A London-listed Russian miner is set to collapse into administration after it was left reeling by western sanctions.
Petropavlovsk, which has seen its share price collapse 94pc this year, said it will file an application for administration at the High Court.
It also requested the suspension of trading of its shares and convertible bonds on the London Stock Exchange.
Petropavlovsk has been struggling to repay nearly $300m of debt to its largest lender Gazprombank due to sanctions imposed on the Russian bank.
It has also suffered an exodus of advisers due to a ban on services City firms can offer to Russian companies.
The miner said it has received a takeover offer from one party and an acquisition proposal from another, but warned it was “highly unlikely” there would be any return to shareholders if a deal goes ahead due to its high levels of debt.
Energy crisis could be ‘even worse than 1970s’
The energy crisis could soon be “even worse than what the world experienced in the 1970s,” a leading authority on the industry has warned, raising the spectre of years of economic pain and a dire cycle of stagflation.
Tim Wallace has more:
“In the 1970s, only oil was involved, whereas this crisis encompasses natural gas, coal, and even the nuclear-fuel cycle,” said Daniel Yergin, vice president of data business S&P Global.
The oil shocks of the 1970s, caused by OPEC’s embargoes, forced much of the world into recession, forcing up living costs and prompting strikes as unions demanded more cash to cope with inflation. However, they also spurred the development of other sources of energy, including North Sea oil and gas.
This time around, Mr Yergin said geopolitical risks are growing with the rise in energy prices, “further deepening the world’s great-power rivalries”.
On top of that, few new sources of energy are available, with sanctions on Iran not expected to end any time soon, Saudi Arabia lacking oil which can be pumped at short notice, and a worldwide lack of refining capacity. China is also adding to global demand as it reopens its economy following Covid lockdowns.
“In some places, the system is going all out, with US refineries already operating at about 95pc capacity. But the system overall still cannot keep up with demand,” Mr Yergin said.
US stocks open lower as recession fears persist
US stocks have opened mostly lower as investors continue to threat about the state of the global economy.
The S&P 500 dipped at the opening bell, while the Dow Jones fell 0.2pc. The tech-heavy Nasdaq gained 0.4pc.
Pub rules are failing tenants, MPs told
The rules governing how pub tenants are treated in England and Wales have been a failure and tenants are being let down by the Government adjudicator, MPs have been told.
Greg Mulholland, chairman of the British Pub Confederation, called for the competition watchdog to probe the power of big brewers, and said the adjudicator is not engaging with independent tenants.
He told MPs on the Business, Energy and Industrial Strategy Committee: “The huge global brewers are getting their stranglehold on the sector, owning far too many of our traditional pubs.
“Not only happy with owning them, they then operate this extraordinary model – which is only operated in the UK and is only legal in the UK – where they can overcharge their so-called business partners for beer and other products.”
Mr Mulholland called for a competition inquiry into the current system, which he said was bad for small brewers, publicans and consumers.
Google hits back at Tinder in row over fees
Google has threatened to throw dating apps Tinder and OKCupid out of its smartphone app store as a row between the two parties over fees escalates.
Gareth Corfield has more:
The search engine company on Monday hit back against a lawsuit from Match, which owns Tinder and OkCupid, with a case of its own.
Google claims Match wants to use the Android Play Store for free so it can be in “an advantaged position relative to other app developers who honour their agreements and compensate Google in good faith for the benefits they receive,” Bloomberg reported. The tech company is now threatening to remove Match’s apps from its Play Store.
Match sued Google in May, claiming the Android giant exploits its control of the Play Store to impose unfair payment terms on businesses hosting apps there.
At the time, the dating app group said: “Ten years ago, Match Group was Google’s partner. We are now its hostage”.
Both cases are ongoing. Neither Google nor Match immediately responded to requests for comment.
Gas prices jump as Norway supply cuts deepen
Natural gas prices have pushed higher again after Norway extended capacity reductions at several facilities that help bring the fuel to Europe.
Shipments from the country are set to decline further today, with progressively reduced supplies to both Easington terminal off the Yorkshire coast and Belgium’s Zeebrugge terminal.
The cuts were caused by an incident at the Sleipner field, where the impact is expected to last until Thursday. That compounds concerns over supply from Russia through the Nord Stream pipeline.
European gas prices rose as much as 7.9pc, while the UK equivalent surged 21pc.
