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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Twitter shares jump as Elon Musk takes 9.2% stake; UK household income squeeze ‘to tighten’ – as it happened

United Kingdom United States Bank of England Eurogroup PwC
Tesla chief executive Elon Musk.
Tesla chief executive Elon Musk. Photograph: Susan Walsh/AP

Closing summary

Time for a recap.

Elon Musk has taken a 9.2% stake in Twitter that appears to make him its biggest shareholder.

Regulatory filings show that Musk hit the mark on 14th March, days before he criticised Twitter’s online moderation for not protecting free speech, saying that he was “giving serious thought” to building a new platform.

Shares in Twitter surged 20%, with analysts predicting that Musk could become an acticist investor pushing for change, or even launch a buyout.

Walid Koudmani, chief market analyst at financial brokerage XTB, says:

“While Elon Musk has been critical of the social media platform, this could be a key development for the company as its share price had been struggling for some time.”

Here’s the full story:

UK consumer confidence has slumped, as rising inflation forces families to cut back on disposable spending as they struggle to meet food and energy bills.

Bank of England deputy governor Sir Jon Cunliffe has predicted that the Ukraine crisis will intensify and prolong the surge in inflation and tighten the squeeze on household incomes.

Supermarket chain Morrisons warned its profits are likely to take a significant hit this year as the cost of living crisis and disruption due to the war in Ukraine weigh on the grocery market.

Inflation is roaring away in Turkey too, where consumer prices jumping by over 60% in the last year due to the tumbling lira, and rising food and energy costs.

Berlin has taken temporary control of Gazprom’s German operations, in an attempt to ensure security of energy supplies.

The move came as top bankers warned that Germany will face a steep recession if imports of Russian gas and oil stopped.

Orders at US factories dropped for the first time in 10 months in February, in a sign that the global economy is slowing.

The slowdown continued in March, with global manufacturing growth hitting an 18-month low as the Russia-Ukraine war and the ongoing Covid-19 pandemic hit the sector.

German trade picked up in February, but imports and exports with Russia dropped in an early sign of the economic consequences of the Ukraine war.

JP Morgan chief executive, Jamie Dimon, has warned that the US bank could lose up to $1bn (£763m) from its exposure to Russia. Dimon also urged the US government to deploy more troops, restructure supply chains and launch a new “Marshall plan” to ensure energy supply in response to the war in Ukraine.

Chancellor Rishi Sunak has asked the Royal Mint to create a non-fungible token (NFT) to be issued by this summer. The move will hardly help the cost of living crisis, but will (apparently) show the UK’s ‘forward-looking approach’ to crypto.

Bank of England chief Andrew Bailey has a more critical approach - warning today that cryptocurrencies are the new “front line” in criminal scams.

Mauricio Magaldi, global strategy director for crypto at fintech consultancy 11:FS, says:

“The news that the Treasury will be launching NFTs later this year seems to be nothing more than a strategic PR-play. However, talk of the UK becoming a ‘crypto hub’ seems to hold much more promise and is a welcome change from their previously limited stance.

“The next steps will paint the bigger picture and determine whether we see actual investment in creating dialogue for a regulatory framework that fosters the crypto economy in the UK.”

There has been chaos at some airports, as EasyJet and British Airways were forced to cancel flights because of high levels of Covid-19 infections among staff.

The disruption follows rising UK case numbers after the removal of almost all pandemic restrictions.

A train breakdown in the Eurotunnel has added to the misery for passengers.

The bus network has also been undermined, with more than one in four bus services in England have been cut in the last decade.

More than 3,000 workers at 60 companies across Britain will trial a four-day working week, in what is thought to be the biggest pilot scheme to take place anywhere in the world.

The UK’s financial regulators are investigating the London Metal Exchange’s handling of a week-long suspension of trading in nickel amid chaotic conditions at the start of Russia’s invasion of Ukraine.

Spanish police and US FBI agents have searched a £70m superyacht in Mallorca linked to Viktor Vekselberg, a sanctioned Russian billionaire the US government says is a close ally of Vladimir Putin...

... while Roman Abramovich’s $600m (£458m) superyacht Solaris has left a port in Turkey after the London-based company that operates the terminal which had been harbouring the oligarch’s yacht was pressed to act.

Goodnight. GW

Updated

Morrisons has warned its profits are likely to take a significant hit this year as the cost of living crisis and disruption due to the war in Ukraine weigh on the grocery market.

