The alleged leader of what was once the world’s largest ransomware outfit, LockBit, has been named as Russian national Dmitry Khoroshev by the UK’s National Crime Agency (NCA), after the seizure of the criminal gang’s infrastructure.

Khoroshev, who lived his online life under the name LockBitSupp, has been sanctioned by the UK, US and Australia as a result of the unmasking.

He was so certain of his anonymity that he once offered a $10m (£8m) reward to anyone who could reveal his identity. The US government is now offering a reward of up to $10m for anyone who can share information leading to his arrest or conviction.

LockBit was seen as one of the world’s most dangerous ransomware groups and its high-profile victims included delivery firm Royal Mail and aerospace company Boeing.

More here:

Time to recap…..

The UK, US and Australia have sanctioned the Russian leader of one of the world’s most prolific ransomware groups, LockBit.

As part of an ongoing international law enforcement investigation, Russian national Dmitry Khoroshev has been identified as one of the leaders of the group, which the Government says has been responsible for extorting more than one billion dollars from victims globally.

As part of the sanctions, the Foreign Office said he would now be subject to a series of asset freezes and travel bans.

The UK’s sanctions minister, Anne-Marie Trevelyan says:

“In sanctioning one of the leaders of LockBit we are taking direct action against those who continue to threaten global security, while simultaneously exposing the malicious cyber-criminal activity emanating from Russia.”

The US Justice Department has unsealed a 26-count indictment against Khoroshev returned by a grand jury in the District of New Jersey.

Deputy Attorney General Lisa Monaco explains:

“Working with U.S. and international partners, we are using all our tools to hold ransomware actors accountable—and we continue to encourage victims to report cyberattacks to the FBI when they happen. Reporting an attack could make all the difference in preventing the next one.”

Here’s the rest of today’s business news stories:

LockBit was particularly disruptive because it was designed as “ransomware-as-a-service” (RaaS) – meaning cybercriminals could buy the package and operate it themselves.

The DoJ alleges that Khoroshev — as the LockBit developer — would typically receive a 20% share of each ransom payment extorted from LockBit victims, with whoever conducted the hack getting the remaining 80%.

Today’s indictment says Khoroshev and his co-conspirators extracted at least $500m in ransom payments from their victims, meaning he received at least $100m in digital currency.

Dmitry Khoroshev will now be subject to a series of asset freezes and travel bans, the UK’s National Crime Agency says.

The UK’s sanctions minister, Anne-Marie Trevelyan says:

“Together with our allies we will continue to crack down on hostile cyber activity which is destroying livelihoods and businesses across the world.

“In sanctioning one of the leaders of LockBit we are taking direct action against those who continue to threaten global security, while simultaneously exposing the malicious cyber-criminal activity emanating from Russia.”

The US Department of Justice has unsealed a raft of charges against Dimitry Yuryevich Khoroshev over his alleged roles as the creator, developer, and administrator of the LockBit ransomware group.

Fresh from being sanctioned by the US, UK and Australia today, Khoroshev has also been charged by a 26-count indictment returned by a grand jury in the District of New Jersey.

Attorney General Merrick Garland explains that the charges follow the international disruption campaign targeting LockBit carried out earlier this year:

“Earlier this year, the Justice Department and our U.K. law enforcement partners disrupted LockBit, a ransomware group responsible for attacks on victims across the United States and around the world.

“Today we are going a step further, charging the individual who we allege developed and administered this malicious cyber scheme, which has targeted over 2,000 victims and stolen more than $100 million in ransomware payments. We will continue to work closely alongside our partners, across the U.S. government and around the world to disrupt cybercrime operations like LockBit and to find and hold accountable those responsible for them.”

Just in: The US, UK and Australian governments say they have sanctioned the leader of the LockBit ransomware group, whose recent victims include Royal Mail.

The US Treasury say it is exposing that that the cybercriminal responsible for the Lockbit ransomware variant is Dmitry Yuryevich Khoroshev, a Russian national.

