner of the Times, Sunday Times and the Sun, argued last year that rules imposed by the Thatcher government had hampered its ability to cut costs.
04:12 PM
Handing over
That’s all from me today – thanks for following! Giulia Bottaro is in the hot seat from here.
03:56 PM
Russia blocks Google News
Russia has banned Google’s News service as the Kremlin seeks to shut down reports contradicting Vladimir Putin’s official line on the war in Ukraine, writes James Titcomb.
Roskomnadzor, the communications regulator, accused Google of spreading fake news about the conflict.
Google confirmed that users in Russia were having difficulty accessing its news service, which collates content from across the web.
Russia is taking an increasingly strict line on access to foreign news services and western internet services as its military struggles in Ukraine become more apparent to the country’s own citizens.
It has already blocked Facebook and Instagram, as well as restricting Twitter, although Google’s YouTube video site remains online.
“We’ve confirmed that some people are having difficulty accessing the Google News app and website in Russia and that this is not due to any technical issues on our end,” Google said.
“We’ve worked hard to keep information services like News accessible to people in Russia for as long as possible.”
03:44 PM
UK and Canada begin formal trade deal talks
The Government has announced the formal start of negotiations over a new trade deal with Canada.
Trade Secretary Anne-Marie Trevelyan said the trading relationship between the two countries was worth over £19bn, adding that a free trade pact had “huge potential to strengthen and grow trade”.
It marks the latest efforts to sign new trade agreements following Brexit, with new deals in place with New Zealand and Australia and talks with India underway.
However, progress half stalled with the US – the deal most touted by Boris Johnson.
03:25 PM
US mortgage rates hit highest level in three years
US mortgage rates have continued their rapid rise, jumping to the highest level in more than three years.
The average for a 30-year loan was 4.42pc – up from 4.16pc last week and the highest since January 2019, according to Freddie Mac.
It comes after the Federal Reserve raised interest rates by 25 basis points last week, with more hikes possible in the coming months.
Russia’s invasion of Ukraine has roiled supply chains and financial markets, raising the stakes of the Fed’s fight to tame inflation.
Sam Khater at Freddie Mac said:
The rise in mortgage rates, combined with continued house price appreciation, is increasing monthly mortgage payments and quickly affecting homebuyers’ ability to keep up with the market.
03:06 PM
BAE wins $176m US Air Force radios contract
BAE Systems has been handed a $176m (£133m) contract to provide radios to the US Air Force.
The FTSE 100 defence giant said the deal provided a secure alternative to satellite communication methods. Shares rose 1.5pc.
Dave Logan at BAE said:
Our airborne radios are scalable and designed for open architecture applications, making them a solution that’s ready for the Air Force’s future needs.
The evolving capabilities of threats in the modern battlefield call for an extensible, modernised anti-jam solution, which our product provides.
02:54 PM
US rolls out fresh sanctions against Russia
The US has joined Britain in imposing fresh sanctions on Russia, targeting dozens of Russian defence companies, hundreds of members of parliament and the chief executive of its largest bank.
The US Treasury Department also issued guidance on its website warning that gold-related transactions involving Russia may be sanctionable by US authorities – a move aimed at stopping Russia from evading existing sanctions.
A senior administration official said: “Our purpose here is to methodically remove the benefits and privileges Russia once enjoyed as a participant in the international economic order.”
The US and its allies have imposed several rounds of sanctions, including targeting the country’s largest banks and President Vladimir Putin, in response to its invasion of Ukraine.
02:29 PM
Rishi Sunak urged to introduce road use charge
Rishi Sunak has been urged to go further than his 5p cut to fuel duty, abolishing the tax altogether and replace it with a road use charge, writes Tim Wallace.
Economists at the Social Market Foundation said road pricing, which could charge drivers for every mile on the road, or take the form of toll roads and congestion charges – is crucial to the Government’s financial future as £30bn of fuel duty revenues are at risk from the shift from petrol and diesel cars to electric vehicles.
The think tank’s research has found that road pricing is more likely to be supported than opposed among people in every region and of every income level.
