Fears are mounting over gas supplies to Europe after Russian troops took control of key energy facilities in Ukraine.
The operator of Ukraine’s gas pipelines said Russian forces were at more than one gas compressor station, posing a potential threat to smooth gas transit to Europe.
Ukrainian authorities demanded that the military and armed groups leave the sites immediately and “stop trying to influence the operation”.
European nations are scrambling to find alternative sources of gas amid fears Moscow could turn off the taps. Alexander Novak, Russia’s deputy prime minister, has said the country would have “every right” to cut supplies in retaliation against western sanctions.
12:12 PM
Lush pulls out of Russia
Lush has become the latest company to cut ties with Russia.
The cosmetics company said it had suspended supplies to its Russian licence holder and halted online sales in the country.
It’s also in the process of acquiring the shares in Lush Ukraine not currently held by the group in an effort to secure the business.
Lush’s businesses in Russia and Ukraine are associate companies, both 65pc owned by a Russian citizen. It has 48 shops in Russia and 15 in Ukraine.
12:06 PM
Russia and Belarus ‘mightily close’ to default, World Bank warns
Russia and Belarus are “mightily close” to default as western sanctions cripple their economies, the World Bank has warned.
Louis Ashworth has the details:
Carmen Reinhart, the development organisation’s chief economist, said both countries are now in “square default territory”, putting payments on about $40bn of external bonds at risk.
“They’re not rated by the agencies as a selective default yet, but mighty close,” she said.
A large-scale default would be Russia’s first since the aftermath of the Bolshevik revolution in 1917.
“I worry about what I do not see,” Ms Reinhart said. “Financial institutions are well-capitalised, but balance sheets are often opaque… there is the issue of Russian private sector defaults. One cannot be complacent.”
Ratings agency Fitch has already cut Russia’s sovereign debt rating to “C”, deep in junk territory, warning a default is “imminent” as Moscow is increasingly frozen out of the global financial system.
S&P, another ratings agency, cut Russia and Belarus to a “CCC” rating last week, with analysts saying they were awaiting more clarity on the ability or willingness of Moscow to pay its debts.
12:00 PM
Shell boss pockets £1m pay rise
Calls for a windfall tax are likely to mount after Shell revealed its boss pocketed a £1.1m pay rise last year.
Ben van Beurden took home €7.4m (£6.3m ), up from €5.8m (£5.2m) the previous year, the company revealed today.
Shell has cashed in on the recent surge in oil and gas prices, causing its profits to increase 14-fold last year to a record high.
Labour politicians and campaigners have called for a windfall tax on energy giants such as Shell as households feel the strain of higher bills. However, Business Secretary Kwasi Kwarteng has dismissed the calls, saying such a policy would harm investment.
While Mr van Beurden’s pay rose sharply last year, it’s still lower than before the pandemic. It’s also far below the £17.2m he made in 2018.
11:45 AM
Fuel prices surge to new record highs
The price of petrol and diesel in the UK has extended its recent rally to hit fresh record highs.
The average price of petrol rose to 159.57p per litre – up 1.4p from the previous day – according to the RAC. Diesel jumped by 2pc to 167.37p.
Surging oil prices in the wake of the Ukraine crisis have driven fuel prices ever higher, adding to the squeeze on household budgets.
But the RAC said yesterday’s sharp drop in wholesale oil – the biggest in three months – offered some hope.
Simon Williams at the RAC said:
There was a hint of better news yesterday on the wholesale market with substantial drops in both petrol and diesel, which could lead, in a week or so, to a slight slowing in the daily pump price increases and record being broken less frequently.
11:38 AM
What UK assets does Abramovich hold?
Roman Abramovich has built up a global empire spanning businesses, luxury properties, artwork, cars, private jets and superyachts, alongside his investment in Chelsea Football Club.
Now, though, the billionaire has been hit with a string of sanctions as the Government clamps down on oligarchs.
But which assets have been frozen? Matt Oliver and Simon Foy have compiled a list:
Roman Abramovich assets: the cars, houses, yachts – and Chelsea FC
11:04 AM
Shares in Evraz halted after Abramovich sanctions spark sell-off
Trading in Evraz shares has been halted after after new sanctions targeting Roman Abramovich sparked a sharp sell-off.
Mr Abramovich, who holds a stake of around 30pc in the mining company, was one of seven oligarchs whose UK assets have been frozen by the Government.
Shares in FTSE 100-listed Evraz dropped 10pc before trading was stopped.
10:41 AM
Three reviewing Chelsea FC sponsorship
Chelsea FC’s shirt sponsor Three has said it’s reviewing its relationship with the club after owner Roman Abramovich was targeted in new sanctions.
The mobile network is likely to come under pressure to end its sponsorship deal as businesses cut ties with Russia over the country’s invasion of Ukraine.
