British Airways said it had suspended flights to Moscow, and warned customers that some flights to destinations east of Russia would now take longer due to rerouting, reports our transport correspondent Gwyn Topham.
It operated to the Russian capital three times a week but currently did not fly to any other destinations in Russia or Ukraine - nor used Ukrainian airspace.
However, the move will increase escalating fuel costs and pose more headaches for the national carrier’s long-haul services.
A spokesperson said:
We have suspended our flights to Moscow and also the use of Russian airspace, following the confirmation of Russian government restrictions.
We apologise for the inconvenience but this is clearly a matter beyond our control. We are notifying customers on cancelled services and are offering a full refund.
We will continue to monitor the situation closely.
A British Airways Airbus A380-841 taking off from Heathrow Airport. Photograph: Steve Parsons/PA
The week has ended on a calmer note in financial markets, even as Russian troops advance on the Ukrainian capital after yesterday’s full-scale invasion of the country, which took markets by surprise.
European stocks are pushing higher: the UK’s FTSE 100 index in London is 260 points, or 3.6%, ahead at 7,467. Germany’s Dax and France’s CAC have both gained about 2.9% while Italy’s FTSE MiB is 3.4% ahead, following heavy losses yesterday.
The London-listed Russian steel and mining group Evraz is still the top FTSE 100 riser, up 20% after heavy losses in recent days. It paid out a $1.55bn dividend to shareholders, including $450m to 29% shareholder Roman Abramovich after profits trebled, but warned that future profits could be affected by economic sanctions aimed at the Kremlin and its allies.
On Wall Street, the Nasdaq has slipped 0.5% (after yesterday’s strong gain of over 3%), the S&P 500 has edged 0.2% higher and the Dow Jones is 0.8% higher.
Russian stocks in Moscow have also staged a comeback after Thursday’s invasion triggered record losses, with the benchmark rouble-based Moex index rising 16.7% while the dollar-based RTS index is 23% ahead. Russian government bonds also recovered after yesterday’s sell-off.
The rouble has recovered to 83.5 against the dollar, up 2%, and to 93.7 against the euro, up 1.6%. Yesterday it slumped to a record low of 89.60 against the dollar.
Oil and gas prices have retreated. Brent crude, the global oil benchmark, has fallen below $100 a barrel (after topping $105 for the first time since August 2014 yesterday) and is trading 1.7% lower at $97.21 a barrel, while US light crude is at $91.75 a barrel, a 1.1% drop.
The benchmark British natural gas contract dropped 29% to 229p per therm today while the Dutch benchmark contract fell nearly 20% to €108 per megawatt hour, following gains of more than 40% on Thursday.
Gold rose to 17-month highs this week amid a flight to safety from which the dollar also benefited while the pound fell sharply yesterday.
Turner says that the Swedish krona, which is “close to the action” (geographically) and with a dovish central bank, has been one of the worst performers this week, along with the Polish zloty, Hungarian forint and Czech koruna. Euro and sterling also underperformed, with the pound falling more than 1% against the dollar yesterday.
There has been a flight to safe-haven currencies like the US dollar. He notes that the US is far less exposed to Russia in terms of trade ties than Europe. There’s also less of a debate about whether the Federal Reserve’s plans for rate hikes will be affected by the war in Ukraine.
Finally, the Chinese renminbi is “one of the standout performances” and lived up to its reputation as a world reserve currency. Turner says traditionally, safe-haven currencies are backed by countries’ large trade surpluses and “that is certainly the case for China at the moment”.
He predicted further weakening in the Russian rouble:
The rouble has to stay soft in the current environment.
Vladimir Putin’s decision to invade Ukraine sent tremors through global markets this week, with investors bailing out of risky assets and rushing into perceived safe havens.
In this podcast, ING’s global head of markets Chris Turner explains how currency markets have responded to the crisis and what might happen next. He and senior editor Rebecca Byrne reflect on a historic week that has shaken confidence and rocked financial markets around the world.
The rally on European stock markets has gathered steam:
UK’s FTSE 100 index up nearly 230 points, or 3.2%, at 7,436
Germany’s Dax up 3% at 14,472
France’s CAC up 3% at 6,716
Italy’s FTSE MiB up 3.5% at 25,746
The London-listed Russian steelmaker Evraz is still leading gains on the FTSE 100, up 23% –– good news for its 29% shareholder Roman Abramovich, the Russian billionaire who owns Chelsea FC. Evraz suffered heavy losses in recent days, though.
