Closing summary
European shares are climbing on optimism about the peace talks between Ukraine and Russia. The FTSE 100 index in London has gained 63 points to 7,537, a 0.85% rise, while Germany’s Dax and France’s CAC 40 have rallied more than 3%, and Italy’s FTSE MiB is 2.4% ahead. Bond yields have also jumped, and the euro rose 1.3% to $1.1127.
US stocks opened higher on Wall Street, with the Dow Jones climbing 244 points to 35,200, up 0.7%.
Russia has promised to dramatically scale back its military operations in northern Ukraine, easing supply concerns that have sent commodity prices surging. Ukraine has proposed adopting neutral status with international guarantees to protect it from future attacks.
Oil prices have fallen by more than 5%, extending Monday’s selloff, with Brent crude falling more than $5 to $107.03 a barrel while US light crude slid to $100.77 a barrel.
On the metal markets, aluminium led industrial metals lower. Russia is a major producer of aluminium, nickel and copper. Benchmark three-month aluminium fell 5.4% to $3,410 a tonne, after hitting a record high of $4,073.50 a tonne on 7 March.
Our main stories today:
Thank you for reading. We’ll be back tomorrow. Take care! – JK
Crude oil is selling off for a second day, with Brent crude now down $6 to $106.56 a barrel. US light crude has also lost more than 5% and is just a touch above $100 a barrel.
Oil started the day lower as rising Covid infections prompted a new lockdown in Shanghai, China’s financial hub, which is expected to lead to a drop in oil demand. As Russia’s defence minister announced Moscow would cut military activity around Kyiv and Chernigiv and there were signs of progress in the peace talks between Ukraine and Russia, fears around oil supplies receded.
European share rally gathers steam, bond yields jump on peace talks
The rally on European stock markets is gathering steam and bond yields jumped after Ukrainian and Russian negotiators reported some progress in their peace talks, with the first face-to-face talks in nearly three weeks.
Russia’s deputy defence minister, Alexander Fomin, said Moscow has decided to “radically reduce military activity in the direction of Kyiv and Chernigiv” in order to “increase mutual trust and create the right conditions for future negotiations and reach the final aim of signing a peace deal with Ukraine.”
Ukraine proposed adopting neutral status in exchange for security guarantees.
The pan-European Stoxx 600 index rose 1.9%, with markets in Paris and Milan up 3%, while Frankfurt is 2.6% ahead.
Bond yields – the return to investors – rose sharply, with Germany’s 10-year yield, the benchmark in Europe, rising as much as 15 basis points to 0.741, the highest since early 2018, while the two-year yield turned positive for the first time since 2014.
The euro extended gains against the dollar, rising 1.2% to $1.1116.
First Russian superyacht seized in British waters
A £38m superyacht, owned by a Russian businessman, has been seized as part of sanctions against Russia, in Canary Wharf, east London, the UK transport secretary, Grant Shapps announced. It is the first vessel to be detained in the UK.
Officials boarded “Phi,” named after the mathematical concept, on Tuesday. It is 58.5 metres long, and has an “infinite wine cellar” and a freshwater swimming pool. The vessel was in London for a superyacht awards ceremony and was due to depart at noon.
Shapps said:
Today we’ve detained a £38m superyacht and turned an icon of Russia’s power and wealth into a clear and stark warning to Putin and his cronies. Detaining the Phi proves, yet again, that we can and will take the strongest possible action against those seeking to benefit from connections to Putin’s regime.
The Department for Transport said it worked with the National Crime Agency and the Border Force maritime investigation bureau to identify and detain the vessel. It declined to reveal the name of the owner.
The department described Phi’s ownership as “deliberately well-hidden”. The vessel is registered to a company based in Saint Kitts and Nevis and carries a Maltese flag. The ship made its maiden voyage last year after being built in the Netherlands.
The UK government is aiming to triple the number of solar panels, more than quadruple offshore wind power and double onshore wind and nuclear energy by 2030, in a move that could lower bills for consumers and reduce the UK’s reliance on foreign energy suppliers such as Russia, writes Mark Sweney.
Kwasi Kwarteng, the business minister, has put forward the targets as part of the Department for Business, Energy and Industrial Strategy’s plans for inclusion in the upcoming energy security white paper.
The paper has faced delays because the cost of approving at least six nuclear power stations as part of an expansion of the UK’s renewable energy strategy has been debated at the Treasury.
Britons are drinking cocktails in record numbers at home and in bars.