Boots stops making sun cream lower than factor 15 over skin cancer concerns
Boots will no longer make Soltan sun cream lower than factor 15 over skin cancer concerns, as soaring temperatures increase pressure on the NHS.
Hannah Boland reports:
The pharmacy’s brand Soltan has pulled sun cream below factor 50 for children and below factor 15 for adults. They are expected to start disappearing from stores over the coming weeks.
Clare O’Connor, from Soltan, said the move was part of efforts to “support our customers to make a simple switch to protect their skin with higher SPF with UVA protection”, and in particular help parents in “choosing the highest protection available” for their children.
The sun cream brand has recently partnered with cancer charity Macmillan Cancer Support, which said using higher factor SPF and spending more time in the shade could lower the risk of developing skin cancer.
It comes after figures earlier this year suggested global cases of melanoma, which is one of the most dangerous forms of skin cancer, are set to increase by 50pc over the next 18 years.
There has been a 140pc increase in melanoma skin cancer incidence rates in the UK since the early 90s.
Spain to impose exceptional bank tax
Spain will impose an exceptional tax on banks as part of the Government’s attempts to cushion the economic impact of the war in Ukraine and surging inflation.
The country will put the new levy in place for two years with the aim of raising about €1.5bn (£1.3bn).
Prime Minister Pedro Sanchez unveiled the new tax today as part of a barrage of economic policies, including an increase in subsidies for transportation.
He also said a planned windfall profit tax on energy firms will raise about €2bn a year over a decade.
Spain’s largest banks are Santander, Caixabank and BBVA.
Health app Babylon to cut 100 jobs
Health tech firm Babylon is said to be in talks to cut around 100 jobs across its global business as part of its plan to slash costs and turn a profit.
Babylon said last week it intends to cut costs by $100m (£84m) in the third quarter to “accelerate its path to profitability”.
The company, which connects patients with doctors via an app, reported an operating loss of more than $400m last year even as its revenue grew fourfold.
A spokesman told Bloomberg that teams affected by job cuts have been notified but individuals won’t know if they’re losing their jobs until a 45-day consultation period is completed.
According to the report, some employees in the US have already been given a week’s notice and told they could keep their laptops as a gift.
Nadine Dorries accused of pressuring Channel 4 to promote privatisation
Channel 4 claims it was pressured by officials in Nadine Dorries’ culture department to change its annual report because it did not reflect the benefits of privatisation.
Ben Woods has more:
Chief executive Alex Mahon said the report outlining last year’s performance had been delayed because of a disagreement with the Department for Digital, Culture, Media and Sport (DCMS) over the broadcaster’s future strength.
DCMS had outlined a different opinion on the sustainability of the station’s advertising-funded business model compared to those of the independent auditors and the board, Ms Mahon added.
Answering questions from the culture committee, Ms Mahon said a full copy of the annual report was sent to DCMS on May 23, but was delayed because there were questions about whether Channel 4’s wording was in line with government policy.
“It’s fair to say that DCMS made some comments that they would like to see in the report, particularly about our future financial sustainability,” she said.
US futures drop as traders brace for earnings
Wall Street looks set to fall this afternoon as traders brace for the upcoming earnings season.
Investors are looking to company results for signs of how they’re coping with surging inflation, China’s Covid struggles and a slump in consumer confidence.
PepsiCo, one of the first major players to report, rose in pre-market trading after lifting its revenue forecast.
Futures tracking the S&P 500 fell 0.6pc, while the Dow Jones was down 0.7pc. The tech-heavy Nasdaq lost 0.5pc.
Tom Tugendhat vows to cut fuel duty
Tory leadership hopeful Tom Tugendhat has vowed to cut fuel duty and reverse a planned rise in National Insurance tax if he becomes prime minister.
Speaking at his campaign launch this morning, he said:
I know the pain families are feeling now. That is why my first pledge is to take fuel duty down by 10p a litre.
I will introduce an energy resilience plan to ensure that the UK has dependable power produced at home or sourced from trusted allies.
Supermarkets hit by Walkers crisps shortages after IT glitch
Some of Britain’s best-known crisps are missing from supermarket shelves after Walkers was once again hit by an IT glitch, writes Hannah Boland.
Around a fifth of all Walkers crisps normally on sale at Tesco appeared out of stock on the supermarket’s website on Tuesday morning, while around an eighth of those on sale at Asda were not in stock.
