China has snubbed troubled aircraft maker Boeing after three of its national flag carriers placed orders worth $37bn (£31bn) with rival Airbus.
China Eastern Airlines has agreed to buy 100 A320neo narrow-body jets from Airbus, while Air China will take 64 units and its Shenzhen Airlines subsidiary is acquiring 32 more.
China Southern Airlines said earlier it would buy 96 A320neos and lease additional planes.
The combined order of 292 planes is one of the biggest ever for Netherlands-headquartered Airbus and the first major jet order placed by Chinese airlines in three years. It will help the manufacturer cement its position in the market, where it has a local final assembly line.
The order is a blow to US-based Boeing. China Southern has historically been Boeing’s biggest customer, but business has slowed in the wake of two crashes of the best-selling 737 Max models in 2019 and as political tensions rise between Washington and Beijing.
The 737 Max was suspended from use in 2019. Chinese authorities allowed it to resume service last year after making a series of safety adjustments.
In March this year, a Boeing 737-800 crashed in the southern province of Guangxi, killing 132 people in China’s worst air disaster in decades.
Last month, the Wall Street Journal reported that US investigators believe someone on board crashed the aircraft deliberately.
Airbus said that the deals showed “the positive recovery momentum and prosperous outlook for the Chinese aviation market”.
It added they “brought to conclusion these long and extensive discussions that have taken place throughout the difficult Covid pandemic”.
06:11 PM
Wrapping up
That’s all from us this week, we shall see you on Monday! Before you go, check out the latest stories from our reporters:
06:10 PM
Britain’s Brexit bill to be €10.9bn this year
Britain’s bill to the EU as part of the Brexit financial settlement will come in at €10.9bn (£9.4bn) this year.
The UK will still have to pay another €30.9bn as of January 1, 2023. The current balance is €41.8bn, according to accounts published by the Commission today.
It consists of Britain’s share of €28.6bn in commitments made as a member state, plus the EU pension and joint sickness schemes worth €14.7bn.
05:51 PM
Klarna valuation plummets in latest funding round
Klarna has launched a new funding round that will see its valuation plummet to $6.5bn (£5.4bn) from $45.6bn in 2021.
The Swedish buy-now-pay-later startup is looking to raise $650m, mostly from existing investors led by Sequoia Capital, The Wall Street Journal reports.
This also shows the extraordinary disconnect between people used to buoyant valuations and the reality on the field
Klarna’s CEO 6 weeks ago:
“I’m not convinced. We’ll see what happens. We’ll see,” he said when asked if it would be a “down round”. https://t.co/ktJpNYkdci
— Eliot Brown (@eliotwb) July 1, 2022
05:29 PM
UK stocks under pressure
UK stocks have been under pressure today after data showed factory activity lost more steam in June amid elevated price pressures, underlining the risk of a sharp slowdown or a recession in Britain.
The FTSE 100 ended flat, while the domestically focussed midcap FTSE 250 closed 0.2pc lower.
Both the indexes started the second half of 2022 on a subdued note after a rough first half amid worries that rapid rate hikes to tame high inflation would trigger a global recession.
“Fears rattling financial markets show little sign of subsiding, with investors spooked about signs of looming recessions, while inflation stays stubbornly high,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
05:07 PM
Vet firm CVS to abort Quality Pet Care acquisition
Vet firm CVS will take a £12m hit to profits after being forced to abort an acquisition following an investigation by the market competition watchdog.
CVS acquired Quality Pet Care for £20m in August last year but announced it has now sold the company for £9m.
The Competition Markets Authority concluded large-scale vet mergers reduced competition and led pet owners in some local areas to have insufficient alternatives for veterinary care.
CVS also announced it has bought North Lincolnshire vet practice Old Courts Veterinary Centre in a £3m deal as it proceeds with acquisitions to profit from the recent boom in pet ownership.
