Ukraine Russia war bond investors markets rouble FTSE 100 – ZURAB KURTSIKIDZE/EPA-EFE/Shutterstock
Rouble plunges and interest rates double as Russian economy reels from sanctions
Oil surges above $100 a barrel; Gas prices leap as much as 40pc
FTSE 100 falls 0.6pc as global markets slide
BP severs ties with energy giant Rosneft
Lucy Burton: It’s high time to crack down on London lawyers protecting Putin’s oligarchs
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Ukraine is issuing ‘war bonds’ to help fund its armed forces in their fierce resistance against Russia’s invasion.
Ukraine’s finance ministry said it was offering citizens, businesses and foreign investors the chance to invest in military government bonds “in the time of military aggression” by Russia.
It added: “The proceeds from the bonds will be used to meet the needs of the Armed Forces of Ukraine and to ensure the uninterrupted provision of the state’s financial needs under the war.”
The auction is set to take place tomorrow, with the tenure of the bonds set at one year.
Ukraine’s fundraising comes as a slew of western sanctions cripples Russia’s economy. Fears are mounting of a run on banks as the rouble crashed to a record low against the dollar and authorities refused to reopen the Moscow Exchange.
Putin bans all Russians from transferring money abroad
Russian President Vladimir Putin has stepped up his retaliation against sanctions by ordering a ban on foreign exchange loans and transfers by Russian residents to outside the country from tomorrow.
The Russian leader also signed into a law an order for exporting companies to sell 80pc of their forex revenues received from the beginning of this year on the market.
Russian ships banned from docking in British ports
Meanwhile, the Government has told ports not to provide access to any Russian flagged, registered, owned or controlled vessels before new legislation comes into effect.
In a letter to all UK ports, Transport Secretary Grant Shapps said: “The maritime sector is fundamental to international trade and we must play our part in restricting Russia’s economic interests and holding the Russian government to account.”
UK slaps sanctions on Sberbank
Foreign Secretary Liz Truss has confirmed that the UK will hit Russian lender Sberbank with sanctions once new legislation is introduced.
She told the House of Commons: “We will bring in a full asset freeze on all Russian banks in days, looking to coordinate with our allies.
“This same legislation will prevent the Russian state from raising debt here and it will isolate all Russian companies, that’s over 3m businesses, from accessing UK capital markets.”
Ms Truss also said Britain will impose an asset freeze on Russian state development bank VEB.
She said: “I will also be imposing a full asset freeze on three further banks: VEB, Russia’s national development bank, Sovcombank, the third largest privately owned financial institution in Russia, and Otkritiye, one of Russia’s largest commercial banks.”
Ukraine to issue ‘war bonds’
Ukraine’s finance ministry has announced plans to borrow money from international bond investors as it looks to raise funds for its army.
In a statement it said: “In the time of military aggression of the Russian Federation, the Ministry of Finance offers citizens, businesses and foreign investors to support the budget of Ukraine by investing in military government bonds.”
It comes after the EU took the unprecedented step of pledging weapons to Ukraine to help resist the Russian invasion.
Tui boss shrugs off risk from Russian oligarch shareholder
Tui Alexey Mordashov sanctions Russia Ukraine – Simon Dawson/Bloomberg
Tui has insisted it won’t suffer “any lasting negative consequences” if western nations sanctioned Alexey Mordashov, the Russian billionaire who owns a major stake in the travel firm.
Mr Mordashov owns more than a third of Tui’s shares after pumping cash into the tour operator to help it navigate the pandemic.
In a note to staff, chief executive Fritz Joussen said: “Our company is run by the executive board, like any German public limited company, and not by the shareholders or the supervisory board.
“We therefore assume that any restrictions or sanctions against Mr Mordashov will not have any lasting negative consequences for us as a company.”
Mr Mordashov is the largest shareholder in Russian steelmaking giant Severstal and has a fortune of over $25bn (£18.7bn), according to Bloomberg.
Pound recovers as West rolls out sanctions
Sterling has proved relatively resilient to the wider market turmoil, gaining ground against the euro and clawing back its losses against the dollar.
The West has rolled out tough measures against Russia, targeting its central bank and banning some lenders from the Swift payments system.