Lockbit has conducted a swath of hacks, using phishing attacks to tricks computer users into downloading malware onto their computers. The infected computer is then compromised and encrypted, with Lockbit demanding money from the victim to release their data.

Khoroshev, the US Treasury alleges, is the primary operator of the well-known and public-facing LockBit-related cybercrime moniker, “LockBitSupp.”

In a statement, the Treasury explains:

As a core LockBit group leader and developer of the LockBit ransomware, Khoroshev has performed a variety of operational and administrative roles for the cybercrime group, and has benefited financially from the LockBit ransomware attacks.

In addition, Khoroshev has facilitated the upgrading of the LockBit infrastructure, recruited new developers for the ransomware, and managed LockBit affiliates. He is also responsible for LockBit’s efforts to continue operations after their disruption by the U.S. and its allies earlier this year.

The US Department of State has also announced a reward of up to $10m for information that leads to the identification or location of any senior individual in the LockBit group.

Khoroshev has also been added to the UK’s sanctions list, and faces a series of asset freezes and travel bans.

The UK government’s list of sanctioned individuals says:

Dmitry Yureyvich KHOROSHEV is or has been involved in relevant cyber activity in that he has been responsible for, engaged in, provided support for or promoted the commission, planning or preparation of relevant cyber activity, or provided technical assistance that could contribute to relevant cyber activity.

Lockbit’s operations were severely disrupted by a coordinated international crackdown earlier this year.

Today, the UK’s National Crime Agency reports that between June 2022 and February 2024, more than 7,000 attacks were built using Lockbit’s services. The top five countries hit were the US, UK, France, Germany and China.

Good news for holidaymakers looking to fly overseas this summer – ticket fares will rise less than expected.

That’s according to budget airline Ryanair’s CEO, Michael O’Leary, who has predicted that ticket fare prices this summer are likely going to be lower than previously expected,

Speaking to reporters in Brussels today, O’Leary says:

“Looking at summer ... We thought pricing would be up 5-10%. We’re heading to flat (pricing year-on-year) to 5% up, which is surprising with a lot of the Airbus <AIR.PA> fleet grounded for maintenance.”

This appears to have knocked shares in airlines. EasyJet’s shares are now down 5% in London, with British Airways parent company IAG down 1.5% and Wizz Air off 3%.

Ryanair’s shares are down 4%.

Airlines have been pushing up prices since the end of pandemic restrictions, as they try to recoup their losses during Covid-19 and take advantage of customers keen to travel again.

In April, one industry consultant said he was seeing “quite stunning levels of pricing” in the market, as passengers stumped up higher air fares.

Advances in artificial intelligence risk destabilising the financial markets, a Bank of England policymaker is warning today.

Jonathan Hall, an external member of our Financial Policy Committee (FPC), argues that market stability could be threatened if deep neural networks – programs that uses multiple layers of artificial neurons to process information – were turned into deep trading agents, which select and execute trading strategies.

Hall tells the University of Exeter Business School that AI traders could amplify shocks and undermine market stability.

He says there are two risks:

[First] That deep trading agents, whilst increasing efficiency in good times, could lead to an increasingly brittle and highly correlated financial market.

[Second] That the incentives of deep trading agents could become misaligned with that of regulators and the public good.

Hall cites a well-known example of AI confusion, where researches taught a system what a panda looked like, and then added noise to the picture of a panda – leading the AI system to declare that the animal was almost certainly a gibbon.

Hall say:

From a financial stability perspective, this raises the question of whether through bad luck, or targeted malicious behaviour, a tiny change in market prices could abruptly shift the trading signal from “buy” to “strong sell”?

And, unlike in the image example, it would be extremely difficult for a human to know whether that sudden shift was the result of a model error, or indicated some important, but inscrutable, information in the pattern of prices.

