A recap –

Stock markets in Europe and the US are deep in the red as Wednesday’s rally proved short-lived. The UK’s FTSE 100 index has lost 110 points, or 1.5%, to 7,080, while the German and French markets have closed almost 3% lower, the Italian market has lost more than 4% and the Spanish index fell 1.3%. On Wall Street, the Dow Jones and S&P 500 are both trading 1.3% lower while the Nasdaq is down 2.2%.

The ECB’s announcement that it will terminate its asset purchase programme – a massive economic stimulus– sooner than expected has sent eurozone bond yields soaring. The central bank now intends to end it in the July to September quarter, depending on how economic data turn out, and said it would raise interest rates some time after that. Increases will be “gradual,” it said.

The central bank raised its inflation projections while cutting its growth outlook because of the war in Ukraine, which has sparked a surge in energy and other commodity prices. The ECB described it as a “watershed for Europe” and president Christine Lagarde said central bankers were working hard on a package of support measures for Ukraine, possibly including a currency swap line.

Propelled by surging costs for gas, food and housing, US consumer inflation climbed to an annual rate of 7.9% last month, the sharpest rise since 1982, with even higher price increases to come.

The Chelsea football club owner, Roman Abramovich, is among seven of Russia’s wealthiest and most influential oligarchs who have been hit with sanctions by the UK, in an effort to further punish allies of Vladimir Putin over the invasion of Ukraine. The asset freeze means the sale of Chelsea FC has been halted.

Shares in the Russian steel company Evraz that is 29% owned by Roman Abramovich have been suspended on the London Stock Exchange by the City watchdog.

A host of major companies have joined the corporate exodus from Russia, including the Japan’s Uniqlo, Sony, Nintendo and Hitachi, as well as the Wall Street bank Goldman Sachs.

Our other main stories:

Marks & Spencer’s chief executive, Steve Rowe, is stepping down in May after nearly 40 years at the business he joined straight from school.

Rowe, who has spent six years overseeing the beginnings of a turnaround in the retailer’s fortunes after years in the doldrums, is to be replaced by the boss of its food business, Stuart Machin.

Thank you for reading. We’ll be back tomorrow. Take care – JK

Goldman Sachs has become the first major Wall Street bank to pull out of Russia.

It said today that it would close its operations in Russia.

Goldman Sachs is winding down its business in Russia in compliance with regulatory and licensing requirements.

In its annual filing earlier today, the US bank disclosed a credit exposure to Russia of $650m (£495m).

Also today, Switzerland’s Credit Suisse said it had a 848m Swiss franc (£694m) exposure to Russia.

The sell-off on stock markets has deepened. The UK’s FTSE 100 index has lost nearly 100 points to 7,092, a 1.4% drop. Germany’s Dax has lost 450 points, or 3.3%, while France’s CAC has slid almost 200 points, a 3.1% fall, and the Italian borsa tumbled 941 points, a 4% decline.

On Wall Street, the Dow Jones, S&P 500 and Nasdaq have all opened 1% lower.

The European Central Bank has raised its inflation projections and cut its economic growth outlook, as war in Ukraine is likely to keep commodity prices high, holding back households’ ability to spend and businesses’ ability to invest.

Inflation is now forecast to average 5.1% this year, above the 3.2% predicted in December. Next year’s forecast has been raised to 2.1% from 1.8%.

ECB president Christine Lagarde warned that the war

will have a material impact on economic activity and inflation through higher energy and commodity prices, the disruption of international commerce and weaker confidence.

The extent of these effects will depend on how the conflict evolves, on the impact of current sanctions, and on possible further measures.

BREAKING: US inflation rose to an annual rate of 7.9% in February from 7.5% in January, as expected. It marks another 40-year high.

Excluding food and energy, which tend to be volatile, inflation was 6.4%.

The European Central Bank has left interest rates unchanged at zero at its policy meeting, as expected, but is winding down its quantitative easing programme faster than expected – it may end in the third quarter.

Shares in the Russian steelmaker Evraz have been suspended, after the company’s biggest shareholder Roman Abramovich was sanctioned by the UK.