“The latest change in fuel duty rates will cost billions of pounds and is just more proof that fuel duty is no longer fit for purpose in the 21st Century. Until politicians show some long-term leadership, Britain will be stuck with an outdated and unfair system of road tax that will see the Treasury coffers losing billions and billions of pounds that is needed for roads and public services,” said Scott Corfe, research director at the Social Market Foundation.
“Our research shows that voters understand that fuel duty is unsustainable and must be replaced with a new system of road pricing that is fairer to motorists and taxpayers alike. Properly designed, a road-pricing system could offer more support to lower-income motorists and rural drivers than the unfair and regressive fuel duty regime.”
He said that “senior politicians privately recognise that road pricing is sensible and inevitable”, calling on them “to have the courage and honesty to bring the public into that conversation”.
02:08 PM
City of London remains Europe’s dominant financial hub
The City of London has retained its crown as Europe’s dominant financial centre as fears of a Brexit-induced exodus failed to materialise.
Simon Foy has more:
London came second only to New York in the latest global financial centres index, which is published by think tank Z/Yen Group and ranks the world’s top 126 finance hubs.
It takes into account areas such as political stability, labour market flexibility, quality of life, infrastructure and innovation.
The City comfortably beat rival European centres including Paris, Frankfurt and Amsterdam, which respectively came 11th, 16th and 19th.
It comes despite repeated warnings from chief executives and politicians that Brexit would damage the Square Mile’s reputation.
Despite London’s strong performance, the gap between the UK capital and New York has grown since September, when Z/Yen last published its index.
London’s fintech offering has fallen behind Beijing and San Francisco, as Chinese and US hubs boosted technology development.
01:54 PM
Philip Morris to exit Russia
Tobacco giant Philip Morris has said it’s planning to withdraw from Russia, joining dozens of multinational companies cutting ties with Moscow following the invasion of Ukraine.
The maker of Marlboro cigarettes said it intends to leave and is looking at ways to do so in an orderly fashion, adding it had become too complex to do business there.
Russia generated 6pc of PMI’s total revenue last year. It’s the company’s fourth-largest cigarette market by volume, but also an important region for growth in its IQOS vaping product.
Rivals British American Tobacco and Imperial Brands have said they plan to transfer their local businesses to Russian partners.
01:42 PM
Tech stocks drive Wall Street higher
Wall Street pushed higher at the opening bell, spurred on by gains for major tech stocks.
The tech-heavy Nasdaq rose 0.6pc, while the S&P 500 and Dow Jones were up 0.3pc and 0.1pc respectively.
Traders have a close eye on the economic recovery amid the threat of rising interest rates, surging inflation and the impact of the war in Ukraine.
The latest data showed unemployment claims fell to their lowest since 1969 last week as demand for labour remains high.
01:36 PM
Uber to list New York taxis on its app
Uber will list New York’s iconic yellow taxis on its app as it looks to ease a driver shortage and pressure on fares.
The ride-hailing giant inked a partnership with New York City Taxi & Limousine Commission’s technology partners Creative Mobile Technologies and Curb Mobility.
Their apps – Curb and Arro – power the vast majority of the city’s yellow taxis and will now allow riders to book trips in taxis through the Uber app. Shares rose 4pc as markets opened.
Guy Peterson at Uber said:
This is a real win for drivers – no longer do they have to worry about finding a fare during off peak times or getting a street hail back to Manhattan when in the outer boroughs.
And this is a real win for riders who will now have access to thousands of yellow taxis in the Uber app.
01:24 PM
P&O boss Peter Hebblethwaite admits mass sackings broke the law
Here’s a bit more from Lucy Burton on the boss of P&O and his car-crash appearance in front of MPs earlier.
The chief executive of P&O Ferries has admitted to MPs that a decision to sack 800 workers last week without consulting the unions broke the law.
In his first public appearance since the sackings a week ago, Peter Hebblethwaite told MPs on the Commons business and transport committees there was “absolutely no doubt” that under employment law the ferry operator was required to consult unions before pushing ahead with the mass sackings.
“We chose not to consult and we are, and will, compensate everybody in full for that,” he said, adding that P&O did not think unions would approve the sackings.