Traders initially flocked to the safe-haven dollar, but sterling has recovered as ceasefire talks between Russia and Ukraine began on the Belarussian border.
The pound rose 0.5pc against the euro to 83.64p as the single currency weakened following the sanctions. Against the euro it erased earlier losses to push 0.2pc higher at $1.3417.
Russian media sites display anti-Putin message after hack
Russia media hack Ukraine anonymous – PA
The websites of several Russian media outlets were replaced by anti-war messages and calls to stop Putin’s invasion of Ukraine following a coordinated hack.
The message read: “Dear citizens. We urge you to stop this madness, do not send your sons and husbands to certain death. Putin is forcing us to lie and is putting us in danger.”
The website of Russian state news agency TASS, along with news websites rbc.ru, kommersant.ru, fontanka.ru and iz.ru of the Izvestia outlet all suffered outages, with several displaying the message.
The message continued: “We have been isolated from the whole world, they have stopped buying oil and gas. In a few years we will be living like North Korea.
“What is this for? So that Putin can get into the history books? It’s not our war, let’s stop him!”
Some Russian media said Anonymous, the online hacking group that’s declared cyber war on Russia, was responsible for the hack.
Airbnb to house up to 100,000 Ukrainian refugees
Airbnb has said it will offer free, temporary housing for up to 100,000 refugees fleeing Ukraine.
Chief executive Brian Chesky and Joe Gebbia, the chairman of charitable arm Airbnb.org, have sent letters to leaders of Poland, Romania, Germany and Hungary offering help to house the refugees.
Senior EU officials have said that at least 300,000 Ukrainian refugees have entered the bloc so far after Russia invaded the country, adding that they expected millions more.
Airbnb is the latest company to offer support to businesses and consumers in Ukraine during the conflict. Telecoms group Virgin Media O2 said it has removed charges for data use in the country.
Who could buy BP’s stake in Rosneft?
Oil treatment facilities at Vankorskoye oil field owned by Rosneft – Sergei Karpukhin
BP’s ties with Russia endured Putin’s attacks in Syria, the annexation of Crimea, poisonings in Salisbury and support for Venezuela’s contested president Nicolás Maduro.
The assault on Ukraine, however, has finally pushed the oil and gas giant to “fundamentally rethink” the entanglement and announce plans to exit its 19.75pc stake in the state’s giant oil producer Rosneft, held since 2013 and worth as much as £6bn.
But the decision was taken in such haste, BP hadn’t worked out the next step: who exactly would it sell to?
Rachel Millard examines the options for the oil giant.
Who could buy BP’s stake in Rosneft?
European banks hammered by sanctions
Banks in Italy and France are most vulnerable to the West’s onslaught of financial sanctions on Moscow after its lenders built up a combined $50bn (£37bn) in Russian exposure.
Here’s some from Tom Rees:
Shares in Societe Generale, UniCredit and Austria’s Raiffeisen tumbled on Monday morning over fears that exposed European lenders will be hit by the fallout of tough sanctions, including ejecting selected Russian banks from the Swift global payments messaging system.
Lenders in Italy and Austria are among the most vulnerable to the crisis and have failed to reduce their exposures to the Russian economy since the Crimea annexation in 2014, according to data from the Bank for International Settlements.
Foreign lenders’ total exposure to Russia is around $90bn, according to JPMorgan, as the West targets its banking sector in a bid to inflict economic pain.
There are fears the Swift removal will make it harder for Russian firms to repay their debts to European banks and could disrupt trade, while some lenders also have subsidiaries in the country which is facing a deep recession.
While French banks have cut their borrowing exposure, which was once at more than $50bn, they and Italian lenders still had $25bn each in outstanding claims by the third quarter of 2021. Austrian banks had almost $18bn while UK banks’ exposure was much lower at $3bn.
Neutral Switzerland hits Russia with sanctions
Protests against Russia in Bern, Switzerland – Manuel Lopez/EPA-EFE/Shutterstock
Switzerland is famously neutral, but that hasn’t stopped it rolling out sanctions against Russia.
The country said it will adopt all the measures already imposed by the EU on Russia over its invasion of Ukraine, including against President Vladimir Putin.