The UK’s fourth largest supermarket chain said “developments in the geopolitical environment” and “ongoing and increasing inflationary pressure” since the beginning of February were hitting consumer sentiment and spending.

It said it was difficult to predict how long the problems would last, and that unless conditions improved, it could face a “material adverse effect” on sales and earnings for the year.

Food and drink businesses have been particularly hit by the energy crisis, and rising raw material costs, according to new data from the ONS this morning:

FTSE 100 close

Back in the City, the FTSE 100 index of blue-chip shares has ended the day 21 points higher at 7558, up 0.3%.

Housebuilders were among the risers, following reports that the government was close to agreeing a deal on the cladding crisis that wouldn’t immediately hit developers with a £4bn bill to fix problems following the Grenfell Tower disaster.

Danni Hewson AJ Bell financial analyst, explains:

Housebuilders have been in the doldrums since the start of the year despite a supercharged housing market as investors priced in the cost of making repairs. The deal on the table would require companies to deal with issues on any medium rise building they’ve built over the last thirty years, but additional funding talks would be put off until later in the year.

The long running dispute about who should foot the bill to deal with fire safety issues has been contentious and housebuilders will need to act quickly to show they’re serious about making things right.

Industrial software group Aveva (+4%) and gambling firm Flutter (+3.9%) led the gainers.

But banks and miners led the fallers, reflecting concerns that the global economy could be heading for a weaker patch.

European stocks rallied, with Germany’s DAX up 0.5 %. and France’s CAC 0.7% higher.

"Nowhere for Twitter executives to hide" after Musk buys stake

Neil Campling, head of TMT research at Mirabaud Equity Research, says Twitter’s executives face a tougher ride now Elon Musk is top of their shareholder register.

“Just a week ago, Musk complained that Twitter didn’t adhere to the principles of free speech. And now he takes a 9.2% stake. It is described as a “passive stake” but given how Musk likes to air his views on the platform, he is unlikely to stay passive for long.

The new CEO has only just settled into the seat, but so far has only really issued goals of revenue growth and user growth (which aren’t any different from previous head Jack Dorsey) without real substance of how they can be achieved. His job has just got a whole lot tougher, as Musk loves to air his views.

And Twitter doesn’t have the multiple share classes (those that give protections to the likes of Zuckerberg at Facebook and Spiegel at Snap) so there is nowhere for the Twitter executives to hide if Musk goes on the attack.”

Germany takes temporary control of Gazporom unit to safeguard supplies

In Germany, regulators have taken temporary control of Gazprom Germania, an energy trading, storage and transmission business.

Gazprom Germania, which its parent company Gazprom abandoned late last week, will be transferred to Germany’s regulator to ensure energy security, Economy Minister Robert Habeck said on Monday.

Habeck told a news conference that the temporary measure would guarantee security of energy supplies:

“The order of the trust administration serves to protect public security and order and to maintain the security of supply. This step is mandatory.”

Klaus Mueller, head of the Bundesnetzagentur regulator, said:

Our goal will be to run Gazprom Germania in the interests of Germany and Europe.

Germany also continues to resist calls for an immediate ban on Russian gas exports to Europe, following reports of atrocities and war crimes in Ukraine, where the bodies of hundreds of civilians have been found in towns near Kyiv.

German Finance Minister Christian Lindner argued that such sanctions would hurt the EU more than Russia. Speaking before today’s Eurogroup meeting of eurozone finance ministers, Lindner said:

“We are dealing with a criminal war.

It is clear we must end as quickly as possible all economic ties to Russia. We must plan tough sanctions, but gas cannot be substituted in the short term. We would inflict more damage on ourselves than on them.”

Wholesale gas prices have dropped around 8% today, with the UK day-ahead contract falling to 231p -- over four times its level a year ago.

Updated

Orders at US factories have dropped for the first time in 10 months, in a sign that the global economy is slowing.

Manufactured goods orders fell 0.5% in February, the US Commerce Department reports, the first monthly drop in factory orders since April 2021.

Orders for heavy-duty “durable goods” (such as cars, kitchen appliances and computers) fell 2.1% in February, led by a 5.3% drop in orders for transportation equipment.

Nondurable goods orders rose 1.2%, but the closely-watched orders for nondefense capital goods, excluding aircraft, fell 0.2% in February.