Andy McDonald, the former shadow transport secretary, then asked Mr Hebblethwaite: “Do you get in your car and drive down the motorway and see the 70mph sign and say, ‘that’s not going to apply to me, I’m going to do 90 because I think it’s important that I do that’? Is that how you go about your life?”
The chief executive also refused to rule out whether he will accept a bonus this year following the dismissals.
12:50 PM
Bank of England pushes for crackdown on $1.7 trillion crypto market
The Bank of England has called for tougher regulation of the $1.7 trillion (£1.3 trillion) crypto market amid concerns it could threaten the wider stability of financial markets.
The Bank’s Financial Policy Committee said the role of regulators should be expanded and their coordination increased.
It will make recommendations to the Treasury on adapting the remit for supervising crypto assets, many of which are beyond the scope of the Financial Conduct Authority.
Deputy Governor Sam Woods has also written to banks warning them that the long-term regulation of crypto is likely to differ from the current framework.
The intervention comes amid concerns that crypto could unsettle the broader financial system in times of strain. It’s now larger than the $1.2 trillion market of sub-prime mortgages that triggered the global financial crash more than a decade ago.
12:37 PM
US jobless claims drop to lowest since 1969
Applications for US state unemployment fell to their lowest level since 1969 last week amid booming demand for labour.
Initial unemployment claims fell by 28,000 to 187,000 in the week ending March 19, the Labor Department said. This was below the 210,000 forecast in a Bloomberg survey.
The fall reflects employers’ desire to cling onto workers and attract new ones, while surging inflation is keeping the incentive to work high.
Separate data showed durable goods orders fell 2.2pc – larger than the 0.6pc expected and the first decline in five months. The fall likely represents a pause in capital spending after a sharp rise in bookings at the start of the year.
12:24 PM
IAG and Wizz Air fall on Deutsche Bank downgrade
Shares in British Airways owner IAG and Wizz Air have tumbled after analysts at Deutsche Bank downgraded both stocks.
The German lender said there was a less positive outlook for European airlines after the recent recovery in the sector as inflation threatens consumer budgets and oil prices soar.
Analyst Jaime Rowbotham said he doesn’t expect airlines will be able to pass on all the extra fuel costs to customers – particularly next year when pent-up demand for travel after the pandemic runs out of steam.
IAG fell 3.3pc, while Wizz Air lost 3pc after Deutsche downgraded them from buy to hold. There were also downgrades for easyJet, Ryanair and Lufthansa.
12:11 PM
US futures rise as traders await wave of data
Wall Street is set to open higher this afternoon as investors keep a close eye on a wave of economic data due later today.
Futures tracking the S&P 500 and Nasdaq both rose 0.4pc, while the Dow Jones was up 0.4pc.
Wells Fargo, Bank of America and Citigroup all gained more than 1pc in pre-market trading, leading gains among big banks.
Weekly jobless claims and durable goods data for February are due this afternoon, followed by a flash reading for March PMIs. These will be watched closely for signs of how inflation is hurting the economy.
Traders will also be looking for updates on Ukraine ahead of a special NATO summit, with the EU divided over further sanctions against Russia.
12:07 PM
Gas prices rise after Putin demands rouble payments
Natural gas prices have risen against after Vladimir Putin’s demand for rouble payments from “unfriendly” nations brought back jitters about Russian supplies.
Benchmark European prices rose as much as 9.8pc after closing 18pc higher yesterday. The UK equivalent rose 6.7pc.
Russia’s insistence on rouble payments could spark disputes and contract negotiations, threatening to disrupt the flow of gas to Europe. It could also dent Moscow’s revenues.
Some European nations have already pushed back against Putin’s demands. Germany said the move was a breach of contract, while Italy said it wasn’t inclined to pay in roubles.
11:57 AM
Russia says it will decide on future use of Renault factory
The Kremlin has said it will make a decision on how to use Renault’s Moscow factory by the end of next week after the carmaker said it was suspending operations there.
Renault said it would halt production and was assessing its stake in Avtovaz, Russia’s largest car manufacturer.
Russia has previously threatened to nationalise assets of foreign firms that pull out of the country in protest against its invasion of Ukraine.