Swiss President Ignazio Cassis described the move as a “big step for Switzerland”,
The neutral nation had come under increasing pressure to get in line with the EU and US sanctions against Russia, with nearly all political parties backing the move.
On Saturday, as many as 20,000 demonstrators marched in Switzerland in solidarity with Ukraine, with many loudly calling on Bern to impose sanctions.
Wall Street falls at the open
Wall Street has started the week in the red, taking its cue from stocks around the globe as western sanctions hammer the Russian economy.
The benchmark S&P 500 fell 0.7pc at the open, while the Dow Jones was down 0.6pc. The Nasdaq dropped 0.9pc.
US and allies consider release of 60m oil barrels
The US and its allies are said to be considering a coordinated release of around 60m barrels of oil from their stockpiles after Russia’s invasion of Ukraine drove prices above $100.
While no decisions have been made, the US has been in discussions with other members of the International Energy Agency over the move, Bloomberg reports.
Benchmark Brent crude prices surged to almost $106 a barrel last week – a new seven-year high – as the conflict fuelled fears of supply disruptions. Prices have eased back slightly since then, but they’re still above $100.
Evening Standard owner Lebedev urges Putin to end war
The Russian owner of the Evening Standard has used the front page of his newspaper to plea with Vladimir Putin to end the war in Ukraine.
Evgeny Lebedev, the billionaire son of a former KGB spy, urged the Russian leader to use peace negotiations to bring the conflict to an end.
He wrote: “As Europe stands on the brink of another world war, and the world on the brink of a possible nuclear disaster, I plead with you to use today’s negotiations to bring this terrible conflict in Ukraine to an end.
“As a Russian citizen I plead with you to stop Russians killing their Ukrainian brothers and sisters. As a British citizen I ask you to save Europe from war.”
Baron Lebedev, who also owns the Independent, was handed a life peerage by Boris Johnson in July 2020.
Gold climbs as sanctions fuel global growth fears
Gold climbed higher today after the West rolled out tough new sanctions against Russia, fuelling fears of a hit to global economic growth.
Prices rose as much as 2.2pc to $1,930 an ounce as Russia’s central bank was targeted with measures blocking it from using foreign reserves to cushion the impact of sanctions.
Some Russian banks have also been banned from the Swift system that underpins trillions of dollars worth of international transactions.
The central bank doubled its key interest rate to 20pc – the highest in almost two decades – and imposed some controls on the flow of capital in a bid to shield the economy as its currency plummeted.
But concerns are now growing about whether the financial chaos may damage global economic growth or require action by the Federal Reserve to supply dollars.
Abrdn ‘unable to sell’ £5m Rosneft stake
Abrdn has reportedly been left unable to sell its £5m stake in Kremlin-controlled energy firm Rosneft due to restrictions on foreign share traders on Moscow’s stock exchange.
The FTSE 100 asset manager is keen to offload its shareholding since Russia invaded Ukraine but has been prevented from doing so, Sky News reports.
It comes after BP announced plans to sell its 20pc stake in Rosneft – a move it warned could cost $25bn (£18.7bn) – though questions remain about how it will be able to do so and who would buy it.
Oligarch Oleg Deripaska demands end to ‘state capitalism’
Oleg Deripaska with Vladimir Putin – Sasha Mordovets/Getty Images
Oleg Deripaska has demanded an end to “state capitalism” as Russian oligarchs break ranks to speak out against the invasion of Ukraine.
Laura Onita has more:
Mr Deripaska, the founder of Russian aluminium giant Rusal, called for a coherent economic plan as escalating financial sanctions threaten to cripple the country’s economy.
“Raising the [interest] rate, the sale of foreign currency – this is the first test of who will actually be responsible for this banquet,” he posted in Russian on the messaging app Telegram on Monday.
“I really want clarifications and intelligible comments on the economic policy of the next three months.”
The oligarch owns almost half of the aluminium company EN+, which listed on the London Stock Exchange in 2017, raising $1.5bn (£1.1bn). Former Conservative energy minister Lord Barker is its executive chairman.
Mr Deripaska added: “Since this is a real crisis, then real crisis managers are needed, and not science fiction writers with a pack of presentations.