Guardian Newsroom: The cost of living crisis

Join Hugh Muir, Richard Partington, Anneliese Dodds MP and youth campaigner Christiana Adane, in a livestreamed event on the cost of living crisis and the effect on the poorest households on Thursday 14 April 2022, 8pm BST. Book tickets here

BoE's Jon Cunliffe: Ukraine war will intensify cost of living squeeze

Bank of England deputy governor Sir John Cunliffe has warned that Russia’s invasion of Ukraine will tighten the UK’s cost of living crisis.

Speaking at the European Economics & Financial Centre this afternoon, Cunliffe points out that the conflict has already pushed up the cost of energy, and other raw materials such as metals and fertiliser.

Global oil prices have increased by 11% and UK wholesale gas prices have increased by 40% since the invasion, Cunliffe explains.

UK gas prices
UK gas prices Photograph: Bank of England

It is likely that prices of energy and commodity prices will be higher for longer, he says, which will push up on inflation and down on GDP in advanced economies such as the UK.

Cunliffe says:

Much will depend on the course of the conflict and the evolution of sanctions. But in all probability, it will intensify and prolong the surge in inflation and tighten the squeeze on household incomes.

The consequent drop in demand through household consumption and business investment will, to an extent not yet clear, be greater than we thought in February. And there are also likely to be additional impacts on the supply side of the economy.

He also points out that poorer families will be hit hardest by higher energy prices (as they have less savings to cushion the impact).

UK inflation
UK inflation Photograph: Bank of England

Cunliffe was the only BoE policymaker to oppose last month’s interest rate rise. And today, he pushes back against fears that the UK is facing a repeat of the wage-price spirals of the 1970s.

At the last MPC meeting, shortly after the invasion, I voted against increasing rates. This was not because I take the first risk lightly. As the oldest member of the MPC (by some way) I remember very well indeed the extreme manifestation of such an inflation psychology, which characterised the 1970s. I remember also the cost of correcting it. But I do not think we are yet seeing a psychology of persistently higher inflation emerge.

The predominant driver of the growth we have seen in pay has been the tightness of the labour market. There may also now be some element of catching up with inflation that has already happened.

Ben Laidler, global markets strategist at social investment network eToro, says Musk is diversifying his investments by taking a 9.2% stake in Twitter.

This is a significant public step in diversifying his investments away from major holdings like Tesla (TSLA) and SpaceX. It has triggered a Twitter share price surge, and focused attention across the long-suffering social media sector, from Meta (FB) to Snap (SNAP).

“Warren Buffett famously encourages investments in ‘what you know’, and Elon Musk knows Twitter very well. He has 80 million followers on the platform, has made over 17,000 tweets since joining in 2009, and recently publicly criticised the company for its free speech policy.

“It remains to be seen what Musk plans for his stake, which is four times the size of founder Jack Dorsey. Twitter has only recently seen Dorsey step down as CEO in November last year, under pressure from famed activist investor Elliott Management.”

Musk’s stake is now worth around $3.5bn, from $2.89bn on Friday night, after today’s share price jump.

Twitter shares jump 20%

Twitter shares have jumped by a fifth in early trading, after Elon Musk took a 9.2% stake in the company.

The stock is up 20.3%, or around $8, at $47.30, as investors wonder what Musk’s plans may be.

That lifts Twitter’s market capitalisation from around $31.4bn to $37.8bn.

CNBC says:

While it is classified as a passive stake, investors were bidding shares higher on the chance this could lead to something more. Twitter stock surged more than 21% in the morning.

Updated

Bank of England governor Andrew Bailey struck a more cautious approach to cryptocurrencies today - warning they are the new “front line” in criminal scams.

Bloomberg has the details:

Speaking at a “Stop Scams” conference organized by the U.K. central bank, Bailey said that the underlying technology of crypto is contributing a good deal of innovation to financial services, but also created an “opportunity for the downright criminal.”

“You only have to ask the question: What do people committing ransom attacks usually demand payment in? The answer is crypto,” he said.

The U.K.’s financial regulator, the Financial Conduct Authority, last week extended a deadline for its approval of crypto operations. That gave a dozen firms more time to get their applications or affairs in order. So far, 33 have been approved for permanent registration with the FCA, which allows them to continue providing cryptocurrency services from within the U.K. after April 1.

