Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Germany has declared an “early warning” that it could be heading for a gas supply emergency and said the measure was aimed at preparing for a possible disruption of natural gas flows from Russia.
Economy minister Robert Habeck said supplies had been safeguarded for the time being and that Germany was closely monitoring supply flows with market operations.
This came as Russia’s top lawmaker said Russia should sell its oil, grain, metals, fertiliser, coal and timber for roubles on global markets where it is profitable to do so. President Vladimir Putin has ordered that natural gas exported to Europe or the United States be paid for in roubles. Energy ministers from the G-7 group of industrialised nations have rejected this demand.
The speaker of Russia’s lower house of parliament, Vyacheslav Volodin, said today:
If you want gas, find roubles.
Moreover, it would be right, where it is beneficial for our country, to widen the list of export products priced in roubles to include fertiliser, grain, food, oil, coal, metals timber etc.
A growing number of German companies are planning to raise their prices over the next three months, pointing to a further rise in Germany’s inflation rate, according to the Munich-based Ifo institute.
Its price expectations measure recorded a new record high of 54.6 points, up from 47.6 points in February. Consumers have to brace for sharp price increases from food retailers in particular (price expectations rose to 94.0 points and to 68.2 points among other retailers).
Timo Wollmershäuser, head of forecasts at Ifo, said:
Russia’s attack on Ukraine is driving up not only energy costs, but also the price of many agricultural raw materials.
This makes it likely that the rate of inflation will rise to well beyond 5% this year. Germany hasn’t experienced such a spike in over 40 years, not since the rate of inflation climbed to 6.3% following the second oil crisis in 1981.
German inflation hit 5.1% last month and is forecast to have risen to 6.3% in March, with data due at 10am BST.
Ifo said price pressures climbed across all sectors. In wholesale, price expectations rose to 78.1 points, in manufacturing to 66.3 points, in construction to 48.9 points, and in the service sector to 42.7 points.
The German Dax rallied 2.8% yesterday and France’s CAC rose 3% while the FTSE 100 index in London lagged with a 0.86% gain and the Dow Jones on Wall Street rose nearly 1%.
Asian shares joined the global rally as hopes increased for a negotiated end to the Ukraine conflict, with new talks between Ukraine and Russia kicking off in Istanbul yesterday and some signs of progress. However, on the ground attacks continued and Ukraine reacted with scepticism to Russia’s pledge to drastically scale back military operations around Kyiv.
Hong Kong’s Hang Seng climbed 1.5%, the Shanghai Composite added 1.8% and Australia was up 0.7%. Japan’s Nikkei was the odd one out, down 1%, as traders took profits heading into the end of the fiscal year.
However, commodities such as oil, wheat and aluminium are rising again after declining on Tuesday, as optimism about a ceasefire started to fade somewhat.
Brent crude is trading at $111.50 a barrel, up 1.15% while the most-active wheat contract on the Chicago Board of Trade rose 0.3%. Three-month aluminium on the London Metal Exchange rose 1.6% to $3,490 a tonne, falling a 4.9% drop on Tuesday.
- 8am BST: Spain inflation for March (preliminary)
- 9am BST: Bank of England deputy governor Ben Broadbent speaks at NIESR conference
- 10am BST: Eurozone consumer confidence final for March
- 10am BST: European Central Bank president Christine Lagarde speaks
- 1pm BST: Germany inflation for March (preliminary) (forecast: 6.3%)
- 1.30pm BST: US GDP for fourth quarter final (forecast: 7.1%)