“Now, as in 2014 [Russia’s annexation of Crimea], it will not be possible to sit out. It is necessary to change the economic policy, it is necessary to end all this state capitalism.”
His remarks came after he called for peace talks on social media on Friday.
US bans transactions with Russian central bank
US sanctions Russia Ukraine – Anton Novoderezhkin
The US has banned its citizens and companies from doing business with Russia’s central bank, its national wealth fund and its ministry of finance.
The Treasury Department said the move would “effectively immobilise” any Russian central bank assets held in the US or by US nationals.
The US also announced new penalties on a key Russian sovereign wealth fund – the Russian Direct Investment Fund – and its chief executive, Kirill Aleksandrovich Dmitriev, a close ally of Vladimir Putin.
It’s the latest salvo in the West’s financial retaliation against Russia following Putin’s invasion of Ukraine.
Treasury Secretary Janet Yellen said: “The unprecedented action we are taking today will significantly limit Russia’s ability to use assets to finance its destabilising activities, and target the funds Putin and his inner circle depend on to enable his invasion of Ukraine.”
Russian bans 36 countries from airspace
Russia has rolled out a sweeping ban on airlines from three dozen countries from using its airspace.
The UK, Germany, Spain, Italy and Canada are all among the nations targeted in the retaliatory move, which comes after most European nations blocked Russian planes from their airspace.
Ukraine asks for Russian passwords in cyber assault
Ukrainian officials are publicly soliciting Russian passwords and details of Russian cyber weaknesses, posting an appeal on Twitter for information could help hackers break into Russian networks.
Ukraine’s State Service of Special Communications and Information Protection wrote on Twitter: “If you possess any information regarding vulnerabilities in Russian cyber defenses (bugs, backdoors, credentials), please report it.”
Over the weekend Vice Prime Minister Mykhailo Fedorov said Ukraine was creating an “IT army” to fight against Russian cyber attacks, and a Telegram channel devoted to the effort has since made repeated claims of knocking Russian websites offline through denials of service.
Last week, Ukraine called on its hacker underground to help protect critical infrastructure and conduct cyber spying missions against Russian troops.
Rouble claws back ground as Russia and Ukraine begins talks
The rouble has pared some of its earlier losses after Russia said it had started talks with Ukraine.
Russia’s foreign ministry said discussions had begun near the Belarusian border, raising some hopes that the Kremlin could agree to de-escalate the crisis.
The rouble – which had plunged 30pc against the dollar to a record low of 120 – recovered some of its losses, though it was still down 20pc at 102 per dollar.
A fresh wave of western sanctions has sparked economic chaos in Russia. Its central bank has doubled interest rates to 20pc and announced a string of interventions to help prop up markets, but this did little to support the rouble.
European stocks set for worst month since 2020
The sell-off is continuing across global markets, putting European stocks on track for their worst month since October 2020.
The pan-European Stoxx 600 index fell 1.1pc, with banks and car manufacturers leading losses. Utilities and healthcare stocks were among the few risers.
On the final day of trading in February, the index is down 4pc for the month.
It’s a slightly brighter story for the FTSE 100, however, which has recovered some of its early losses to trade down just 0.8pc.
A 13pc rise for BAE Systems and gains for miners helped limit losses on the commodity-heavy index.
Putin blames nuclear threat on Liz Truss
Kremlin spokesman Dmitry Peskov has claimed that Vladimir Putin placed nuclear deterrence forces on high alert after statements from foreign secretary Liz Truss.
According to the Interfax news agency, Mr Pekov told a press briefing: “Statements were made by various representatives at various levels on possible altercations or even collisions and clashes between Nato and Russia.
“We believe that such statements are absolutely unacceptable.
“I would not call the authors of these statements by name, although it was the British foreign minister.”
Ukraine raises $13m in crypto after crowdfunding appeal
Ukraine’s government has raised almost $13m (£9.7m) in cryptocurrency after posting appeals on social media for donations of bitcoin and other digital tokens.
Ukraine’s official Twitter account made the appeal for cryptocurrency donations over the weekend following the country’s invasion by Russia, posting digital wallets addresses for tokens including bitcoin and ether.
By 9am today, the wallet addresses had received crypto worth $12.8m across almost 17,300 donations, according to analysis firm Elliptic.
