Weakest March for UK car sales since 1998 amid cost of living squeeze and chip shortages – business live

Weakest March for UK car sales since 1998 amid cost of living squeeze and chip shortages – business live

World News

US stops Russian dollar bond payments in bid to raise pressure on Moscow

The US government has ratcheted up the financial pressure on Russia, by halting its ability to make debt payments in dollars through US banks.

The move could bring Moscow a step closer to potentially defaulting on its obligations to international investors.

The US Treasury prevented Russia from paying holders of its sovereign debt more than $600m from reserves held at American banks yesterday, Reuters reports.

It would force Russia to choose between using dollar reserves held in its own country to service its debts, or spend new revenue, or miss bond payments and go into default.

This puts more pressure on Moscow, at a time when its economy is already weakening (today’s PMI report showed company growth contracting).

A US Treasury spokesperson said late on Monday that:

Beginning today, the US Treasury will not permit any dollar debt payments to be made from Russian government accounts at US financial institutions.

Russia must choose between draining remaining valuable dollar reserves or new revenue coming in, or default.”

The move came just as Russia was due to make a $552.4m payment on a maturing bond yesterday, and after the discovery of mass graves and bodies of bound civilians shot at close range in the town of Bucha, prompting calls for more sanctions.

An earlier debt payment had been allowed last month, despite the freeze on Russia’s foreign exchange reserves. But the US Treasury now seems to have changed its position, blocking Moscow from tapping its dollars held in US banks to service its debts.

Bloomberg explains:

A carve-out in U.S. policies has allowed overseas and U.S. investors so far to receive payments on Russian foreign-currency debt, even as restrictions complicate the process. The exemption is set to expire on May 25.

“It seems to me that it is a U-turn of what the U.S. government allowed on March 17, when Russia paid a $117 million coupon,” said Carl Wong, head of fixed income at Avenue Asset Management Ltd. in Hong Kong, which doesn’t own any Russian dollar debt.

Bloomberg Economics (@economics)

Treasury cuts off Russian reserves in the U.S. as war in Ukraine drags on https://t.co/GDg83GLzTs

April 5, 2022

JPMorgan Chase & Co, which had been processing payments as a correspondent bank so far, was stopped by the Treasury, a source familiar with the matter told Reuters.

The correspondent bank processes the coupon payments from Russia, sending them to the payment agent to distribute to overseas bondholders.

The country has a 30-day grace period to make the payment, the source said.

Reuters U.S. News (@ReutersUS)

U.S. stops Russian bond payments in bid to raise pressure on Moscow https://t.co/WZcxkJxopK pic.twitter.com/Y0NgggXElN

April 5, 2022

Updated

Closing post

Time to wrap up…. with a quick summary.

The US government has ratcheted up the financial pressure on Russia, by halting its ability to make debt payments in dollars through US banks.

The move increases the risk that Russia defaults on its loans, and could also restrict Moscow’s ability to fund the Ukraine war, experts say.

The EU has proposed a fresh package of sanctions on Russia, including a ban on Russian coal and on Russian ships entering EU ports, following the horrific scenes from Bucha of dead civilians.

EC president Ursula von der Leyen also said the EU was “working on additional sanctions, including on oil imports”.

Inflationary worries have continued to mount today, with the head of the BIS group saying the world may be on the brink of a new inflationary era that would demand action from central banks.

The OECD reported that inflation among its rich nations had reached a 30-year high, as energy and food prices rise across the board.

The latest PMI surveys showed that firms in the UK, US and eurozone were raising prices sharply as they passed on higher energy costs, commodity prices and wage bills to consumers — even as activity continued to rise.

Russia’s economy, though, shrank sharply last month as sanctions hit companies, with new orders and employment levels down.

The cost of living crisis, and problems sourcing computer chips, both hit UK car sales last month. But with fossil fuels at record prices, more motorists turned to electric cars:

Elon Musk is joining the board of Twitter, just a day after surprisingly becoming its largest shareholders.

