Russia Ukraine markets rouble dollar FTSE 100 gold – REUTERS/Anton Vaganov
Rouble crashes to record low; Moscow Exchange closed
Oil surges above $103 a barrel; Gas prices leap 40pc
FTSE 100 falls 1.5pc as global markets slide
The rouble has collapsed to a fresh record low against the dollar after the West rolled out fresh sanctions against Russia and President Vladimir Putin put his nuclear forces on high alert.
The Russian currency dropped almost 30pc to 119 per dollar in early trading. The opening of the Moscow Exchange has been delayed and the Russian central bank raised interest rates to 20pc in a desperate bid to prop up the economy.
It came after the US and Western allies agreed to banish Russia from the Swift international payments platform and took measures against its central bank, while the EU has banned Russian airlines from its airspace and is sending weapons to Ukraine.
Global markets are now braced for a tumultuous day of trading. Oil benchmark Brent crude jumped above $102 a barrel and gas prices surged almost 40pc, while US and European stocks markets are set to plunge at the open.
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.
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)