The Russian rouble tumbled to a near 15-month low against the dollar as markets responded for the first time to the short-lived military coup against Vladimir Putin.
The rouble has lost as much as 3pc against the dollar, hitting 86.88 as markets opened, its weakest point since late March last year, about a month after Russia invaded Ukraine.
The rouble has lost about 13pc of its value against the US currency this year, making it one of the worst performers among emerging markets worldwide.
It comes as Goldman Sachs warned that the world faces the risk of higher oil prices long-term, although Brent crude was little changed overnight after the Wagner mercenary group called off its march on Moscow over the weekend.
Analysts at the bank believe that while the short-term impact is likely to be muted, the unprecedented challenge to Putin’s authority risks a supply shock if the Russian leader’s 23 years in power come to an end.
Daan Struyven and Callum Bruce said: “The higher risk of lower supply at some point may put some upward pressure on prices.”
Goldman Sachs addressed a slate of possible, longer-term risks. Since the rebellion was initiated around Rostov-on-Don in the south — by the Sea of Azov, which filters into the Black Sea — oil infrastructure in that region may face a relatively higher risk of disruption or blockade, it said.
RBC Capital Markets LLC analysts including Helima Croft said: “The immediate challenge to the Putin regime appears to have receded.
“However, the risk of further civil unrest in Russia now must be factored into our oil analysis for the back half of the year.”
Read the latest updates below.
09:08 AM BST
HSBC to leave Canary Wharf for BT’s former head office
HSBC is planning to leave its Canary Wharf headquarters and relocate to the City of London, the latest sign of how a shift to flexible work is reshaping demand for offices.
The lender, which launched a review in September, will tell staff today that its preferred option is BT’s former head office near St Paul’s, according to the Times.
The bank said it “will now now begin more detailed discussions on a potential lease, with the intention to move in late 2026”.
HSBC has been looking for alternatives to its Docklands skyscraper as it looks to a more flexible workspace and adapts to the post-pandemic cityscape.
The lease on its current address is due to expire in 2027.
Orion Capital Management, a private equity firm, is redeveloping the former BT headquarters on Newgate Street.
HSBC has resided in the 45-story 8 Canada Square building since 2002, when it was completed by Canary Wharf Group.
The building is now owned by Qatar’s sovereign wealth fund, which bought it for about £1.1bn in 2014.
09:02 AM BST
FTSE 100 slumps as energy stocks hit
The FTSE 100 has slumped to a three-month low as financial and energy stocks suffered in the wake of the political instability over the weekend in major crude producer Russia.
The blue-chip index was down 0.3p, while the more domestically-focussed FTSE 250 midcap index has dropped 0.5pc.
The FTSE oil and gas index was down 0.2pc while banks slumped 0.7pc amid concerns for the UK economy as interest rates look set to move higher for longer.
Lloyds fell 1.9pc after JP Morgan downgraded the bank’s rating to “underweight” from “neutral”.
Shares of Aston Martin has jumped 10.3pc after the luxury carmaker said it would enter into a strategic supply agreement with US electric vehicle company Lucid Group.
Cineworld Group dropped as much as 34.4pc after the cinema chain operator said it will file for administration as part of a proposed restructuring plan.
08:52 AM BST
Deutsche Bank issues warning on Russian shares held by its clients
Deutsche Bank has reportedly told clients it can no longer guarantee full access to Russian stocks that belong to them, underlining the challenges global investors face to recover stranded investments in the country’s companies.
The bank has discovered a discrepancy in so-called depositary receipts (DRs) – the certificates issued by a bank representing shares in a foreign company traded on a local stock exchange.
Germany’s largest bank said in a note dated June 9 that it had uncovered a shortfall in the shares linked to the DRs the bank had issued before the Ukraine invasion, according to Reuters. The shares have been held in Russia by a different depositary bank.
In the circular, Deutsche attributed the shortfall to a decision by Moscow to allow investors to convert some of the DRs into local stock.
The conversion was carried out without the German bank’s “involvement or oversight” and Deutsche was unable to reconcile the company shares with the depositary receipts.
It is the first major bank to formally inform depositary receipt holders that they may not get take ownership of precisely all the shares they are entitled to, Reuters reported.
08:33 AM BST
Aston Martin shares surge following electric vehicle deal
Aston Martin shares have jumped by the most in five weeks after revealing a strategic supply agreement for high performance electric vehicles from Lucid Group.
Lucid will gain about a 3.7pc stake in the UK company in exchange for supplying Aston Martin with select powertrain components for battery electric vehicles.
The agreement would also complement the bespoke development of a single battery electric vehicle platform by Aston Martin and support the company’s target to launch its first such vehicle in 2025.
Yew Tree Overseas, which owns about 21pc of Aston Martin’s shares, has agreed to back the supply deal.
Aston Martin shares have gained 12pc.
08:15 AM BST
Markets muted following short-lived Russian coup
There have been big moves in the value of Russia’s currency and European gas prices following the geopolitical shock that challenged Vladimir Putin’s rule.
However, aside from those areas, global markets have been a picture of relative calm.
Russia has largely become cut off from from global financial markets due to sanctions imposed since its invasion of Ukraine, thus limiting the impact on Monday.
As a result, initial moves have been modest and reflected the impact of a deal that was brokered to halt the Wagner mercenary group’s advance toward Moscow.
The agreement includes dropping criminal mutiny charges against Yevgeny Prigozhin and his fighters.
Hong Kong shares of Russian aluminum producer Rusal, which offer some insight into appetite for the nation’s assets, fell as much as 2.9pc.
