People with children and renters are more likely to have seen their spending on utility bills increase while working from home during the coronavirus pandemic, official figures released this morning suggest.

The Office for National Statistics (ONS) said almost half of people who worked from home had spent less than they would have normally, with reduced costs for travel and food offset by an increase in spending on gas, electricity and internet access.

However, it said the change in spending patterns was more pronounced for some people in the survey of more than 3,000 adults in Great Britain undertaken by government statisticians last month.

As many as 92% of people working from home who live in rented accommodation reported increased spending on utilities, compared with 86% for home workers who were paying a mortgage and 77% for those who owned their homes outright.

Here’s an ONS twitter thread with the key points too:

European stock markets also closed solidly in the red.

Germany’s DAX fell 2%, as did Italy’s FTSE Mib, while France’s CAC lost 2.3% and Spain’s IBEX lost 2.5%.

Danni Hewson, AJ Bell financial analyst, sums up the day:

“Very few stocks trading on the FTSE 100 today managed to make it into positive territory. Concerns that tensions in the Ukraine are close to turning into conflict unsettled markets right across Europe as investors considered the potential implications.

No one would be surprised to find travel stocks amongst the hardest hit and Wizz Air, Carnival, IAG and TUI all sustained losses. Today has been one of those days when fear tumbles into volatility helped by some investors rushing to take profits just in case today’s fall is just the first step down but ready to back buy bargains if the price is right tomorrow.

US government bond yields have also risen, as traders anticipate a series of American interest rate rises through this year.

In the bond markets, the yield (or interest rate) on UK two-year government debt has risen to its highest level since 2011.

Yields rise when bond price fall. The yield on two-year gilts rose as high as 1.5% today, nudging above over the five-year gilt yield (1.49%).

Typically, a longer-dated bond ought to trade at a higher yield (to reflect the greater risk of holding it), so when that flips, it can be a signal of an economic downturn.

Michael Hewson of CMC Markets explains:

Banks have taken a bit of a kicking, after decent gains year to date, largely down to an inversion of the yield curve, as 5-year gilt yields fall below 2-year gilt yields, although we have been here before in the second half of 2019, and the beginning of 2020.

Typically, a yield curve inversion is a forerunner, or warning of a possible recession, and while higher yields are widely seen as a good thing, if there is little difference between short- and long-term rates then banks’ ability to make a decent return is hindered. Barclays, NatWest and Lloyds Banking Group are all lower.

Stocks are turning south in London in late trading.

With an hour to go, the FTSE 100 index of blue-chip shares is down 2.1%, off 161 points at around 7500 points. Financial stocks are weaker, with Barclays down 5.7% and Lloyds and NatWest losing around 5%.

Travel stocks are still sliding too, with British Airways parent company IAG losing 6.4%.

The FTSE 250 index of medium-sized companies is down around 2.3% - with cybersecurity firm Darktrace off 9.4%, and budget airline Wizz dropping almost 8%.

Energy stocks are lower in New York, with the oil price having dropped back from its earlier seven-year highs.

The Dow Jones industrial average is dropping lower, now down 0.65% in choppy trading.

Oil producer Chevron has dropped 1.3%, while the Dow fallers are led by pharmacy group Walgreens Boots Alliance (-2.8%), conglomerate 3M (-2%) and IBM (-1.6%).

Here’s our news story on the surge in petrol prices, which are expected to climb further in coming weeks, adding to the burden on UK households’ already squeezed budgets.

One of America’s senior central bankers has called for a rapid rise in interest rates, sticking to a position that spooked Wall Street last week.

St. Louis Federal Reserve President James Bullard has told CNBC that the Fed needs to react to accelerating inflation, after it hit a 40-year high of 7.5% in January.

Bullard told CNBC’s “Squawk Box” show that Fed’s credibility was ‘on the line’:

“I do think we need to front-load more of our planned removal of accommodation than we would have previously.

We’ve been surprised to the upside on inflation. This is a lot of inflation in the US economy... 7.5% on the headline CPI.

“Our credibility is on the line here and we do have to react to the data.

However, I do think we can do it in a way that’s organized and not disruptive to markets.”

Last Thursday, Bullard rattled markets by saying he thought the Fed should raise its benchmark short-term borrowing rate a full percentage point by July.

That triggered investors to price in a faster pace of rate rises, and the possibility of a 50-basis point hike in March, rather than a more typical 25bp move.

Inflation in India has hit its highest level in seven months, as cost of living pressures build globally.

India’s annual retail inflation rose to 6.01% in January, its highest pace since June, up from 5.66% in December. It was lifted by prices of food and manufactured items, as well as higher fuel costs.

That takes the Consumer Prices Index above the Reserve Bank of India’s inflation target of 2% to 6%.

Bloomberg has more details:

• The gains were driven by rising cost of food and fuel. Food price inflation accelerated 5.43%, while clothing and footwear prices rose 8.84% and fuel and light prices rose 9.32%
• A surge in oil prices and upbeat demand following fewer pandemic curbs are seen adding to price pressures, leading many economists to question the RBI’s dovish inflation projection

BP’s chief executive, Bernard Looney, has said today that the oil major is sticking with its Russian oil and gas business.

Reuters has the details:

BP is the largest foreign investor in Russia with a 19.75% stake in the country’s national oil company Rosneft. It also holds stake in several other oil and gas projects in the country.

“Quite frankly, there is no impact on our ongoing operations in Russia and we are sticking to the business,” Looney said at a conference in Cairo.

He added that BP will comply with any western sanctions on Moscow.

BP’s near-20% stake in Rosneft is a legacy of its joint venture with a string of Russian oligarchs, called TNK-BP, which was later dissolved to form Rosneft.