More here: BOE’s Andrew Bailey Says Crypto Is the ‘New Front Line’ for Scams

Sunak asks Royal Mint to issue NFT

Chancellor Rishi Sunak has asked the Royal Mint to create a non-fungible token (NFT) to be issued by this summer.

I initially thought was a belated April Fool’s joke, but according to the Treasury it shows the UK’s ‘forward-looking approach’ towards cryptoassets.

NFTs give people ownership of digital assets, such as a piece of digital art, by registering them on a blockchain.

Perhaps the UK’s design should show a struggling family who can’t afford to heat their homes.

The Treasury have also said the UK plans to legislate to regulate some stablecoins - cryptocurrencies pegged to traditional currencies or assets - when they are used as a means of payment.

UK financial services minister John Glen outlined the plan to UK Fintech Week today, saying (via Reuters):

“We have a detailed plan... this is a new world for the newly regulated and the regulators.

Updated

The JP Morgan chief executive, Jamie Dimon, has warned that the US bank could lose up to $1bn (£763m) from its exposure to Russia, as he called on the US government to deploy more troops, restructure supply chains and launch a new “Marshall plan” to ensure energy supply in response to the war in Ukraine.

In his widely read annual letter to investors, Dimon urged Joe Biden’s administration to take a stronger stance against the “grave new geopolitical realities” emerging after Russia’s invasion of Ukraine, saying it was up to democratic nations to take a stand “against all forms of evil”.

Dimon, who is one of the most high-profile bosses to comment on the conflict so far, also detailed the bank’s potential $1bn losses because of its direct exposure to Russia. JP Morgan announced it was winding down its Russia operations – which employ about 160 staff – last month.

He wrote:

“As I write this letter, the war in Ukraine has been raging for well over a month and is creating a significant refugee crisis. We do not know what its outcome ultimately will be, but the hostilities in Ukraine and the sanctions on Russia are already having a substantial economic impact.

They have roiled global oil, commodity and agricultural markets.”

However, Dimon said the war’s wider impact, including the “potential restructuring of the global order – is far more important”.

Noting that the war could impact geopolitics for decades, he added: “We must confront the Russia challenge with bold solutions.”

Full story: Elon Musk buys $2.9bn stake in Twitter to become biggest shareholder

The billionaire Elon Musk has taken an almost $3bn (£2.3bn) stake in Twitter to become the social media platform’s largest shareholder.

The world’s richest man, who has a penchant for eccentric behaviour frequently involving posts on Twitter, has built a 9.2% stake in Twitter, according to filings made to the US Securities and Exchange Commission (SEC) on Monday.

The boss of Tesla and SpaceX, who with more than 80 million followers ranks in the top 10 most popular Twitter users globally, paid $2.89bn for the stake at Twitter’s closing share price on Friday.

Shares in the microblogging site soared as much as 26% in pre-market trading on the back of the news, adding more than $8bn to its $31.5bn market value before Musk’s interest was made public. After the stock price jump Musk’s shares are now worth about $3.6bn.

Musk, who just last week said he was “giving serious thought” to building his own social media platform, now holds a stake more than four times the 2.25% holding of the Twitter co-founder Jack Dorsey

Updated

Here’s Associated Press’s take on Tesla CEO Elon Musk taking a 9.2% stake in Twitter:

Musk’s stake in Twitter is considered a passive investment, which means Musk is a long-term investor that’s looking to minimize his buying and selling of the shares.

Yet in recent weeks Musk has raised questions about free speech on Twitter and if failing to adhere to its basic principles undermines democracy.

He has also pondered starting up a rival social media network and industry analysts are skeptical about whether the mercurial CEO would remain on the sidelines for long.

“We would expect this passive stake as just the start of broader conversations with the Twitter board/management that could ultimately lead to an active stake and a potential more aggressive ownership role of Twitter,” Dan Ives of Wedbush Securities said in a client note early Monday.

Elon Musk’s surprise Twitter stake is a ‘major test’ for the social media company’s chief executive Parag Agrawal, says Bloomberg:

Musk has been one of the biggest personalities on Twitter and has regularly run into trouble on the platform.

The Tesla Inc. chief executive officer is currently seeking to exit a 2018 deal with the U.S. Securities and Exchange Commission that put controls in place related to his tweeting about the electric-car maker.

