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The following is a summary of top news stories Monday.
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COMPANIES
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American Express said Sunday it is suspending its operations in Russia and Belarus over Moscow's ‘unjustified’ attack on Ukraine, the latest financial services blow to Russia over its invasion. ‘In light of Russia's ongoing, unjustified attack on the people of Ukraine, American Express is suspending all operations in Russia,’ the company said in a statement, noting that American Express cards will no longer work at merchants or ATM money machines in Russia. ‘We are also terminating all business operations in Belarus,’ it added. In addition to blocking usage of globally issued Amex cards in Russia, ‘cards issued locally in Russia by Russian banks will no longer work outside of the country on the American Express global network,’ the company said. Previously, card payment firms Visa and Mastercard also had announced they will suspend operations in Russia.
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Streaming giant Netflix has suspended its service in Russia, US media reported Sunday, in protest at Moscow's invasion of Ukraine. The US-based platform had already halted its acquisitions in Russia earlier this week, as well as its production of original programmes. ‘Given the circumstances on the ground, we have decided to suspend our service in Russia,’ a spokesperson told the US magazine Variety. When contacted by AFP, Netflix did not immediately respond. Netflix is the world's leading streaming platform, with 221.8 million subscribers at the end of 2021. But it is a minor player in Russia, where it has fewer than one million subscribers, according to The Wall Street Journal.
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Two of the so-called ‘big four’ accounting firms are pulling out of Russia over Moscow's invasion of Ukraine. PricewaterhouseCoopers said it had decided not to have a member firm in Russia. It has 3,700 people there. KPMG, headquartered in Netherlands, also announced it would withdraw from Russia and Belarus. KPMG has over 4,500 people in Russia and Belarus and said ‘ending our working relationship with them, many of whom have been a part of KPMG for many decades, is incredibly difficult.’
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Six non-executive directors of Russian precious metals miner Polymetal have resigned, all effective immediately. Departing en mass are Ian Cockerill, Ollie Oliveira, Tracey Kerr, Italia Boninelli, Victor Flores and Andrea Abt. Polymetal shares were up 29% on Monday, though the stock remains down 39%.
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Russian steelmaker Evraz has lost another member of the board. It said Sandra Stash has resigned as non-executive director, effective immediately. On Friday, Evraz said James Rutherford, who also is chair of Egyptian gold miner Centamin, had resigned.
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Russian aluminium firm EN+ said Lord Barker, who has been chair since the company floated in London in 2021 and executive chair since 2019, has resigned, handing over to Christopher Bancroft Burnham, who is currently senior independent director. Joan MacNaughton also has resigned as an independent director of EN+
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Rio Tinto has reached a settlement with the Australian Securities & Investment Commission regarding the impairment of Rio Tinto Coal Mozambique. As part of the settlement, the London-based mining company with operations in Australia will pay a A$750,000 penalty. The penalty, worth around $555,660, is for a breach of its continuous disclosure obligations during December 2012 to January 2013. The company noted that this court settlement showed no findings of fraud or any systemic failure by Rio Tinto.
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Spectris has called off talks with Oxford Instruments over a potential takeover, blaming the market uncertainty caused by Russia's attack on its neighbour. Oxford Instruments confirmed at the end of February it had received a takeover offer proposal from Spectris worth about £1.8 billion. Oxford Instruments makes scientific tools for research and industry. ‘Oxford Instruments is a quality company and the strategic and financial rationale for a combination of our businesses is highly compelling,’ Spectris Chief Executive Andrew Heath said. ‘However, with the invasion of Ukraine, the world has changed since our proposed offer was made regarding a combination of our businesses, bringing a high degree of uncertainty to the economic outlook around the world. While we believe this combination is a great opportunity for both companies, the timing is no longer right and we have brought our discussions to a close.’ Oxford Instruments noted the proposal was ‘unsolicited’ and still believes it has a ‘clear and compelling’ strategy to achieve growth on its own.
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MARKETS
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A spike in the Brent oil price to close to $140 a barrel and a 14-year high has send equities tumbling on concerns about economic 'stagflation'. Research firm sentix said its economic index suggests the eurozone economy already is slumping dramatically. The current economic situation index, based on a poll conducted last week, dropped by 11.5 points to 7.8 points from 19.3 in February, while the expectations index swung to negative 20.8 points from positive 14.0. The more-than 34-point swing was the worst in the survey's 20 year history, sentix said, putting the expectations index at its lowest since 2012.
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CAC 40: down 3.2% at 5,870.73
DAX 40: down 3.7% at 12,614.85
FTSE 100: down 1.6% at 6,875.12
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Hang Seng: closed down 3.9% at 21,057.63
Nikkei 225: closed down 2.9% at 25,221.41
S&P/ASX 200: closed down 1.0% at 7,038.60
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DJIA: called down 1.5%
S&P 500: called down 1.6%
Nasdaq Composite: called down 1.7%
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EUR: down at $1.0852 ($1.0915)
GBP: down at $1.3176 ($1.3215)
USD: up at JP¥115.09 (JP¥114.76)
GOLD: up at $1,997.00 per ounce ($1,961.27)
OIL (Brent): up at $125.08 a barrel ($114.52)
(currency and commodities changes since previous London equities close)
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ECONOMICS AND GENERAL
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Russian forces pummelled Ukrainian cities from the air, land and sea on Monday, with warnings they were preparing for an assault on the capital Kyiv, as terrified civilians failed for a second day to escape besieged Mariupol. The relentless fire has pushed more than 1.5 million people across Ukraine's borders as refugees, though many others are displaced internally or trapped in cities being reduced to rubble by Russian bombardment.