Austria vows to cut reliance on Russian gas
Austria, which obtains roughly 80pc of its natural gas from Russia, will “do everything” it can to reduce its dependence on the country, Chancellor Karl Nehammer has said.
In a tweet posted after a meeting of ministers over the Ukraine crisis, Mr Nehammer said:
Gas deliveries to Austria are not currently at risk. In the medium term, Austria will do everything to reduce its dependence on Russian gas imports.
Wall Street set to slide as West ramps up sanctions
Wall Street looks set to drop sharply at the opening bell as the latest escalation in tensions over Russia’s invasion of Ukraine wreaks havoc through markets.
Futures tracking the S&P 500, Dow Jones and Nasdaq all dropped more than 1pc as investors digest a fresh round of sanctions against Russia.
Stocks have plunged around the globe, while oil prices jumped and the rouble crashed to a record low in a torrid day for markets.
Roman Abramovich called in to help peace talks
Russia Ukraine Roman Abramovich peace talks – Alexander Hassenstein – UEFA
Chelsea FC owner Roman Abramovich has been called in to try to help broker an end to the war in Ukraine.
A spokesman for the Russian billionaire said: “I can confirm that Roman Abramovich was contacted by the Ukrainian side for support in achieving a peaceful resolution, and that he has been trying to help ever since.”
The oligarch, whose net worth is listed at about $13bn (£9bn) by Bloomberg, has come under increasing pressure as the conflict escalates, with Labour MP Chris Bryant arguing he shouldn’t be allowed to own an English football club.
Over the weekend Mr Abramovich said he was stepping back from day-to-day running of Chelsea, but would remain the owner.
Binance refuses Ukraine request to ban Russians
The world’s biggest cryptocurrency exchange Binance has refused to ban Russian users despite pleas from Ukraine’s deputy prime minister.
Mykhailo Fedorov said he was asking all major exchanges to block the addresses of all Russians.
But in a statement Binance said it was “not going to unilaterally freeze millions of innocent users’ accounts”.
Crypto is meant to provide greater financial freedom for people across the globe. To unilaterally decide to ban people’s access to their crypto would fly in the face of the reason why crypto exists.
However, we are taking the steps necessary to ensure we take action against those that have had sanctions levied against them while minimizing impact to innocent users. Should the international community widen those sanctions further, we will apply those aggressively as well.
Markets signal 56pc chance of Russian debt default
The risk of Russia defaulting on its debt has surged to a record 56pc after western nations rolled out a fresh wave of sanctions.
Credit default swaps insuring $10bn (£7.5m) of Russia’s government debt for five years were quoted at around $4m upfront and $100,000 annually, according to Bloomberg data. That signals around a 56pc likelihood of default.
For the first time ever, the price of protecting Russia’s debt is no longer being officially quoted in basis points, as protection sellers now demand payments in advance, suggesting markets think default might be imminent.
Read more on this story: Risk of Russian banks defaulting on debts highest since Crimea
Russia and Ukraine begin talks
Officials from Russia and Ukraine have begun talks on the Belarus border, with official photos showing the delegations sitting opposite each other at a long table.
Ukraine has said its goal for the talks is an immediate ceasefire and the withdrawal of Russian forces from Ukraine. Russia has been cagier, with the Kremlin declining to comment on Moscow’s aim in negotiations.
Kettle controls firm Strix hit by Russian cyber attack
A British company that specialises in kettle safety controls has been hit by a Russian cyber attack.
London-listed Strix Group said it took its systems offline while and hired external advisers to investigate an incident that mainly affected its Isle of Man and UK servers.
Its systems are now up and running again and Strix said there had been no impact on customer orders or sales.
Petrol hits 150p a litre
Petrol prices fuel oil energy Russia Ukraine – Luke MacGregor/Bloomberg
Petrol prices have hit a new record high of 150p a litre as the crisis in Ukraine fuels more chaos in energy markets.
Pump prices hit 151.25p a litre on average yesterday, according to the AA. That’s more than 25p more expensive than this time last year. Diesel has also risen to a fresh high, reaching 154.72p a litre.