Bloomberg adds:

The announcement will be yet another major test for new Twitter CEO Parag Agrawal, who replaced Jack Dorsey after he unexpectedly resigned in November.

Agrawal vowed to increase accountability, make decisions faster and to improve product execution. The company set ambitious goals for growth including increasing annual revenue to $7.5bn and getting to 315 million daily users by the end of 2023.

Musk now Twitter's biggest shareholder

Elon Musk is now Twitter’s biggest shareholder, according to data on our Refinitiv terminal.

Musk’s 9.2% stake puts him ahead of investment group The Vanguard Group (with 8.79%), Morgan Stanley Investment Management (8.08%) and BlackRock Institutional Trust Company (4.56%).

Twitter co-founder Jack Dorsey still owns around 2.25% of its stock, or around a quarter of Musk’s stake.

Updated

Elon Musk’s 9.2% stake in Twitter is worth almost $3bn, and on track to jump by a quarter when Wall Street opens in a couple of hours time.

That’s only a small proportion of Musk’s wealth, though - the world’s richest person is worth $287bn according to Forbes’ Real-Time billionaire’s list.

Twitter was worth around $32bn as of Friday night’s close.

Elon Musk’s 9.2% stake in Twitter is ‘just the starter’, predicts Dan Ives, analyst at Wedbush Securities.

He told CNBC that Musk is ultimately likely to take an active interest in Twitter to try and change the company, or eventually it could lead to a buyout.

Ives explained:

Musk could try to take a more aggressive stance here on Twitter. This eventually could lead to some sort of buyout.

Ives points out that Musk has signalled that he wanted to do something on social media.

Taking this stake in Twitter means he is not just ‘talking the talk, but walking the walk’, said Ives.

This makes sense given what Musk has been talking about, from a social media perspective.

Here’s a video clip from CNBC:

Elon Musk holds 9.2% stake in Twitter

Now this is interesting.

Tesla’s chief executive, Elon Musk, has build up a 9.2% stake in social media company Twitter.

An SEC regulatory filing showed that Musk, a regular tweeter, now owns over 73m shares in Twitter.

Shares in Twitter have soared around 25% in pre-market trading following the news.

Late last month, Musk tweeted that he was giving “serious thought” to building a new social media platform.

He held a Twitter poll asking users if they believed Twitter adheres to the principle of free speech, to which over 70% voted “no”.

Musk then suggested that Twitter was undermining democracy by failing to adhere to free speech principles, adding “Is a new platform needed?”.

Updated

Manufacturing PMI at 18-month low as Ukraine war and Omicron wave disrupt growth

Global manufacturing growth has slowed to an 18-month low, as the Russia-Ukraine war and the ongoing Covid-19 pandemic both weigh on the world economy.

That’s according to the latest survey of purchasing managers from S&P Global, which found that:

Production and demand growth was subdued by a combination of headwinds, including the Ukraine war and new COVID-19 related disruptions - notably in China.

These headwinds led to an intensification of supply chain delays and re-acceleration of price pressures, as well as a renewed fall in global trade flows. Business confidence also fell sharply, down to the lowest since September 2020, signalling downside risks to output growth in the second quarter.

British Airways is also caught up in the travel disruption at UK airports today.

BA has cancelled about 100 flights, although only about five were last-minute cancellations directly related to staff absence, a spokesperson said.

The rest of the cancellations had already been made for different reasons and the airline was aiming to keep cancellations to high-frequency routes such as Paris and Madrid.

My colleague Jasper Jolly has more details here:

The European Bank for Reconstruction and Development’s board of governors has voted to suspend access for Russia and Belarus to its financing and other resources with immediate effect.

The move, following the invasion of Ukraine in late February, means that there can be no new financing of projects or technical cooperation activities in either country.

The EBRD could also suspend or cancel further disbursements of funding on existing projects.

EBRD president, Odile Renaud-Basso, said:

“It is sad that we have come to this point after so many years of cooperation and activity in both countries.

However, the Russian-led war on Ukraine has left us no choice but to show our condemnation with more than just words. Actions are required, too, so that the two countries are in no doubt that we believe they have undermined the values which are important to us as an institution and to the international community.”

The EBRD added that it is now focussed on delivering a €2bn Resilience and Livelihoods Support Package for Ukraine and for other countries in the region directly impacted by the refugee crisis.

