Published: 08 March 2022
Location: London, UK
European stock markets were well into the red yesterday, suffering their worst weekly losses since the start of the coronavirus pandemic in March 2020. The German DAX hit its lowest level in more than a year. The FTSE is continuing to fall this morning: it currently stands at around 6925, down 33 points, or 0.50%.
A third round of negotiations between Ukraine and Russia are continuing today.
Oil prices are still soaring. Yesterday they hit their highest level since 2008, with Brent crude jumping to reach as high as $139 (£105.12) a barrel, only about $8 below the record of $147.50 set in July 2008. The rise follows an interview given to NBC by US Secretary of State Antony Blinken in which he said the US was discussing a ban on Russian oil with Europe. Responding to the interview on state television yesterday, Russian deputy prime minister Alexander Novak — who also oversees energy affairs — said on state television on Monday, "It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market," according to a Reuters translation. "The surge in prices would be unpredictable. It would be $300 per barrel if not more." JPMorgan analysts said in a note last week that oil prices could reach $185 a barrel by the end of the year if Russian oil demand remains disrupted.
Europe is considering slashing Russian gas imports by two-thirds this year, the Financial Times said yesterday, citing European Green Deal commissioner Frans Timmermans. It's planning to achieve this with measures such as boosting liquefied natural gas imports and increasing renewable energy generation.
The pound sank to its lowest against the US dollar since December 2020 as investors rushed to safety as the Ukraine conflict deepens. Sterling tumbled as low as $1.314 yesterday, a level not seen since before Britain finalised its exit from the European Union, and it is currently even lower this morning, standing at $1.3115 at the time of writing.
The World Bank has approved $723m (£551m) in loans and grants for Ukraine and the bank is continuing to work on another $3bn package of support in the coming months for the country. Extra help has also been promised for neighbouring countries that are taking in more than 1.7m refugees, mostly women, children and the elderly. The financial package for Ukraine includes a $100m pledge from the UK.
The head of the World Food Programme, David Beasley, has warned the conflict in Ukraine could send global food prices soaring, with a catastrophic impact on the world's poorest. Ukraine and Russia are both major exporters of basic foodstuffs, and the war has already hit crop production, driving up prices. Beasley said it was putting more people at risk of starvation worldwide. "Just when you think hell on earth can't get any worse, it does," he told the BBC World Service's Business Daily. Russia and Ukraine, once dubbed "the breadbasket of Europe", export about a quarter of the world's wheat and half of its sunflower products, such as seeds and oil. The number of people facing potential starvation worldwide had already risen from 80 million to 276 million in four years prior to Russia's invasion, due to a "perfect storm" of conflict, climate change and coronavirus, Beasley said.
Russia’s invasion of Ukraine risks hammering British consumers with higher costs as families already face the largest cost of living squeeze in a generation, Neil Shearing, the group chief economist at Capital Economics, has told MPs from the Treasury select committee. He said the war risks pushing inflation in the UK by 1% or even 2% to 7.5% from the current 5.5% recorded in January. “It is going to push up inflation, contributing to what has been called the cost of living crisis. I think the increase in global commodity prices will push up inflation by another 1% compared to a pre-conflict baseline," he said. Should the west sanction Russian oil and gas, the extra inflation hit could reach 2%.
UK prime minister Boris Johnson has said the government will be setting out a new energy supply strategy in the coming days as oil prices surge to record highs amid the Ukraine crisis. Speaking at a press conference yesterday alongside Canadian PM Justin Trudeau and Dutch PM Mark Rutte, Johnson warned that Europe could not simply ban the use of oil and gas overnight but that countries should move together quickly to look beyond Russia for energy supplies. Johnson's announcement follows earlier remarks from James Cleverly, Europe minister, that the UK will consider barring Russian oil imports after the US said it was in talks to do so.
Russia has said it may close its main gas pipeline to Germany if the West goes ahead with a ban on Russian oil. Deputy Prime Minister Alexander Novak said a "rejection of Russian oil would lead to catastrophic consequences for the global market", causing prices to more than double to $300 a barrel. The US has been exploring a potential ban with allies as a way of punishing Russia for its invasion of Ukraine. But Germany and the Netherlands rejected the plan on Monday. The EU gets about 40% of its gas and 30% of its oil from Russia, and has no easy substitutes if supplies are disrupted.