Musk said he was looking forward to making “significant improvements to Twitter in coming months!”, suggesting this story has a long way to run….

Elon Musk (@elonmusk)

Looking forward to working with Parag & Twitter board to make significant improvements to Twitter in coming months!

April 5, 2022

Several UK housebuilders have signed a pledge to fix fire safety problems at blocks of flats, with some setting aside millions of pounds more to cover cladding costs.

Stocks have fallen in Paris, as investors react to the possibility that Marine Le Pen wins the French presidential election.

In other news, the managing director of Manchester airport has quit following weeks of chaos in which thousands of passengers have missed their flights because of queues lasting up to seven hours.

Gambling and betting companies will be banned from using advertising featuring top-flight footballers and other sports personalities, as well as reality TV and social media stars, under new rules designed to protect under-18s and other vulnerable groups.

The total wealth of the world’s billionaires has dipped from a record high last year amid a drop in global stock markets since Russia’s invasion of Ukraine, despite the planet’s richest people still holding a combined $12.7tn (£9.7tn) in assets.

A cyber-attack targeting The Works has caused the closure of some of the retailer’s stores, delayed the resupply of stock and online order deliveries to customers.

Sunflower oil is running low in the UK, as the Ukraine war drive up the price of cooking oil.

The World Bank warned that Russia’s invasion of Ukraine has further dampened the economic prospects for developing countries in east Asia and the Pacific, meaning lower economic growth and higher poverty in the region this year.

Travel disruption continues for lorry drivers and holidaymakers on the Easter getaway, after the ferry company Stena Line was forced to suspend all sailings between Fishguard in south Wales and Rosslare in Ireland to fill the gaps left by the continued suspension of P&O Ferries services.

Amazon will compete directly with SpaceX and the UK government-owned OneWeb to set up a constellation of broadband-providing satellites, the company has announced.

And a Kent woman who has invited a Ukrainian family of refugees into her home has been told to pay an extra £41 a year by John Lewis Home Insurance:

Goodnight. GW

Updated

World may be on cusp of new inflationary era, BIS central bank group says

Phillip Inman

The world economy may be on the cusp of a new inflationary era with persistently higher growth in consumer prices due to the retreat of globalisation, a leading central bank chief has warned tonight.

Agustín Carstens, the head of the Basel-based Bank for International Settlements – which is known as the central bank of central banks – said there was a strong risk that prices would rise uncontrollably without a sharp rise in interest rates above existing plans.

In a speech setting out risks for persistently higher rates of inflation, Carstens said higher borrowing costs could be required for several years to curb the risk of spiralling prices wreaking long-term damage on the economies of the industrialised world.

Carstens warned that higher inflation may prove persistent, causing long-term problems for central banks:

“A key message is that we may be on the cusp of a new inflationary era

“We need to be open to the possibility that the inflationary environment is changing fundamentally.

“If my thesis is correct, central banks will need to adjust”.

However, other experts have warned that high inflation will probably choke consumer spending and economic growth – reducing the urgency for significantly higher interest rates.

Here’s the full story:

French stock market falls as Le Pen closes in on Macron

France’s stock market fell today after investors started to price in the possibility that far-right candidate Marine Le Pen wins this month’s presidential elections against Emmanuel Macron.

The CAC 40 share index dropped by 1.3%. Banks were among the fallers, with Societe Generale losing 5.6%, Credit Agricole off 5% and BNP Paribas down 4.5%.

Shares in infrastructure groups also dropped, with traders citing Le Pen’s pledge to nationalise French toll road operators.

French government bond prices also weakened, widening the gap in borrowing costs against Germany on jitters that a Macron win was no longer a foregone conclusion.

A poll yesterday showed that Le Pen was now within the margin of error of beating Macron in a second-round runoff, with 48.5% of the vote.

Zeitgeist Global (@ZeitgeistGB)

A new poll in France finds Marine Le Pen with 48.5% to 51.5% for Emmanuel Macron in a two-way runoff.