Reuters points out that the EBRD has not put new money to work in Russia since Moscow annexed Crimea in 2014, and also introduced a moratorium on new investment in Belarus following the country’s disputed 2020 election.

Germany faces steep recession if Russian oil and gas halted, say banks

Germany will face a steep recession if there is a stop to imports or delivery of Russian gas and oil, a top German bank lobby warned today (Reuters reports).

Europe’s largest economy is heavily dependent upon Russia for energy, and nations banks echoed concerns over possible energy disruption expressed by big names in industry in recent days.

Christian Sewing, the chief executive of Deutsche Bank, said in his role as president of Germany’s BDB bank lobby that banks expected sharply slower growth this year of around 2% due to the war in Ukraine.

Sewing told journalists:

“The situation would be even worse if imports or supplies of Russian oil and natural gas were to be halted. A significant recession in Germany would then be virtually unavoidable.”

“The question of government aid measures for companies and sectors would then become even more urgent,” he said.

Sewing once again called on the European Central Bank to act to fend off inflation.

He said the ECB should end its net asset purchases soon and should send a signal with interest rates, adding:

“A signal that is urgently needed.”

A Ted Baker a store in London.

Ted Baker has put itself up for sale after receiving a third takeover approach by US private equity suitor Sycamore Partners.

Shares in the company have jumped 13% this morning after the fashion brand launched a formal sale process, and said it had also received another “unsolicited” approach by an unnamed party.

It comes a week after Ted Baker rejected two takeover approaches by Sycamore; the second valued the business at £254m.

The first proposals were rejected after they “significantly undervalued” Ted Baker, the company board said.

The retail firm did not disclose the value of the latest approach by Sycamore or the unnamed third party.

“In view of the interest expressed by potential offerors, and having consulted its major shareholders, the board has decided to conduct an orderly process to establish whether there is a bidder prepared to offer a value that the board considers attractive relative to the standalone prospects of Ted Baker as a listed company.”

European markets mixed as airline stocks dip

In the City, the FTSE 100 index has inched higher this morning, although travel companies, hospitality firms and banks are lower.

The blue-chip index is up 15 points at 7552 points, approaching last Thursday’s six-week highs.

Housebuilders are in the risers, along with weapons manufacturer BAE Systems (+2%).

British Airlines parent company, IAG (-1.4%), is leading the fallers, followed by insurer Aviva (-1.35%) and NatWest bank (-1%). Hotel chain InterContinental (-0.85%) is also in the fallers, with miners also lower.

On the smaller FTSE 250, easyJet shares have dropped by 2% after it was forced to cancel flights as more staff fell ill with Covid. SSP, which

European markets are mixed, with Germany’s DAX flat and France’s CAC 0.25% higher.

Investors are anticipating a series of US interest rate rises this year after America’s jobless rate fell to 3.6% last Friday. That could slow the recovery, as the US Federal Reserve tries to get a grip on inflation which hit 7.9% in the US (higher than the UK, but lagging Turkey...).

Richard Hunter, head of markets at interactive investor, adds:

Elsewhere, the conflict between Russia and Ukraine continues to engender a split between hope and despair. Reports of some progress in talks aimed at ending the war continue to be offset by further reports of Russian atrocities which have seemingly strengthened the resolve of other nations to ratchet up sanctions once more.

The oil price has shown some recent weakness after the actual and potential release of further supply, alongside a truce in Yemen, although even allowing for this dip the price is still ahead by 36% so far this year.

Turkish inflation hits 20-year high of 61%

In Turkey, inflation has soared over 60% (!) as rising energy and commodity costs intensify its cost of living crisis.

Turkey’s annual inflation hit a fresh 20-year high of 61.14% in March, new data this morning shows, the highest since 2002.

Turkish inflation had already been soaring after the lira crashed last year, following a series of interest rate cuts by Turkey’s central bank under pressure from president Recep Tayyip Erdoğan.

The Ukraine war, which drove up the cost of oil, gas, metals, fertiliser and other commodities, has intensified those price pressures, with food prices up 70% per year and transport costs almost doubling.

The report also shows that Turkish factories have more than doubled their prices over the last year, as they passed on soaring costs to their customers.

The producer price index climbed 9.19% month-on-month in March alone, giving a jaw-dropping annual rise of 114.97%.

Speaking of Russian energy imports...

Updated

German trade picked up in February, but imports and exports with Russia both fell after the Ukraine war began.

