Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Talks near the Belarus-Ukraine between Ukrainian and Russian officials yesterday ended inconclusively and were overshadowed by intensifying fighting in Ukraine. We’ve woken up to news that more than 70 Ukrainian soldiers have been killed in Okhtyrka, a city between Kharkiv and Kyiv, after a Russian strike on a military base.
As western nations imposed wider sanctions on Russia, Mastercard said last night that it had blocked several financial institutions from its payment network. The New York-based firm said it would continue to work with regulators in coming days, and pledged to contribute $2m for humanitarian relief for Ukraine.
Visa made a similar donation, and said in a statement that it was taking action to ensure compliance with sanctions.
Expectations are growing that Russia could turn to crypto currencies after being shut out of the Swift international payment system and with sanctions imposed on its banks. Bitcoin, the world’s best-known cryptocurrency, has reversed declines in recent days and rose 4.4% to $43,460 this morning, after a 10% gain yesterday.
Asian shares were firmer after heavy selling across global stock markets in recent days. Japan’s Nikkei rose 1.2% while Hong Kong’s Hang Seng was up 0.4% and the Australian stock market rose 0.7%.
Kerry Craig, global market strategist at JPMorgan Asset Management, said:
The markets are going to focus on the broader implications of what’s gong to happen around energy prices, what that means for inflation across parts of the world.
Brent crude, the global benchmark, is trading just below $100 a barrel, at $99.92, up 2%, after touching a seven-year high of $105.799 last Thursday when Russia invaded Ukraine. Gold, a traditional safe-haven investment, has eased to $1,907 an ounce.
The Russian rouble has stabilised after it plunged 30% to a record low of 120 per dollar on Monday. The Russian central bank more than doubled its key interest rate to 20% and announced a slew of other measures to stem the decline. This morning the rouble is down 0.3% to 94.85 per dollar, and is unchanged versus the euro at 106.02.
After European markets closed yesterday, Shell announced it would divest its Russian assets and end its alliance with Gazprom, following a move by BP the previous day to get rid of a 20% stake in Rosneft, which will cost it $25bn.
Attention has now turned to oil giants like TotalEnergies and Exxon, which haven’t yet disclosed what they will do. US firm Exxon is now under pressure to sever its ties with Rosneft, and offload a 30% stake in a Sakhalin Island oil and gas fields projecct in Russia’s Far East.
France’s TotalEnergies holds a 19.4% stake in publicly listed Novatek, reputedly with close ties to the Kremlin as Putin ally Gennady Timchenko sits on its board. Novatek is Russia’s second-largest gas producer.
The Agenda
- 9am GMT: Eurozone Markit manufacturing PMI for February (final)
- 9.30am GMT: UK Markit manufacturing PMI for February (final)
- 9.30am GMT: UK Mortgage approvals and consumer credit for January
- 10am GMT: Italy inflation for February (preliminary)
- 1pm GMT: Germany inflation for February (preliminary)
- 2.45pm GMT: US Markit manufacturing PMI for February (final)