04:45 PM
Investor Robert Tchenguiz ordered to pay £1.3m to CMC Markets
Investor Robert Tchenguiz has been ordered to pay £1.3m to an online spread-betting company after losing a legal spat where he was accused of failing to pay his debt.
CMC Spreadbet, a unit of CMC Markets, sued Tchenguiz after the debt racked up during market turmoil linked to the coronavirus pandemic. The loss arose after shares in FirstGroup, a transport operator, tanked in March 2020.
But the British tycoon claimed CMC breached its contract by closing out his account.
Tchenguiz “did not seem to have been concerned to read the warnings he was given” or to have checked details that showed “he considered he knew what he was doing,” Judge David Elvin said in the ruling.
04:25 PM
Chinese airlines place $37bn order with Airbus in blow to Boeing
China is snubbing troubled aircraft maker Boeing as three flagship carriers placed orders worth $37bn (£31bn) in total with rival Airbus.
The combined order of 292 planes is one of the biggest ever for Airbus, which is headquartered in the Netherlands, and the first major one for China in three years.
It will help the manufacturer cement its position in the market, supported by a local final assembly line, in a blow to US-based Boeing.
China Southern has historically been Boeing’s biggest customer, but business has slowed in the wake of two crashes of the best-selling 737 Max model and as political tensions rise between Washington and Beijing.
04:08 PM
Handing over
That’s all from me for today – thanks for following! Giulia Bottaro will see you through to the weekend.
03:55 PM
Markets facing ‘recession shock’, warns Bank of America
A “recession shock” will now begin for markets following the worst first half of the year for Wall Street in more than 50 years.
That’s according to economists at Bank of America, who said the bank’s bull and bear indicator remained at “maximum bearish” for the third week in a row.
While expectations of aggressive interest rate rises by the Federal Reserve are peaking, inflation expectations are not.
Stocks around the globe have suffered their worst start to the year on record amid fears of a looming recession. The S&P 500 has had its worst first half since 1970.
BoA said both stocks and bonds were rocked by outflows this week as investors pulled their money out of the market.
About $5.8bn exited global stock funds in the week to June 29, although US equities saw small inflows of about $0.5bn.
Read more: $13 trillion wiped off markets in worst six months on record
03:38 PM
US manufacturing growth slows to two-year low
A measure of US manufacturing activity slumped to its lowest level in two years in June as new orders contracted in a sign that demand is starting to slow.
The Institute for Supply Management’s gauge decreased to 53 last month from 56.1 in May, falling short of economists’ expectations.
The group’s index of new orders dropped nearly six points to 49.2, the weakest result since May 2020 when the economy began its recovery from the initial Covid shock.
The decline in new orders reflects the squeeze on consumer spending as inflation rises and inventories pile up.
⚠️ ISM falls to 53 which confirms market fears that the US economy is slowing down rapidly. New orders at 49.2… lowest since May ’20… isn’t pretty. Neither is employment at 47.3. Inflation-focused Fed has caused bond yields to go against ISM trend. This will change now $USD pic.twitter.com/TwsrL1WXac
— Viraj Patel (@VPatelFX) July 1, 2022
03:21 PM
Female doctor unable to book BA flights as ‘title and gender do not match’
British Airways has been forced to apologise over a “glitch” that bars women from using the title doctor when booking flights online, writes Oliver Gill.
The flag carrier said it was “urgently investigating” issues with its website following a customer complaint.
An American traveller, Juliana Kling, posted a picture of BA’s website on Twitter along with the comment: “Apparently ‘Dr’ and ‘woman’ do not match on British Airways. Looking forward to their reply.”
A BA spokesman said: “We’re sorry for a technical issue that has occurred in one drop down box on our website and we’re urgently investigating.”
03:08 PM
Gucci’s former London HQ up for sale as £55m mansion
Gucci’s former London headquarters have been put up for sale for £55m after being transformed into the most expensive house currently on sale in Mayfair.
The house on Grafton Street, also available to lease for £40,000 a week, includes eight bedrooms, a garden terrace, a swimming pool, conservatory and sun room, Bloomberg reports.