Statistics body Destatis reports that German exports rose by 6.4% month-on-month in February, while imports were 4.5% higher than in January.

Exports of German goods to other EU members were 10.4% higher, suggesting demand picked up as the Omicron wave receded.

That pick-up in trade could help Germany’s economy return to growth after contracting in the last quarter of 2021, and thus avoid a recession.

Trade with the Russian Federation was down “markedly”, Destatis adds, with exports down 6.3% and imports falling 7.3% compared with January, in an early sign of the impact of sanctions:

Trade with Russia was not restricted until late February 2022 as a result of Russia’s attack on Ukraine and the sanctions imposed as a consequence.

It is expected that, as of reference month March, foreign trade figures will show in detail in how far the sanctions, further measures to restrict exports and unsanctioned behaviour of market participants will further impact German trade with the Russian Federation.

Germany’s defence minister said on Sunday that the European Union must discuss banning the import of Russian gas, after the discovery of the bodies of hundreds of civilians in towns near Kyiv, many with bound hands, close-range gunshot wounds and signs of torture, and a mass grave in the town of Bucha.

Updated

Watchdogs probe London nickel trading chaos

Traders at the London Metal Exchange.
Traders at the London Metal Exchange. Photograph: Leon Neal/Getty Images

City watchdogs have launched an investigation into chaotic nickel trading in London last month.

The Financial Conduct Authority will examine why the London Metal Exchange (LME) suspended nickel trading for several days after a ‘disorderly market’ in the metal arose.

The LME halted nickel trading after sanctions on Russia drove the price to record levels, creating a ‘short squeeze’ on traders who had bet against nickel.

The FCA says it intends to review “the LME’s approach to managing the suspension and resumption of the market in nickel to determine what lessons might be learned in relation to the LME’s governance and market oversight arrangements.”

The Prudential Regulation Authority (part of the Bank of England) will look into the actions of LME Clear, its clearing house, to see “whether any lessons might be learned” regarding its governance and risk management.

The LME halted nickel trading on 8th March and then cancelled that day’s trades, worth around $4bn, after the short squeeze caused nickel prices to more than double to $100,000 per tonne.

The fiasco centred on a Chinese tycoon known as “Big Shot”. Xiang Guangda controls the world’s largest nickel producer, China’s Tsingshan Holding Group, and had taken a large short position on nickel.

As the nickel price soared, Xiang’s losses on his short position increased - reportedly hitting around $8bn before trading was suspended, and then reopened with daily price limits. Nickel then fell back sharply -- bringing some relief to Xiang, but not those on the other side of the trades.

Hedge funds were reportedly considering legal action against the LME over its decision to halt trading and cancel trades in nickel, which is currently trading around $33,000 per tonne.

The LME, meanwhile, has announced new 15% daily price limits for all its metals,m to avoid a repeat of the chaos.

In other airline news, Ryanair has narrowed its forecast for its losses over the last 12 months.

The Dublin-based airline now expects to make a net loss of between €350m and €400m for the financial year to 31st March (last Thursday). It had previously guided for a loss between €250m-€450m.

Ryanair also reported that it carried 11.2 million passengers in March, up from 8.7m in February, although the Ukraine war did knock customer numbers.

It’s the highest monthly total since last October (before the Omicron variant led to travel restrictions).

It’s also above pre-pandemic levels. Ryanair carried 10.9 million in March 2019, which fell to 5.5m in March 2020 and just 500,000 in March 2021.

Ryanair travel stats
Ryanair travel stats Photograph: Ryanair

Ryanair adds:

March traffic was impacted by the Russian invasion of Ukraine which caused 2,000 flights to/from Ukraine to be cancelled in March due to airspace closures.

Ryanair says full-year traffic recovered strongly to over 97m, up from 27.5m the year before, but only two-thirds of its pre-Covid traffic of 149m.

Updated

An easyJet flight taking off from London Gatwick bound for Glasgow.

EasyJet cancelled more than 200 flights over the weekend, as rising Covid-19 infections led to a rise in staff absences.

Disruption is expected to last into this week, leaving some passengers stranded amid travel chaos at some of Britain’s biggest airports.

The airline blamed the problems on high levels of sickness among employees caused by Covid, with at least 222 trips axed since Friday.