According to the drinks group AG Barr, consumers are opting for a pornstar martini or mojito in a trend accelerated during the pandemic, reports my colleague Mark Sweney.
The Scottish company, which makes Irn-Bru, Rubicon and cocktail brand Funkin, said 7.4 million people drink cocktails when they go to a bar, club or restaurant, a 13% increase compared with pre-pandemic levels. About 43% of those cocktail drinkers indulge at least once a week.
And here’s our full story on the rise in UK grocery price inflation to 5.2%, the highest since April 2012.
UK shoppers are choosing to shop at discount supermarkets in greater numbers as grocery price inflation reaches the highest level in a decade amid a mounting cost of living crisis, reports our retail correspondent Sarah Butler.
Aldi grabbed its biggest share of the grocery market to date and Lidl matched its previous peak as grocery price inflation reached 5.2% in March, the highest level since April 2012, according to the latest figures from analysts Kantar.
Updated
Here’s the latest in the P&O Ferries sackings saga.
P&O Ferries has rejected the government’s call to move this week’s deadline for the 800 sacked workers to accept redundancy offers, saying most had already signed contracts and ministers were “ignoring the situation’s fundamental and factual realities,” reports our transport correspondent Gwyn Topham.
In a bullish response to transport secretary Grant Shapps, the ferry operator’s chief executive, Peter Hebblethwaite, said the demand was legally impossible and would close the firm down.
He wrote to Shapps: “Complying with your request would deliberately cause the company’s collapse, resulting in the irretrievable loss of an additional 2,200 jobs. I cannot imagine that you would wish to compel an employer to bring about its downfall, affecting not hundreds but thousands of families.”
Updated
European shares push higher as peace talks resume
European shares are pushing higher, as negotiators from Ukraine and Russia resumed talks in Istanbul.
The FTSE 100 index in London has climbed nearly 100 points, or 1.3%, to 7,570, while Germany’s Dax is up almost 2%, France’s CAC 40 is 2.4% ahead and Italy’s FTSE MiB has posted a 2.1% gain.
Kremlin’s spokesperson Dmitry Peskov has dismissed reports that the sanctioned Russian billionaire Roman Abramovich suffered symptoms consistent with poisoning during an informal round of talks earlier this month, calling the reports “part of the information war.”
The Chelsea FC owner is part of the latest talks in Istanbul, Peskov confirmed, but said the Russian billionaire was not an official member of the delegation.
You can read more on our Ukraine live blog:
Consumer stocks such as the Coca-Cola HBC bottling company, JD Sports and Ocado are leading the share gains in London.
Barclays is the top faller on the FTSE 100, trading 3.6% lower at 154.68p. It fell as much as 6% in early trading, after one of its main shareholders offloaded $1.2bn off shares at a discount overnight.
An unnamed investor sold 599m shares, facilitated by Goldman Sachs, and equivalent to a 3.6% stake, according to Refinitiv Eikon data.
It’s another blow to the UK bank, a day after it disclosed a bond sales blunder, which led to a £450m loss for overselling structured products in the US.
UK consumer borrowing rises to five-year high
UK consumers borrowed an additional £1.9bn in February, a five-year high, of which £1.5bn was borrowing racked up on credit cards.
Mortgage approvals fell slightly in February, but remained above pre-pandemic levels, according to data from the Bank of England published this morning. The monthly figure fell to 71,000 in February from 73,800 in January, still above the pre-pandemic average of 66,700 in the 12 months to February 2020.
Paul Dales, chief UK economist at Capital Economics, said:
The leap in credit card borrowing in February and smaller increase in household savings could suggest that the cost of living crisis is already starting to bite. But we think it is more likely that households had the confidence to borrow and spend a bit more and/or were willing to use borrowing/savings to smooth their spending. As a result, the economy may have a bit more near-term momentum than we thought.
The £1.9bn rise in consumer credit beat the consensus forecast of £800m, was the largest in five years and compared to the pre-pandemic 2019 average rise of £1.1bn. Admittedly, as it was driven by a £1.5bn gain in borrowing on credit cards, it could be a result of the cost of living crisis forcing people to turn to credit.
But while that may be true for some people, typically during periods when finances are tight households in aggregate pare back their demand for credit.
Rouble rises to one-month high, Russian stocks mixed
The Russian rouble continues to strengthen against the dollar. It’s up more than 2% at 87.81 per dollar, touching 87.40 per dollar earlier, its highest level since 28 February (four days after Russia invaded Ukraine).