A spokesman for Walkers said: “We experienced a short-term IT issue which led to the supply of our crisps and snacks being more limited than usual.”
They added that “availability of our brands in shops remains good so crisp fans can continue to enjoy their favourite snacks”.
It comes months after Walkers was hit by an IT issue at its factory that “disrupted the supply of some of our products”. Last November, a botched IT system upgrade resulted in a nationwide crisp shortage. Almost one third of shops were left running short of crisps after Walkers was forced to scale back production.
News of the latest disruption comes amid a focus on supermarket supplies and gaps on shelves.
IAG shares fall after Heathrow rolls out capacity cap
Shares in British Airways owner IAG have dropped after Heathrow rolled out a cap on passenger numbers this summer.
The airport said it will limit daily departing passengers to 100,000 until September 11 and has asked airlines to stop selling seats this summer.
Shares in IAG fell as much as 1pc to their lowest since November 2020.
Reaction: Lack of euro trading is worrying
George Saravelos at Deutsche Bank says that while there’s nothing economically significant about euro/dollar parity, the psychological impact is “clearly important”.
Bringing it all together, there is nothing unusual or extreme from either a market positioning or flow perspective with EUR/USD at parity.
More worrying, however, is the absence of market depth with liquidity conditions having significantly deteriorated in recent weeks. Effectively, market participation has declined significantly.
This has the greatest potential to generate disorderly price action in the coming days as large flows in the market have the potential to generate bigger moves in the exchange rate.
Heathrow tells airlines to stop selling summer tickets
Heathrow has told airlines to stop selling tickets and set a cap on departing passengers for the summer.
The airport will limit the number of travellers catching flights to 100,000 per day from now until September 11 as it grapples with staff shortages that have sparked repeated delays and cancellations.
Heathrow said daily departing seats are set to be 4,000 over this cap, and on average 1,500 of these seats have been sold to passengers. As a result, it’s telling airlines not to sell any more summer tickets.
John Holland-Kaye, chief executive of Heathrow, said:
By making this intervention now, our objective is to protect flights for the vast majority of passengers at Heathrow this summer and to give confidence that everyone who does travel through the airport will have a safe and reliable journey and arrive at their destination with their bags.
We recognise that this will mean some summer journeys will either be moved to another day, another airport or be cancelled and we apologise to those whose travel plans are affected.
Euro slumps to parity with dollar
A euro is now worth the same as a single dollar for the first time in two decades as fears grow that Putin’s gas cuts could push Europe into a recession.
After months of steady decline, the common currency finally hit parity with the dollar.
The euro is at its weakest since 2002 as dwindling supplies of Russian gas to the continent fuel fears of rationing and blackouts this winter.
The eurozone is also grappling with a widening gap between bond yields in different countries that’s bringing back the spectre of the debt crisis a decade ago.
British Airways staff begin pay vote amid strike threat
Hundreds of British Airways staff working at Heathrow will begin voting in a pay ballot today amid threats of a strike.
Aviation workers were set to walk out after a 10pc pay cut imposed by the airline during the pandemic wasn’t reinstated.
Industrial action has been suspended after BA made an improved offer, which members of the GMB union will now vote on.
The ballot closes on 21 July and if workers accept the deal, the Heathrow strike will be called off.
Nadine Houghton, GMB national officer, said:
Our members stood up for themselves and fought for what they were owed. Not only have these predominantly women workers won pay improvements for themselves, but BA have now been forced to make this offer to the rest of their staff too.
They will now vote on whether to accept the new pay deal – which the GMB is recommending they do.
German investor sentiment slumps amid gas threat
German investor expectations have tumbled by even more than expected amid fears Europe’s largest economy could be pushed into a recession.
Markets are increasingly worried about a cut-off in gas supplies from Russia, as well as a looming debt crisis taking hold across the eurozone.
ZEW’s investor expectations gauge fell to -53.8 in July from -28 the previous month. A survey of current conditions also slumped.
The figures are the worst since 2011, when Europe was last plunged into a sovereign debt crisis.
Achim Wambach, ZEW President, said:
The current major concerns about the energy supply in Germany, the ECB’s announced interest rate hike and further pandemic-related restrictions in China have led to a considerable deterioration in the economic outlook.
Butlin’s snapped up in £300m deal
The real estate assets of holiday camp chain Butlin’s have been snapped up by a US investor in a £300m deal.