The shares fell sharply on the news, down 12%, but have now been suspended “in order to protect investors pending clarification of the impact of the UK sanctions,” according to the Financial Conduct Authority.

Abramovich holds a 30% stake in Evraz. His assets have been frozen along with those of six other Russian oligarchs. His planned sale of Chelsea FC is also on hold, but the Premier League club can continue to play under a special licence granted by the UK government.

Yesterday saw another round of record average pump prices in the UK, the RAC motoring group reports – taking the cost of a tank of petrol to almost £88 while diesel is over £92.

The average price of both petrol and diesel climbed to new records again on Wednesday. Unleaded is now 159.57p a litre while diesel increased by another 2p to 167.37p – making for a rise of more than 5p in two days.

RAC fuel spokesman Simon Williams said:

A tank of petrol is now almost £88 while diesel has now gone over £92.

Diesel unfortunately appears to be on a clear path to £1.70 a litre. As this is an average price, drivers will be seeing some unbelievably high prices on forecourts as retailers pass on their increased wholesale costs.

But there was a hint of better news yesterday on the wholesale market with substantial drops in both petrol and diesel which could lead, in a week or so, to a slight slowing in the daily pump price increases and records being broken less frequently.

China has refused to supply Russian airlines with aircraft parts, an official at Russia’s aviation authority was quoted by Russian news agencies including Interfax as saying.

This comes after US planemaker Boeing and Europe’s Airbus halted supply of components.

Russia’s aviation sector is being squeezed by western sanctions, with Russia’s foreign ministry warning this week that the safety of Russian passenger pflights was under threat.

Valery Kudinov, an official responsible for maintaining airplane airworthiness, said Russia would look for opportunities to source parts from countries including Turkey and India, after failing to obtain them from China.

He was also quoted as saying that Russian companies are now registering their aircraft – many of which had been registered abroad – in Russia after western sanctions. He expects some other planes to be returned to the western companies they are leased from.

Separately, a draft law published today showed the Russian government plans to order domestic airlines to pay for leased aircraft in roubles and could bar them from returning planes to foreign firms if leases are cancelled.

Aside from Japan’s Hitachi suspending business in Russia, Sony and Nintendo have halted shipments of gaming consoles and games to Russia, joining a global corporate exodus from Russia following its invasion of Ukraine two weeks ago.

Sony, whose movie studio had already stopped releases in Russia, said it had suspended the launch of its racing game “Gran Turismo 7” and shut its PlayStation Store in Russia. It also made a $2m donation to the United Nations High Commissioner for Refugees and Save the Children “to support the victims of this tragedy”.

Japanese rival Nintendo has delayed the global release of “Advance Wars 1+2: Re-Boot Camp,” a strategy game with a military theme, because of “recent world events”. It was due to launch on its Switch console on 8 April. The company said it was suspending shipments of all products to Russia

for the foreseeable future... due to considerable volatility surrounding the logistics of shipping and distributing physical goods.

Rio Tinto has become the first major mining company to sever ties with Russia, throwing into doubt an aluminium joint venture between it and Rusal, which was founded by oligarch Oleg Deripaska.

Food companies Nestlé, Mondelez, Procter & Gamble and Unilever have halted investment in Russia but said they would continue to provide essentials.

Coca-Cola and McDonald’s also bowed to public pressure and paused business in Russia this week, while hoteliers Hilton and Hyatt suspended development of new hotels there.

Among luxury brands, Japan’s Shiseido suspended exports of its cosmetics to Russia from Europe, and German fashion house Hugo Boss, which generated 3% of its sales in Russia and Ukraine last year, temporarily stopped business in Russia.

The asset freeze imposed on Roman Abramovich means his planned sale of Chelsea FC has been halted. The Russian oligarch had put the club up for sale but Britain’s asset freeze and sanctions on him bar that process.

However, the English Premier League club can continue to play under a special licence, according to Nadine Dorries, Britain’s minister for sport.

Britain has added seven more Russian oligarchs to its sanctions list, including Chelsea FC owner Roman Abramovich and Putin’s close ally and de facto deputy Igor Sechin, the chief executive of the state oil company Rosneft. It means they have their assets frozen.

