Late breaking news from the G20 meeting of finance ministers in Washington:
The Treasury just told me that the UK representatives, Lindsey Whyte, who is Rishi Sunak’s deputy, and Bank of England governor Andrew Bailey left the G20 meeting in Washington today alongside representatives from the US and Canada as the Russian delegate spoke – in protest at Russia’s invasion of Ukraine.
The Treasury said:
Alongside our allies the US and Canada, representatives from the UK left the G20 meeting as Russian delegates spoke.
The UK is being represented in all G20 sessions by Bank of England Governor Andrew Bailey and the Chancellor’s Finance Deputy Lindsey Whyte.
We will continue working with our allies to condemn Russia’s war against Ukraine in strongest terms, and push for stronger international coordination to punish Russia for their unprovoked and unjustified actions, and work closely with partners and the International Finance Institutions to support Ukraine in their hour of need.
We’ll be back tomorrow. Thank you for reading. Bye! - JK
Closing summary
IMF fiscal affairs director Vitor Gaspar said governments must target support measures at vulnerable people who are hit hardest by rising energy and food prices in the wake of the war in Ukraine.
He said the Washington-based fund was open to emergency financing for nations facing food insecurity, especially those struggling under high debts.
The IMF managing director Kristalina Georgieva said “rising food and fuel prices are straining the budgets of ordinary families to the breaking point”. She warned of a “double crisis” from the Ukraine war and the Covid pandemic, which she said is a “massive setback for the global recovery,” a day after the IMF slashed its global growth forecast.
The Russian rouble has strengthened and is trading close to pre-invasion levels, while Russian stocks reversed earlier losses.
On the European stock markets, the FTSE 100 index is trading 0.1% higher at 7,610, while the German and French markets have advanced more than 1% and the Italian exchange is also nearly 1% higher.
On Wall Street, the Dow Jones is up 0.6% at 213 points while the Nasdaq and S&P 500 turned negative.
Gas prices are climbing again, with the Dutch wholesale gas contract for the first quarter rising 5.1% to €98.50 per megawatt hour. Crude oil prices are unchanged at present, with Brent crude, the global benchmark, at $107.25 a barrel.
Our main stories today:
Netflix shares have crashed a further 36%, after losing 25% in after-hours trading last night, after the streaming giant revealed that it had lost subscribers for the first time in 10 years.
Back to the IMF spring meetings. IMF fiscal affairs director Vitor Gaspar said governments must target support measures at vulnerable people who are hit hardest by rising energy and food prices in the wake of the war in Ukraine.
He told Reuters:
Government acting in its special role to protect the vulnerable when things fall apart goes a long way to keep social cohesion.
It is an absolute imperative for public policies everywhere to provide food secuity for all.
He advocated temporary, targeted measures such as cash transfers, instead of broader, generalised subsidies that could be costly.
Rouble firms, Russian stocks reverse losses
The rouble has strengthened and is now trading close to pre-invasion levels, while Russian stocks reversed earlier losses, on day 56 of Moscow’s invasion of Ukraine.
Shrugging off the impact of western sanctions – soaring inflation, capital flight and a potential debt default – the rouble gained 2.8% to 76.3 per dollar, hovering near levels seen before 24 February when Russia invaded Ukraine. It jumped as high as 120 per dollar in the weeks after the invasion.
Against the euro, the rouble added 2.4% to 82 per euro, heading away from an all-time low of 132.41 hit on the Moscow exchange on 10 March.
However trading activity remains subdued compared to those before the invasion, and moves in the Russian currency are limited by capital controls imposed in late February.
Analysts said companies are due to pay a record 3 trillion roubles in taxes this month, for which some export-focused firms need to sell foreign currency, and this will further support the rouble in coming days.
On the Moscow stock exchange, the dollar-denominated RTS index rose 2.65% while the rouble-based Moex edged 0.3% higher.
HM Treasury has now clarified that the UK chancellor, Rishi Sunak, won’t be attending sessions of G20 finance ministers due to domestic diary pressures, rather than a boycott of Russian officials.
The UK will be represented at all G20 meetings by chancellor’s finance deputy Lindsey Whyte, along with the Bank of England governor, Andrew Bailey.