It said it had made efforts to offset staff shortages by rostering additional standby crew on the weekend but was forced to make “additional cancellations for [Sunday] and [Monday]”.

A total of 62 flights scheduled for Monday have been pulled, most of which were announced at short notice on Saturday.

An easyJet spokesperson said:

“As a result of the current high rates of Covid infections across Europe, like all businesses easyJet is experiencing higher than usual levels of employee sickness.

“We have made 62 pre-emptive cancellations for flights to and from the UK for [Monday] which represents a small proportion of [Monday’s] total flying programme which was planned to be more than 1,645 flights. We cancelled the majority of these [on Saturday].”

UK consumers are cutting back on discretionary spending, as rising food bills leave them with less money for other

Spending expectations for eating out, going out, holidays and fashion spending have all fallen this year, PwC’s consumer confidence report shows.

PwC consumer confidence
PwC consumer confidence Photograph: PwC

Grocery is now the only category with a net positive spending intention; almost exclusively due to inflation expectations.

PwC says:

Spending expectations on eating out and going out have plummeted; they are now the lowest categories as consumers look for ways to tighten their spending. Eating out, in particular, had an excellent post-lockdown rebound, with the Coffer CGA Business Tracker showing high single digit like-for-like growth in chain restaurant sales compared with 2019 throughout Autumn and into early 2022. The only exceptions to this were at the height of Omicron and working-from-home guidance issued in December 2021 and January 2022.

Other discretionary spending should expect to be hit hard, with holidays and fashion spending intentions also seeing substantial falls since last Spring. Pent-up demand and weak comparatives may mean that both categories should see double-digit growth compared with 2021, but neither is expected to reach pre-pandemic heights.

Updated

Consumers are bracing for prices to continue climbing in the coming months.

Three quarters of people surveyed by PwC last month had seen their grocery shopping become more expensive in the past few months, and 78% expect prices will rise further in the coming months.

It’s a similar picture with utilities - two-thirds were already spending more, with 77% expecting further rises. Just 4% of all consumers do not expect to increase spending on either groceries, utilities or petrol in the coming months.

UK consumer confidence report

UK inflation hit a 30-year high of 6.2% in February, and is expected to rise over 8% this month due to last Friday’s rise in the energy price cap.

Introduction: UK consumer confidence hammered by cost of living

Good morning, and welcome to our live rolling coverage of business, economics and financial markets.

The cost of living crisis has knocked UK consumer confidence down to its lowest level since the pandemic, as rising food and energy bills hammer families.

There has been a “significant and sustained drop-off in consumer sentiment”, leading to the biggest one-year drop in confidence since the global financial crisis, a new report from PwC this morning shows.

Its index of UK consumer confidence has dropped to -20 this month, from +10 last summer. That’s barely above the -26 recorded at the start of the pandemic two years ago.

UK consumer confidence
UK consumer confidence Photograph: PwC

PwC warns that this dramatic drop shows the impact that the cost of living crisis is having across the UK.

Lisa Hooker, Leader of Industry for Consumer Markets, PwC UK, says:

“This shift in sentiment is both significant and sudden, with consumer spending expectations moving towards more essential areas at the expense of discretionary items. Businesses that help customers by offering them the options to trade down are more likely to keep their loyalty for when things get better.”

The 30-point drop over the last nine months is the biggest sustained decline in PwC’s survey since the 2008 Global Financial Crisis, as households face the biggest squeeze in in decaces.

Energy bills have just soared, and could do so again in October, while food price inflation is the fastest in 10 years.

More details to follow.....

Also coming up today

Eurozone finance ministers will discuss the impact of the war in Ukraine on Europe’s economies when they hold a Eurogroup meeting today, as pressure grows for a ban on imports of Russian gas.

They will also discuss how a digital euro could be designed, and the trade-offs between privacy and preventing money laundering, illicit financing and tax evasion.

European stock markets have opened a little higher, despite worries over rising inflation, slower growth and the impact of the Ukraine war.

The agenda

  • 7am BST: German trade balance for February
  • 10.05am BST: Bank of England governor Andrew Bailey: Speech at the Stop Scams Conference
  • From 2pm BST: Eurogroup meeting of eurozone finance ministers in Luxembourg.
  • 3pm BST: Bank of England deputy governor Sir Jon Cunliffe speech at a European Economics & Financial Centre seminar
  • 3pm BST: US factory orders for February

Updated

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