11:43 AM
Sackings ‘slashed wage costs in half’
Here’s some more from Lucy Burton:
Mr Hebblethwaite said firing 800 people has slashed wage costs in half as agency workers are being paid as little as £5.15 an hour.
He insisted that the decision came from the P&O Ferries board and not its Dubai-based owner DP World.
The chief executive then revealed that a conversation was made in Dubai on 22nd November between the Secretary of State, Grant Shapps, and an unknown senior executive at DP World.
He said: “At that point our plans were nowhere near finalised so it’s unlikely that that conversation would have had any real substance to it, I suspect.”
11:37 AM
P&O boss: I’d fire workers again
Asked if there’s anything he’d do different following the backlash over the mass sackings, the P&O boss said he’d make the decision again.
He insists P&O was not a viable business and the sackings were necessary.
11:29 AM
P&O chose not to consult unions
There’s another eyebrow-raising moment as Mr Hebblethwaite admits P&O didn’t consult unions because the company didn’t think they’d approve the sackings.
Laughter breaks out as P&O boss says he was sure no union would accept their plans so he just didn’t consult them
This is going as badly as you’d expect and is very awkward
— Scott Beasley (@SkyScottBeasley) March 24, 2022
11:25 AM
P&O pays staff average £5.15 an hour
P&O boss Peter Hebblethwaite has admitted that the average hourly rate of pay for new workers is £5.15 an hour.
Asked if he could live on £5.15 an hour, the ferry boss is unable to respond. The UK minimum wage rises to £9.50 an hour in April.
He says the average sacked seafarer earned £36,000 a year and will get £46,500 in compensation.
11:21 AM
P&O boss refuses to rule out bonus
The chief executive of P&O is facing a grilling from MPs after the ferry firm sacked 800 employees last week.
In a painful interaction, Peter Hebblethwaite refused to rule out whether he will accept a bonus this year following the mass sacking.
After confirming to two parliamentary select committees that he receives a basic salary of £325,000 a year plus is in line for two bonus schemes, he admitted to MPs that he hasn’t decided whether or not he will accept a bonus this year.
“I can’t tell you how far that is from my thoughts,” he said, before being pressed again on whether he’d accept the money. “I don’t know the answer to that. I don’t know.”
11:11 AM
National Grid investigated over maintenance of Cumbria substation
Ofgem has launched an investigation into National Grid into whether it breached rules relating to its maintenance of the Harker electrical substation in Cumbria.
National Grid owns the high-voltage electricity transmission network in England and Wales, including the Harker substation.
The energy regulator gave no further details about the investigation, but said there was no implication it had made any findings of non-compliance.
11:06 AM
Shell calls for ‘stable political discourse’ in UK energy push
Here’s some more detail from Shell UK chair David Bunch after the company said it will pump up to £25bn in Britain’s energy system over the next decade:
These investments, subject to board approval, aim to propel the UK closer to net zero and help to ensure security of supply whilst stimulating economic growth and jobs.
However, Shell cannot act alone. Investing this money requires urgency of action across government to deliver the enabling policy and business case frameworks. These must address both the supply and demand side of the energy transition (in areas such as hydrogen and CCS, for example).
We will also need a stable political discourse, as I mentioned in my meeting with the Prime Minister and industry leaders last week.
11:00 AM
BBC handed emergency funding to fight Russian disinformation
The Government has handed the BBC £4.1m in emergency funding to help it fight Russian propaganda.
The BBC World Service will receive the cash to support its Ukrainian and Russian language services in the region, and to help it increase trusted and independent content to counter disinformation about the war in Ukraine.
The Department for Digital, Media, Culture and Sport said the funding will help to cover urgent and unexpected costs that have arisen as a result of the conflict.
This includes helping the BBC relocate staff to safe locations and ensure the resilience of its services.
Culture Secretary Nadine Dorries said:
In scenes reminiscent of 80 years ago, the BBC will ensure that audiences in the region can continue to access independent news reporting in the face of systemic propaganda from a dictator waging war on European soil.
It’s vital we lift the veil on and expose the barbaric actions of Putin’s forces.