Reuters had reported earlier that Sunak would only attend certain G20 sessions, similar to US Treasury Secretary Jane Yellen, who according to US officials will skip sessions attended by Russian officials.
IMF open to emergency financing for nations facing food insecurity
Her remarks came after a senior official said the International Monetary Fund is open to providing emergency financing to help vulnerable countries facing food security issues, or additional funding under existing lending programmes.
Vitor Gaspar, director of the IMF’s fiscal affairs department, told a press conference that food security was a critical issue being debated at this week’s spring meetings of IMF and World Bank members.
If a country already has a programme with the fund, additional financing associated with food security priorities can be considered, and in case such a programme does not exist, or for whatever reason the country does not want to use that channel, the possibility of emergency financing is also open to this type of situation.
Turning to inflation, Georgieva recommended three things:
First, it requires decisive actions by central banks—they must keep their finger on the pulse of the economy and adjust policy as needed. Also, as they tighten, major central banks should communicate clearly, mindful of spillover risks to vulnerable emerging and developing economies.
Second, high and rising food prices are particularly concerning—especially in poor countries where there is a growing risk of a food crisis. International action to avoid it is critical. Yesterday, with Secretary Yellen and other finance ministers and partners, we made important progress toward global action to provide immediate relief.
Third, fighting inflation through monetary policy tightening raises the costs of servicing debt. For low-income countries, its burden has reached 50% of GDP—placing 60 percent of these counties at or near debt distress.
To address debt, countries need domestic policies that can help bring their budgets back on track—while providing targeted assistance to the most vulnerable. They can help finance this with more equitable tax policies.
At the same time, international support is essential—and here we have said that the G20’s Common Framework for Debt Treatment must be improved with clear procedures and timelines for debtors and creditors. It should also be expanded to other highly-indebted vulnerable countries.
So what can we do? she asked.
Our immediate hope must be for the war to end—that would have the single most positive effect on the global recovery right now. In the meantime, we must do everything we can to help Ukraine and other heavily affected countries.
The IMF has already provided $1.4bn in emergency financing to Ukraine, and set up a special account through which others can securely contribute. Just a few days ago, President Zelenskyy and I discussed the massive reconstruction efforts that will be needed. We are also working to help impacted neighbors like Moldova—which is so generously hosting large numbers of refugees.
At the same time, we must continue to fight Covid —the pandemic has not gone away. With our partners, we have recently proposed a comprehensive toolkit that includes vaccines, testing, and anti-viral 3 treatments. It can be deployed everywhere at the modest cost of $15bn this year and $10bn in subsequent years.
In her opening remarks at the IMF/World Bank spring meetings, IMF managing director Kristalina Georgieva warned of a “double crisis”:
We meet at a consequential moment for the world—facing a crisis upon a crisis. The war on top of the pandemic. It is like being hit by another storm before we have recovered from the last one.
The result is a massive setback for the global recovery. Yesterday, we reduced our global growth forecast to 3.6% for both this year and 2023— with downgrades for 143 countries.
This is caused largely by Russia’s invasion of Ukraine and the shock waves it has sent around the world. First and foremost, of course, is the dreadful human suffering it has caused for the Ukrainian people. Our hearts go out to them.
Another consequence is accelerating inflation, which has become a clear and present danger for many countries—rising food and fuel prices are straining the budgets of ordinary families to the breaking point.
Financial tightening, high debt, and frequent, wide-ranging lockdowns in China—causing further bottlenecks in global supply chains—are additional dark clouds weighing on the global economy.
And I see one more hanging overhead: the risk of geopolitical fragmentation, which could jeopardize the development gains of the last 75 years—and leave us unable to address other urgent global challenges, such as climate change.
Updated
More than 40,000 UK railway workers are to be balloted in a dispute over jobs and pay that a union says could prompt the biggest rail strike in modern history.
The National Union of Rail, Maritime and Transport Workers (RMT) said on Wednesday that staff will be asked to vote on strike action over Network Rail’s plans to cut at least 2,500 maintenance jobs as part of a £2bn reduction in spending on the network.