On these numbers, Marine Le Pen could very well be the next French President. pic.twitter.com/jpbsRaEx8N

April 5, 2022

Olaf Storbeck (@OlafStorbeck)

Le Pen is closing down on Macron in latest opinion poll – his lead in a second election round (51.5% to 48.5%) is within the margin of error. https://t.co/A5sX930Asf pic.twitter.com/q4MHQQZrld

April 5, 2022

Jonas Goltermann, senior markets economist at Capital Economics, says:

The recent polling shift in favour of far-right candidate Marine Le Pen ahead of France’s presidential election is starting to affect financial markets.

If the experience of the last election in 2017 is anything to go by, there would be more to come if the perceived chance of a far-right win were to rise further.

In the City, the FTSE 100 share index has closed at its highest level in almost eight weeks.

The blue-chip index finished the day 55 points higher at 7613, its highest close since Friday 11th February.

Defensive stocks led the risers, such as utility firms National Grid (+3.6%), SSE (+3.5%) and United Utilities (+3.5%), along with specialty chemicals firm Croda (+3.4%) and pharma group Glaxo (+3%).

Passengers queuing for security screening in the departures area of Terminal 2 at Manchester Airport yesterday
Passengers queuing for security screening in the departures area of Terminal 2 at Manchester Airport yesterday Photograph: Phil Noble/Reuters

The managing director of the troubled Manchester Airport has stepped down, after weeks of travel disruption and delays caused by staff shortages.

Karen Smart quit following chaotic scenes at UK’s third busiest airport in recent days.

Passengers have suffered hours-long queues and packed security lines, leading them to miss flights, and long waits at the baggage carousel for their luggage.

Jane Gilham (@GilhamJane)

@manairport you are an absolute disgrace! It was dangerous today, people will get hurt if you do not improve things @BBCNews pic.twitter.com/ZDee9KqTsP

April 1, 2022

BBC North West (@BBCNWT)

Managing Director of @manairport Karen Smart – steps down after weeks of chaos at the airport #ManchesterAirport pic.twitter.com/zc1DOgEOtU

April 5, 2022

ITV News has more details:

Karen Smart has been in charge since August 2020, but has quit on the day political leaders and unions met with the airport bosses to discuss the “concerning” situation.

Long delays, queues trailing outside terminals to reach check-in and piles of abandoned suitcases left by travellers are among the airport’s recent problems.

In one case, a mother whose terminally ill daughter needs monthly treatment in Germany said she is dreading their next journey after experiencing chaotic queues.

Some staff have even quit their jobs out of fear for passenger safety.

Manchester Airport say they have struggled to recruit staff made redundant after the pandemic shutdown airports and travel.

ITV Granada Reports (@GranadaReports)

BREAKING: Managing director of Manchester Airport Karen Smart steps down after weeks of ‘chaos’https://t.co/tLUbHhpSfh

April 5, 2022

Housebuilders sign up to fire safety pledge

Several UK housebuilders have today signed a government-led pledge to fix fire safety problems in apartment blocks built since 1992 following the Grenfell Tower fire in London.

Persimmon, Taylor Wimpey, and Berkeley Group told shareholders today that they had signed to the new Building Safety Pledge, and Crest Nicholson said it will sign it.

The pledge commits developers to remove unsafe cladding and address fire-safety issues on all buildings of 11 metres tall or higher which they have developed in the last 30 years, and not to claim any funds from the Government’s Building Safety Fund to fund cladding work.

Taylor Wimpey set aside another £80m to cover its fire safety remediation work, raising the total amount to around £245m. It had previously committed to fix buildings built over the last 20 years, but will now include all sites built since 1992.

Crest Nicholson estimated that fulfilling the pledge will cost it between £80m and £120m, on top of £47.8m already set aside.

Crest told shareholders:

In January 2022 the Secretary of State for the Department for Levelling Up, Housing and Communities (DLUHC) announced the Government’s intention to widen and lengthen the definition of legal obligation on developers to fund the remediation of affected buildings between 11 and 18 metres high.