Hall then cites the idea that an AI system could be trained on all historic price changes and all readable historic data relevant to fundamental financial analysis. Such an algorithm would have risk, and profit and loss, rules built in, and over time would outcompete human traders.

If that happened, capital would shift towards this high-performing AI system. But if it was unable to absorb shocks, this ecosystem that is unsustainable.

Hall says there are two general concerns about such a trading algorithm based on analysing the fair value of stocks – either it shows exhibit volatile, unpredictable behaviour because it was not trained well, or it fails because it can’t adjust to a change in market environment.

But there’s another danger too – what about an AI system that analyse order book data to predict the imminent order flow of other traders?

Studies have shown that such “informed AI speculators” will behave in a cooperative, way until triggered to do otherwise, leading to lower price informativeness and lower market liquidity.

And worse – the AI system might learn that it can make the best profits during times of market instability, so decide to amplify any external shock that hits the markets….

Hall argues that City firms must ensure that any AI systems they develop are aligned with regulations.

He says:

Any deep trading algorithms must be trained in a way that ensures that their behaviour is consistent the regulatory rule book.

This is a dynamic process in two respects: Training must be updated to respond to any discovered divergence between regulatory intent and reaction function; and trading managers must keep reinforcing the rules to make sure they are not forgotten

Entertainment giant Disney has hit a landmark today – its streaming business has turned a profit for the first time since the launch of Disney+ more than four years ago.

Disney has report that its “Direct-to-Consumer” division made a profit of $47m in the first quarter of this year, up from a $587m loss in Q1 2023.

It also added more than six million Disney+ subscribers in the quarter, taking the total worldwide to 117.6m

But, Disney’s shares have dropped by more than 5% in pre-market trading.

Kathleen Brooks, research director at XTB, says the results have fallen short of high expectations:

Revenues were $22.08bn, down a touch from the $22.1bn expected. Operating income was 17% higher than a year ago at $3.85bn, vs. $3.51bn expected. Hulu reported higher than expected subscriber figures, however, Disney + subscriber growth did not meet expectations, the total number of subscribers is now 153.6mn, analysts were expecting 155.66mn.

In the cut-throat world of streaming, subscribers mean everything, and if you fall short on this metric, then it can put off investors, which may be the case on Tuesday.

Bob Iger may have won the boardroom battle with Nelson Peltz, but not even higher future guidance for earnings -per – share was enough to stop the market selling Disney on the back of these results.

UK government bonds have been rising in price today, as City investors await hints from the Bank of England as to when interest rates may start to fall.

This has pushed down the yield, or rate of return, on short and long-term UK bonds.

The yield on two-year UK gilts has dropped by 7 basis points, to 4.31% from 4.38% at the end of last week. That’s the lowest since mid-April.

Ten-year gilt yields also hit a three-week low, at 4.61%.

Thirty-year debt (which matures in 2054) has also strengthened, which has pushed down its yield by 10 basis points (0.1 percentage point) to 4.618% from 4.71%.

Mechanistically, bond yields fall when the price paid by investors rises.

Falling bond yields can be a sign that the City is anticipating that central banks will cut interest rates soon – as investors would accept a lower rate of return for holding onto government bonds.

The BoE isn’t expected to cut interest rates on Thursday, but it could offer hints as to how soon it might lower borrowing costs.

The Bank of England has an attack of the gremlins this morning.

The UK central bank has said today it is postponing an indexed long-term repo operation due to technical problems with the platform markets use to place bids for funds, Reuters reports.

In a message to markets, the BoE said:

“A further screen announcement will be made as soon as possible.”

Repo auctions allows commercial banks to borrow cash from the Bank of England, in return for providing other, less liquid assets as collateral. They’re part of the plumbing of the financial system.

Just in: UK construction sector growth has hit a 14-month high, despite a drop in housebuilding.

Data firm S&P Global reports that the UK construction sector gained momentum last month, due to solid rates of expansion in the commercial and civil engineering segments.