The Universities Superannuation Scheme has bought the sites at Skegness, Minehead and Bognor Regis from owner Bourne Leisure Group, which is controlled by Blackstone.
Bourne Leisure will continue to operate the sites under the Butlin’s brand and rent them back on long-term leases.
In its heyday Butlin’s, which was founded in 1936 by Billy Butlin, operated nine sites across the UK and welcomed 1m holidaymakers each year.
France to cut back nuclear power production during heatwave
France is cutting back nuclear power production due to a wave of hot weather, risking driving electricity prices even higher amid a Europe-wide energy crunch.
Warm temperatures in the Garonne River mean that production restrictions are likely at the Golfech nuclear plant in the south of the country from Thursday, EDF warned.
Temperatures in France and the Iberia region will be well above average over the next five days and even hotter next week, according to forecasts.
The reduction is another blow to EDF, whose 56 reactors are already operating at about half their capacity because of maintenance and checks. Meanwhile, the heatwave will increase demand for cooling from the many millions of homes, offices and factories hit by soaring temperatures.
It comes as France prepares to nationalise EDF in a deal reported to cost more than €8bn.
Pound extends losses against dollar
Sterling has extended its losses against the dollar this morning as the spiralling economic outlook takes its toll.
The pound is languishing at a two-year low as the cost-of-living crisis and collapsing consumer confidence weigh, while traders also have an eye on the turmoil in British politics.
Meanwhile, the dollar has strengthened its position as the Federal Reserve raises interest rates aggressively and traders flock to safe haven assets amid fears of a recession.
The pound fell 0.5pc against the dollar to $1.1828. Against the euro it was down 0.2pc to 84.59p.
UK recession threat almost 50-50, warn economists
The risk of a recession in the UK is now almost 50-50, according to economists.
While official estimates predict the country will dodge two consecutive quarters of contraction, surging inflation is making economists increasingly pessimistic on the outlook.
A survey of 13 economists by Bloomberg found a 45pc chance of a downturn in the next year. That’s three times higher than the probability recorded when the survey was carried out at the beginning of this year.
The forecasts show the scale of the challenge facing Boris Johnson’s successor in Downing Street.
GDP figures due tomorrow are expected to show that the economy stagnated in May, fuelling expectations of a contraction in the second quarter.
Pret Index: London airports full despite flight chaos
London’s airports are jam-packed with more passengers every week despite thousands of flight cancellations.
That’s according to Bloomberg’s Pret Index, which shows sales at Pret a Manger stores in Heathrow, Gatwick, City and Luton airports are now more than 40pc higher than before the pandemic.
The numbers suggest demand for travel isn’t abating despite staff shortages, IT meltdowns and strikes sparking delays and cancellations for major airlines including British Airways, easyJet and Wizz Air.
Ministers to back next wave of City reforms
Ministers are poised to back the next wave of post-Brexit reforms for the City of London that will aim to attract more companies to raise money in the capital.
Freshfields lawyer Mark Austin has been drawing up recommendations on fundraising rules in London on behalf of the Treasury. That follows a review by Lord Hill in 2020.
The Austin review focuses on several key areas, including making it quicker and cheaper for companies to raise money on the stock market, such as through rights issues and equity raising for growth plans, the Financial Times reports.
The plans are expected to be unveiled as part of a speech at Mansion House next week by Chancellor Nadhim Zahawi.
FTSE risers and fallers
The FTSE 100 has started the day on the back foot as recession fears continue to grip markets.
The blue-chip index slid 0.5pc into the red, with investors turning their attention to key economic data this week.
Miners Anglo American, Rio Tinto and Glencore were among the biggest drags on the index, tracking commodity prices lower amid a resurgence of Covid cases in China.
SSE jumped to the top of the index, rising 1pc after Downing Street said the windfall tax won’t be extended to power generators under Boris Johnson’s Government.
The domestically-focused FTSE 250 fell 1.1pc, with real estate firm Hammerson dropping 7.8pc after a downgrade by brokers at RBC.
Sunak to pledge tax cuts as soon as inflation under control
Rishi Sunak will fire the starting gun on his leadership bid today with a pledge to cut taxes once inflation is under control.
The former Chancellor is due to use his campaign to hit back at his Tory rivals, most of whom have proposed tax cuts and implicitly criticised his time at the Treasury.
Mr Sunak will say: “Once we have gripped inflation, I will get the tax burden down. It is a question of ‘when’, not ‘if’.”