It was constructed in the 1700s and was once the London base of Lord Brougham, who entertained Queen Victoria and the 1st Duke of Wellington at the property in his role as Lord Chancellor.
A sale would be the latest high-profile deal in the capital after Swiss billionaire Ernesto Bertarelli bought a home in Belgravia for £92m.
02:52 PM
Budweiser strikes to continue after talks collapse
A planned strike by Budweiser workers will go ahead this month after crisis talks collapsed.
The GMB union said bosses had proposed a “derisory” pay offer of 3pc and told staff they would not be able to claim back pay if the deal was not agreed by 21 July.
The 36-hour walkout will run from Saturday 16 July at 7pm until Monday 16 July at 7am, with a further 12-hour stoppage on Tuesday 19 July.
Workers at the site in Salmesbury in Lancashire have already walked out several times in June over the pay dispute.
Stephen Boden, GMB Organiser, said:
We will not be intimidated by their bully boy tactics. It’s disgraceful they would threaten to take money out of workers’ pockets during a cost-of-living crisis.
02:36 PM
Wall Street opens lower in gloomy start to second half
Wall Street’s main indices have opened lower, starting the second half of the year on a dull note as investors worry about the hit to economic growth from aggressive interest rate rises.
The S&P 500 and Dow Jones both slipped 0.1pc, while the tech-heavy Nasdaq was down 0.2pc.
02:17 PM
Vatican sells London building at heart of corruption trial
The Vatican has sold a London building at the centre of an ongoing corruption trial to Bain Capital in a £186m deal.
The Holy See is investigating how more than $200m of donations given to the Church for charitable activities was spent on the acquisition of 60 Sloane Avenue in Chelsea.
Ten people including a cardinal and two Italian financial brokers are on trial in the Vatican on charges including embezzlement, fraud, money laundering and extortion.
The Vatican said losses from the deal had been covered by its reserve funds, adding that donations from the faithful had not been used.
01:53 PM
Brexit not to blame for travel chaos, says HSBC
Brexit is unlikely to be to blame for travel chaos at airports, HSBC has said, as a shortage of aviation workers is worse in America and “at least as intense elsewhere in Europe”.
Oliver Gill has more:
Analysts at HSBC noted that while it was “intuitive” to assume stricter immigration rules post-Brexit were the key driver of staffing shortages that have wreaked havoc on millions of British holidaymakers, it added that there was evidence to the contrary elsewhere in the world.
They said: “The US has a much tighter vacancies-to-unemployment ratio. And while airline bosses have blamed recent disruption on Brexit, it seems to be at least as intense elsewhere in Europe.
“Insofar as Brexit has played into the currency weakness, though, it may have had an effect on inflation.”
Airlines and airports have bemoaned staffing shortages for the travel chaos, with Brexit regularly blamed for being unable to hire enough workers.
01:42 PM
Slug & Lettuce owner plots £100m pub sale
The UK’s biggest pub operator is said to be exploring a deal a sale of 75 sites in a deal that could be worth as much as £100m.
Stonegate Group, which owns Slug & Lettuce and Be At One, has hired advisers to gauge appetite for the portfolio, which is mainly based in London and the South East, Sky News reports.
A sale would represent only a small portion of Stonegate’s overall estate, which covers more than 4,500 sites.
Stonegate is controlled by the private equity firm TDR Capital, which also has big stakes in Asda and petrol stations giant EG Group.
01:29 PM
EU bans Russian gold ban in new sanctions
The EU is said to be working on a new packet of sanctions that will include a ban on Russian gold.
The ban would follow a similar move by the UK, US, Japan and Canada, which earlier this week said they were halting new gold imports from the country.
The Government said the measure would have a “huge impact” on Putin’s ability to fund is armed forces and efforts by oligarchs to evade sanctions.
However, analysts have dismissed the ban as largely symbolic because existing sanctions have already effectively closed off European and US markets.