There’s even more good news for Abramovich. Evraz today handed investors a $1.55bn (£1.2bn) dividend, worth approximately $450m to the billionaire, but warned profits could be affected by economic sanctions aimed at the Kremlin and its allies. The company reported a 45% rise revenues to $14.1bn last year, mainly from the sale of steel but also from coal, while pre-tax profit more than trebled to $4.2bn.
The Anglo-Russian precious metals miner Polymetal, which is registered in Jersey but has substantial operations in Russia, has also recouped some of yesterday’s losses, trading 9.6% higher on the FTSE 100.
More news on the sports front: Manchester United have cancelled their £40m sponsorship deal with the Russian airline Aeroflot, the Daily Mail reports.
This in response to Russia’s invasion of Ukraine yesterday, and comes after United flew to Madrid on Tuesday with the British charter airline Titan Airways.
A United Spokesperson said: “In light of events in Ukraine, we have withdrawn Aeroflot’s sponsorship rights.”
While the price of Brent crude has dipped below $100 a barrel today after rising to over $105 yesterday, the price has risen from around $93 at the start of the week.
This has pushed up petrol and diesel prices at British forecourts.
The average price of both petrol and diesel rose to new record highs for the fourth time this week, the RAC motoring group reported. Unleaded rose to 149.67p yesterday, moving closer to the 150p a litre milestone, while diesel topped 153p, rising to to an average of 153.05p, for the first time ever.
RAC fuel spokesman Simon Williams said:
Sadly, more increases are on the way as a result of oil hitting $106 a barrel and the pound weakening, making wholesale fuel more expensive to buy for retailers in the UK. This is the worst possible combination for drivers as it will push already rising prices higher still and worsen the cost of living crisis. Drivers need to brace themselves for what’s to come, with many on lower incomes having to make difficult choices as a result of needing to put fuel in their cars.
And Formula One has cancelled the Russian Grand Prix in Sochi after the country’s invasion of Ukraine. The sport did not issue any condemnation of Russia but cited the “impossibility” of holding the race under the current circumstances. The Russian Grand Prix is an annual motor racing event held at Sochi Autodrom as part of the Formula One World Championship.
My colleague Mark Sweney has the latest on VTB Bank and VTB Capital.
VTB Capital, a subsidiary of Russia’s second largest bank, VTB, has been suspended from trading on the London Stock Exchange following the UK implementing sanctions over Vladimir Putin’s move to invade Ukraine.
The London Stock Exchange Group said on Friday that it has suspended VTB Capital’s membership with “immediate effect” which means that it can no longer trade in the capital.
VTB, which is majority-owned by the state and has interests in banking assets across Eastern Europe, has assets totalling £154bn. Legislation is expected to be tabled next week to ban major Russian companies from raising finance on UK markets and to prevent Moscow from raising sovereign debt in London.
“Sanctions are a reality for us over the last few years and another round of politically motivated anti-Russian sanctions did not come as a surprise,” VTB said in a statement.
There are a number of VTB executives, and those with links to the bank, who feature in the government’s list of individuals that it has levelled sanctions.
These include VTB’s president-chair Andrey Kostin, who is also a member of the Supreme Council of the “United Russia” political party, as well as high-ranking executives Andrey Puchkov and Yuriy Alekseyevich Soloviev.
And Denis Bortnikov, the deputy chair of VTB Bank’s management board. He is a deputy president of VTB Bank and chair of its management board. Son ofAleksandr Bortnikov, a director of the Federal Security Service (FSB), who has been on the sanctions list since March 2021.
A view of the head office of VTB Bank in Moscow. Photograph: Artyom Geodakyan/TASS
Global stocks have bounced back, but not enough to make up the steep losses run up yesterday. The UK’s FTSE 100 index has advanced 155 points, or 2.2%, to 7,363 while the other main European indices have gained between 1.3% (Germany) and 16.% (France).
Brent crude has fallen back below $100 a barrel, trading 0.37% lower at $98.71. US light crude has retreated to $92.3 a barrel.