EDF shares rise on reports of €8bn nationalisation
Shares in EDF have jumped almost 7pc following a report that France will pay more than €8bn (£6.8bn) to bring the energy giant back under full state control.
The French Government already holds an 84pc stake in EDF, but is looking to buy the remainder to give it more control over the company as it battles the energy crisis.
Reuters reports that the cost of buying the 16pc stake could be as high as almost €10bn when accounting for outstanding convertible bonds and a premium to current market prices.
According to the report, the state will likely launch a public offer on the market at a premium to the stock price because the other option – a nationalisation law to be pushed through parliament – would take too long.
FTSE 100 opens lower
The FTSE 100 has dropped at the open as traders continue to digest worries about an economic slowdown.
The blue-chip index fell 0.4pc to 7,166 points.
Kingfisher tycoon sentenced to jail in India
Indian tycoon Vijay Mallya has been sentenced to four months behind bars for disobeying an earlier court judgement linked to the collapse of his airline.
India’s Supreme Court found Mr Mallya guilty of contempt for failing to disclose his assets after defaulting on a loan. The country has previously tried to extradite the businessman, who’s believed to be in London.
Mr Mallya made a fortune selling Kingfisher beer, before expanding the brand into aviation and Formula 1.
Kingfisher Airlines was India’s second largest domestic carrier before it collapsed a decade ago.
Mr Mallya, often dubbed the “king of good times” due to his decadent lifestyle, faces a number of charges relating to financial irregularities and is fighting extradition.
Oil sinks on demand worries as IEA warns worst of crisis to come
Oil extended its losses this morning as a fresh Covid outbreak in China added to worries about a global economic slowdown, while the International Energy Agency warned the worst of the energy crisis is still to come.
Benchmark Brent crude shed around 2pc to trade just above $105 a barrel, while West Texas Intermediate was at $102.
Rising cases in China and surging inflation have stoked fears about the demand outlook, while a rising dollar has also made oil less attractive to investors.
Meanwhile, IEA executive director Fatih Birol said countries were experiencing the first global energy crisis and warned “we might not have seen the worst of it yet”.
KPMG: Retailers ‘walking fine line’ with price rises
Paul Martin at KPMG says retailers face a dilemma over how much to pass on price increases without deterring shoppers.
As the cost-of-living crisis continues to deepen, retailers face walking a fine line between protecting margins and further denting consumer confidence by passing on price rises whilst negotiating with their suppliers to share the cost increases.
Retail sales tumble as inflation bites
Retail sales are dropping at the fastest rate since Britain was in the clutches of lockdown as surging inflation and a deepening cost-of-living crisis force shoppers to tighten the purse strings.
Total sales fell 1pc in June, marking the third straight month of decline, according to the BRC and KPMG.
The figures aren’t adjusted for inflation, meaning there’s likely to be a much larger fall in the actual number of products being sold.
Food sales were up in the three months to the end of June, but non-food sales dropped 4.2pc as consumers cut back on discretionary items.
5 things to start your day
1) Euro tumbles to the brink of parity with the dollar over fears Putin will cut off gas The single currency fell to a fresh 20-year low against its US counterpart following the shutdown of Russia’s main gas pipeline to Germany.
2) The doomsday scenario of a winter without Russian gas Millions of jobs are at risk and gas rationing on the table if the Kremlin chokes off supplies.
3) Bank of England governor slaps down Tory leadership contender Andrew Bailey warns against attacks on Threadneedle Street’s independence after Tom Tugendhat claimed it had stoked inflation with quantitative easing.
4) Macron pumps taxpayer money into microchip plant to escape clutches of China French facility comes as Britain’s biggest microchip factory faces being sold off
5) Biggest railway strikes for 25 years as drivers and station staff back walkouts Aslef, the drivers’ union, said its members had voted for industrial action at eight train companies, marking the first national walkout since 1995.
What happened overnight
Asian shares fell this morning, weighed down by the prospect of further monetary policy tightening by central banks, China’s renewed Covid outbreak and Europe’s energy shortage, which also left the euro a whisker from parity with the safe haven dollar.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.8pc to its lowest level in two years, while Japan’s Nikkei lost 1.75pc.
Coming up today
Corporate: Grafton Group, Wincanton (trading update)
Economics: ZEW economic sentiment (EU), Andrew Bailey speech (UK)