The new package of sanctions will also cover fixed to previously approved measures, which could include adjustments to rules around the movement of sanctioned goods to the Russian city of Kaliningrad, Bloomberg results.
Some officials have raised concerns that Lithuania could be pressured into allowing banned goods to transit through the country and into Russia via Kaliningrad.
01:15 PM
Swarm of malfunctioning driverless taxis brings traffic to a halt for hours
A swarm of driverless taxis held up traffic for hours at a junction after one of the first public trials of the technology went wrong, writes James Titcomb.
More than a dozen autonomous vehicles operated by driverless car company Cruise in San Francisco came to a halt for around two hours before employees made it to the scene on Wednesday.
The company has not revealed what caused the vehicles to stop or why multiple cars suffered the fault at the same place. Several were stationary at the entrance to the crossroad junction, while others were stopped at the exit.
Cruise, backed by General Motors, started charging passengers for driverless taxi rides in San Francisco last week.
It is one of the first real-world robot taxi services in a major city. Vehicles do not have a safety driver in the front seat.
12:33 PM
US gas supplies to Europe overtake Russia for first time
For the first time ever, the US is supplying more gas to Europe than Russia sends through pipeline.
Europe is ramping up imports of liquefied natural gas after Gazprom slash shipments through the Nord Stream pipeline and cut off some countries in a row over rouble payments.
Shipments from the US remain strong even after a fire at the Freeport LNG terminal in Texas forced it to close until October.
Fatih Birol, executive director at the International Energy Agency, said: “Russia’s recent steep cuts in natural gas flows to the EU mean this is the first month in history in which the EU has imported more gas via LNG from the US than via pipeline from Russia.
“The drop in Russian supply calls for efforts to reduce EU demand to prepare for a tough winter.”
Combined with Russian LNG shipments, the country may still be a bigger overall gas supplier to Europe than the US. Britain has halted LNG imports from Russia, but deliveries are still arriving elsewhere on the continent.
Russia’s recent steep cuts in natural gas flows to the EU mean this is the 1st month in history in which the EU has imported more gas via LNG from the US than via pipeline from Russia
The drop in Russian supply calls for efforts to reduce EU demand to prepare for a tough winter pic.twitter.com/YmjvRN39ND
— Fatih Birol (@fbirol) June 30, 2022
12:16 PM
Pound extends losses to 1pc
Sterling has extended its morning losses to shed 1pc against the dollar as growing fears of a recession drive investors to the safe-haven currency.
The pound dropped to $1.2049 – its lowest level in two weeks. Against the euro, though, it climbed to 86.75p.
12:10 PM
AstraZeneca inks new Covid vaccine deal
British pharmaceutical giant AstraZeneca has struck a new deal to make Covid-19 jabs in Oxford “on an as-needed basis” as demand for the vaccines continues to wane.
Hannah Boland has the story:
AstraZeneca has extended its partnership with Oxford BioMedica to make the vaccines at its Oxbox facility for another three years.
Oxford BioMedica has already made 100 million doses of the Covid jab at the site, and expects to record £30m in revenues from AstraZeneca in 2022.
An initial pandemic deal between the pair ends later this year, with the new three-year deal replacing it. AstraZeneca will be able to manufacture the vaccines at the 84,000 square foot Oxbox site “on an as needed basis beyond 2022”.
It comes as Governments considers what longer-term booster roll-outs could look like. Experts have warned there could be “vaccine fatigue” from repeated boosters, even among the older population.
12:02 PM
Wall Street to drop as market rout continues
Wall Street looks set to fall at the opening bell as a grim sell-off across global markets shows no signs of slowing.
The benchmark S&P 500 suffered its biggest first-half drop in over 50 years, while global stocks more broadly posted their worst start to the year on record.
Investors are continuing to sell off riskier assets as fears of a looming recession overtake inflation worries.
