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Germany has begun rationing hot water, dimming the lights and turning down the heating as the country reels from Putin’s gas cuts.
Economy minister Robert Habeck last month moved Germany to the second phase of its three-stage emergency gas plan, but stopped short of rationing supplies.
However, some local authorities have taken matters into their own hands amid fears shortages could lead to blackouts this winter.
Vonovia, the country’s largest residential landlord, said it would lower the temperature of its tenants’ gas central heating to 17 degrees between 11pm and 6am, the Financial Times reports.
A housing association in Saxony said it would start rationing the supply of hot water, while Cologne is dimming its street lighting. Other measures include switching off hot water altogether in school and gyms and shutting down public swimming pools.
The moves highlight the real concerns about an energy crisis this winter after Russia slashed gas supplies to Europe.
Next week the crucial Nord Stream pipeline to Germany will shut down for planned maintenance, with some fearing it will never reopen.
10:05 AM
Advisers pocket near £70m from Shaftesbury and Capital & Counties merger
ICYMI – Advisers to two of West End’s biggest landlords will pocket nearly £70m in fees following Shaftesbury and Capital & Counties £5bn merger.
Ben Woods has more:
Shaftesbury, whose portfolio stretches parts of Soho and Carnaby Street, is paying £35.7m to bankers, lawyers, legal and communications advisers, while Capco, which owns Covent Garden, is dishing out £33m.
Capco’s advisers include bankers Rothschild, UBS and Jefferies, while Evercore and Blackdown are supporting Shaftesbury on the deal that has faced investor opposition.
First mooted before the pandemic, the merger faces the hurdle of passing a shareholder vote on July 29. Two of Shaftesbury’s investors, Royal London Asset Management and Investec, have previously raised concerns about whether it is in the best interest of shareholders.
However, Norges Bank Investment Management, the Norwegian sovereign wealth fund, is poised to vote in favour of the deal. It holds 25pc and 15pc in Shaftesbury and Capco, respectively, as the largest investor of both.
The enlarged company portfolio would span 670 buildings, comprising 2.9m sq ft and 2,000 commercial and residential units.
09:45 AM
AA: Pump price competition is broken
The AA has issued its response to the CMA’s fuel market review, and it’s still not happy.
Jack Cousens, head of roads policy at the motoring group, takes aim at fuel retailers for the delay in passing savings on to consumers:
Pump price competition in the UK is broken. A month of major wholesale price falls without a penny coming off the average pump price of petrol is testament to that.
It is very welcome and timely that the Competition and Markets Authority probe into road fuel pricing has agreed with the AA that there is a need for further investigation.
However, the AA argues that the problem is not the gap between the oil price and wholesale price feeding through to the forecourts but the length of time it takes for that wholesale price to be reflected at the pump.
The fuel trade has no trouble in passing on rising costs to the customer but lags badly in passing on savings. It has been labelled ‘rocket and feather’ pricing, and it exists.
09:30 AM
Regulator finds ’cause for concern’ in fuel market
Regulators have found cause for concern in the fuel market due to the grow gap between the price of crude oil and wholesale prices charged to retailers.
The Competition and Markets Authority carried out an urgent review into the market following a request from Business Secretary Kwasi Kwarteng amid soaring pump prices.
It found that the refining spread – the gap between the price of crude oil when it enters refineries and the wholesale price when it leaves as petrol or diesel – had tripled in the last year from 10p to almost 35p.
Over the same period, retailer spread – the difference between the wholesale price and the price charged to motorists – fluctuated but remained about 10p per litre on average.
The CMA also found that on the whole the fuel duty cut appears to have been implemented, with the largest fuel retailers doing so immediately and others more gradually.
It’s now launched a market study that will examine the road fuel market in more depth.
Sarah Cardell, CMA general counsel, said:
The recent rises in pump prices are a major worry for millions of drivers. While there is no escaping the global pressures pushing up fuel prices, the growing gap between the oil price, and the wholesale price of petrol and diesel, is a cause for concern.
We now need to get to the bottom of whether there are legitimate reasons for this and, if not, what action can be taken to address it.
09:12 AM
Pound and euro fall as traders flock to dollar
The pound and euro have both lost ground this morning as the dollar continues to strengthen.
The Bloomberg dollar index hit a fresh two-year high this morning as investors ditched riskier assets and flocked to safe havens amid fears of a looming recession.
The pound shed 0.8pc to $1.1931 – just off its recent two-year lows. Meanwhile, the euro dropped 0.9pc to $1.0072, leaving it dangling just above parity.
Analysts are predicting that the euro will slump to parity against the dollar in the coming days, with recession woes compounded by fears of cuts to Russian gas supplies.
08:56 AM
Lloyd’s of London to stay in landmark London HQ
Lloyd’s of London plans to stay in its iconic London building until at least 2031 in a show of confidence in the City.
The move to home working during the pandemic sparked fears of the death of face-to-face trading and raised questions over whether the world-famous insurance marketplace would keep its headquarters.
But Lloyd’s has now decided to stay in the building, dismissing fears it could exercise a break clause in its lease that would see it leave in 2026, the Financial Times reports.
According to the report, there’s now “zero chance” Lloyd’s will exit a lease that runs until 2031 and negotiations with Ping An, the Chinese owner of the building at One Lime Street, have moved on to the terms under which it could stay for even longer.