This pushed the S&P Global UK Construction Purchasing Managers’ Index, which measures activity, up to 53.0 in April, from 50.2 in March. That’s the highest reading since February 2023, further from the 50-point mark that shows stagnation.

But, the survey also shows a “setback” for house building activity, where the sub-index dropped to 47.6.

The data suggests “a moderate fall in residential building work”, with builders blaming sluggish market conditions and higher borrowing costs.

Tim Moore, economics director at S&P Global Market Intelligence, says:

Lacklustre market conditions in the house building segment continued to weigh on activity. The latest survey pointed to the fastest reduction in residential building work since January, although the speed of the downturn remained much softer than in the second half of 2023.

Hiring trends were subdued in April despite a recovery in workloads, which mirrored trends seen in other part of the UK economy, as construction firms sought to maintain a tight focus on costs against a backdrop of strong wage pressures. Purchasing prices nonetheless increased only modestly in April.

Car sales to UK private buyers fell in April, as demand for vehicles weakened and sales of electric cars to consumers fell.

Industry body SMMT has reported that overall UK new car registrations grew for the 21st consecutive month in April, rising by 1.0% to 134,274 units.

But, that growth was entirely due to sales to fleet operators (such as car rental firms). While fleet registrations jumped by 18.5%, there was a 17.7% drop in sales to private buyers and a 16.1% drop in registrations to businesses

The SMMT reports that electrified vehicles were the main drivers of market expansion again.

Sales of plug-in hybrids (PHEVs) rose by 22.1% year-on-year, followed by hybrid electric vehicles (HEVs) which gres by 16.7%. Sales of battery-powered electric vehicle (BEVs) rose by 10.7%.

But, the increased sales of BEVs was entirely due to business buyers, with sales to consumers falling by almost 22%.

The SMMT says:

While the overall increase in BEV demand is positive, urgent action is needed to re-enthuse private buyers into switching….

Drivers today enjoy the widest ever choice of BEV models – more than 100 – powered by the latest technology, and manufacturers continue to provide compelling offers to encourage their uptake. However, the lack of government incentives for private motorists remains a barrier that cannot be overcome by industry alone.

The small increase in UK house prices in April has left them broadly flat since the turn of the year, says Peter Arnold, EY UK chief economist:

The stabilisation in market conditions reflects the large fall in mortgage rates since last summer, with transactions and prices appearing to have passed their trough.

However, the recent rise in mortgage rates is likely to dampen the recovery in the short-term. And looking ahead, the recovery in prices is unlikely to be rapid given that poor affordability continues to significantly limit the pool of potential buyers and mortgage rates are only likely to fall back slowly.

Tom Bill, head of UK residential research at Knight Frank says higher mortgage rates are continuing to hit market momentum, adding:

As the prospect of the first rate cut since March 2020 drifts further into the distance, borrowing costs have edged higher and budgets have been squeezed.

A short-lived burst of positivity in the early weeks of this year led to higher supply, increasing downwards pressure on prices. A wave of homeowners currently rolling off sub-2% mortgages is adding to the financial pressures in the system. As a summer rate cut moves onto the horizon, we expect UK house prices to respond and rise by 3% in 2024.”

The recent increases in mortgage rates could lead to market volatility this year, warns Mark Harris, chief executive of mortgage broker SPF Private Clients:

“Borrowers have benefited from cheaper mortgage rates since the start of the year, which has boosted market activity and enquiries.

“Since then, higher funding costs have led to higher mortgage rates over the past couple of weeks and there is likely to be some volatility in pricing ahead. Borrowers would be wise to secure a rate they like the look of to protect themselves from further price fluctuations in the short term.

“Once the Bank of England is confident inflationary pressures have eased and starts cutting interest rates, this will provide a welcome boost for the market and should help increase confidence and activity.”

Nicky Stevenson, managing director at estate agent group Fine & Country, suggests a cut in interesst ratesr would help the market:

“House prices are yo-yoing as buyers and sellers negotiate their way through the uncertain economy, with a small monthly rise in April.