Futures tracking the S&P 500 fell 0.4pc, while the Dow Jones was down 0.3pc. The tech-heavy Nasdaq lost 0.5pc.
11:55 AM
Siemens writes off €2.8bn as energy spin-off struggles
Siemens has written off an eye-watering €2.8bn (£2.4bn) after a sharp fall in the share price of its former energy division.
The German industrial giant said the drop in the value of Siemens Energy meant its 35pc holding in the spin-off was “significantly below the book value”.
The turbine maker, which split from Siemens in 2020, has lost about 40pc of its value on the Frankfurt Stock Exchange since the start of the year.
The decline in value has been driven largely by the struggles of its wind energy subsidiary Siemens Gamesa, which has struggled to turn a profit despite surging demand for renewable energy.
11:43 AM
Bulb boss to step down from collapsed energy firm
The chief executive and co-founder of Bulb is to leave the failed energy supplier at the end of July as the Government looks to secure a sale of the bailed-out company.
Bulb said Hayden Wood was “stepping back from the business”, adding: “We wish him all the best for the future.”
He will not be replaced, with the role being split among the remining executive team.
Mr Wood stayed on at Bulb after it was placed into a special administration when it collapsed in November last year. It was propped up with an initial taxpayer loan of £1.7bn to cover the normal running of the firm until a buyer could be found.
He has been criticised by MPs for continuing to receive a £250,000 salary to head up the supplier – effectively paid for by the taxpayer.
The announcement of his departure comes as the Government is considering offers for the firm, following a deadline of June 30 that was earmarked for closing bids.
11:23 AM
Mark Zuckerberg tells Meta staff to brace for ‘worst downturn in recent history’
Facebook’s parent company Meta is slashing hiring plans as Mark Zuckerberg warns of “one of the worst downturns in recent history”.
James Titcomb has more:
The social media giant plans to hire as much as 40pc fewer engineers than it had earlier predicted, amid an economic downturn and as privacy changes hit its advertising business.
Mr Zuckerberg, Meta’s chief executive, outlined the changes to staff on Thursday.
“If I had to bet, I’d say that this might be one of the worst downturns that we’ve seen in recent history,” he told employees according to a recording of the event leaked to Reuters.
He said that Meta would hire between 6,000 and 7,000 engineers, compared to previous plans for around 10,000.
Mr Zuckerberg’s comments echo those of fellow tech entrepreneur Elon Musk, who is in the process of cutting 3,500 salaried jobs because of a “super bad feeling” about the economy.
Mr Zuckerberg said many staff who leave will not be replaced and bosses will be encouraged to identify employees not pulling their weight.
11:03 AM
Citi in talks over sale of Russian business
Citigroup is said to be in talks with several local buyers over a potential sale of its operations in Russia.
The US bank is in negotiations with privately owned Russian companies including Expobank and insurance company Reso-Garantia over plans to offload its consumer and commercial businesses, the Financial Times reports.
Rosbank is also said to have expressed interest in a deal, but that’s been thrown into doubt after the UK sanctions its owner Vladimir Potanin this week.
A transaction would make Citi the latest lender to exit Russia in response to Putin’s invasion of Ukraine.
Citi is also winding down its corporate banking balances and operations, but it’s still working with its multinational clients to help them exit the country in the wake of western sanctions.
10:50 AM
Why Heinz demanded an ‘unheard of’ 30pc price increase… and Tesco balked
ICYMI – Heinz and Tesco are embroiled in a bitter row over the the price of baked beans.
The showdown shines a spotlight on supermarket-supplier tensions as inflation bites, as my colleague Hannah Boland writes.
10:35 AM
Chart: Eurozone inflation sparks crisis for Brussels
10:25 AM
Pound slumps amid recession fears
Sterling lost ground this morning as traders shed risky assets amid growing fears of a recession.
Markets have suffered a torrid first half of the year as investors worry efforts to curb inflation could push economies around the globe into a recession.
The pound dropped 0.5pc against the dollar to $1.2112. Against the euro, it fell 0.3pc to 86.32p.