Russia is demanding to be paid in roubles for its gas shipments, and exporting firms are required to convert 80% off their foreign currency earnings into roubles. This is supporting the Russian currency, said Iskander Lutsko, chief investment strategist at ITI Capital.
Referring to the Russian stock market, which fully reopened yesteday after weeks of shutdown, he told Reuters:
The market now really depends on progress in negotiations between Russia and Ukraine.
The rouble-based Moex Russia index has turned negative, trading 2.45% lower at the moment, after an earlier gain of more than 4%. The dollar-denominated RTS index is clinging on to a 4% increase, after climbing more than 10% earlier.
The Russian flag carrier Aeroflot, one of the most volatile stocks since the market reopened, jumped nearly 15%. The oil and gas giant Rosneft and the state lender Sberbank are both up more than 2%, after earlier bigger gains.
RAC: Fuel duty cut hasn't been fully passed on; VAT cut would have been immediate
The latest fuel prices from the RAC motoring group show that the chancellor’s fuel duty cut of 5p per litre, plus 1p for VAT, hasn’t been passed on in full by petrol stations across the UK.
It said Rishi Sunak missed a trick – a VAT cut on fuel would have given drivers “an immediate and guaranteed reduction on their fuel bill”.
According to the RAC, the average petrol price was 167.01p per litre last Wednesday, when Rishi Sunak presented his spring statement (a mini-budget), and dropped to 163.30p yesterday – a fall of 3.71p. The average price of diesel dropped by 2.79p from 179.90p last Wednesday to 177.11p yesterday.
RAC spokesperson Rod Dennis said:
Unfortunately, wholesale fuel prices were already rising before the chancellor made his announcement on fuel duty last week. This meant retailers were buying fuel in at a higher cost than they were a week earlier, which meant drivers may not have immediately and fully benefitted from the duty cut. Wholesale prices are currently falling, but it’s likely to be next week before we see what impact this has at the pumps.
Had the chancellor instead cut VAT on motor fuel last week, drivers would have seen an immediate and guaranteed reduction in their fuel bill next time they visited a petrol station. As things stand, drivers remain entirely dependent on what is happening on the wholesale market and the extent to which retailers are able or willing to pass on savings they make.
The UK chancellor, Rishi Sunak, is under mounting pressure over accusations that his wife, Akshata Murthy, is collecting “bloody money” in dividends from a family company that has refused to pull out of Russia, despite Putin’s invasion of Ukraine, writes my colleague Rupert Neate.
Labour and the Liberal Democrats are calling on Sunak to answer “very serious questions” over Murthy’s estimated $900m (£690m) stake in the IT services and consultancy company Infosys.
Infosys, which was founded by her billionaire father, NR Narayana Murthy, continues to operate in Russia while most big global IT and consultancy firms such as SAP, Oracle, PwC, McKinsey, Accenture and KPMG have all closed their Russian operations.
Sunak, who has repeatedly called on British companies to pull out of Russia in order to “inflict maximum economic pain” on Putin’s regime, refused to comment on his wife’s 0.91% stake in Infosys.
Here is a profile of Akshata Murthy. Money comes in from her 0.91% stake in Infosys, which is valued at about $900m (£690m), making Murthy richer than the Queen (£365m).
Updated
Our Guardian US reporter Lauren Aratani has looked at how America is embarking on the great new experiment of hybrid working.
It can be hard to remember what work at the office was like before the pandemic forced millions of Americans to start working from home. That shift was monumental and seemingly implausible, until it happened. But people soon adapted to saying “sorry, you’re on mute” on Zoom calls and wearing sweatpants all day.
This spring, workers are finally heading back to the office en masse and into another untested and ambitious experiment in work life: hybrid working.
“This is a brave new world – we’re doing something we’ve never done before, which is we’re going to go, en masse, hybrid,” said Nicholas Bloom, an economics professor at Stanford.
Over 7,000 finance jobs move from London to EU due to Brexit
More than 7,000 finance jobs have moved from London to the European Union as a result of Brexit, according to consultants EY.
While the total is far less than the 12,500 job moves forecast by firms after June 2016, when Britain voted to leave the bloc, more could follow, EY said in its latest Brexit Tracker.
Paris scored highest in terms of attracting jobs from London, totalling 2,800, followed by Frankfurt at around 1,800, and Dublin with 1,200. Some £1.3 trillion of assets was also transferred from London to EU hubs.
EY said new local hires linked to Brexit total 2,900 across Europe, and 2,500 in Britain, where just over a million people work in the financial services sector.