“Consumers are expecting a fall in interest rates at some point this year. But with lenders increasing rates in the last few weeks, buyers have understandable hesitancy over the right price to offer, while sellers are trying to navigate how offers align with their expectations.

“Yet despite this confusion over pricing, demand is holding up well, with mortgage approvals continuing to rise and supply levels improving.

“All attention turns to the Bank of England, as a fall in the base rate this week would help to solidify confidence in the housing market.”

However, the City don’t expect the BoE to cut rates at its meeting on Thursday – the first cut is currently fully priced in for August.

Victoria Scholar, head of investment at interactive investor, explains:

It looks like mortgage rates will continue to remain elevated with the Bank of England poised to keep interest rates at 16-year highs of 5.25% this Thursday.

Financial markets have been pushing back their forecasts for the timing of the first rate hike this year, with August currently pencilled into the diary, although that could certainly change depending on the data.”

Over in Germany, manufacturing orders have dropped unexpectedly…. but exports are improving.

New data shows that German factory orders dropped by 0.4% in March, missing forecasts for a rise of 0.4%.

Orders for new cars rose by 1.1%, but orders for ”other transport equipment” such as aircraft, ships, and trains fell by 2.3% month on month.

Orders for fabricated metal products fell by 4.5%, but electrical equipment orders were up 5.9%.

But, statistics body Destatis have also reported that German exports picked up by 0.9% in March, rising faster than imports (which were up 0.3%).

This “confirms the return of the export-driven German growth model’, says Carsten Brzeski, global head of macro at ING, who is also concerned that industrial orders remain weak.

Brzeski writes:

The share of exports to the US increased to more than 10% of total exports in 2023, while the share of exports to China dropped to 6%, significantly below pre-pandemic levels. At the same time, Germany exported more to Poland, the Czech Republic and Hungary than to the US.

However, banking on a return of the well-known success formula of the export-oriented growth model would be deceptive. The long list of geopolitical risks, potential trade tensions and increasing global competition should provide sufficient arguments against policy complacency. The German economic business model still needs to be much more balanced.

To some extent, industrial orders this morning illustrated the high risk that the revival of the export-oriented success formula is only short-lived. In fact, after the first post-lockdown recovery, demand for German manufacturing goods has been weak. In fact, since the start of 2022, industrial orders have dropped on average by 0.5% every month.

Boom! Britain’s FTSE 100 share index has hit a fresh alltime high at the start of trading in London.

The Footsie has extended its recent rally, jumping by over 1.1% to hit 8311 points, a new intraday high.

Traders are hitting their buy buttons as they return to their desks after the Bank Holiday break, catching up with a rally on Wall Street last night….

…. those traders who managed to reach their desks, anyway, given trains on some of the busiest commuter routes in the country are not running today, due to strike action.

Campaign group Global Witness have calculated that BP shareholders have received “a staggering £22.3bn” since the invasion of Ukraine in February 2022.

Those payments have come through dividends – which BP raised by 10% last year – and through share buybacks, in which BP uses case to buy back and cancel shares, a process which lifts its share prices.

Alice Harrison, Head of Fossil Fuel Campaigns at Global Witness, says:

“These past two years have inflicted untold misery and pain on the people of Ukraine, while big energy firms that spent years doing business with Putin’s Russia have seen the cash roll in.”

It’s obscene that anyone would profit from the Ukraine war, the energy crisis, or the climate crisis, but that’s what’s happening. With the biggest spoils going to one of the richest, most destructive industries in the world - the fossil fuel industry.”

“Instead of helping to rebuild Ukraine, ease the burden of high bills or support countries suffering from the climate crisis, BP is making the rich richer. And this will continue to be the case until we make the urgent switch to a clean energy system.”

Halifax’s UK house price report shows that annual price falls are predominately found in the south of England, maintaining the ‘North-South’ divide across English regions.