Meanwhile, workers at train operators have been subject to pay freezes and changes to their terms and conditions.
The RMT said the strike ballot was the biggest of members for a single dispute it has undertaken since it was formed in 1990. The ballot opens on 26 April and closes on 24 May, so strike action could begin in June.
UK sets target of 40% women on company boards
Women should make up at least 40% of boards at British listed companies and one director should be a person of colour, according to new rules set out by the Financial Conduct Authority.
The UK’s financial watchdog set a range of diversity targets, and said at least one senior position such as company chair, chief executive or chief financial officer should be held by a woman. Companies will have to make annual statements showing how they are complying with the new rules, or explain any divergences.
The rules will apply to listed companies for financial accounting periods starting from 1 April. The FCA will review the rules in three years’ time to make sure they are working and to check if the diversity targets are still appropriate.
Sarah Pritchard, executive director of markets at the FCA, said:
As investors pay increasing attention to diversity at the top of the companies they invest in, enhancing transparency at board and executive management level will help hold companies to account and drive further progress.
The FCA said it had finalised rules requiring listed companies to report information and disclose against targets on the representation of women and ethnic minorities on their boards and executive management.
In February, the government-backed FTSE Women Leaders Review said female representation on the boards of Britain’s top 100 listed companies was 39.1%.
Separately, the eurozone recorded a trade in goods deficit of €7.6bn with the rest of the world in February compared with a surplus of €23.6bn a year earlier, according to Eurostat. A near-39% increase in imports, driven by energy imports, outweighed a 17% gain in exports.
The EU’s trade position worsened to a €15.8bn deficit from a €21.4bn surplus in February last year. The figures also revealed that the EU’s trade surplus with the UK shrank to €20.4bn from €23bn.
Updated
Industrial production in the eurozone rebounded in February from a January decline, thanks to stronger output of consumer goods, which countered lower output of energy and capital goods.
Production in the 19 countries sharing the euro rose 0.7% in February from January, according to Eurostat, the EU’s statistics office. The biggest monthly increases were in Italy (up 4%), Croatia (up 2.7%) and Ireland (up 2.4%).
However, the data does not capture the impact of the Russian invasion of Ukraine, which began on 24 February, and has shaken business sentiment.
Updated
The UK Treasury has told me that there will be British representation at all G20 meetings: some will attended by the chancellor, and other meetings by another British official. He said this is not unusual, as Rishi Sunak is not able to attend all meetings himself.
Western nations are preparing to stage coordinated walkouts and other diplomatic snubs in protest against Russia’s invasion of Ukraine at a meeting of G20 finance ministers in Washington.
The US treasury secretary, Janet Yellen, plans to avoid G20 sessions attended by Russian officials on the sidelines of International Monetary Fund and World Bank meetings on Wednesday. The UK chancellor, Rishi Sunak, also will not attend certain G20 sessions, a British government source said, as reported earlier.
However, Yellen will attend an opening session on the Ukraine war regardless of Russian participation, a US treasury official said.
While some in western capitals argue that Russia’s actions should mean it is excluded from global meetings altogether, that is not a view shared by others in the G20, including notably China and Indonesia, which is chairing the group this year.
Gazprombank demands $300m repayment from London-listed gold miner Petropavlovsk
The Russian gold producer Petropavlovsk, once one of the biggest gold producers listed in London, has been plunged further into turmoil as its main lender Gazprombank demanded repayment of almost $300m of loans.
Gazprombank, which has been sanctioned and its assets frozen by the UK government, is demanding immediate repayment of $201m of loans, and repayment of a $87m revolving credit facility by 26 April. However, Petropavlovsk had already warned that sanctions imposed on Russia after its invasion of Ukraine prohibited it from making the repayments.
The gold miner said in a statement to the London Stock Exchange today:
The company is considering the implications of these notices with its advisers.
Petropavlovsk shares crashed 28% to a record low of 1.53p in early trading, and are now trading 15% lower. Last month, the Russian billionaire Sergey Sudarikov, who part-owns the sanction-hit Credit Bank of Moscow, bought a 29% stake in Petropavlovsk from its biggest shareholder, Konstantin Strukov, who owns the Russian gold miner UGC.