Shortly after the sanctions were announced, Three said it would offer support to Ukrainian refugees arriving in the UK.
The company will offer a free 30-day preloaded pay as you go SIM card to any incoming refugees from the conflict, including unlimited domestic calls, text and data for use within the UK.
10:21 AM
Russia says China is refusing to supply aircraft parts
Russia has admitted China is refusing to supply airlines with parts, cutting off a key lifeline for the country’s industry following western sanctions.
Russian news agencies cited a top official as saying that Russia would look for opportunities to source parts from countries including Turkey and India after a failed attempt to obtain them from China.
He also said Russian companies were registering their planes – many of which had been registered abroad – in Russia after the US and EU sanctions on aviation and that he expects some others to be returned to leasing companies.
It comes after the Kremlin published draft laws showing it plans to block airlines from returning jets to foreign leasing companies and force them to pay leases in roubles.
10:13 AM
Shell faces $400,000 hit from Russia exit
Shell is facing further financial hits from its decision to withdraw Russia over the country’s invasion of Ukraine.
The oil giant said it has $400,000 (£304,000) in Russian downstream assets. That’s on top of the $3bn it has in other projects announced previously.
Shell said last month it would pull out of its ventures in Russia with Gazprom and related entities including the flagship Sakhalin 2 liquefied natural gas plant and the Nord Stream 2 pipeline project.
This week it also said it’s halting all purchases of Russian energy after it came under fire for buying a cargo of the Kremlin’s crude at a discount last week, defying a wider trading boycott.
10:06 AM
Asian leasing firm BOC has $935m trapped in Russia
Asian plane leasing giant BOC Aviation has said it has 18 jets trapped in Russia with a net book value of $935m (£710m).
BOC, which is wholly owned by the Chinese state, said 4.8pc of its aircraft assets by net book value were leased to airlines in Russia as of the end of last month, adding they may be affected by sanctions against the country.
The company said: “This is a complex and rapidly developing situation that we are monitoring closely. We will fully comply with all sanctions and other laws that are applicable to our business.”
BOC added that insurers were cancelling elements of policies related to aircraft in Russia or leased to airlines there.
The UK has shut Russia’s aviation sector out of the London insurance market as part of a swathe of sanctions against Moscow.
09:52 AM
Uniqlo pulls out of Russia after backlash
Uniqlo has decided to temporarily suspend operations in Russia after it faced a backlash over its decision to stay put.
The brand’s owner Fast Retailing came under fire after saying it would keep its stores in the country open, even as rivals including H&M and Zara pulled out.
Tadashi Yanai, founder of Asia’s largest retailer, insisted clothing was a necessity and that “the people of Russia have the same right to live as we do.”
But Uniqlo has now backtracked on its decision, citing operational challenges and the worsening of the conflict.
09:44 AM
Ukraine warns of energy risk as Russian troops take gas stations
The operator of Ukraine’s gas pipelines has warned that Russian forces have seized more than one compressor station in the country, posing a potential threat to smooth gas transit to Europe.
The operator (OGTSU) did not say how many stations were affected or where they were.
It said:
The OGTSU demands that the military and armed groups immediately leave the territory of the compressor stations and stop trying to influence the operation of the GTS [gas transmission system].
Interference in the technological processes of GTS operations creates significant risks for the safety of continuous gas transportation to consumers in Ukraine and Europe.
09:38 AM
Evraz shares slump after Abramovich sanctions
Russian miner Evraz has slumped after its biggest shareholder Roman Abramovich was hit by UK sanctions.
Mr Abramovich, who holds a stake of around 30pc in the company, was one of seven oligarchs targeted by new measures. Shares in Evraz dropped more than 12pc.
It comes just a day after Evraz played down its links to Russia and said it hadn’t granted any loans to the oligarch.
The miner yesterday also scrapped its interim dividend, which would have returned cash to Mr Abramovich.
09:29 AM
Britain puts oligarchs in its sights
The Government has ramped up its financial assault on Moscow by targeting a string of Russian oligarchs with new sanctions.
Seven of Russia’s wealthiest and most influential tycoons, whose collective net worth is estimated at $15bn, have been targeted in the fresh measures.
Their assets in the UK will be frozen, they’re banned from travelling here and no UK citizen or company may do business with them.
They are:
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Roman Abramovich, owner of Chelsea FC, who has stakes in steel giant Evraz and Norilsk Nickel
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Oleg Deripaska, who holds stakes in EN+
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Igor Sechin, chief executive of Rosneft
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Andrey Kostin, chairman of VTB bank
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Alexei Miller, chief executive of Gazprom
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Nikolai Tokarev, president of state-owned pipeline company Transneft
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Dmitri Lebedev, chairman of Bank Rossiya
09:21 AM
UK hits Roman Abramovich with sanctions
Britain has slapped sanctions on Chelsea FC owner Roman Abramovich as part of a fresh wave of measures targeting oligarchs.