10:52 AM
Alfa-Bank says new sanctions don’t affect regular operations
Russian lender Alfa-Bank has insisted new UK sanctions won’t affect its regular operations.
The bank was one of 65 entities to be targeted in a fresh wave of economic measures aimed at hitting the country’s “strategic industries”.
Alfa-Bank said Visa, Mastercard and Mir card transactions within Russia were working normally. It said it will suspend all transactions with UK counterparties as a result of the sanctions.
10:35 AM
Bank of England delays stress tests amid Ukraine conflict
The Bank of England has delayed the launch of its 2022 stress tests for British lenders as it warned Russia’s invasion of Ukraine had increased uncertainty and sparked market volatility.
The central bank said that while the UK’s direct exposure to Russia was limited, the war could pose further risks to the financial system and was likely to pile further pressure on real incomes for households and businesses.
While markets have remained functional, the Bank said it had noted heightened levels of market calls on energy and other commodity derivatives, and also said market liquidity has been impacted by the war in some bond markets.
The Bank halted stress tests, due to start today, and changed its guidance on the outlook for its countercyclical capital buffer, indicating a signalled increase next quarter was now less likely.
10:05 AM
Seven in eight workers to pay more tax
Seven in eight workers will see their taxes rise before the next election despite commitments by the Chancellor to reduce the burden on households as families face a £1,100 plunge in their real incomes over the next 12 months.
Tom Rees has more details:
A lack of support from the Chancellor at the Spring Statement will push 1.3m into absolute poverty as his Spring Statement support falls short, analysis by the Resolution Foundation also revealed.
Around 27m out of the 31m people in work will pay more in income tax and national insurance despite Rishi Sunak’s attempt to bolster his low tax credentials yesterday.
The think tank found that the typical working-age household will suffer a 4pc drop in their incomes in real terms in 2022-23, a £1,100 hit, while the poorest quarter of families face an even bigger 6pc fall.
Torsten Bell, chief executive of the Resolution Foundation, said: “The big picture is that Rishi Sunak has prioritised rebuilding his tax-cutting credentials over supporting the low-to-middle income households who will be hardest hit from the surging cost of living, while also leaving himself fiscal flexibility in the years ahead.
“Whether that will be sustainable in the face of huge income falls to come remains to be seen.”
09:53 AM
UK hits Alfa-Bank in fresh wave of sanctions
The UK has unveiled fresh sanctions against 65 more Russian entities, including Alfa-Bank, as it targets “strategic industries” and top business figures in the country.
The new measures target industries supporting Russia’s invasion of Ukraine, including Russian Railways and defence company Kronshtadt, the main producer of Russian drones.
The Wagner Group – the organisation Russian mercenaries reportedly tasked with assassinating President Zelenskyy – has also been sanctioned.
Six more banks are targeted, including Alfa-Bank, whose cofounders include previously sanctioned oligarchs Mikhail Fridman, Petr Aven and German Khan. The world’s largest diamond producer Alrosa is also sanctioned.
Individuals sanctioned include the billionaire oil tycoon Eugene Shvidler, founder of Tinkoff bank Oleg Tinkov, Herman Gref, the chief executive of Russia’s largest bank Sberbank, and Polina Kovaleva, step-daughter of foreign minister Lavrov.
Foreign Secretary Liz Truss said:
These oligarchs, businesses and hired thugs are complicit in the murder of innocent civilians and it is right that they pay the price. Putin should be under no illusions – we are united with our allies and will keep tightening the screw on the Russian economy to help ensure he fails in Ukraine. There will be no let-up.
09:46 AM
Expert reaction: Ukraine war sparking uncertainty
Rhys Herbert at Lloyds Bank says the Ukraine war will fuel inflation, prolong uncertainty and could drag on the economy.
The economic outlook continues to be uncertain and mixed. While the reduction in pandemic-related restrictions is bolstering many sectors, inflationary pressures, exacerbated by the war in Ukraine, are causing a drag on the economy.
The price of commodities such as oil, nickel, zinc, and wheat have soared since the beginning of the conflict and are now impacting some businesses’ balance sheets.