Last week, Petropavlovsk said it was considering putting itself up for sale “as soon as practically possible” because it would be “very challenging” to refinance a $304m bond, which is due to mature in November. It warned that investors might be wiped out by a sale.
The company has been hit hard by western sanctions on Russia (even though it is not on the sanctions list itself), and said then:
The group has limited cash reserves outside Russia. There are legal restrictions in place in Russia which limit the group’s ability to transfer cash out of Russia.
The firm said last month that restrictions on buying and selling gold in Russia might make it hard to find an alternative buyer for its output. Gazprombank is one of Petropavlovsk’s main customers and buys all of its gold.
Updated
Consumer stocks and banks are among the biggest risers in the UK and the rest of Europe today, while miners have been hit by downbeat results from Rio Tinto.
The Euro Stoxx 600 rose 0.4%, with Danone the top riser, up 7.6%, after positive results and rumours that the French dairy firm Lactalis could bid for it. Heineken rose more than 4% after reporting a surge in beer sales as bars and restaurants reopened in Europe following Covid lockdowns.
Europe’s main stock indices are trading between 0.2% (Germany’s Dax) and 0.4% (France’s CAC) higher, while the UK’s FTSE 100 index has gained 18 points, or 0.2%, to 7,619.
In London, consumer stocks such as Kingfisher, Reckitt Benckiser, Unilever and British American Tobacco are rising as these stocks are seen as good defensive staples amid the war in Ukraine.
Lloyds Banking Group was also among the top FTSE 100 risers and the banking index rose 1.4%, as the yield on the UK’s 10-year government bond climbed above 2% for the first time since late 2015.
Updated
Just Eat considers selling Grubhub arm after drop in orders
Just Eat Takeaway is considering selling off its Grubhub arm, after reporting a decline in orders compared with bumper levels during Covid lockdowns.
The takeaway delivery specialist said orders dropped by 1% to 264.2m in the first three months of 2022 as it struggled against pandemic-boosted levels from last year. As a result, it lowered its transaction value and earnings forecasts for the year.
The Netherlands-based company agreed to buy the US-based app Grubhub for $7.3bn (£5.8bn) in June 2020 in a deal completed last year that created the world’s largest food delivery service outside China.
Heineken sells more beer after bars reopen
Heineken, the world’s second-biggest brewer, has sold more beer than expected thanks to a surge in demand from Europe, where bars and restaurants reopened from Covid lockdowns in recent months.
The Dutch company said revenues climbed 35% to almost €7bn in the first three months of the year, compared with the same period last year. Beer volumes rose 5.2% on a like-for-like basis from a year earlier, above analysts’ expectations of a 3.5% increase. They were 2.8% ahead of 2019.
Premium beer volumes grew by 6.3%, led by Heineken, which was up nearly 13%. Growth was mainly driven by Brazil, China, the Netherlands, Spain, Ireland, Italy, the UK, Portugal, Nigeria, and the United Arab Emirates.
Heineken shares rose 3.4% on the news.
Updated
Rio Tinto flags risks from inflation and prolonged war
The Anglo-Australian mining giant Rio Tinto has reported lower-than-expected iron ore shipments in the first quarter and flagged risks from sustained high inflation, new Covid lockdowns in China and a prolonged Russia-Ukraine war.
The world’s biggest iron ore producer shipped 71.5 million tonnes of iron ore, which is used to make steel, in the three months to 31 March, compared with 77.8 million tonnes a year earlier and analysts’ estimates of 76 million tonnes.
Labour shortages and supply chain snags hampered the company’s efforts to ramp up its Pilbara operations in Western Australia in the first three months of the year.
Rio Tinto shares fell 2.2%, making it the biggest loser on the FTSE 100 this morning. Other miners, Fresnillo and Anglo American, were also among the biggest fallers.
Rio Tinto chief executive Jakob Stausholm said:
Production in the first quarter was challenging as expected, re-emphasising a need to lift our operational performance.
