Closing summary
The German and French stock markets are pushing higher, trading up 1.2% and 1.7% respectively, while the UK’s FTSE MiB is lagging for a second day. It’s edged 0.1% higher to 7,635, dragged down by mining shares after disappointing results. Italy’s FTSE MiB is flat.
On Wall Street, the Nasdaq advanced 1%, boosted by a 9% rise in the Tesla share price after bumper profits.
Oil prices have risen about 2%, with Brent crude trading at $108.92 a barrel.
Our main stories today:
Over here, THG shares jumped 18% to 112p after the company said it had received “numerous” takeover offers and rejected them as “unacceptable”.
Thank you for reading. We’ll be back tomorrow. take care! – JK
Elon Musk secures $46.5bn to buy Twitter
Elon Musk has lined up $46.5bn in financing to buy Twitter, and is trying to negotiate an agreement with the company, according to regulatory filings.
Last week, the Tesla boss launched an audacious bid to buy Twitter for $54.20 a share, valuing the company at $43.4bn (£33bn). He said he wants to release its “extraordinary potential” to boost free speech and democracy across the world.
According to documents filed with US securities regulators, Musk is exploring what’s known as a tender offer to buy all of the social media platform’s common stock for $54.20 per share in cash.
Under a tender offer Musk, who already owns about 9% of Twitter shares, would take his offer directly to other shareholders, bypassing the board. (The entrepreneur hasn’t decided yet whether to do that.) Twitter has not responded to Musk’s proposal, according to the filings.
Last week Twitter’s board adopted a “poison pill” defence that could make a takeover attempt prohibitively expensive. It announced a limited-duration shareholder rights plan that could thwart the billionaire’s attempts to take over the company.
The filing states that “entities related to [Musk] have received commitment letters committing to provide an aggregate of approximately $46.5bn.”
Manchester United shares dipped 0.6% when they opened in New York. The Premier League club confirmed that the Ajax coach Erik ten Hag will be their new manager on contract to June 2025, with the option to extend for a further year, but the announcement had little impact on the share price.
Bank of England policymaker Mann: interest rates to go up 'a little bit'
UK interest rates will probably have to go up “a little bit” further, said Bank of England monetary policymaker Catherine Mann, adding that in some ways Britain’s economy is already suffering from stagflation.
Answering questions after delivering a speech today, she said:
We want to avoid inflation getting out of control. And it may mean that interest rates go up a little bit. We’ll just have to see where we are in May.
Asked about the risk of stagflation – a combination of slow economic growth (stagnation) and high inflation – Mann said “in some senses, we could say we’re already there” because of the recent jump in energy prices and slowing retail sales.
But... it’s premature to kind of hearken back to the 1980s or the 1970s, in the US context in particular, and use that vocabulary.
The Bank of England is widely expected to lift interest rates again next month, although the size of the rate hike (a quarter or half point) is uncertain. Markets are eagerly waiting for further clues when the central bank’s governor Andrew Bailey speaks at 5.30pm BST today, at the Peterson Institute for International Economics, a think tank based in Washington, DC.
Consumer confidence in the eurozone improved in April, after a sharp decline in March (following Russia’s invasion of Ukraine on 24 February) – but remained far below its long-term average.
The European Commission said its confidence indicator rose by 1.8 points to -16.9 in the eurozone, and by 2 points to -17.6 in the wider European Union.
Shares in Tesla jumped nearly 11% when Wall Street opened, after the electric carmaker smashed Wall Street estimates for revenue and profit in another record quarter– despite a tumultuous few months for its CEO, Elon Musk, and ongoing supply chain concerns.
This brought some respite to Nasdaq, which was dragged down by Netflix yesterday. The tech-heavy index is trading 1.6% higher.
More Brits went shopping and dined out in the run-up to the Easter holiday weekend, and bookings at restaurants rose to a seven-month high, according to official figures.
In the latest week the number of UK seated diners was 138% of the equivalent week in 2019, the highest level since early September 2021, the Office for National Statistics said. Visits to “retail and recreation” locations increased by 8% in the latest week to 91% of pre-coronavirus levels.