Derek Halpenny at MUFG said: “GBP tends to perform poorly during periods of increased financial market stress and the data released yesterday suggests that could well continue as financial market conditions worsen further.
“We remain of the view that financial market conditions will remain challenging in the months ahead which points to continued GBP underperformance.”
10:11 AM
Mortgage lending jumps despite end of housing boom
UK mortgage lending jumped to the highest level in eight months in May despite signs the property market boom is coming to an end.
Lending jumped to £7.4bn in May, according to the Bank of England. That’s the highest since September.
Banks approved 66,200 home loans, slightly higher than in April and beating economists’ expectations of a decline.
The figures conflict with reports from Nationwide and Zoopla suggesting house price growth has ground almost to a halt.
Read more on this story: House price growth nearly at zero as property boom ends
09:52 AM
BT loses exclusive rights to Champions League
BT Sport has lost its stranglehold on Champions League football in Britain after almost a decade, ceding a handful of matches to Amazon as regulators scrutinise its merger with Eurosport.
James Titcomb has the story:
Amazon has won the rights to show one game a week on its Prime Video service from 2024, UEFA is expected to announce on Friday morning.
BT Sport, which is due to merge with Eurosport later this year, will retain the vast majority of games across the Champions League, Europa League and the third-tier Conference League.
It has enjoyed exclusive rights to UEFA club competitions since outbidding Sky in 2013 and retaining the majority of the rights will be seen as a welcome boost ahead of the merger with Eurosport.
Amazon’s intervention may also ease regulatory pressure on the deal, which the Competition and Markets Authority is investigating.
09:40 AM
UK manufacturing output slumps to two-year low
The slowdown in the UK manufacturing sector continued at the end of the second quarter, as June saw output growth grind nearly to a halt.
The S&P Global Manufacturing PMI fell to 52.8 last month, down from 54.6 in May and the lowest since June 2020.
Manufacturing production rose for the twenty-fifth consecutive month in June. However, the rate of expansion was the weakest during the current upturn.
New orders contracted for the first time in 17 months, while business optimism dropped to its lowest since May 2020.
Companies cited a weakening economy, the war in Ukraine, material shortages and China lockdowns for the bleak outlook.
?? Growth in the UK’s manufacturing sector slowed in June with the #PMI at a 2-year low of 52.8 (May: 54.6). Weaker economic outlook, the war in Ukraine and raw material shortages led to a reduction in demand. Read more: https://t.co/MxsAa9RScr pic.twitter.com/AVAw3zeLTm
— S&P Global PMI™ (@SPGlobalPMI) July 1, 2022
09:20 AM
Revolut boss: We have enough funding for two years
The boss of Revolut has said his fintech startup has enough funding for at least two more years and won’t be looking to raise more money.
Speaking at a conference in London, Nikolay Storonsky said the payments firm was now profitable and “aggressively expanding” in Latin America, India and the Philippines.
The comments suggest Revolut can avoid the pitfalls of trying to raise money during a downturn, with venture capital drying up and startup valuations falling.
Swedish rival Klarna is said to be raising funds in a round that could slash its valuation by almost a third to $30bn.
08:57 AM
Striking bus drivers are ‘highest paid in Merseyside’
Matt Davies, managing director at Stagecoach Merseyside, has hit back at unions over planned bus strikes this month:
Bus users will be angered that the bus services that they depend on to access work, education, the high street, and keep in touch with their families are being deliberately targeted by the union in this way.
The fact is that even in these difficult times, we have offered a substantial pay increase of more than 10pc to our employees that would make them the highest paid bus drivers in Merseyside from July.
They would also continue to benefit from more generous holiday entitlement and other benefits than other local bus workers with whom they want parity.
The two recent pay deals we offered were both supported by the union, so it is puzzling that it believes hurting local communities by strike action is now the way forward.
08:54 AM
Bus workers to strike over pay
The summer of discontent looks set to worsen as hundreds of bus drivers plan to stage a series of strikes in a row over pay.