Further relocations could result from European Central Bank checks on whether new hubs in the EU opened by banks which used London as their European base have enough staff to justify their new licences, EY said.
The Bank of England is scrutinising these to avoid banks in London being left with too few senior staff.
Omar Ali, financial services leader for Europe, the Middle East, India, and Africa at EY, said:
Staff and operational moves across European financial markets will continue as firms navigate ongoing geo-political uncertainty, post-pandemic dynamics and regulatory requirements.
McKevitt added:
The grocers are also adapting their pricing strategies in response to the rising cost of goods. One trend we’re already tracking is the move away from selling products at ‘round pound’ prices. The percentage of packs sold at either £1, £2 or £3 has dropped significantly from 18.2% last year to 15.9% this March.
Turning to the impact of the pandemic, he said:
Two years on since the first lockdown, we can assess what permanent changes the pandemic has made to the grocery landscape. The real story of Covid-19 has been the acceleration of online shopping, and retailers have built their digital capacity to match a seismic change in demand. 12.6% of sales were made online in March 2022 compared with just 8% three years ago. Shoppers over the age of 65 are leading the charge – the proportion of this demographic buying online has doubled from 9% to 18% over the past three years.
What we’re buying has shifted too and some of the recipes we learnt during the lockdowns have become firm favourites. For some, baking seems to have gone from fad to hobby as flour volume sales are 28% higher than in March 2019. The dry pasta market is also 17% larger compared with two years ago. There are hints too that people have become permanently more germ-conscious with liquid soap volumes up by 11%.
Updated
UK grocery price inflation highest since April 2012
Grocery price inflation in the UK hit 5.2% in March, the highest since April 2012, according to the latest figures from data analytics firm Kantar.
As costs rise, consumers are turning to own-label products which tend to be cheaper than branded ones, and now account for 50.6% of all spending (versus 49.9% this time last year).
Discount retailers Aldi achieved a record market share of 8.6% and Lidl matched its best performance at 6.4%, as both chains grew sales by 3.6%.
Overall supermarket sales fell by 6.3% over the 12 weeks to 20 March from a year earlier, when many people stayed home because of the Covid-19 pandemic.
Fraser McKevitt, head of retail and consumer insight at Kantar, said:
It’s no surprise that sales are down over the latest period as consumers are now more confident eating out of the home again. As well as enjoying meals out with friends and families, people will have also been grabbing food and drink on the go from supermarkets while travelling or at work. Those sales aren’t included in these take-home figures, but they will be adding to the grocers’ overall performance.
What we’re really starting to see is the switch from the pandemic being the dominant factor driving our shopping behaviour towards the growing impact of inflation, as the cost of living becomes the bigger issue on consumers’ minds.
More and more we’re going to see consumers and retailers take action to manage the growing cost of grocery baskets. Consumers are increasingly turning to own label products, which are usually cheaper than branded alternatives.
Updated
European stock markets have opened higher, ahead of peace talks between Ukraine and Russia.
The FTSE 100 index in London is 59 points ahead at 7,532, a 0.8% gain. The Dax in Frankfurt climbed 1.2%, the CAC 40 in Paris is up 0.56%, the Ibex in Madrid rose 1.1% and the Milan exchange added 1.2%.
And, finally in our news round-up, my colleague Dominic Rushe has taken a look at Joe Biden’s proposed new tax on America’s richest households, when he unveiled his latest budget on Monday.
The Biden administration wants to impose a 20% minimum tax on households worth more than $100m. The proposal would raise more than $360bn over the next decade and “would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters”, according to a factsheet released by the White House.
The plan – called the “billionaire minimum income tax” – is the administration’s most aggressive move to date to tax the very wealthiest Americans.
Also on the retail front: Deliveroo has struck a partnership with WH Smith, Sarah reports. Books, stationery, phone chargers, toys and exam study guides are the latest items to be ferried to customers on fast-track delivery bikes via a partnership between WH Smith and Deliveroo.
The high street retailer will offer 600 products for delivery in as little as 20 minutes, joining similar services offered by supermarkets, pharmacies and takeaways.
Meanwhile, Asda faces a legal wrangle with Waitrose after unveiling a new £45m cut-price grocery range with a similar name to its pricier rival’s established discount brand.
Waitrose, which has used the Essential Waitrose brand for about 13 years, said it had sent a legal letter to its bigger rival over its new brand name Just Essentials by Asda on Monday.