Failing to agree to these new guidelines would carry further consequences, implemented by DLUHC, that would impact the Group’s ability to operate and trade normally within the housing market.

Persimmon, though, said it could meet the pledge without adding to its £75m provision. It says four of its 33 developments requiring remediation work now have new fire safety certificates, and it is working to complete any necessary works at the remainder as soon as possible.

Persimmon CEO Dean Finch said:

“Over a year ago we said that leaseholders in multi-storey buildings Persimmon constructed should not have to pay for the remediation of cladding and fire related issues. We are pleased to reaffirm this commitment today and sign the Government’s Developer Pledge.

“We made this commitment last year as we believed it was not only fair for leaseholders but also the right thing to do as one of the country’s leading homebuilders. We are pleased that we were able to work constructively with the Government to secure this agreement.”

In January, housing secretary Michael Gove said developers should pay the estimated £4bn cost of fixing cladding problems. Housebuilders, though, argued that the government and companies that sold combustible materials should also shoulder the cost.

Construction News re ported yesterday that the £4bn demand had been dropped from the current negotiations between government and builders. The two sides are trying to agree a fully costed plan to fix any buildings between 11 and 18 metres tall built within the past 30 years. Instead, additional funding talks would be put off until later in the year.

Developers are also paying a 4% tax on their profits to fund cladding work on buildings over 18m tall.

But, today’s pledges from developers don’t appear to address how fire safety work will be funded at so-called ‘orphan blocks’, where the company that built them cannot be traced or no longer exists.

Here’s our news story on Elon Musk joining Twitter’s board:

US companies are raising their prices at the fastest rate since at least 2009, as inflationary pressures build across the Atlantic.

The latest survey of purchasing managers at US companies paints a similar picture to the UK and the eurozone (see earlier posts) — with activity continuing to rise, but input and output pressures worsening.

Data firm S&P Global reports that:

  • New business expansion accelerates to fastest since June 2021
  • Selling prices rise at sharpest pace on record
  • Backlogs of work grow at series-record rate

US firms also said that the easing of COVID-19 restrictions boosted footfall, while shortages of raw materials and staff made it harder to complete orders.

IHS Markit PMI™ (@IHSMarkitPMI)

With both manufacturers and services firms seeing quicker growth, the U.S. Composite #PMI rose to 57.7 in March, up from 55.9 in February, to signal the strongest expansion in private sector output since last July. Read more: https://t.co/2vO9PzQILd pic.twitter.com/NETtwnf2bA

April 5, 2022

World’s billionaires are poorer, and fewer

Rupert Neate

The total wealth of the world’s billionaires has dipped from a record high last year amid a drop in global stock markets since Russia’s invasion of Ukraine, despite the planet’s richest people still holding a combined $12.7tn (£9.7tn) in assets.

According to the annual Forbes magazine ranking of the world richest people, the number of billionaires worldwide fell by 329 to 2,668, with the total value of their combined assets falling slightly from $13.1tn on the 2021 list.

It said that Putin’s invasion of Ukraine – and the avalanche of sanctions that followed – sent the Russian stock market and the rouble plummeting, resulting in 34 fewer Russian billionaires on the list.

Those from the country with billionaire status almost all saw their fortunes stagnate or decline, with their total wealth dropping by more than $260bn compared with a year earlier.

Forbes said the decline in the total number of billionaires from 2,755 to 2,668 was the largest since the 2009 financial crisis, but followed an increase of more than 600 in 2021 when global stock bounced back from pandemic lows.

Here’s the full story:

Twitter co-founder Jack Dorsey has welcomed his friend Elon Musk’s move onto the company’s board:

jack⚡️ (@jack)

I’m really happy Elon is joining the Twitter board! He cares deeply about our world and Twitter’s role in it.

