Morning Report

April 11, 2022

“With an estimated $358.52 billion of Russian money frozen by international sanctions, it has been predicted that Russia is headed for the deepest recession since the collapse of the Soviet Union. Meanwhile, the Ukrainian government has reiterated calls for the world’s largest energy traders to stop handling Russian crude.”

Sam Cornford, Partner – Head of Trading

Main Headlines

US President Joe Biden is set to speak with Indian Prime Minister Narendra Modi today as he presses world leaders to take a hard line against Russia’s invasion of Ukraine. India continues to purchase Russian energy supplies, despite pressure from Western countries to avoid buying Russian oil and gas. The US has also considered sanctions on India for its recent purchase of advanced Russian air defense systems. India’s neutral stance in the war has raised concerns from the White House. In a virtual meeting between the two nations, Biden will talk about the consequences of Russia’s war against Ukraine “and mitigating its destabilizing impact on global food supply and commodity markets.” India isn’t alone in buying Russian energy, however; several European allies such as Germany have continued to do so, despite public pressure to end these contracts. Indian media reports said Russia was offering a discount on oil purchases of 20% below global benchmark prices.

Growth in Britain’s economy slowed more sharply than expected in February as gross domestic product rose by 0.1%, official figures have today revealed, down from 0.8% growth in January. The expansion was less than a 0.3% increase forecast in a Reuters poll of economists. Britain’s economy shrank more than 9% in 2020, its biggest annual fall since just after World War One, but rebounded sharply in 2021 and suffered only a modest hit from the Omicron variant of coronavirus in December. However, economists have downgraded their growth forecasts for 2022 due to a surge in inflation caused by rising energy and commodity prices – partly linked to the war in Ukraine – as well as ongoing supply-chain difficulties since the pandemic. Last month the government’s Office for Budget Responsibility cut its forecast for growth in 2022 to 3.8% from 6.0% in its previous forecast in October, predicting that inflation would hit a 40-year high of 8.7% later this year.


Sterling is weaker than most major currencies in the early morning trade. Prime Minister Boris Johnson has held talks in Kyiv with Ukraine’s President Volodymyr Zelensky. Following the meeting, Downing Street said the UK would send 120 armoured vehicles and anti-ship missile systems to support Ukraine. Johnson’s visit to Kyiv was not announced in advance and the first indication he was in the city came when a photograph of his meeting with President Zelensky was put on Twitter by the Ukrainian embassy in London. Johnson announced that the UK will stand “unwaveringly” with Ukraine, and confirmed further economic support, taking total UK loan guarantees to £770m. Britain has extended a scheme to help energy-intensive industries such as steel manufacturing cope with soaring electricity costs, the government said on Friday. Many businesses struggled with high energy bills last year leading some to curtail production and energy costs have reached new highs this year following Russia’s invasion of Ukraine.


The euro is stronger against sterling and unchanged against the dollar this morning. It has been predicted that Russia is headed for the deepest recession since the collapse of the Soviet Union, as it is estimated that over $358.52 billion of Russian money has been frozen by international sanctions in recent weeks. Meanwhile, the Ukrainian government has reiterated calls for the world’s largest energy traders to stop handling Russian crude, of which the companies have discharged more than 20 million barrels since the outbreak of war. However, politicians are wary of exacerbating the surge in energy prices, which were up 45 per cent in March from a year earlier in the Eurozone. Olaf Scholz, German chancellor, said last week that his country was working actively to wean itself from Russian oil this year – stating that a ban on seaborne Russian oil would be relatively easy for the EU to implement, but that Germany would struggle to find a substitute for the Russian oil that arrives in the country via pipeline.


The dollar is stronger against sterling and unchanged against the euro this morning. Market turmoil, driven by Russia’s invasion of Ukraine and rising inflation, has sharply divided the hedge fund industry, with macro hedge funds celebrating one of their best-ever starts to a year while technology and growth funds rack up double-digit losses. The top 10% of hedge funds gained an average of 24.3% in the first quarter, while the bottom decile dropped by 15.4%. The dispersion is one of the widest since the financial crisis. The industry as a whole suffered losses of 0.3% for the first quarter, and larger funds tended to do better than small ones. Last Friday, the Biden administration fully rescinded the so-called Title 42 policy imposed under Trump that allowed US authorities to turn back anyone crossing the southern border to prevent the spread of coronavirus. The political backlash against the president’s move to ease restrictions threatens to jeopardise support from voters concerned about excessive immigration ahead of the midterm elections in November.


Stocks and bonds fell Monday as political and economic risks weighed on sentiment. A gauge of the dollar was little changed. Europe’s Stoxx 600 slipped, and the euro fluctuated after the first round of France’s presidential election gave incumbent Emmanuel Macron a narrow lead over nationalist challenger Marine Le Pen. Investors have been fretting whether a Le Pen presidency would make France less business friendly and more Eurosceptic. US futures declined, pointing to more challenges for global shares after the Federal Reserve last week signalled sharp interest-rate hikes and balance-sheet reduction to curb price pressures. The 10-year Treasury yield touched 2.77%, exceeding the equivalent rate on Chinese debt for the first time since 2010. Chinese stocks also fell, weighed down by the mainland’s Covid outbreak, elevated factory-gate prices, and regulatory concerns in the technology sector. Oil retreated on risks to demand from China’s Covid lockdowns, including extensive curbs in Shanghai.

Main Economic Data/Central Banks/Government (All Times CET)

8:00 a.m.: Norway March CPI
8:00 a.m.: UK Feb. monthly GDP, industrial production, trade balance
9:00 a.m.: Turkey Feb. current account, unemployment rate
10:30 a.m.: Bank of Italy releases money monthly statistics
11:30 a.m.: Germany to sell bills
1:00 p.m.: South Africa manufacturing production
2:50 p.m.: France to sell bills
3:00 p.m.: Russia Feb. trade balance
3:00 p.m.: Israel rate decision
EU foreign ministers meet in Luxembourg
Deadline for final bids for Chelsea Football Club

Corporate Events

Earnings include TCS, Qatar National Bank


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