Pressure is growing on McDonald's and Coca-Cola to pull out of Russia. The two have been criticised on social media for failing to speak out about the attacks and continuing to operate in the country. #BoycottMcDonalds and #BoycottCocaCola were trending on Twitter yesterday and Dragon's Deninvestor Deborah Meaden urged people to stop drinking Coca-Cola.
One of Russia's richest men - who said imposing sanctions on oligarchs would have no impact on the war in Ukraine - has been frozen out of a company. Investment firm LetterOne confirmed Mikhail Fridman's shareholdings had been "frozen indefinitely", along with those of long-time partner Pyotr Aven. Neither men can receive dividends or any other financial benefit. LetterOne said it was "taking all action necessary" to protect the 120,000 jobs its investments support and will donate $150m (£114m) to support people affected by the war in Ukraine. Fridman and Aven set up LetterOne, an international investment business based in Luxembourg, in 2013. They both stepped down from the company last week after being sanctioned by the EU over Russia's invasion of Ukraine. Last week, Fridman said the war was a tragedy for both sides, but stopped short of direct criticism, adding personal remarks could be a risk not just to himself but also staff and colleagues.
American Express has followed Visa and Mastercard out of Russia. "In light of Russia's ongoing, unjustified attack on the people of Ukraine, American Express is suspending all operations in Russia," the credit card company said in a statement on Sunday. Globally issued American Express (Amex) cards will no longer work at merchants or ATMs in Russia, and cards issued "locally in Russia by Russian banks" will stop working outside the country.
The London Stock Exchange cancelled all Polymetal trades executed between 0841 GMT and 0902 GMT yesterday after a spike in shares of the Anglo-Russian precious metals miner. The LSE had said in a notice to members earlier that it was investigating trades in Polymetal after the shares surged 700% and that some of them could be cancelled. At 1055 GMT, the shares were up 31% at 223.11p, having jumped to as high as 1,400p earlier in the morning. Polymetal is due to be kicked out of the FTSE 100 in the next quarterly reshuffle later this month, along with Russian steelmaker Evraz, after shares in the two tumbled due to the Russia-Ukraine crisis.
Both Polymetal and Evraz have lost board members since Russia’s invasion of Ukraine. Polymetal chairman Ian Cockerill will be stepping down from the board after almost three years in the job, with immediate effect, while non-executive directors Ollie Oliveira, Tracey Kerr, Italia Boninelli, Victor Flores,and Andrea Abt will also stand down from the firm's board. Meanwhile, Sandra Stash stepped down with immediate effect on 4 March from her non-executive role at Evraz. The American had only been on the board since June, and is an independent director of a number of other firms, including Diversified Energy, Lucid Energy and Chaarat Gold Holdings. Her departure followed a similar resignation from Briton James Rutherford on Friday - also the non-executive chairman of Centamin - who had been on the Evraz board as a non-executive director for a similarly short nine months.
Shares in Amigo Holdings more than doubled yesterday after the financial watchdog gave the troubled firm the green light to resume lending, Sharecast News reports. Amigo, which was forced to halt new lending in March 2020, is seeking approval from the Financial Conduct Authority for a rescue plan after being hit by a barrage of customer complaints over alleged mis-selling.
The Competition and Markets Authority has cleared Pennon's £425m acquisition of Bristol Water.
Yahoo Finance UK reports that work and pay inequalities faced by ethnic minority women in Britain widened during the coronavirus pandemic. According to PwC’s Women in Work Index, pre-existing labour market inequalities faced by ethnic minority women were exacerbated during the crisis, as they already receive lower pay, and experience higher unemployment rates. The annual report measures progress in women’s employment outcomes across 33 OECD countries. Data shows that ethnic minority women are over-represented in insecure, low-paid jobs, and also experienced some of the largest percentage falls in employee numbers in contact-intensive industries like retail and hospitality which were heavily impacted by Covid lockdowns and job losses.
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