The billionaire is one of seven wealthy Russians whose assets have been frozen and will be banned from travelling to the country.
Industrialist Oleg Deripaska – a former business partner of Mr Abramovich who holds a stake in miner EN+ – is also included on the list.
Putin’s right-hand man Igor Sechin and four more of Putin’s inner circle are targeted. Their collective net worth is estimated at £15bn.
The move means Mr Abramovich will be blocked from selling Chelsea. Last week he confirmed plans to offload the club, aiming for a price tag of around £3bn.
Prime Minister Boris Johnson said:
There can be no safe havens for those who have supported Putin’s vicious assault on Ukraine.
Today’s sanctions are the latest step in the UK’s unwavering support for the Ukrainian people. We will be ruthless in pursuing those who enable the killing of civilians, destruction of hospitals and illegal occupation of sovereign allies.
09:10 AM
YouTube and Google Pay block paid services in Russia
YouTube and the Google Play store are suspending all payment-based services in Russia, including subscriptions, in the latest challenge to the country’s economy.
Google and YouTube had recently stopped selling online advertising in Russia following similar pauses by Twitter and Snap after Moscow’s invasion of Ukraine.
In a statement, YouTube said: “As a follow-up, we’re now extending this pause to all our monetisation features, including YouTube Premium, Channel Memberships, Super Chat and Merchandise, for viewers in Russia.”
YouTube channels in Russia will still be able to generate revenue from viewers outside of Russia through ads and paid features, which include Super Chat and merchandise sales.
Free apps on Google Play also remain available in Russia, according to a company support website.
08:57 AM
Gas prices drop as Russian flows hold steady
Natural gas prices dropped as much as 10pc this morning as Russia kept flows to the continent steady despite worries that Vladimir Putin could turn off the taps.
Shipments via a key route crossing Ukraine are set to remain normal today, according to data from grid operator Eustream. Supplier Gazprom has also said flows via Ukraine are in line with client requests.
That’s reassuring markets amid concerns Moscow could cut gas supplies to Europe in retaliation against sanctions. Governments are preparing plans to wean themselves off Russian energy, but a halt in supplies would send prices even higher.
Adding to the turmoil, Ukraine’s grid operator yesterday said Russian troops had entered two of four stations that pump gas to Europe.
08:31 AM
FTSE risers and fallers
The FTSE 100 has lost ground in early trading, with sentiment dipping after yesterday’s blistering rally.
The blue-chip index fell 0.9pc, dragged down by losses for banking and mining stocks.
Rio Tinto slumped to the bottom of the index, dropping more than 6pc in ex-dividend trading after it said it was cutting all ties with Russian businesses.
HSBC lost ground, while BP and Shell both dropped after oil prices suffered their biggest one-day fall in three months amid volatile trading.
The FTSE 250 dipped 0.2pc, with Wizz Air shedding 3pc.
08:27 AM
Credit Suisse reveals £700m exposure to Russia
Credit Suisse has revealed it had 848m francs (£694m) of credit exposure to Russia at the end of last year, while it warned of higher provisions and lower deal-making as a result of the invasion.
The Swiss lender said its exposure to Russia included derivatives and financing at the investment bank, trade finance at the Swiss business and lombard and other loans within private banking.
But it said it had minimal exposure to sanctioned individuals within wealth management and that its Russia market risk exposure wasn’t significant.
Credit Suisse is the latest European bank to reassure investors it can weather the conflict in Ukraine. The bank still has an office in Moscow and is viewed as a key player in managing expat Russian wealth.
The lender said demand for trading and hedging was up, but this was offset by more fears of loans going bad – a similar dynamic to early in the pandemic.
08:12 AM
John Lewis brings back bonus after record sales
John Lewis is bringing back its staff bonus after the retailer’s profits rebounded following a tough pandemic year.
Employees at the high street stalwart will share a £46m pot, with each receiving a bonus of 3pc – or one-and-a-half week’s pay. The company also said it will increase wages by 2pc on top of its pledge to pay the real living wage.
It marks the return of payouts after John Lewis was forced to scrap last year’s bonus for the first time since 1953.
The group, which also owns Waitrose, reported underlying pre-tax profits of £181m in the year to January 29 thanks to record sales of £4.9bn – up 8pc on a like-for-like basis.
It remained in the red on a bottom-line basis, though losses narrowed sharply to £26m from £517m in 2020, when the pandemic drove the company to its first ever annual loss.
Chair Dame Sharon White hailed a “good start” to the group’s five-year overhaul, but warned of a troubled wider outlook amid inflation and a cost-of-living crisis.