Gas prices have also declined today after yesterday’s surge. The British Gas benchmark is 19% lower at 261p per therm, while the European benchmark has fallen by a similar amount to €108 per megawatt hour.
London-listed Russian companies have seen their shares recover after yesterday’s steep losses.
Among the state-backed oil and gas producers, Rosneft has jumped nearly 66% after tumbling 50% on Thursday, while Gazprom is up 3.3% after yesterday’s 25% drop and Lukoil is 28% ahead this morning.
As for Russia’s two biggest banks, VTB Bank gained 9.3% and Sberbank has jumped nearly 60%.
The London Stock Exchange said it had suspended VTB Capital, a subsidiary of VTB Bank.
British Airways said it had suspended flights to Moscow, and warned customers that some flights to destinations east of Russia would now take longer due to rerouting, reports our transport correspondent Gwyn Topham.
It operated to the Russian capital three times a week but currently did not fly to any other destinations in Russia or Ukraine - nor used Ukrainian airspace.
However, the move will increase escalating fuel costs and pose more headaches for the national carrier’s long-haul services.
A spokesperson said:
We have suspended our flights to Moscow and also the use of Russian airspace, following the confirmation of Russian government restrictions.
We apologise for the inconvenience but this is clearly a matter beyond our control. We are notifying customers on cancelled services and are offering a full refund.
We will continue to monitor the situation closely.
A British Airways Airbus A380-841 taking off from Heathrow Airport. Photograph: Steve Parsons/PA
French inflation rises to 3.6%, but not as high as elsewhere
France has published inflation figures this morning. Inflation came in at 3.6% in January, up from 2.9% and a bit stronger than expected.
ING economist Charlotte de Montpellier reckons inflation “remains reasonable”. It certainly is, compared with other countries –– in the UK and Germany, inflation is above 5%.
She said:
So although inflation is rising strongly in France, it is still lower than inflation in other European countries.
This difference between France and its European neighbours is mainly explained by energy prices, which did not increase as much in France as elsewhere. This is due to the actions put in place by the French government to limit the impact of rising energy prices on households, including the “tariff shield” which locks the price of gas at its 2021 level.
In addition, the capping of the price of electricity at a maximum increase of 4% in 2022 also plays an important role: the electricity component in the harmonised index of consumer prices is up by only 4% in France compared to an average of more than 27% in the eurozone.
Ultimately, the smaller rise in gas and electricity prices leads to less inflationary pressure on all sectors of the French economy than in the eurozone area, and therefore also to lower non-energy inflation. We expect inflation in France to remain below inflation in the eurozone throughout the year.
🇫🇷 French inflation has been lower than in other countries, but is now facing a perfect storm: very high energy costs; core goods rebound post winter sales; services inflation firming up. Expect similar trends in underlying price pressures in other euro area countries in Feb-Mar. pic.twitter.com/VXajBm7zbX
Brent crude is now hovering just above $100 a barrel, after rising above $105 yesterday when markets were rattled by Russia’s invasion of Ukraine.
Gas prices surged more than 40% yesterday but have fallen back today. The price of the British March gas contract has fallen 24% to 246p. On the Dutch exchange, the European benchmark natural gas contract dropped 20.7% to €106.50 per megawatt hour.
European benchmark nat gas TTF falls ~20% early on Friday as Russian gas flows into the EU (via Ukraine) surge. European utilities are asking Gazprom to ship more gas, and the Russian state-owned giant is happy to oblige. Capitalism in times of war | #Ukraine#UkraineInvasion
Russia's civil aviation authority bans UK flights to Russia
Russia’s civil aviation authority has banned UK flights to and over Russia in retaliation for the British ban on Aeroflot flights, PA reports.
Rosaviatsiya said that all flights by UK carriers to Russia as well as transit flights have been banned as of today.
It said the measure was taken in response to the “unfriendly decisions” by the British authorities who banned flights to the UK by Russian flag carrier Aeroflot as part of sanctions over Russia’s invasion of Ukraine.
#Breaking Russia’s civil aviation authority has banned UK flights to and over Russia in retaliation for a British ban on Aeroflot pic.twitter.com/dUrK4vkhpQ