Members of Unite employed by Stagecoach in Merseyside will walk out on July 4, 15, 18, 20, 22, 25, 28 and 29. It’s the latest industrial action that will cause disruption and travel chaos across the country.
Sharon Graham, Unite general secretary, said: “Stagecoach makes money hand over fist. Our members are making it abundantly clear that they will not accept being underpaid by this wealthy company any longer.
“Stagecoach can easily afford to pay its workers a decent wage but its repeated refusal to do so is why these strikes will go ahead.”
08:44 AM
Four-year Chemring fraud probe ends without prosecution
A four-year investigation into alleged bribery, corruption and money laundering at ammunition and grenade maker Chemring has been closed without prosecution.
The Serious Fraud Office opened its probe into the activities of Chemring, its subsidiary Chemring Technology Solutions and associated people in 2018 after the firm handed over its own report.
Hampshire-based Chemring said it co-operated fully with the SFO throughout the investigation and was “pleased” the matter is now closed.
It said: “Chemring remains committed to conducting its business in an ethical and responsible manner at all times, and in full compliance with all applicable laws and regulations.”
08:26 AM
FTSE risers and fallers
The FTSE 100 has kicked off the second half of the year in negative territory amid worries that interest rate rises could tip Britain into a recession.
The blue-chip index shed 0.6pc, putting it on track for its fourth weekly decline in five. That’s after it suffered its worst month since the outbreak of Covid in March 2020.
Oil major BP dropped 1.3pc, while mining stocks including Fresnillo also fell as they took a hit from lower commodity prices.
Shell gained 0.5pc even after it suspended plans to sell its onshore oil assets in Nigeria and Russia moved to seize the Sakhalin-2 gas facility.
Abrdn was the biggest faller, losing more than 2pc after Citigroup downgraded the fund manager’s stocks to “sell” from “neutral”.
The domestically-focused FTSE 250 was down 0.3pc.
08:16 AM
Gas prices set for third weekly gain
Natural gas prices are heading for their longest run of weekly gains this year as Putin’s threat over the Sakhalin-2 project deepened Europe’s energy crisis.
Benchmark European prices rose as much as 6.1pc to head for a third week of increases.
Aside from the Sakhalin-2 saga, the continent is also grappling with lower supplies after Russia cut shipments through a major pipeline by 60pc.
Adding to the strain, the key Freeport LNG export facility in the US will now remain shut until October – a month later than expected – after an explosion early last month.
European countries are racing to refill storage sites amid fears shortages could lead to rationing this winter.
08:08 AM
Japan warns gas interests ‘must not be undermined’
Japan has said its energy interests “must not be undermined” after the Kremlin issued a decree that could force foreign shareholders out of a major Russian gas project.
Japanese trading houses Mitsui and Mitsubishi own 12.5pc and 10pc stakes respectively in the Sakhalin-2 facility, but the future of their investments appears uncertain after the Russian move.
It calls for the establishment of a new Russian operator and requires existing foreign shareholders to apply for the right to participate in the new firm, with Moscow deciding on their inclusion.
Japanese government spokesman Seiji Kihara said Tokyo was “closely examining the impact on liquified natural gas imports”.
He added: “Speaking generally, we believe our resource interests must not be undermined.”
Shell is yet to issue its response to the move.
08:03 AM
FTSE 100 drops again
The FTSE 100 has dropped at the open as inflation and recession fears continue to drag down markets.
The blue-chip index fell 0.9pc to 7,107 points.
The FTSE yesterday rounded off its worst month since the outbreak of Covid in March 2020 as investors feared interest rate rises could spark recessions around the world.
Meanwhile, $13 trillion was wiped off global stocks in the worst first half of a year on record.
Read more: $13 trillion wiped off markets in worst six months on record
07:52 AM
EU reaches provisional deal on crypto crackdown
The EU has reached a provisional deal on its landmark crypto rules that will usher in a major regulatory crackdown on the volatile sector.