Parag and Elon both lead with their hearts, and they will be an incredible team. https://t.co/T4rWEJFAes

April 5, 2022

Elon Musk’s move onto Twitter’s board will fuel expectations that he wants, and will have, greater involvement in decision making at the social network.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says this could eventually backfire:

This may lead to some nervousness about Mr Musk getting too much influence about the way Twitter is run, with a view to bolstering his own personal brand and that of his companies.

Although his involvement has already sparked a share surge with expectation that it could lead to higher levels of participation on the platform, over the longer term Twitter investors will want to see that high levels of governance are adhered to, otherwise the independence of Twitter could be questioned, and the risk is that users may start to drift away.

Mr Musk has also made no secret of his desire to launch a social media platform of his own so this new role will put him in an ideal position to glean knowledge about the opportunities and risks of a possible future venture.”

EU Commission proposes banning Russian coal imports, ships from entering EU ports

The European Commission has proposed new sanctions against Russia over its invasion of Ukraine, including a ban on buying Russian coal and on many Russian ships entering EU ports.

The EC also said it was working on banning oil imports too.

In a speech posted on Twitter, EC president Ursula von der Leyen said:

“We all saw the gruesome pictures from Bucha and other areas from which Russian troops have recently left.

Yesterday I conveyed to president Zelenskiy my condolences and assured him of the European Commission’s full support in these terrible times.

These atrocities cannot and will not be left unanswered,”

Ursula von der Leyen (@vonderleyen)

Russia is waging a cruel, ruthless war, also against Ukraine’s civilian population.

We need to sustain utmost pressure at this critical point.

So today we are proposing a 5th package of sanctions. pic.twitter.com/GEuPQf0Wgr

April 5, 2022

Von der Leyen says the EC’s four existing packages of sanctions have hit hard and limited the Kremlin’s political and economic options. In view of the latest events, pressures on Russia need to be increased further, she adds, so the EU will make its sanctions “broader” and” sharper”.

The proposal include an EU ban on imports of coal from Russia worth €4bn per year, and a full transaction ban on four key Russian banks, including the country’s second-largest, VTB.

Ursula von der Leyen (@vonderleyen)

1 – An import ban on coal from Russia, worth €4 billion per year, cutting another important revenue source for Russia.

2 – A full transaction ban on 4 key Russian banks, among them VTB, the 2nd largest Russian bank. pic.twitter.com/MknRVScmbN

April 5, 2022

The EU will also ban Russian vessels and Russian-operated vessels from accessing EU ports, though there would be exemptions for essential items — agricultural and food products, humanitarian aid and energy.

Russian and Belarusian road transport operators will also be barred.

The new sanctions package will also prohibit the sale to Russia of quantum computers, advanced semiconductors, sensitive machinery and transportation equipment worth €10bn euros annually.

Ursula von der Leyen (@vonderleyen)

3 – A ban on Russian & Russian operated vessels from accessing EU ports and a ban on Russian and Belarusian road transport operators.

4 – Further export bans, worth €10 billion, in crucial areas: advanced semiconductors, machinery and transport equipment pic.twitter.com/qLu1JZyhER

April 5, 2022

Imports of Russian wood and cement as well as seafood and liquor worth in total some €5.5bn euros annually will also be banned.

Ursula von der Leyen (@vonderleyen)

5 – Specific new import bans, worth €5.5 billion euros.

6 – Targeted measures, such as a ban on participation of Russian companies in public procurement in 🇪🇺 and exclusion of all financial support, EU or national to Russian public bodies. pic.twitter.com/7loq1Sd00E

April 5, 2022

And sixth, Russian companies will be banned from public procurement tenders in EU countries, so that European taxpapers money will not go to Russia. Also, further individuals will be added to a list of people whose assets in the EU will be frozen and who will not be allowed to enter the EU.

Von der Leyen also says that the EU could yet go further:

“We are working on additional sanctions, including on oil imports, and we are reflecting on some of the ideas presented by the member states, such as taxes or specific payment channels such as an escrow account.”