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Ukraine rejected Moscow's offer of humanitarian corridors to Russia and Belarus, Deputy Prime Minister Iryna Vereshchuk said. ‘This is not an acceptable option,’ she said, after Russia proposed safe passage for civilians from Kharkiv, Kyiv, Mariupol and Sumy. The civilians ‘aren't going to go to Belarus and then take a plane to Russia’. The Russian army said earlier on Monday it was opening humanitarian corridors from the four Ukrainian cities. Russian army spokesman Igor Konashenkov said local ceasefires had begun at 0700 GMT to allow civilians to escape. Fighting was still ongoing Monday in the four the capital Kyiv, the second city Kharkhiv in the east, the southeastern port of Mariupol on the Sea of Azov and Sumy, near the eastern border with Russia.
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Washington said it was now discussing a ban on Russian oil imports with Europe. The White House is looking for ways to reduce US consumption of Russian oil while protecting American families from price hikes, an administration spokeswoman had said Friday. Russia's invasion of Ukraine has sent oil prices soaring to their highest levels since 2014. While Western allies' severe financial sanctions on Moscow have so far exempted oil transactions, pressure has been building for new sanctions targeting Russia's main source of cash oil exports. ‘We are looking at ways to reduce the import of Russian oil while also making sure that we are maintaining the global supply needs out there,’ White House spokeswoman Jen Psaki told reporters. ‘We are very focused on minimizing the impact to families,’ she said.
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Iran and the UN nuclear watchdog said Saturday they had agreed an approach for resolving issues crucial to reviving the country's 2015 nuclear accord with world powers but new Russian demands may delay a deal. The announcement came shortly before Russia said it would seek guarantees from the US before it backs the deal, potentially scuppering hopes an agreement could be wrapped up quickly. International Atomic Energy Agency chief Rafael Grossi said the UN agency and Iran ‘did have a number of important matters that we needed...to resolve’, but that they had now ‘decided to try a practical, pragmatic approach’ to overcome them. Atomic Energy Organization of Iran President Mohammed Eslami said the two sides had come to the ‘conclusion that some documents which need to be exchanged between the IAEA and the Iranian organisation should be exchanged’ by May 22.
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Russia's sovereign credit rating has been cut by both Moody's and Scope Ratings, with the fallout of a wave sanctions a key risk to the nation's economy. Western powers have imposed heavy economic sanctions on Russia, in the wake of the latter's invasion of Ukraine. Companies, including payments firms Visa, Mastercard and American Express, have halted new sales in Russia. Moody's lowered its long-term issuer and senior unsecured debt ratings to Ca from B3, with a negative outlook, on Sunday. Moody's had only just downgraded Russian debt to B3 from Baa3 on Thursday. Scope, meanwhile, lowered Russia's long-term issuer and senior unsecured debt ratings to CCC from BB+. The score is under review for a downgrade.
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China said it has cut its economic growth target for next year to ‘about 5.5%’ but it seeks to increase military spending by 7.1% as the annual People's Congress kicked off in Beijing on Saturday. In a speech at the start of the annual session of the People's Congress in the Great Hall of the People in Beijing, Prime Minister Li Keqiang prepared the nation for a difficult year economically. The prime minister justified the downsized growth target for the world's second-largest economy with pressure from shrinking demand, disrupted supply chains and weakening expectations. The global economic recovery is also lacking impetus, he added. Achieving even the lower goal would require hard efforts, Li said in his report to the nearly 3,000 delegates. Last year, growth of ‘more than 6%’ had been projected.
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China's trade surplus expanded in the first two months of 2022, as the world's second largest economy increased trade with the US and European Union. According to China's General Administration of Customs, the nation's trade surplus increased by 16% annually to ¥738.8 billion, around $116.81 billion, in the first two months of the year. Exports rose by 14% annually, while imports increased 13%.
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Chinese Foreign Minister Wang Yi on Monday stressed that the friendship between Beijing and Moscow was still very strong, despite international condemnation of Russia's ongoing invasion of Ukraine, as he said China was open to helping mediate peace. Beijing has walked a tight diplomatic tightrope throughout the crisis, refusing to condemn its close ally Moscow after only last month touting a ‘no limits’ strategic partnership between the two countries. ‘The friendship between the two peoples is rock-solid, and both sides' future cooperation prospects are very vast,’ said Wang at an annual press briefing. But he said China was ‘willing to work with the international community to carry out necessary mediation, when necessary.’
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UK house prices rose at fastest the annual pace since 2007 to reach new record high, the Halifax house price index showed. Monthly house price growth was 0.5% in February, with prices rising 11% annually. ‘This was an eighth successive month of house price growth, as the resilience which has typified the market throughout the pandemic shows little sign of easing. Year-on-year prices grew by 10.8%, the fastest pace of annual growth since June 2007, pushing the average house price up to another record high of £278,123,’ Halifax Managing Director Russell Galley said. ‘Two years on from the start of the pandemic, average property values have now risen by £38,709, or 16%, since February 2020. Over the last 12 months alone house prices have gained on average £27,215. This is the biggest one-year cash rise recorded in over 39 years of index history.’
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German retail sales growth was ahead of market consensus in January, data from the Federal Statistical Office showed. Retail sales were up 2.0% in January, in real terms, beating market consensus, according to FXStreet, for 1.5% growth. Annually, sales were up 10%.
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