The latest economic activity and social change data show
— Office for National Statistics (ONS) (@ONS) April 21, 2022
▪️UK seated diners were at 138% of the equivalent week in 2019, its highest relative level since early Sept 2021
▪️Retail and recreation trips rose 8% in the latest week to 91% of pre-COVID levelshttps://t.co/BEVDD8fyph pic.twitter.com/nkFB4sirwA
Here is a bit more on the latest 26 UK sanctions against Russian generals and defence companies, announced today.
The companies include:
- Kalashnikov Concern, a Russian developer and manufacturer of army Russian equipment whose weapons have been used by Russian armed forces during the invasion of Ukraine
- Arzamas Machine-Building Plant, who build amphibious armoured personnel carriers that have been used in the invasion of Ukraine
- Military Industrial Company, a major supplier of arms and military equipment to the Russian armed forces
- GTLK, Russia’s largest leasing company which operates in different types of transport and special equipment for Russian companies in the transport industry
You can read the government announcement here.
NEWS: Today I announce new sanctions on those with Ukrainian blood on their hands including the commander of the unit which occupied Bucha and other individuals and businesses supporting Putin’s military.
— Liz Truss (@trussliz) April 21, 2022
We are relentless in support of Ukraine.https://t.co/kUMdnKjJ5D
KitKat maker Nestlé ups prices by 5.2%
Nestlé, the owner of KitKat, Häagen-Dazs and Felix cat food, raised its prices by 5.2% in the first three months of this year and has said rising costs will force another increase soon, reports our retail correspondent Sarah Butler.
Mark Schneider, Nestlé’s chief executive, said: “Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the course of the year.”
Nestlé is the latest major brand owner to issue a warning about the impact of rising prices of raw ingredients combined with higher energy, fuel, labour and transport costs. Greggs the bakers, the consumer goods maker Unilever and the fashion chain Next are among those who have said more inflation is on the way.
Updated
Here is our full story on the Lukoil president stepping down today.
The multibillionaire Russian oligarch Vagit Alekperov has stepped down as the president of the London-listed firm Lukoil after sanctions were imposed on him by the UK and EU, writes my colleague Rob Davies.
In a statement to the stock market, Russia’s second-largest oil company said Alekperov, who is on good terms with Vladimir Putin, had formally notified the company of his decision to resign on Thursday.
Lukoil is among 27 companies whose shares were suspended by the London Stock Exchange early last month in order to avoid market turmoil. The Moscow-headquartered firm is not subject to sanctions.
However, the UK government has said Alekperov was targeted because of his role in the Russian energy sector, including an 8.5% equity stake in Lukoil that was worth £3bn before the shares were suspended.
“Through his directorship of Lukoil, Alekperov continues to obtain a benefit from and/or continues to support the government of Russia by working as a director […] trustee, or equivalent, of entities carrying on business in sectors of strategic significance to the government of Russia, namely the Russian energy sector,” the official sanctions list states.
Updated
Globalisation is not working – in an age of insecurity, we need more local solutions, writes our economics editor Larry Elliott.
Elon Musk to collect $23bn bonus
Elon Musk, chief executive of Tesla and the world’s richest person, is set to collect a $23bn (£17.6bn) bonus after the California electric car company’s first-quarter results exceeded performance targets, reports our wealth correspondent Rupert Neate.
Musk, who is already sitting on an estimated $249bn fortune, is in line for the bonus share payout after Tesla hit share price and financial growth milestones in its earnings on Wednesday night.
Tesla made an adjusted profit of $5bn on revenue of $18.8bn in the first quarter of the year – an 81% increase on the same period a year earlier. The results, combined with the growth in Tesla’s share price performance, mean Musk has hit targets that should lead to a bonus share payout worth about $23bn.
The company outlined an extraordinary deal for Musk in 2018 that would pay him an unprecedented $55.8bn (£40bn) bonus if he built the business into a $650bn company within a decade.
Updated
Here is our full story on THG.
The online shopping group THG has dismissed “numerous” takeover approaches as “unacceptable”, saying they undervalued the company.
Manchester-based THG (formerly known as The Hut Group), which runs beauty and nutrition websites including Lookfantastic, Cult Beauty and Myprotein, confirmed there had been interest from third parties, but said the company was not currently involved in any talks.
Updated
UK government sets out 26 new sanctions against Russia
The UK government has set out 26 new sanctions against Russia over its invasion of Ukraine, including on military figures and defence companies.
This comes on top of hundreds of other sanctions, such as asset freezes and travel bans on Russian oligarchs and companies.