The legislation, dubbed the Markets in Cryptoassets directive, will regulate the crypto sector with common rules across all 27 member states.
It’s the first time globally that politicians have attempted to supervise the sector on such a scale.
The EU approved new rules on overseeing cryptoasset service providers, consumer protection and environmental safeguards.
It will cover cryptocurrencies such as Bitcoin and Ether. Non-fungible tokens offered to the public at a fixed price will be exempt from the new rules, though the bloc said they could be included at a later date.
Bitcoin fell 2.8pc after suffering its biggest quarterly drop in more than a decade.
07:43 AM
Kremlin hits back as energy row deepens
Putin’s order to seize control of the Sakhalin-2 gas project marks an escalation in the energy row engulfing Europe.
Most western energy firms are trying to pull out of Russia, but are struggling to find willing buyers for their investments.
Japanese trading houses Mitsubishi and Mitsui own a combined 22.5pc of the Sakhalin-2 project, and a majority of the gas produced there supplies Japan.
While Japan was quick to impose sanctions on Russia, it’s said it won’t pull out of the gas facility.
According to the decree, Russian state energy giant Gazprom, which holds the remaining 50pc, will automatically get the same stake in the new company.
But Russia won’t make it easy for Shell and others to transfer their ownership.
If the foreign firms want stakes in the new Russian venture, they must provide proof of their rights in the old company, with Moscow having the final say over whether they are allowed in.
There will also be an audit to determine what damages were caused by the actions of foreign companies, and companies will be liable to pay the Russian government damages.
07:33 AM
Putin threatens Shell’s Russian gas project
Good morning.
Shell could be forced to abandoned its investment in a major Russian gas project after Putin threatened to seize the rights to the facility.
The Kremlin said rights to the Sakhalin-2 plant will be transferred to a new Russian company, citing threats to the country’s national interests and economic security.
Shareholders have a month to say if they’ll take stakes in the new company, but have been warned they may not get their money back if they don’t.
The move could spark complications for Shell, which holds a 27.5pc stake in Sakhalin-2.
The firm previously said it will sell its holding – whose value Shell impaired to $1.6bn (£1.3bn) earlier this year – with Chinese state energy companies linked to a potential deal.
5 things to start your day
1) BT workers to strike for first time since Thatcher privatisation 40,000 staff to strike in broadband blow as they reject ‘unsustainable’ pay rise offer
2) How Heinz provoked Tesco in the battle of the beans Showdown shines a spotlight on supermarket-supplier tensions as inflation bites
3) Elon Musk escalates Tesla’s war on working from home with ‘please explain’ emails Staff receive automated communications if they fail to go into the office often enough
4) Surge in early retirement is fuelling inflation, says top Treasury mandarin Exodus of almost half a million workers from the jobs market is damaging the economy
5) Amazon blocks LGBTQ searches in UAE after political pressure Online giant says it adheres to laws in the countries where it operates
What happened overnight
Asian markets struggled again this morning following another sell-off on Wall Street fuelled by recession fears, with warnings of a bleak outlook for the global economy as central banks slam on the brakes to battle soaring inflation.
Data showing US consumers – the backbone of the world’s top economy – were growing increasingly reticent about spending dealt a fresh blow to equities on Thursday, with the S&P 500 suffering its worst January-June since 1970.
With the war in Ukraine showing no sign of ending – keeping energy costs elevated – there is an expectation that borrowing costs will continue to rise and send economies into recession.
After a broad retreat on Thursday in Asia, markets battled to recover but with little conviction.
Tokyo, Shanghai, Seoul, Taipei and Bangkok all fell, though there were small gains in Sydney, Singapore, Manila and Jakarta. Hong Kong was closed for a holiday.
Coming up today
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Corporate: No scheduled updates
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Economics: Inflation (EU), manufacturing PMI (UK, US, EU China), mortgage approvals (UK)