Also included are Oleg Deripaska, who has stakes in the Russian hydropower firm En+ Group, and Dmitri Lebedev, chairman of the board of directors of Bank Rossiya.

UK prime minister Boris Johnson said:

There can be no safe havens for those who have supported Putin’s vicious assault on Ukraine.

UK businesses have called on the government to provide urgent support to firms and consumers, as global energy prices surge.

The CBI, the biggest business lobby group, said with sanctions against Russia rightly being put in place, “the next phase of economic actions must be to secure greater economic independence from Russia and to build a far more resilient UK economy”.

The group called for faster action on big policy issues around energy, supply chains and cybersecurity, as it spoke of a “looming crisis in domestic and business energy bills”.

Tony Danker, CBI director-general, said:

The actions of this Russian government are making their country an economic no-go area.

Sanctions have been a successful start to global efforts to isolate the Putin regime. But the next phase will require global economies, including Britain, to be economically resilient to further threats.

This conflict shows us quite clearly that we need to start bolstering the UK’s future economic resilience, from our supply chains and energy sources to our cyber security.

To do that, the government will need to fast-track progress on some of the big policy issues and help firms invest. Business stands ready to support them in that endeavour.

Turning to energy, he said the UK must “move far faster towards clean energy solutions” to lessen reliance on Russia for oil and gas.

We need to double down on successful strategies for wind power and nuclear.

We need to move immediately towards energy efficiency in homes to dampen down demand. And government will need to think urgently about consumers as bills go higher still later in the year.

We also need to support energy intensive industries that lie at the heart of our critical supply chains but are threatened by soaring prices. And we must recognise that smaller firms unprotected by the energy price caps will face significant cashflow constraints.

European stock markets are extending losses, as yesterday’s rally proved to be short-lived.

At lunchtime we will get the European Central Bank’s interest rate decision (no change expected) as well as US inflation data for February (we are expecting a rise in the annual rate to 7.9% from 7.5%).

• UK’s FTSE 100 down 1%, or 75 points, at 7115
• Germany’s Dax down 213 points, or 1.5%, at 13,636
• France’s CAC down 85 points, or 1.3%, at 6,302
• Italys’s FTSE MiB down 554 points, or 2.3%, at 23,333

Crude oil prices are climbing after yesterday’s decline. Brent crude, the global benchmark, has gained $6 to $117.26 a barrel while US light crude is up more than $4 at $112.92 a barrel.

Shell chief executive Ben van Beurden’s pay rose by a quarter in 2021 to £6m, as the fossil fuel producer benefited from soaring energy prices amid calls for a windfall tax on energy companies, reports my colleague Jasper Jolly.

It’s his first pay rise since he received a bumper €20m for 2018, Shell’s annual report showed.

The FTSE 100 company reported record profits during 2021 thanks in part to a gas price surge in the final three months of the year amid a rebound in demand for commodities as the global economy recovered from coronavirus pandemic lockdowns.

Van Beurden’s pay rise, to €7.4m (£6.1m) in 2021 from €5.8m the year before, came amid widespread calls, including from Britain’s Labour party, for booming energy companies to face a windfall tax on profits as people in Britain and beyond face up to a cost-of-living crisis.

Russia’s invasion of Ukraine has caused energy prices to rise further since the start of the year, suggesting that even higher bills could be on the way for households and businesses.

Good news for John Lewis employees: The John Lewis Partnership has restored its staff bonus after narrowing losses to £26m last year, reports our retail correspondent Sarah Butler.

The department store group, which is staff-owned and also operates Waitrose supermarkets, said it would pay a 3% bonus to workers, equivalent to 1.5 weeks pay.

A year ago it said it would not be paying a bonus to staff, known as partners as they jointly own the company via a trust, for the first time in 67 years and was unlikely to pay a bonus this year, after slumping to a £517m loss for 2020.

JLP also said it would pay all partners at least the independently verified living wage of £9.90 across the UK, a 2% pay rise.