The price growth has sparked a huge increase in costs for motorists. A year ago, filling up the typical 55-litre petrol tank cost £67.86. It now costs £83.19.
It comes as wholesale oil prices continue to surge, with war in Ukraine pushing benchmark Brent crude to new seven-year highs of more than $100 a barrel.
Luke Bosdet at the AA said:
Petrol at 150p a litre reaches a milestone that millions of motorists, faced with a cost of living crisis, have dreaded. It comes as households are getting notices of domestic energy price rises in April…
If there is a silver lining, the predictions of 160p or even 170p-a-litre fuel now look exaggerated as the oil price fell back after one day’s surge last week.
However, it is the cumulative impact of record pump prices, other inflation and tax rises, along with a raft of extra charges implemented or threatened by councils for motoring in city and town centres, that threatens those least able to bear the financial burden.
Kremlin vows to retaliate against aviation sanctions
Moscow has vowed to retaliate against western sanctions targeting Russia’s aviation industry.
Kremlin spokesperson Dmitry Peskov told reporters: “The guiding principle will be reciprocity, and our own interests will be at the forefront of that.”
Mr Peskov also accused the EU of hostile behaviour towards Russia, saying weapons supplies to Ukraine were dangerous and destabilising.
Putin to hold emergency meeting as Russian economy crashes
Vladimir Putin will hold an emergency meeting of cabinet members and the central bank after a fresh wave of western sanctions sent Russia’s economy into freefall.
The Kremlin said the sanctions had “significantly changed Russia’s economic reality” but insisted the country could weather the impact.
Hundreds of Russian plane leases axed
Russia Ukraine airlines sanctions – Marina Lystseva/TASS
Hundreds of aircraft leases with Russian airlines are set to be axed after Western nations rolled out fresh sanctions over the invasion of Ukraine.
Asian lessor BOC Aviation said most of its aircraft in Russia would be affected by EU sanctions that require the leases be terminated by March 28.
Russian companies have 980 passenger jets in service, of which 777 are leased, according to analytics firm Cirium.
Of these, two-thirds – or 515 jets – with an estimated market value of about $10nm (£7.5bn), are rented from foreign firms in the mainly Ireland-based industry.
AerCap Holdings, the world’s biggest leasing company, has the largest exposure to Russia and Ukraine with 152 planes, according to aviation consultancy IBA.
Moscow Exchange to remain shut all day
There will be no trading at all on the Moscow Exchange today as authorities brace for a collapse in stocks.
Russia’s central bank said it had decided against opening the exchange “due to the emerging situation”. Market open had initially been delayed by three hours, before being pushed back progressively further.
There’s a glimpse of what things could look like when the exchange reopens, though. Sberbank’s London-listed shares nosedived 75pc this morning, while Gazprom’s London listing dropped 62pc.
EU to link power grid to Ukraine in emergency measure
The European Commission will ask member states to activate an emergency synchronisation procedure to link the bloc’s power grid to that of Ukraine.
Energy Commissioner Kadri Simson wrote in a tweet: “I believe this is the only possible course of action in current circumstances.”
Oil shipping costs soar as crisis roils energy markets
As war in Ukraine rages, shipping oil by sea has become much more expensive.
Freight rates for transporting crude oil from Russia are surging as Western sanctions increase the risks of carrying cargo on those routes, while a scramble for alternative supplies boosts the rates for other routes.
Shipowners are offering at least double the last transacted rate to carry so-called ESPO crude from Kozmino – which loads oil from Russia’s Far East – to ports in China, Bloomberg reports.
At the same time, the cost of shipping oil from the US to Ningbo by supertanker has jumped, as has the rate for Ceyhan, Turkey, to China.
Energy markets have been plunged into chaos by Russia’s invasion of Ukraine. Benchmark Brent crude soared to almost $106 a barrel last week. It’s up 5pc to almost $103 this morning following a fresh wave of Western sanctions.
Poland-Lithuania gas pipeline to open early
Europe may have enough gas supplies to get through next winter, but it’s still taking precautions as the energy crisis deepens.
A gas pipeline linking Poland and Lithuania will now open on May 1 – ahead of its scheduled start of mid-2022.
Polish grid operator Gaz System said the pipeline’s first volume auctions will be held in April for capacity available in either direction from May to September.
