Russia’s oil toxic Oil prices surged again early this morning to as high as US$113/barrel (NZ$166) for Brent crude as countries, companies and traders scrambled to find supplies that had nothing to do with Russia. Traders are finding they can’t find insurers for shipments or financiers to handle payments. Fresh fears about gas shortages also saw European gas futures rise 50% to an all-time high of €185 (NZ$302) a megawatt-hour.
Not enough supply The Opec + group of oil producers added to the concerns over supply by deciding overnight not to increase output by more than the 400,000 barrels a day it had agreed last year. Russia is the third-largest oil producer in the world after Saudi Arabia and the United States, pumping out 8 million barrels a day of its ‘Urals’ grade crude. But traders now say they can’t find buyers for up to 70% of spot supplies of Russian oil, which meant Urals traded at a record-high discount of US$18/barrel overnight.
Chelsea Russian oligarch Roman Abramovich has confirmed he has put Chelsea up for sale and has written off the £1.5 billion (NZ$2.9b) of loans he has made to the club, The Guardian reported. The billionaires Hansjörg Wyss and Todd Boehly are part of a consortium trying to buy the Premier League team. Abramovich confirmed his plans to sell in a statement on Wednesday evening (Thursday morning NZT) and said net proceeds from the sale would be donated to a charitable foundation which would be “for the benefit of all victims of the war in Ukraine”. Meanwhile, 141 nations voted in favour of the draft resolution "Aggression against Ukraine" in the United Nations General Assembly. Five countries opposed the vote and 35 nations abstained.
Rate hike on US Federal Reserve chairman Jerome Powell reassured financial markets overnight that the world’s largest central bank would go ahead with its first rate hike since covid in a fortnight’s time. He also confirmed it was much more likely to be a 25 basis point hike than a 50 basis point rise. US stocks took heart from the relative certainty, rising around 2% by 7am NZT. “With inflation well above 2% and a strong labour market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month,” Powell told a congressional hearing. Elsewhere, the Bank of Canada hiked its main policy rate by 25 basis points to 0.5% as expected.
Free RATs. Finally The Ministry of Health announced this morning it had launched a ‘Request RATs’ website where anyone can order rapid antigen tests (RATs) for free and then pick them up from a range of sites, including 146 collection sites, 106 testing centres, and 21 providers. Meanwhile, Consumer NZ reported on prices being charged on RATs at various retailers for between $6-10 per test.
Corporate boycott More global corporates raced for the exits from anything to do with Russia. Boeing and Airbus suspended their activities in the country and stopped supplying parts and technical assistance to customers, potentially crippling air travel inside Russia and for Russian airlines still able to fly internationally. Exxon Mobil also joined BP and Shell in saying it planned to exit Russia. Apple stopped selling iPhones in Russia and GM stopped selling cars there. BMW, Ford, Siemens and Nike are also pulling out. The rouble fell further to a new record low of 110 roubles to the US dollar overnight and Sberbank, Russia's largest bank, stopped operating in Europe completely.
Euro inflation The Eurozone reported annual inflation rose to a record high of 5.8% in February from 5.1% in January. Rising fuel and natural gas prices are the main culprits. The European Central Bank meets next week to decide on its monetary policy settings, although most think rate hikes are unlikely until later in the year.
NZ$1b capital raise The Australian reported this morning that Air NZ is set to raise over NZ$1b in fresh capital later this month through a share issue arranged by UBS and Forsyth Barr, along with Citigroup. The newspaper reports the government has agreed to participate in the rights issue with its 52% stake.
Armstrong float The Australian Financial Review reports this morning that NZ car dealership group Armstrong’s is road-testing plans for an initial public offering in both Australia and NZ, holding roadshows for institutional investors in Australia yesterday. It reported Jarden and UBS were advising Armstrong’s and that the roadshow was led by founder Rick Armstrong and CEO Troy Kennedy. It reported Armstrong’s revenues from its 34 dealerships on 15 sites at $549.8m in the 2022 financial year, with earnings of $37.5m that are expected to grow to $45.6m next year. The roadshow did not include valuations or the expected amount of any stake sale or capital raising.
Fresh on BusinessDesk this morning
Peter Griffin’s tech column today is about how Putin may win his war in Ukraine but is losing the propaganda war online.
Jenny Ruth reports on Ian Harrison’s criticisms of the Reserve Bank’s plans for a debt to income multiple limit.
Daniel Dunkley reports on independent media agency Calibre+Candor’s plans for a wider revamp to take on the established media buying giants.