08:07 AM BST
UK markets edge up
It has been a relatively quiet start for the markets in London despite the extraordinary weekend in Russia.
The FTSE 100 has begun the day flat at 7,461.11 while the midcap FTSE 250 has risen 0.2pc to 18,103.12.
07:51 AM BST
Cineworld still ‘business as usual’
After announcing its intention to file for administration, Cineworld said:
Cineworld continues to operate its global business and cinemas as usual without interruption and this will not be affected by the entry of Cineworld Group into administration.
The group and its brands around the world – including Regal, Cinema City, Picturehouse and Planet – are continuing to welcome customers to cinemas as usual.
The group continues to honour the terms of all existing customer membership programmes, including Regal Unlimited and Regal Crown Club in the United States and Cineworld Unlimited in the UK.
07:44 AM BST
Cineworld shareholders face wipe out as chain files for administration
Stricken cinema chain Cineworld has said it will file for administration in the UK as part of a restructuring plan that is set to wipe out shareholders.
The world’s second largest cinema chain said it will apply for administration for the London-listed company in July, which will see shares in the firm suspended.
But it stressed that the move will not impact the British operations for the holding company, with cinemas continuing to remain open as usual.
Cineworld filed for Chapter 11 bankruptcy in the US last year after being weighed down by its mammoth debts and weaker-than-hoped audience numbers.
The group, which also owns the Picturehouse brand, is moving forward with plans to restructure its near $5bn (£3.9bn) debt pile to allow it to exit bankruptcy.
It is also looking to raise $800m (£628m) through a rights offering and secure $1.46bn (£1.1bn) of new debt financing.
07:32 AM BST
Gas prices jump after failed coup in Russia
European natural gas prices have jumped amid nervousness over the short-lived rebellion in Russia.
Benchmark futures rose as much as 8.4pc with gas already having soared about 30pc this month as outages and nervousness about supply roiled markets.
The dramatic mutiny over the weekend is the latest factor adding to volatility.
While Europe has significantly reduced its dependence on Russian pipeline gas, it still receives large amounts of Russian LNG.
Tom Marzec-Manser, head of gas analytics at ICIS in London, said:
Russian geopolitical risk now is significantly higher than before the weekend.
The uncertainty of what could happen in the coming weeks within Russia itself – rather than within Ukraine – is likely to push markets higher on Monday.
Dutch front-month futures, Europe’s pricing benchmark, were last up 7.4pc to just below $35 per megawatt hour.
07:25 AM BST
Primark owner boosts profit outlook as prices rise
The owner of Primark said its sales jumped over the latest quarter amid higher prices, and was now upgrading its full-year profit expectations.
Associated British Foods, which also has major sugar, ingredients and other food businesses, said its total sales surged by 16pc over the three months to the end of May to £4.7bn.
Sales in Primark grew by 13pc across its global stores, helped by higher average selling prices for its products, the firm said.
Seasonal clothing and accessories, as well as health and beauty products sold particularly well during the period, the retailer said.
The company now expects its adjusted operating profit for the full year to be slightly ahead of last year.
07:22 AM BST
Oil inches higher and rouble lower after abandoned Putin coup
Oil was slightly higher and the rouble lower after the Wagner Group abandoned its coup against the Putin regime having marched to within 150 miles of Moscow virtually unopposed.
Brent crude has gained 0.6pc to more than $74 a barrel while the rouble dropped to a 15-month low early in Moscow.
Russian mercenaries made a short-lived rebellion on Saturday, seizing the southern city of Rostov and advancing on Moscow demanding the removal of Russian military commanders in charge of the war in Ukraine.
The private Wagner army then withdrew after striking a deal guaranteeing their safety and the passage of their leader, Yevgeny Prigozhin, to Belarus.
Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney, said: “I don’t think the market can get its head around working out if there are implications.”
07:13 AM BST
Good morning
The rouble dropped to a 15-month low in Moscow as an aborted weekend mutiny by the Wagner Group of mercenaries raised questions about Russian stability.
Oil was little changed but faced warnings about its long-term outlook from Goldman Sachs as rhe unprecedented challenge to Vladimir Putin’s authority risks a supply shock if the Russian leader’s 23 years in power come to an end.
5 things to start your day
1) Putin increases charges for flying over Russia | Kremlin seeking to recoup fees lost from West’s ban on using airspace
2) Britain’s house price crash ‘will be the worst in the world’ | Downturn expected to be longest in the West after interest rate rise hammers mortgage market
3) Britain’s offshore wind industry is running out of puff | Key projects are buckling under the weight of spiralling costs and rigid planning rules
4) Ministers ‘letting Huawei off the hook’ | Anger towards Government’s lack of transparency over monitoring of Chinese tech company
5) Basket case Britain is back – and a recession is inevitable | Bank of England must keep raising rates to bring soaring prices under control
What happened overnight
Asian shares are mixed after a short-lived armed rebellion in Russia added to uncertainties over the war in Ukraine.
Benchmarks rose in Hong Kong, Tokyo and Seoul and fell in Shanghai and Sydney. Oil prices were little changed.
Japan’s benchmark Nikkei 225 recouped early losses, gaining 0.2pc to 32,846.24. South Korea’s Kospi rose 0.5pc to 2,581.83.
Hong Kong’s Hang Seng was up 0.1pc to 18,898.51, while the Shanghai Composite, reopening after a holiday, dropped 0.7pc to 3,173.37.
Australia’s S&P/ASX 200 lost 0.4pc to 7,070.30
Wall Street marked its first losing week in the last six Friday.
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Source: https://finance.yahoo.com/news/rouble-tumbles-15-month-low-061331648.html