Elon Musk says he is looking forward to making “significant improvements to Twitter in coming months!” once he’s taken up his board seat.

Elon Musk (@elonmusk)

Looking forward to working with Parag & Twitter board to make significant improvements to Twitter in coming months!

April 5, 2022

Elon Musk to join Twitter board after becoming top shareholder

Elon Musk is joining the board of Twitter, a day after revealing he had built up a 9.2% stake in the social media company.

Twitter CEO Parag Agrawal has tweeted that he’s “excited to share the news”, and that the Tesla CEO will bring “great value to our Board.”

Agrawal adds:

“He’s both a passionate believer and intense critic of the service which is exactly what we need on Twitter, and in the boardroom, to make us stronger in the long-term.”

Parag Agrawal (@paraga)

I’m excited to share that we’re appointing @elonmusk to our board! Through conversations with Elon in recent weeks, it became clear to us that he would bring great value to our Board.

April 5, 2022

Parag Agrawal (@paraga)

He’s both a passionate believer and intense critic of the service which is exactly what we need on @Twitter, and in the boardroom, to make us stronger in the long-term. Welcome Elon!

April 5, 2022

A release filed with the SEC shows that Musk will be appoined to serve as a Class II director, with his term expiring at the Company’s 2024 Annual Meeting of Stockholders.

It adds:

For so long as Mr. Musk is serving on the Board and for 90 days thereafter, Mr. Musk will not, either alone or as a member of a group, become the beneficial owner of more than 14.9% of the Company’s common stock outstanding at such time, including for these purposes economic exposure through derivative securities, swaps, or hedging transactions.

Gareth Brown (@forager_gareth)

They didn’t have to think about that for long, Musk appointed to the $TWTR board.
Agreement says he won’t take his stake above 14.9% while he’s on the board: pic.twitter.com/kNYPX10rX3

April 5, 2022

Musk has been highly critical of Twitter, saying last week he was “giving serious thought” to building his own social media platform after questioning whether it was adequately supporting free speech.

Analysts had speculated that Musk might become an activist investors at Twitter, or even potentially launch a buyout sometime in the future.

Last night, Musk launched a poll on whether Twitter should add an ‘edit’ function, allowing users to change tweets once they’d been published.

Elon Musk (@elonmusk)

Do you want an edit button?

April 5, 2022

UK optical equipment maker Gooch & Housego has warned that annual profit would miss expectations because staff have been off ill with Covid-19, adding to supply chain problems.

The Somerset-based manufacturer of photonics components & systems says it has a record order book, with £119.9m of business booked at the end of March (half way through its financial year).

Demand for industrial lasers remains high, while medical lasers continue to benefit from the strong return of elective surgery and demand for its medical diagnostics has remained robust too.

However, pandemic-related problems had curbed output in the first half of the year, with sickness among UK staff a recent factor. Gooch says:

We are working hard to mitigate these factors and good progress has been made with recruitment and securing our supply chain, though COVID absences impacted our US sites earlier in the financial year and more recently our UK facilities have been affected.

Pre-tax profits this financial year are expected to be £2.5m lower than previously forecast, Gooch warns.

Last year Gooch made adjusted profit before tax of £12.6m, but reported pre-tax profits of £4.7m.

Gooch & Housego financial results
Gooch & Housego financial results Photograph: AJ Bell

AJ Bell investment director Russ Mould says the 30% jump in Gooch & Housego’s order book is very encouraging, but the AIM-listed company is struggling to process them.

“Since the company listed in 1997, year-on-year drops in profit have been relatively rare.

“Prior stumbles came in 2002 (bursting of the tech bubble and a US recession), 2009 (great financial crisis), 2012 (European debt crisis), 2016 (global growth pause) and then 2020 as the pandemic swept around the world.

“Chief executive Mark Webster’s acknowledgement that the current problems could mean adjusted pre-tax profits come in some £2.5 million below analysts’ consensus forecasts of £13.6 million suggests that earnings could drop again this year.

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