EU ‘could survive’ next winter without Russian gas
Russia gas Europe Nord Stream 2 – Anton Vaganov
The EU is capable of surviving next winter without imports of Russian natural gas while avoiding major damage to its economy.
That’s according to a new report by Belgium-based think tank Bruege, which said the bloc would need to reduce its demand by at least 10 to 15pc if Russia halted imports altogether.
But if energy giant Gazprom continues to meet its long-term contractual obligations, depleted storage levels could easily be replenished before next winter, the report said.
Simone Tagliapietra, one of the authors of the report, said: “Russia’s invasion of Ukraine is a watershed moment for the EU, which will also redesign its energy map.
“Our key message here is clear: if the EU is forced or willing to bear the cost, it should be doable to replace Russian gas already for next winter without economic activity being devastated.”
Benchmark European gas prices surged as much as 40pc this morning amid renewed concerns the war could disrupt supply. Germany has halted approval of the Nord Stream 2 pipeline from Russia in response to the crisis.
Pound falls as traders flock to safe-haven dollar
Sterling has lost ground against the dollar as traders seek out safe-haven assets amid an escalation of tensions in Europe.
The Government has said it will block citizens transacting with Russia’s central bank and will ramp up plans to crack down on money laundering by introducing new laws to register foreign owners of British property.
The pound fell 0.2pc against the dollar to $1.3381.
Sberbank plunges 75pc in London trading
While the Moscow Exchange is *still* not open, it’s a torrid start to trading for Sberbank’s London listing.
London shares in Russia’s biggest state bank plunged 75pc at the open, before recovering marginally to a fall of 70pc.
It follows the Telegraph’s report that the UK is preparing to hit Sberbank with a package of sanctions. Earlier today the ECB froze the bank’s divisions in the bloc, warning they were likely to collapse.
Read more on this story: UK targets Russia’s biggest state bank as sanctions heat up
FTSE 100 tumbles 1.5pc
The FTSE 100 has extended its losses in morning trading, sliding 1.5pc into the red.
Polymetal International has seen its share price collapse in half, while fellow Russian miner Evraz crashed 20pc.
But the biggest drag on the blue-chip index is coming from banking stocks including HSBC, Lloyds and Barclays.
BP has tumbled more than 6pc after announcing plans to ditch its stake in Russian energy firm Rosneft. Rival Shell has also slid into the red.
Still, there are some bright spots. BAE Systems leapt 14pc after Germany said it’s ramping up defence spending. Miners including Rio Tino, Anglo American and Glencore also rose on higher commodity prices.
Airline stocks sink amid airspace bans
Aeroflot airline stocks Russia Ukraine – REUTERS/Maxim Shemetov/File Photo
Banking isn’t the only sector feeling the impact of sanctions this morning – airlines are also in decline.
Most of Europe has closed its airspace to Russian airlines, while Moscow has hit back with its own bans.
A Bloomberg gauge of European airlines dropped as much as 4.8pc on Monday. British Airways owner IAG fell 3.7pc, while Wizz Air and easyJet dropped 9.9pc and 6pc respectively.
The bans are sparking memories of Cold War era restrictions that forced airlines to fly circuitous intercontinental routes. It’s also a major setback for carriers still struggling to recover from the pandemic.
Traders cut bets on ECB interest rate rise
Money markets are starting to scale back their expectations that the European Central Bank will raise interest rates this year.
Volatility is even more severe than usual this morning, making it hard to establish a clear consensus.
Traders are flipping their bets between less than one 25 basis point increase by the end of the year and a rise of around 30 basis points.
Still, it’s clear there’s far less confidence that the ECB will tighten policy given the wider turbulence on markets.
Banks lead stock declines after Swift ban
Banks Swift payments Russia Ukraine – Tolga Akmen / AFP
Banks are leading the decline on markets this morning after the West issued tougher sanctions to cripple Russia’s financial system.
A number of the country’s lenders have been blocked from the Swift transaction messaging system, while a crackdown on Russia’s central bank is sparking chaos for the economy.
HSBC is the biggest drag on the FTSE 100, tumbling as much as 5pc. Lloyds, Barclays, NatWest and Standard Chartered have also slid into the red.