This seems bound to push inflation higher, which will reduce the spending power of companies and consumers alike, potentially causing orders and output to falter in the near term.
The ongoing crisis in Ukraine and apparent lack of progress in reaching a peaceful settlement will prolong the period of uncertainty that firms have to contend with.
09:40 AM
Manufacturing stalls as Ukraine war drives up costs
UK manufacturers grew at their slowest pace in 13 months in the aftermath of Russia’s invasion of Ukraine as the war disrupted supply chains and drove up costs.
S&P Global’s manufacturing PMI dropped to 55.5 in March from 58 last month – well below expectations. Meanwhile, business optimism fell to its lowest since October 2020, with bosses concerned about surging energy and raw material prices.
Chris Williamson, chief business economist at S&P Global, said: “The outlook darkened as concerns over Russia’s invasion exacerbated existing worries over soaring prices, supply chains and slowing economic growth.
“The survey indicators point to potentially sharply slower growth in the coming months, accompanied by a further acceleration of inflation and a worsening cost of living crisis, which paints an unwelcome picture of ‘stagflation’ for the economy in the months ahead.”
Output across the economy as a whole held up in March, with the PMI slipping to 59.7 from 59.9 in February – that’s ahead of forecasts of a fall to 57.5.
The services sector was unexpectedly strong, with the PMI accelerating to a nine-month high of 61 from 60.5.
09:29 AM
Morrisons takeover could push up fuel prices, says watchdog
The competition watchdog has warned that the £7.1bn private equity takeover of Morrisons could lead to higher fuel prices.
In January the Competition and Markets Authority (CMA) launched an investigation into Clayton, Dubilier & Rice’s (CD&R) deal to snap up the supermarket chain.
It now says it has concerns about fuel prices in 121 locations across the UK.
Morrisons has 339 petrol stations at its supermarkets, while CD&R also owns Motor Fuel Group, which runs more than 900 forecourts under various brands.
The two sides have five days to offer proposals to ease the concerns, after which the CMA has five days to decide whether to accept them or launch an in-depth investigation.
Colin Raftery at the CMA said:
Prices for petrol and diesel have recently hit record highs, which makes it even more important that we don’t allow a lack of competition at the pump to make the situation worse.
We’re concerned that this deal could lead to higher prices for motorists in some parts of the country. But if CD&R and Morrisons are able to address these concerns, then we won’t need to move on to an in-depth investigation of the merger.
09:20 AM
Pound falls again after Sunak’s cuts
Sterling has weakened against the dollar for a second day amid concerns Chancellor Rishi Sunak didn’t do enough to tackle the cost-of-living crisis.
The pound fell 0.3pc to $1.3164, with the dollar also gaining ground following the Federal Reserve’s increasingly hawkish tone. Against the euro, it fell 0.2pc to 83.48p.
09:13 AM
Renault shares fall after Moscow factory closure
Shares in Renault fell in early trading after the company said it was suspending operations at a factory in Moscow.
The French car maker also said it would assess options on its majority stake in Avtovaz, Russia’s biggest car manufacturer.
Shares slid as much as 2pc before paring losses to trade flat.
The move came after Ukrainian President Volodymyr Zelenskyy accused Renault of financing Russia’s war. The foreign ministry has since welcomed the company’s decision.
09:05 AM
Rouble extends rally as trading resumes
The rouble has extended its recovery this morning as the Moscow Exchange partially resumed trading after a month-long shutdown.
The Russian currency gained 2pc to just under 96 against the dollar, extending overnight gains after Vladimir Putin said the country would start selling gas to “unfriendly nations” in roubles.
Against the euro, the rouble was 3pc higher at 105. This is well above the all-time low of 132 hit earlier this month, but far from levels of around 90 seen before Russia invaded Ukraine.
09:04 AM
Next takes £85m sales hit over Ukraine crisis
Next has warned of an £85m hit to sales in the current financial year after it was forced to shut down its operations in Russia and Ukraine.
The retailer said the closure of its websites in both countries would also pull down profits by £18m for the year, although this will be partially offset by “better-than-expected” sales in the UK. It downgraded profit targets by £10m as a result.