The North West of England continues to see the strongest growth in England, with average prices up by 3.3% on an annual basis to £231,599.

Prices in London are pretty flat over the last year up just 0.1% (with the average at £539,336).

Properties in Eastern England recorded the biggest decline of -1.1%, with homes selling for an average of £329,723, a drop of £3,541 over the last year.

Northern Ireland remains the strongest performing nation or region in the UK, with house prices up by 3.4% over the last year (taking the average to £192,502))

In Wales annual property price growth slowed to +1.1% in April, while prices in Scotland are up 1.5% year-on-year.

Despite average house prices inching up in April, Halifax adds that affordability constraints are still a significant challenge.

That applies to new buyers, and also borrowers who are rolling off fixed-term deals, and facing a jump in repayment costs.

Amanda Bryden, Halifax’s head of mortgages, says interest rate cuts later this year should help borrowers:

Mortgage rates have edged up again in recent weeks, primarily as a result of expectations around future Bank of England base rate changes, with markets now pricing in a slower pace of cuts.

If, as is still expected, downward moves in Bank Rate come into play later this year, fixed mortgage rates should fall. Combined with the resilience displayed by the housing market over recent months, we now expect property prices to rise modestly over the course of 2024.”

In the oil sector, energy giant BP has missed profit forecasts this morning.

BP has reported a drop in profits, with underlying earnings falling to $2.7bn in the first quarter of 2024, down from $2.9bn in the final quarter of 2024.

That’s below analysts forecasts for profits of $2.9bn, and sharply lower than the $4.9bn BP made in Q1 2023, when oil and gas prices were higher.

BP says the drop in profits was due to weaker oil and gas trading, “significantly weaker” profit margins at its fuels division, and the disruption at its Whiting refinery outage in northwest Indiana which shut down for several weeks due to a power outage.

But despite this drop in profits, BP is continuing to pump money to shareholders. It has annouced a new $1.75bn share buyback this morning.

Kate Thomson chief financial officer at BP, says:

bp reported solid financial performance in the first quarter with adjusted EBITDA* of $10.3 billion and underlying replacement cost profit of $2.7 billion.

Our financial frame is unchanged, and we are delivering competitive shareholder distributions, announcing a $1.75 billion share buyback for the first quarter as part of our commitment of $3.5 billion for the first half of 2024.

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

Another day, another healthcheck on the UK housing sector.

And this morning, lender Halifax have reported that the market is “finding its feet” in the face of higher borrowing costs.

Halifax’s monthly gauge shows that average house price rose by +0.1% in April on a monthly basis, after a fall of 0.9% in March.

On an annual basis, prices were 1.1% higher than in April 2023 – a time when house price growth was weaker.

This has lifted the average price to £288,949, slightly higher than the £288,781 in March, with growth fastest in Northern Ireland.

This contrasts with rival lender Nationwide, which reported last week that prices dipped by 0.4% in April.

Amanda Bryden, head of mortgages at Halifax, says the average house prices have “largely plateaued” in the early part of 2024, adding:

“This reflects a housing market finding its feet in an era of higher interest rates. While borrowing costs remain more expensive than a few years ago, homebuyers are gaining confidence from a period of relative stability.

Activity and demand is improving, evidenced by greater numbers of mortgage applications so far this year, while at an industry level mortgage approvals have reached their highest point in 18 months.

Bryden adds that first-time buyers have been compensating for higher borrowing costs by targeting smaller properties. That has left to the prices of flats rising faster than larger properties in 2024.

The agenda

• 7am BST: German trade balance for March

• 8.30am BST: Eurozone construction PMI for April

• 9am BST: UK new car sales for April

• 9.30am BST: UK construction PMI for April

• 10am BST: Business and Trade Committee hearing on good work and protecting workers’ rights

• 1.30m BST: BoE policymaker Jonathan Hall gives a speech at the University of Exeter about artificial intelligence, titled ‘Monsters in the deep ….’