The latest sanctions include Colonel General Nikolay Bogdanovsky of the Russian army, who is the first deputy chief of the general staff, the manufacturer Military Industrial Company and the industrial group Promtech-Dubna.
Lukoil president Alekperov resigns
Vagit Alekperov has resigned as president and as a director of Russia’s second-largest oil producer Lukoil, the company said.
It did not disclose the reasons behind the 71-year-old’s resignation. Lukoil shares fell 3.3% in Moscow. Its London-listed shares have previously been suspended. Alekperov is one of a number of Russian businessmen who have been sanctioned by the UK government and the European Union, while Lukoil is not subject to sanctions.
The multi-billionaire, who has frequently been pictured with Vladimir Putin, controls an 8.5% stake in Lukoil (3.1% directly, for which he has voting rights, and a further 5.4% through family trusts or mutual funds, without voting rights) but is not a controlling shareholder, the group said.
Updated
A Russian oil tanker that was impounded by Greek authorities this week will be released, Reuters is reporting, citing a government source.
Greek authorities said on Tuesday that the Russian-flagged Pegas (renamed Lana in March), with 19 Russian crew members on board, was seized off the island of Evia, as part of EU sanctions.
The government source told Reuters:
The coastguard has been ordered by the anti-money laundering authority to release the vessel.
The coastguard said the ship’s oil cargo has not been confiscated. The vessel is managed by Russia-based Transmorflot.
Boris Johnson is in India at the start of a two-day visit, where he said he hopes to clinch a free trade deal for Britain by the end of the year.
UK hopes to clinch Indian free trade deal by year-end: Boris Johnson https://t.co/CwFdUb1CrG
— TOI India (@TOIIndiaNews) April 21, 2022
Eurozone inflation revised to 7.4% but remains at record high
Inflation in the eurozone has been revised slightly lower but remains at a record high as energy costs surge.
Consumer prices rose at an annual rate of 7.4% in March, rather than 7.5% as previously estimated, according to the European Union’s statistics office Eurostat.
Energy prices surged 44.4% last month while unprocessed food cost 7.8% more. But even when these volatile components are stripped out, annual inflation was running at 3.2% in March, well above the European Central Bank’s 2% target.
Traders are betting on three quarter-point rate hikes from the European Central Bank this year, as they assume record inflation will force officials to raise borrowing costs above zero.
Traders bet on 3 ECB hikes in 2022 to take rate above zero https://t.co/JO7q7UvCjU via @greg_ritchie pic.twitter.com/VzgdHaeHPa
— Zoe Schneeweiss (@ZSchneeweiss) April 21, 2022
Updated
Here’s our full story on the New York billionaire hedge fund manager Bill Ackmann selling his Netflix stake at a $400m loss.
Russia moves closer to debt default
Russia is moving closer to a potential debt default, after an industry body overseeing the credit default swaps market ruled last night that Moscow failed to meet its obligations to foreign creditors when it paid interest payments on dollar-denominated bonds in roubles (rather than dollars) in early April.
Russia paid bondholders in roubles after it was blocked from using American banks to make payments on its dollar-denominated bonds.
The Credit Derivatives Determinations Committee said Moscow’s payment of roubles on two dollar bonds was a “potential failure-to-pay” event for credit-default swaps. The group includes Goldman Sachs Group, Barclays and JPMorgan Chase.
The Wall Street Journal reported:
The 14 counterparties that oversee the credit-default swaps market, including investment banks, asset managers and brokerage firms, ruled unanimously on Wednesday that the borrower fell short of fulfilling its debt obligations, as investors didn’t receive dollars that were owed.
Following the decision, credit-default swaps tied to the Kremlin’s creditworthiness can be triggered if Russia fails to make dollar payments before a grace period expires on May 4. It would be Russia’s first default on foreign debts since 1918.
Brendan Mckenna, a currency strategist at Wells Fargo Securities in New York, told Bloomberg News:
The bond covenants were pretty clear that ruble payments on dollar debt would constitute default. Come May 4 – unless the logistical challenges around actually making debt payments are cleared, which seems unlikely – I would expect Russia to be declared in default on its external debt.
#Russia is on course for its first external default in a century after its payment of rubles on two dollar bonds was ruled a “potential failure-to-pay event” https://t.co/vx8FIdQhos pic.twitter.com/eJbYXoIoHg
— Holger Zschaepitz (@Schuldensuehner) April 20, 2022
Updated
Here’s a round-up of our other main stories.