A gauge of banking stocks across the European Stoxx 600 index slumped 5pc in early trading, outstripping the wider decline.
Austria’s Raiffeisen dropped 18pc, ING fell 9.4pc, Deutsche Bank shed 7.7pc, while Societe Generale and BNP Paribas were down 9.5pc and 8.5pc respectively.
Credit Suisse: Russian Swift bank could force Fed to step in
The decision to ban some Russian banks from the Swift system could result in missed payments and huge overdrafts in the international banking system, forcing authorities to step in.
That’s according to Credit Suisse, which warned central banks may need to reactivate daily operations to supply the market with dollars.
Analyst Zoltan Pozsar drew comparisons with the collapse of Lehman Brothers in 2008 and the pandemic market crash in 2020.
He said: “Exclusions from Swift will lead to missed payments and giant overdrafts similar to the missed payments and overdrafts that we saw in March 2020,
“Banks’ inability to make payments due to their exclusion from Swift is the same as Lehman’s inability to make payments due to its clearing bank’s unwillingness to send payments on its behalf. History does not repeat itself, but it rhymes.”
Mr Pozsar argued that current excess reserves and reverse repurchase agreement facilities won’t be enough, and monetary authorities will need to act.
Germany could extend coal use to reduce reliance on Russian gas
Germany could extend its use of coal as the country rethinks its energy plans in the aftermath of Russia’s invasion of Ukraine, Economy Minister Robert Habeck has said.
The former co-leader of the Green party said coal plants could run for longer and even said he wasn’t “ideologically opposed” to extending the use of nuclear energy.
Chancellor Olaf Scholz announced on Sunday plans to build two new liquefied natural gas terminals to expand Germany’s energy choices and reduce its reliance on Russia.
Mr Habeck said the government wanted to reach a point where it can “pick and choose which countries we want to build energy partnerships with”.
He told German television: “Being able to choose also means, in case of doubt, that you can become independent from Russian gas, coal or oil.”
While Germany can manage without Russian gas for the coming months, the country would have to expand its purchasing strategy significantly for next winter, he said.
FTSE risers and fallers
The FTSE 100 has dropped 1.3pc as an escalation in tensions over Russia’s invasion of Ukraine sparked fresh jitters across global markets.
Russia-exposed miners Polymetal International and Evraz are the biggest fallers, dropping 36pc and 17pc respectively.
BP is down 5.8pc after announcing plans to sell its state in Russian energy firm Rosneft – a move that could cost it as much as $25bn (£18.7bn).
Financial stocks including HSBC, Barclays, Lloyds and Prudential are also dragging down the index.
The FTSE is outperforming its European rivals, however. That’s largely thanks to a 14pc surge for BAE Systems after Germany said it was ramping up its defence spending.
Miners Rio Tinto and Anglo American are also helping to limit losses as they track commodity prices higher.
The domestically-focused FTSE 250 has suffered a less severe drop of 0.7pc, with Petropavlovsk tumbling 12pc.
Defence stocks surge as Germany ramps up spending
Germany navy defence stocks Russia Ukraine – FOCKE STRANGMANN/EPA-EFE/Shutterstock
While markets have opened in the red, defence stocks are making gains.
It comes after Germany said it will increase defence spending in a radical policy shift following Russia’s invasion of Ukraine.
BAE Systems – Europe’s largest defence contractor – jumped 13.5pc to the top of the FTSE 100. Babcock gained 6.6pc, while Qinetiq rose 8.6pc and Chemring pushed 3pc higher.
In Germany, Hensoldt surged as much as 84pc and Rehinmetall rose more than 40pc.
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.
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.
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
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.
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.
ECB freezes Sberbank operations as it warns lender ‘likely to fail’
Russia Ukraine Sberbank ECB – Artyom Geodakyan
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.”
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.
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).
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.
BP abandons stake in Russian oil giant Rosneft
Russia Ukraine BP Rosneft – Mikhail Metzel
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”.
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).
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.
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.
Russia braces for run on banks
Russia Ukraine bank rouble – ANTON VAGANOV
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?”
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.
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.
Markets braced after ‘terrible’ weekend
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.”
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)