Overall, the company still expects a 5pc increase in sales for the year, while profits are set to rise by 3.3pc to £850m.
Lord Simon Wolfson, chief executive of Next, told PA the company was expecting to increase prices by an average of 3.7pc over the half-year to July as inflation bites.
He said pricing is expected to rise by an average of 8pc in the following six-month period, with fashion set for a 6.5pc rise.
Lord Wolfson warned Next had factored in potential for “subdued” trading as the cost-of-living crisis bites over the rest of the year. Shares fell 3.4pc following the update.
09:02 AM
FTSE risers and fallers
The FTSE 100 has posted cautious gains this morning as traders weigh up the economic fallout from the Ukraine crisis and Rishi Sunak’s new measures to tackle the cost-of-living crisis.
The blue-chip index rose 0.3pc in early trading, with BP and Shell gaining as oil prices continued to rise.
Miner Glencore fell 3.2pc after it priced its share offering at a discount, while retailer Next lost 2.9pc after lowering its sales and profit forecasts for the year ahead.
The domestically-focused FTSE 250 was down 0.2pc, with Bridgepoint jumping as much as 16pc on upbeat results.
08:28 AM
Ukraine war will be ‘major claim’, warns Lloyd’s of London
Insurance market Lloyd’s of London has warned Russia’s war against Ukraine will be a “major claim” this year.
The insurance group said it was in “close dialogue” with market partners to gauge their exposure to Ukraine and the impact of Russia’s invasion.
While it did not give a figure, it stressed that direct and indirect claims were “expected to fall within manageable tolerances and will not create solvency challenges”.
It came as Lloyd’s revealed it swung out of the red last year, with pre-tax profits of £2.3bn against losses of £900m in 2020.
08:21 AM
1.3m Brits to be pushed into poverty, warns think tank
1.3m people will be pushed into absolute poverty next year after Rishi Sunak failed to ease the cost-of-living crisis for British families, the Resolution Foundation has warned.
The think tank took aim at the Chancellor’s “big but poorly targeted policy package”, saying it focused on offsetting previously announced tax rises rather than providing more support.
Torsten Bell, chief executive of the Resolution Foundation, said typical family incomes would drop by £1,100 next year, while 1.3 million people – including half a million children – would fall below the poverty line.
He added that despite the “eye-catching” cut to income tax, seven in eight workers will see their tax bills rise.
RF analysis of #SpringStatement2022 – The scale and distribution of the cost of living squeeze means a further 1.3 million people are set to fall into absolute poverty next year, including 500,000 children – the first time Britain has seen such a rise outside of recessions. pic.twitter.com/YKGauScDKZ
— Resolution Foundation (@resfoundation) March 24, 2022
08:19 AM
Reaction: Not much to celebrate for locals
Emre Akcakmak at Greenwest Consultancy says there’s “not much to celebrate” for Russian investors as markets reopen.
While Putin has averted a market crash, Russia is still grappling with a slump in the rouble and surging inflation.
#Russia equities are up strongly today, ie. first day of trading since #MOEX closed on 25 Feb.
Foreigners can’t even trade and there’s not much to celebrate for locals who try to protect vs. weaker Ruble and higher inflation.
Oil px +25% and USDRUB parity +15% since the close. pic.twitter.com/3fOp4wlh1b
— Emre Akcakmak (@akcakmak) March 24, 2022
08:12 AM
UK puts Putin’s gold reserves in its sights
Britain and other western allies are looking at whether more can to done to prevent Vladimir Putin from accessing gold reserves as they ramp up the economic pressure on Russia.
A wave of sanctions have already frozen much of Russia’s central bank’s $640bn (£486bn) in assets, barred several banks from the Swift global payments system and hammered the rouble.
But Boris Johnson said : “We need to do more, and so we need to do more economically. Can we do more to stop him using his gold reserves for instance, in addition to his cash reserves?
“The more pressure we apply now, particularly on things like gold, that I believe the more we can shorten the war.”
Speaking to LBC radio, the Prime Minister said US President Joe Biden was right to say Russia was guilty of war crimes, adding that Putin should appear before the International Criminal Court.