Tesla smashed Wall Street estimates for revenue and profit in another record quarter last night, despite a tumultuous few months for its CEO, Elon Musk, and ongoing supply chain concerns, reports Kari Paul in San Francisco.
The electric car manufacturer reported $18.8bn in revenue for Q1 of 2022, up 81% from a year earlier. The report beat analyst expectations of $17.8bn, sending Tesla shares up 4% in after-hours trading.
“The future is very exciting,” Musk said in a call with investors after the close. “I’ve never been more optimistic or excited about the future of Tesla than I am right now.”
Freelance writer Andrew Lawrence has looked at why Netflix is bleeding subscribers.
A safety feature that uses AI technology to scan messages sent to and from children will soon hit British iPhones, Apple has announced, reports our UK technology editor Alex Hern.
The feature, referred to as “communication safety in Messages”, allows parents to turn on warnings for their children’s iPhones. When enabled, all photos sent or received by the child using the Messages app will be scanned for nudity.
Quarantine hotels for inbound travellers to the UK during Covid have cost the taxpayer more than £400m, a National Audit Office (NAO) investigation has found, including almost £100m in unpaid room bills and fraud, reports our transport correspondent Gwyn Topham.
While the government expected the hotels’ costs would be covered by the occupants, it has emerged that the taxpayer has been left responsible for more than half of the £757m bill. The rooms were for those travelling to the UK from high-risk “red list” countries during the pandemic.
Shoppers in New Zealand are ordering groceries from Australia as inflation soars, writes Tess McClure in Auckland.
‘What we now know … they lied’: how big oil companies betrayed us all: Chris McGreal has looked a new documentary series on the power of Big Oil.
THG says it rejected 'unacceptable' takeover offers
The UK online shopping group THG said it had received “numerous” takeover offers in recent weeks but rejected them as “unacceptable” as they undervalued the company.
Its chief executive and founder Matthew Moulding confirmed the offers as he presented the company’s annual results, which showed revenues climbed 35% to £2.2bn, while also warning of further cost pressures.
He said:
You will all be aware that there has been significant speculation about possible third party interest in THG. I can confirm that the board has received indicative proposals from numerous parties in recent weeks.
The board has concluded that each and every proposal to date has been unacceptable, failing to reflect the fair value of the Group, and confirms that THG is not currently in receipt of any approaches. We continue to focus on delivering our exciting growth strategy across a number of large global sectors, and prepare to step up to the premium segment of the LSE at the appropriate time.
Shares in THG, formerly known as The Hut Group, rose 8% in early trading and are currently up 2%.
The shares soared on its £4.5bn stock market debut in September 2020, the biggest London IPO since 2013, but the euphoria evaporated last year when the shares lost 71% of their value, amid questions over donations made to the Conservative party and corporate governance concerns.
Billionaire Bill Ackman sells Netflix shares at £400m loss
Billionaire hedge fund manager Bill Ackman has sold his shares in Netflix at a loss of about $400m, reversing his bullish position in the streaming giant after it reported an outflow of more than 200,000 subscribers, reports my colleague Kalyeena Makortoff.
It comes just months after the New York-based investor bought more than $1bn of Netflix shares in January, despite grim forecasts about the company’s subscription levels. Ackman said at the time that the subsequent drop in the share price had presented at “attractive” opportunity for his Pershing Square fund.
But Ackman made a u-turn overnight after shares in the online streaming platform plunged more than 35% in reaction to news that Netflix had lost more than 200,000 subscribers in the first three months of the year and was likely to lose another 2 million over the next quarter, as customers reviewed subscriptions bought at the height of Covid lockdowns.
Updated
European shares are mostly trading higher, with the exception of the FTSE 100 index, which has edged down 4 points to 7,624, and the Italian borsa in Milan, down 0.17%.
Germany’s Dax has added 0.36% and France’s CAC is 0.77% ahead.
In London, mining shares are among the top fallers again, including Antofagasta, Anglo American and Rio Tinto, as well as commodities trader Glencore.
Antofagasta shares fell more than 8% after it revealed a 24% drop in copper production in the first three months of the year today. Anglo American said production in the first quarter was 10% lower than in the same period in 2021, because of Covid-related absence, high rainfall in South Africa and Brazil and other issues. Rio Tinto also released downbeat results yesterday.