The Russian rouble has stabilised at 120.1 per dollar in early trading in Moscow, before the first talks between the Russian and Ukrainian foreign ministers since Russia invaded Ukraine exactly two weeks ago. Sergei Lavrov and Dmytro Kuleba are due to to meet in Turkey later today.

Against the euro, the rouble weakened slightly to 128. The Russian currency has tanked since Russian forces marched into Ukraine, prompting severe economic sanctions from the west. Yesterday, the rouble went over 120 per dollar for the first time in Moscow trading, and reached a record low of 131 per euro.

The Moscow stock exchange remains closed. It has been shut for almost two weeks, as sanctions against Russia were widened.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The International Monetary Fund’s executive board has approved $1.4bn in emergency financing for Ukraine, and predicted a “deep recession” in Ukraine this year. In a statement, it expressed its “strong support for the Ukrainian people”.

IMF managing director Kristalina Georgieva said once the war is over, the country is likely to need additional “large support”.

The Russian military invasion of Ukraine has been responsible for a massive humanitarian and economic crisis.

Financing needs are large, urgent, and could rises significantly as the war continues.

Vladyslav Rashkovan, Ukraine’s alternate executive director, gave an emotional speech at the board meeting about the devastation caused by the war and the impact on Ukrainians, Reuters reported. His remarks were met with spontaneous applause, a rare event at these meetings.

Russian executive director Aleksei Mozhin, who is the board’s most senior member and serves as its honorary dean, spoke only briefly, saying: “I pray for peace.”

The Ukrainian authorities have cancelled the previous stand-by arrangement and expressed their desire to work with the IMF to design an economic programme aimed at rehabilitation and growth, when conditions permit.

The World Bank’s executive board approved a $723m package of loans and grants for Ukraine on Tuesday.

Meanwhile, US House lawmakers voted to rush through a $13.6bn aid package that would increase military and humanitarian support to Ukraine and its European allies. The aid includes $6.5bn for the US costs of sending troops and weapons to eastern Europe and equipping allied forces there, and $6.8bn to care for refugees and provide economic support to allies. Senate approval is expected within days. The House also passed a bill banning Russia oil imports.

Asian stocks joined yesterday’s European and US market rally after recent heavy losses, with markets in Europe seeing their biggest one-day gain since March 2020, with the DAX standing out, while US markets rose at their fastest rate since November 2020. Japan’s Nikkei closed nearly 4% higher while South Korea’s Kospi is 2.2% ahead and Hong Kong’s Hang Seng rose 0.5%.

Oil prices also dropped sharply yesterday after an aide to Ukraine president Zelenskiy said the country is open to Russia’s demand of neutrality, assuming its gets cast-iron security guarantees. Today, Brent crude has risen about 3% to $114.58 a barrel while US light crude is 1.7% ahead at $110.6 a barrel.

European stock markets are expected to open lower after yesterday’s rebound. While Ukraine will undoubtedly remain the focus, markets will also be eyeing today’s European Central Bank rate decision at lunchtime, as well as US inflation for February, where we are expecting an annual rate of 7.9%, up from 7.5% the month before.

Joining the growing number of companies that are pausing business in Russia, Japan’s Hitachi said today it would suspend operations there – but stopped short of linking the decision to pressure from Ukraine. Two days ao, the Ukrainian vice prime minister Mykhailo Fedorov on Twitter urged the conglomerate to take action, with an image of his letter to Hitachi boss Toshiaki Higashihara attached.

The company, which produces and sells construction machinery in Russia, said it would stop exports and cease most operations in the country with the exception of vital electrical power facilities.

A spokesperson told Reuters:

We took multiple factors including the supply chain situation into account when we came to the decision.

The Russian government plans to order local airlines to pay for leased aircraft in roubles and bar them from returning planes to foreign companies if leases are cancelled, according to a draft law published today. Western sanctions have forced Russian airlines to cancel international flights.

The rouble has dropped sharply in value since Russia’s invasion of Ukraine.

The Agenda

• 12.45pm GMT: European Central Bank interest rate decision
• 1.30pm GMT: ECB Press conference
• 1.30pm GMT: US inflation for February (forecast: 7.9%)
• 2.30pm GMT: ECB Macroeconomic projections