“We were surprised to hear that Asda is launching an essentials range as the Essential Waitrose brand has been in use since 2009 and has built up a strong reputation for value, quality and higher welfare standards in that time,” said a spokesperson for Waitrose, which is part of the employee-owned John Lewis Partnership.
The supermarket chain Iceland will temporarily return to using palm oil in some own-label foods from June because the price of a key alternative – sunflower oil – has soared by 1,000% during the war in Ukraine, reports our retail correspondent Sarah Butler.
In 2018 the supermarket chain announced to much fanfare that it was removing the controversial ingredient, which has been linked to destruction of the Earth’s forests. As part of its stand against the product, it launched a TV advert made with Greenpeace, which was pulled after it was deemed too political.
But now the retailer’s boss, Richard Walker, has announced in a blog that he is making a U-turn with “huge regret”. “The only alternative to using palm oil under the current circumstances would simply be to clear our freezers and shelves of a wide range of staples including frozen chips and other potato products,” he said.
‘Our top search term is nuclear’: US bunker sales soar as anxiety over Russia rises.
Gary Lynch, chief executive of Rising S Company in Texas, sold five bunkers on a single day in February, at prices ranging from $70,000 to $240,000, reports Bradley Garrett.
Rishi Sunak yesterday defended his spring statement from accusations that it failed to do enough to help the poorest in Britain with soaring living costs by arguing that extra help could have put government finances at risk, report my colleagues on the economics team, Richard Partington and Phillip Inman.
In a fractious exchange with MPs on the House of Commons Treasury committee, the chancellor said he had been forced to make choices over where to prioritise support because of rising government borrowing costs as the British economy is buffeted by surging inflation made worse by Russia’s war in Ukraine.
“One may say, if they don’t like my choices, they’d be happy to borrow a lot more. That’s just not something I think is responsible or sensible,” he said.
The Bank of England’s governor Andrew Bailey warned of an energy price shock on the scale of the 1970s, and said there were already signs of a growth slowdown, as consumers and businesses come under heavy pressure from the cost of living squeeze, with soaring prices for gas, electricity and other goods and services.
Introduction: Oil dips, German consumer confidence worsens on war concerns
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
In Germany, a closely-watched consumer confidence barometer from GfK fell to -15.5 going into April, below expectations and a 14-month low. In March, it was at -8.5.
Consumers worry about rising inflation and the war in Ukraine, which led to a substantial decline in expectations for the economy and their own finances. The income expectations measure fell to -22.1, the lowest since the financial crisis of 2009.
GfK said:
In February hopes were still high that consumer sentiment would recover significantly with the foreseeable easing of pandemic-related restrictions. However, the start of the war in Ukraine caused these hopes to vanish into thin air. Rising uncertainty and sanctions against Russia have caused energy prices in particular to skyrocket, putting a noticeable strain on general consumer sentiment.
Good Morning from Germany where consumer confidence in free fall as inflation & Ukraine war darken households' expectations about econ & personal finances. GfK consumer index dropped to -15.5 in Apr, 14mth low, from -8.5 in Mar. Income expectations fell to -22.1, lowest since GFC pic.twitter.com/PvV3zPshLM
— Holger Zschaepitz (@Schuldensuehner) March 29, 2022
Oil prices are falling again, extending losses from Monday, as traders worried about a sharp drop in demand from China. Yesterday saw the biggest oil sell-off since mid-March, as Shanghai went into a two-stage Covid lockdown, and ahead of peace talks between Ukraine and Russia. Negotiators are set to meet in Istanbul today for the first time in almost two weeks.
The war drove oil to 14-year highs earlier this month, but today Brent crude is down 1.1% at $111.24 a barrel while US light crude is at $104.84 a barrel. China is the world’s largest oil importer, and Shanghai, its financial hub, accounts for 4% of the country’s oil consumption, according to analysts at ANZ Research.
Japanese shares led gains in Asian stock markets as the Bank of Japan vowed to keep monetary policy ultra-loose, offering to buy unlimited government bonds for the first four days of this week, to stop yields rising. Globally, bond yields are climbing following the US Federal Reserve’s moves to lift interest rates to tame soaring inflation. Japan’s Nikkei rose 1.1% while Hong Kong’s Hang Seng gained 0.8%, and the Shanghai Composite slipped 0.3%.
The Agenda
- 7.45am BST: France consumer confidence for March
- 9.30am BST: UK Mortgage approvals/consumer credit for February
- 12.00 BST: Bank of England quarterly bulletin
- 3.00pm BST: US Conference Board Consumer confidence for March
Updated