Updated
Oil prices are climbing this morning, as investors worry about future supply in the event of an EU ban on Russian oil, and amid reduced flows from Libya.
Brent crude, the global benchmark, rose 1.5% to $108.40 a barrel, while US light cure gained 1.4% to $103.63 a barrel.
Libya, a member of the Opec oil cartel, said yesterday that it was losing more than 550,000 barrels a day due to blockades at major oil fields and export terminals.
Introduction: World Bank warns of 'human catastrophe' from food crisis
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
The world is facing a “human catastrophe” from soaring food prices following Russia’s invasion of Ukraine, warns the president of the World Bank, David Malpass.
In an interview with the BBC, Malpass said record rises in food prices would push hundreds of millions of people into poverty. He said on the sidelines of the IMF-World Bank spring meetings in Washington:
It’s a human catastrophe, meaning nutrition goes down. But then it also becomes a political challenge for governments who can’t do anything about it, they didn’t cause it and they see the prices going up.”
The World Bank estimates that there could be a “huge” 37% increase in food prices, which is “magnified for [the] poor”, who will
eat less and have less money for anything else such as schooling. And so that means that it’s really an unfair kind of crisis. It hits the poorest the hardest. That was true also of Covid.
It’s affecting food of all different kinds: oils, grains, and then it gets into other crops, corn crops, because they go up when wheat goes up.
Ukraine and Russia are major exporters of wheat and other grains but the war has disrupted production. Malpass called on governments around the world to increase supply of food, energy and fertiliser wherever possible and to introduce measures targeted at the poorest.
The International Monetary Fund said yesterday that it was open to providing emergency financing to nations facing food insecurity.
Malpass also warned of a debt crisis, with developing countries struggling to service large debts that have grown during the Covid pandemic, amid soaring food and energy prices.
As many as 60% of the poorest countries right now are either in debt distress or at high risk of being in debt distress.
European stock markets bounced back yesterday after losses earlier in the week, while on Wall Street the tech-heavy Nasdaq fell 1.2%, dragged down by Netflix. The streaming giant’s shares crashed 35% after it said it expected to lose 2 million subscribers in coming months.
Many Asian markets are up on Thursday, as Japan’s Nikkei rose 1.2% and the Australian market added 0.3%. However, Hong Kong’s Hang Seng lost more than 2% and the Chinese CSI 300 index fell 1.8%, dragged down by worries about the Chinese economy. European shares are expected to extend their bounce, supported by positive company results from Nestlé and others.
Also coming up
The central bank ‘holy trinity’ of US Federal Reserve chair Jerome Powell, European Central Bank president Christine Lagarde and Bank of England governor Andrew Bailey are all due to speak in Washington DC later today.
Michael Hewson, chief market analyst at CMC Markets UK, said:
Lagarde’s comments will be closely scrutinised after yesterday’s comments from Latvian governing council member Martin Kazaks said that a rate rise in July was possible, and that tightening measures needn’t have to wait for evidence of wages growth. Those comments were in contrast to the tone of Lagarde’s ECB press conference earlier this month, so it will be notable if she doesn’t push back on them.
Sterling traders will be looking for clues from Bank of England governor Andrew Bailey on the central bank’s intentions at its May meeting when some form of rate hike is expected, although the extent of any move remains uncertain, whether it be 25 basis points or 50bps. Traders would still be well advised to exercise some caution with respect to any comments Bailey might make given that in previous instances Bank of England guidance has been about as reliable as a chocolate teapot.
The Agenda
IMF/World Bank spring meetings in Washington
- 7.45am BST: France business confidence for April
- 10am BST: Eurozone inflation final for March (forecast: 7.5%)
- 1.30pm BST: US Initial jobless claims for week of 16 April
- 2pm BST: Bank of England policymaker Catherine Mann speaks
- 3pm BST: Eurozone Consumer confidence flash for April (forecast: -20)
- 4.15pm BST: IMF managing director Kristalina Georgieva holds press conference
- 5.30pm BST: Bank of England governor Andrew Bailey speaks at Peterson Institute for International Economics
- 6pm BST: Georgieva, ECB president Christine Lagarde, Fed chair Jerome Powell and others debate the global economy
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