John Lewis, which recently ditched its “Never Knowingly Undersold” pledge, has said it will remove any products made in Russia from its shelves.
08:04 AM
FTSE 100 falls at the open
The FTSE 100 has lost ground at the open, bringing to an end a blistering rally that saw global markets surge on Wednesday.
The blue-chip index fell 0.4pc to 7,159 points.
08:02 AM
VW boss: Fallout from war will be ‘much worse’ than pandemic
The boss of Volkswagen has warned the economic damage from the war in Ukraine will be “very much worse” than the pandemic.
Herbert Diess, chief executive of Europe’s largest car maker, said the disruption to global supply chains from the conflict “could lead to huge price increases, scarcity of energy and inflation”.
He told the Financial Times: “It could be very risky for the European and German economies.”
Tough western sanctions against Moscow, combined with fears that Vladimir Putin could retaliate by cutting off supplies, have sparked chaos across energy and commodity markets.
Economist fear this could fan inflation even higher across the continent, while also denting economic growth.
Mr Diess added:
For a society like Germany, depending on Russian energy, raw materials . . . if you imagine a scenario where we cut off business relations with Russia, which we probably would have to do if this conflict [does not end], you could not buy energy any more and this would lead to a situation that might impact Europe and Germany considerably.
07:53 AM
Rouble steadies ahead of Russia-Ukraine talks
The rouble stabilised in early Moscow trading ahead of the first talks between Russian and Ukrainian foreign ministers since the invasion began two weeks ago.
The Russian currency was trading at 120.1 against the dollar – barely changed from yesterday’s closing pric. Against the euro it was around 0.8pc weaker at 128.
The rouble has tanked since Russia pushed troops into its neighbour, sparking a wave of tough sanctions by the West. It dropped to record lows yesterday when the Moscow market reopened after a trading suspension.
Top Russian and Ukrainian diplomats Sergei Lavrov and Dmytro Kuleba are due to meet in Turkey later in the day, though Kyiv has said its expectations for the talks are low.
07:48 AM
Rio Tinto cuts ties with Russia
Rio Tinto has become the first big mining company to cut ties with Russia following its invasion of Ukraine.
The Anglo-Australian company, which previously said it had no assets or employees in Russia or Ukraine, said it was terminating all commercial relationships with Russian businesses.
Rio Tinto runs the Queensland Alumina joint venture with Rusal, which holds a 20pc stake. It’s not yet clear how the move will affect this partnership, but the firm said last week it had the “appropriate structures” in place to ensure operations would not be disrupted.
Any decision to curb production at the site could add to the crunch in the aluminium market, where prices are already at historic highs.
Rio is the latest in a string of companies to cut ties with Moscow. US giants McDonald’s, PepsiCo, Coca-Cola and Starbucks all said they were halted business in the country this week.
07:39 AM
Russia threatens to hold planes hostage
Good morning.
Russia may ban its airlines from returning leased aircraft to their owners in stubborn defiance against western sanctions.
European leasing companies are facing a huge challenge to try and recover hundreds of jets after new measures against Vladimir Putin blocked them from doing business in the country.
But the Kremlin has published draft laws that would prevent carriers from returning the planes. It would also force them to pay leases in roubles for the rest of the year.
Russia’s aviation industry has been brought to its knees by the sanctions, which also include wide-ranging airspace bans and exclusion from London’s insurance market.
5 things to start your day
1) Fracking back on the table as Putin shakes foundations of UK energy policy Soaring gas prices prompt rethink among ministers keen to secure Britain’s domestic supplies
2) Russian banks offer yuan accounts as Putin turns to China Plunging rouble and western sanctions prompt Russia to use Chinese currency
3) MoD signs off contracts worth billions on basis of just one bid £7.2bn worth of contracts were signed without a competitive process at all
4) Germany ‘fights efforts to block Sberbank’ Berlin faces accusations of pushing back on plans to block Russia from Swift international payments system
5) IMF approves $1.4bn in ‘critical’ support for Ukraine Global lender warns of “already very serious” consequences of war as 2m refugees flee country
What happened overnight
Asian equities rallied on Thursday following a strong bounce on Wall Street and a breathtaking surge in Europe. Tokyo jumped up 3.8pc, while Hong Kong, Seoul and Taipei climbed more than 2pc each. Shanghai, Sydney, Singapore, Manila and Wellington were also sharply up.
Coming up today
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Corporate: Capita, Balfour Beatty, Hill & Smith Holdings, Just Group, National Express, Savills, Spirax-Sarco Engineering, Spirent Communications, Volution Group (full-year results); DS Smith (interims)
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Economics: ECB interest rate decision (EU), consumer price index (EU), initial jobless claims (US), monthly budget statement (US), RICS house price balance (UK)