Turning to the outlook, he said:
Economic growth and commodity demand started positively this year as the world continues to recover from the pandemic downturn. However, market expectations have been revised downwards amidst sustained high inflation, the outbreak of the Russia-Ukraine war, and a resurgence of Covid-19 lockdowns in China. Further downside risks include a prolonged war and other geopolitical tensions, extended labour and supply shortages, and monetary policy adjustments to curb inflation.
In March, Rio Tinto became the first major mining company to announce it was severing all ties with Russian businesses. It owned an 80% stake in Queensland Alumina in a joint venture with Russia’s Rusal, the world’s second-largest aluminium producer.
Updated
European stocks have opened cautiously higher.
Germany’s Dax rose 0.1%, France’s CAC and Italy’s FTSE MiB added 0.3% and Spain’s Ibex edged 0.2%, while the UK’s FTSE 100 index was up 0.1% at 7,608.
Britain’s chancellor of the exchequer, Rishi Sunak, will only attend some G20 meetings in Washington this week, Reuters is reporting, citing a government source, after US officials said they would avoid meetings with Russian officials.
US officials said on Monday that Treasury Secretary Janet Yellen would skip some meetings of finance ministers from the G20 group of advanced and emerging economies if Russian officials were present.
Sunak will not attend all G20 meetings either. A government source told Reuters:
As per the US, the chancellor will attend the core G20 sessions... and will continue working with our allies to call out Russian aggression, and push for stronger coordinated action to punish Russia and support Ukraine.
Russia’s finance minister, Anton Siluanov, will lead Russia’s delegation to the sessions, which take place on the sidelines of the twice-yearly meetings of the IMF and World Bank in Washington.
Updated
Introduction: German producer prices at record high, IMF/World Bank meetings under way
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
In Germany, factory gate prices jumped 30.9% in the year to March, the biggest increase since records started in 1949, according to the Federal Statistics Office. This reflects the impact of the war in Ukraine for the first time, with surging energy costs the main culprit. The worry is that increases in producer prices will feed through into consumer prices and push inflation even higher.
Netflix shares crashed 25% last night after the US streaming giant said it had lost subscribers for the first time in 10 years at the start of the year, and expects to lose even more in the spring.
After gains on Wall Street on Tuesday, with the Nasdaq rising 2.15% and the Dow Jones up 1.45%, Asian shares are mostly higher in choppy trading, apart from the Shanghai composite, which fell 1%. Japan’s Nikkei rose 0.86%, Hong Hong’s Hang Seng dipped 0.47% and the Singapore exchange finished 0.9% higher.
China’s central bank kept its benchmark lending rates unchanged but announced some measures to help people and companies affected by Covid. Iris Pang, chief economist for Greater China at ING, says:
Most of the measures mentioned are window guidance for banks to be flexible in lending to individuals and companies that are affected temporarily by lockdowns and credit issues, but which are willing to repay debts when the lockdowns are released. The outcome depends on the banks’ reaction to the central bank’s suggestions. The measures also suggest that the monetary policy response will remain modest compared to fiscal stimulus.
European stock markets were in the red yesterday, as Russia launched the ‘second phase’ of the war in Eastern Ukraine. Futures point to a higher open today, but the risks remain tilted to the downside.
Oil prices have rebounded amid concerns about tighter supplies from Russia and Libya. Yesterday, both Brent crude and US light crude lost more than 5% after the International Monetary Fund slashed its forecast for global growth because of the war in Uraine. Brent crude, the global benchmark, is nearly $1 higher at $108.18 a barrel at the moment, while US light crude is trading at $103.02 a barrel.
Also coming up
The spring meetings held by the International Monetary Fund and World Bank are under way in Washington, with speeches this afternoon by the IMF managing director Kristalina Georgieva on the global policy agenda, followed by the World Bank president David Malpass.
The Agenda
- IMF/World Bank spring meetings in Washington
- 10am BST: Eurozone trade and industrial production for February
- 1.30pm BST: Canada inflation for March (forecast: 6.1%)
- 1.30pm BST IMF head Kristalina Georgieva speaks
- 2.15pm BST: World Bank president David Malpass speaks
- 3pm BST: US Home sales for March
Updated