08:03 AM
FTSE 100 inches higher
Closer to home, it’s a cautiously positive start to trading for the FTSE 100, as traders digest the latest inflation figures and Rishi Sunak’s efforts to ease the cost-of-living crisis.
The blue-chip index ticked up marginally to 7,466 points.
08:01 AM
White House slams ‘Potemkin market opening’
The White House has slammed the partial resumption of trading on the Moscow Exchange, branding it a “Potemkin market opening”.
Russia has made clear they are going to pour government resources into artificially propping up the shares of companies that are trading.
This is not a real market and not a sustainable model—which only underscores Russia’s isolation from the global financial system.
Only stocks that have primary listings in Russia are active today, meaning tech firms such as Yandex and Ozon haven’t resumed trading. A range of other restrictions on trading have also limited the damage.
On the day of Russia’s invasion of Ukraine, the benchmark index crashed as much as 45pc in the fifth-worst plunge in equity market history.
07:56 AM
Energy stocks rise as Aeroflot slumps
Energy stocks are providing the biggest momentum to the Moscow Exchange this morning. They’ve managed to avoid western sanctions, while Putin’s demand for gas payments in roubles has also helped sentiment.
Lukoil jumped 16pc, while Gazprom was up more than 18pc. State-owned pipeline transport company Transneft bucked the trend, falling 5.9pc.
Rostelecom, the country’s largest telecoms group, also jumped 13pc, outstripping wider gains.
But Putin hasn’t been able to prevent a slump in all stocks. Heavily-sanctioned bank VTB shed 6pc, while flag carrier Aeroflot dropped as much as 18pc.
07:49 AM
Putin staves off market crash
Traders’ fears of a market crash as the Moscow Exchange reopened haven’t materialised – but that’s largely due to Russia’s efforts to block a sell-off.
Analyst Hasnain Malik said: “With restrictions on foreign selling and repatriation this is not a functional market in terms of efficient price discovery, given foreigners dominate the market’s free float.
“The one fundamental factor that has improved during the stock market’s suspension is the partial recovery in the currency as Russia tries to shift oil and gas trade to roubles.”
Vladimir Putin yesterday moved to prop up the sinking rouble by demanding payments in the currency for natural gas purchases from so-called “unfriendly” nations.
07:32 AM
Russian stocks rise as Moscow reopens
Good morning.
Russian stocks have pushed higher as trading reopened following an historic shutdown of the Moscow Exchange.
The benchmark index rose 11pc in early trading, driven by gains for energy stocks such as Lukoil and Gazprom.
The market is open for a shortened session, with only 33 stocks trading. Moscow has also rolled out a string of measures to try and limit a sell-off, including a ban on short selling and foreigners withdrawing their investments, as well as a cash injection from Russia’s wealth fund.
The Moscow Exchange has been shuttered since February 26. It crashed as much as 45pc following Russia’s invasion of Ukraine – its biggest drop ever.
5 things to start your day
1) Commuters brace for record rise in rail fares Ticket prices expected to increase by about 10pc if ministers keep them pegged to the Retail Prices Index (RPI)
2) Sunak holds back £32bn war chest amid economic uncertainty The Ukraine crisis poses a threat to Britain’s recovery as actions to hobble Putin’s regime ‘are not cost free’
3) £33bn student loan ‘stealth tax’ funds Sunak’s giveaways Repayment level freeze will be the biggest earner of the Chancellor’s fiscal tweaks
4) P&O Ferries faces huge fine if it broke the law, warns Boris Johnson Prime Minister condemns “callous” nature of the mass redundancies and vows that employees working in the UK will be paid the minimum wage
5) Putin demands payment for Russian gas in roubles Tactic ramps up pressure on EU leaders and sends prices soaring by a third
What happened overnight
In early trade, Tokyo, Hong Kong, Shanghai, Seoul, Wellington, Taipei and Bangkok were all down, though Sydney and Singapore eked out gains.
Coming up today
-
Corporate: Bridgepoint, Energean, Next, International Public Partnerships (full-year); CVS (interims)
-
Economics: ‘Flash’ PMI surveys (UK, eurozone, Japan, US), jobless claims, durable goods orders (US)