08:40 AM
FTSE risers and fallers
The FTSE 100 is struggling at the end of the week as investor sentiment soured after days of political turmoil.
The blue-chip index fell as much as 0.3pc, before treading water.
Miners including Rio Tinto and Anglo American were the biggest drag as metal prices slid on worries about China’s Covid flare-ups.
Harbour Energy was the biggest riser, gaining 2.6pc after it said EIG had reduced its stake in the company.
The domestically-focused FTSE 250 was down 0.3pc. Housebuilder Vistry Group rose 1.5pc after it said profits will be at the top end of forecasts.
08:26 AM
Elon Musk’s Twitter deal on the ropes amid bot row
Elon Musk’s deal to buy Twitter for $44bn could be in jeopardy over his complaints that the social media company is inaccurately reporting the number of spam bots on its platform.
Twitter has repeatedly said that spam accounts represent less than 5pc of its total user base. Meanwhile, Musk has complained that the actual number is much higher, and threatened to walk away from the deal.
The Tesla chief’s team has concluded that Twitter can’t verify its figures and has “stopped engaging” in discussions around funding the deal, the Washington Post reports. That’s put the acquisition in “serious jeopardy”, according to the report.
Musk’s complaints about bots are widely seen as a negotiating tactic to reduce what he’s obliged to pay.
A Twitter spokesman said:
Twitter has and will continue to cooperatively share information with Mr Musk to consummate the transaction in accordance with the terms of the merger agreement.
We believe this agreement is in the best interest of all shareholders. We intend to close the transaction nad enforce the merger agreement at the agreed price and terms.
08:09 AM
JD Sports taps former Morrisons boss as new chair
JD Sports has hired the former head of Morrisons as its new chair as it tries to draw a line under Peter Cowgill’s acrimonious departure.
Mr Cowgill stepped down from the sportswear retailer in May after 18 year as the company’s executive chairman.
The resignation came after the company was fined £4.3m by the competition watchdog for exchanging information with Footasylum in February after it emerged Mr Cowgill held a clandestine meeting with the brand it was planning to acquire in a Bury car park.
JD Sports said Andrew Higginson, who was chairman of Morrisons until its takeover last year, was appointed following an extensive search process by the board.
Helen Ashton, interim chair of JD Sports, said:
The board was impressed with the high-quality candidates that we met throughout the recruitment process.
Andy, however, stood out as the best candidate with his extensive board experience including as a chair and his strong track record in the international retail sector.
08:02 AM
FTSE 100 dips at the open
The FTSE 100 slipped into the red at the open as traders turn their attention to US jobs data due later today.
The blue-chip index was down 0.2pc to 7,173 points.
07:53 AM
How will Europe cope without Russian gas?
Fears are growing that Putin could turn off the taps completely in the coming months, sparking shortages this winter and leading to rationing and blackouts.
Governments are rapidly putting together contingency plans to help cope with a possible supply cut-off.
Here’s a rundown of what some countries are planning:
07:45 AM
Gas prices head for another week of gains
Natural gas prices are on course for the longest stretch of weekly gains this year as worries mount about Putin’s supply cuts.
Benchmark European prices eased this morning, but are still heading for a fourth straight week of increases.
The Nord Stream pipeline from Russia to Germany is due to shut on Monday for 10 days of maintenance, and there’s mounting concern that flows won’t return after the work.
Traders will have a close eye on scheduled talks between Putin and officials on energy issues.
07:36 AM
Germany starts to dim the lights
Good morning.
Germany has begun an unofficial process of rationing energy amid rising fears Putin’s gas cuts could lead to blackouts this winter.
Economy minister Robert Habeck has placed the country in the second phase of its three-stage emergency gas plan, warning: “We have to be prepared for the situation to become critical.”
While that stage doesn’t include rationing, some local authorities and housing companies have taken matters into their own hands.
Vonovia, the country’s largest residential landlord, said it would lower the temperature of its tenants’ gas central heating to 17 degrees between 11pm and 6am, the Financial Times reports.
A housing association in Saxony said it would start rationing the supply of hot water, while Cologne is dimming its street lighting.
Things could still get worse. The key Nord Stream pipeline from Russia to Germany is due to shut down for maintenance work next week, and some fear it will never reopen.
5 things to start your day
1) Advisers pocket near £70m from Shaftesbury and Capital & Counties merger – Shareholders are poised to vote on the £5bn merger on July 29
2) HSBC banker quits and declares ‘cancel culture destroys wealth and progress’ – Stuart Kirk was suspended in May after attacking climate change ‘nut jobs’
3) PwC partners receive record £1m payout – Sale windfall and ‘exceptional’ year push pay to new high
4) Facebook threatened with European ban over data handling – Facebook told sending user details to US breaches EU’s data laws
5) Bank of England hawk urges ‘front loading’ interest rate rises – Businesses lose faith in the Bank’s ability to keep inflation under control, new survey shows
What happened overnight
Hong Kong stocks jumped early this morning, with the Hang Seng Index climbing 1.5pc.
The Shanghai Composite Index rose 0.5pc, while the Shenzhen Composite Index on China’s second exchange added 0.4pc.
Tokyo stocks opened higher following gains on Wall Street. The benchmark Nikkei 225 index was up 0.5pc in early trade.
Coming up today
Corporate: Vistry Group (trading statement)
Economics: Non-farm payrolls, unemployment rate, average hourly earnings, labour force participation rate (US)
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