That stake helped to lift BP’s annual profits to an eight-year high:

Amid growing fears of a Russian invasion of Ukraine, the Milan stock exchange’s FTSE Mib index shed 3.7% in early trading, in line with other European markets, our Southern Italy correspondent Lorenzo Tondo writes.

With markets now recovering a little, the FTSE Mib is now down 2.3% so far today.

The spread between Italian government bonds and German borrowing costs widened today too.

Italy’s news agency ANSA said:

“The spread between Italy’s 10-year BTP bond and the German Bund rose to 169 basis points, up from 165 at the end of business on Friday, while the yield on the BTP was 1.90%.”

Italian Foreign Minister Luigi Di Maio will travel on a diplomatic mission to Moscow and Kiev on Tuesday for talks over the Ukraine crisis.

In the retail world, JD Sports and Footasylum have been fined almost £5m for sharing commercially sensitive information during an investigation by the UK competition watchdog.

The CMA imposed the penalty for breaching an order that barred the two merged companies from integrating further, after finding that their chairmen held multiple clandestine meetings including one caught on video in a car park near Bury in Greater Manchester.

More here:

The London stock market has recovered a little ground, with the FTSE 100 index now down 1.3% after a nervous morning.

It’s off by around 95 points, or 1.25%, at 7565 points, with airline group IAG (which owns British Airways) recovering a little, but still down 5%.

It’s followed by industrial software group Aveva (-4.6%) and investment group Abrdn (-4.5%). Financial stocks are also lower.

This would be the Footsie’s biggest drop in three weeks (since Monday 24 January, when worries about a possible Ukraine invasion rocked markets).

Brad Bechtel of Jefferies says markets have begun the week on a sour note:

It’s all about Russia/Ukraine as we start the week. The tensions remain elevated with very little progress from any of the talks that have occurred between Russia and western nations. Biden and Putin had an hour-long chat on Saturday and nothing came of it.

US tech stocks are heading for a soft open:

The UK tax department has seized three non-fungible tokens (NFTs) as part of an investigation into a suspected VAT fraud scheme involving 250 fake companies.

HM Revenue and Customs said on Monday it had seized the NFTs and arrested three people on suspicion of attempting to defraud it out of £1.4m. It is the first time a UK law enforcement agency has seized an NFT.

NFTs are unique digital tokens that first appeared in 2014 and can be bought and sold in crypto or traditional currencies but which have no tangible form of their own.

Nick Sharp, HMRC’s deputy director economic crime, said the NFT seizure “serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC”, adding:

“We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”

Here’s the full story:

Helen Davenport, partner at the law firm Gowling WLG, says

“This clearly demonstrates the impact-growth of this area and the difficulties that fraudsters face when using crypto-assets to hide their wrongdoings - contrary perhaps to some public perception regarding their nature. HMRC’s move, alongside a recent crackdown by the ASA on misleading advertising around cryptocurrencies, further demonstrates the authorities and regulators’ growing focus on crypto-assets.

“It is also a good example of HMRC’s practices evolving in line with the changing nature of the economy and taking into account the increasing value and prevalence of digital assets.”

The jump in fuel costs will put more pressure on household budgets, with inflation expected to rise above 7% in April.

British employers are expecting to award pay rises of 3% in 2022, the highest in at least a decade, though well below the rate of inflation, as they try to recruit and retain workers, according to a new survey of businesses.

The expected pay rise comes amid persistent signs of a tight labour market, with almost two-thirds of employers expecting to have difficulties filling job vacancies in the coming six months, according to a survey of more than 1,000 recruitment and human resources workers by YouGov for the Chartered Institute of Personnel and Development (CIPD).

Pay growth has risen sharply higher than it was before the pandemic, thanks in part to the pace of the economic recovery following coronavirus lockdowns at the start of the pandemic in 2020.

Average weekly earnings rose by 4.2% year on year in the three months to November 2021, faster than at any point between the financial crisis in 2008 and the start of the pandemic in 2020, according to the Office for National Statistics. The latest data on wages and employment will be published on Tuesday, with economists expecting pay growth to slow, but remain above pre-pandemic levels.

More details here.

Wall Street is on track to open lower, as fears of a Ukraine invasion worry investors.

The S&P 500 futures contract is down 0.75%, with the Nasdaq seen dropping around 1%.

New York stocks fell on Friday night, with the S&P 500 benchmark losing 1.9% after the US warned a Russian invasion of Ukraine could come within days.

Oil has dipped back from its seven-year highs, with Brent crude back at $94.50 per barrel.

The International Energy Agency’s (IEA) chief Fatih Birol this morning urged the OPEC+ group of oil producers to close the gap between its words and its actions (more here).

On Friday, the IEA said the failure of Opec and its allies to hit their production quotes was creating market volatility.

After over two hours trading, European stock markets are still deep in the red, with Germany’s DAX and France’s CAC down around 3.2%.

Every stock on the DAX is lower, led by Deutsche Bank (-4.8%) and insurance groups Munich Re (-4.5%) and Allianz (-4.3%).

Tiremaker Continental (-4.3%) and carmaker Volkswagen (-4.1%) are also in the DAX top fallers.

It’s a similar picture in Paris, where banks such as Societe Generale (-6.5%) and BNP Paribas are in the fallers (-5.1%), along with industrial groups and carmakers such as Renault (-4.9%).

Neil Wilson of Markets.com explains:

Banks and Autos led the decliners on the [pan-European] Stoxx 600 with losses of around 3-4%

Banks are being hit as they are not only exposed to Russia through outstanding loans (SocGen, UniCredit etc) but also fears that Russia could be cut off from the Swift payments network.

The VIX index, which tracks volatility in the markets (known as Wall Street’s fear gauge) has risen to its highest level in just over two weeks:

The US dollar is strengthening today, hitting a two-week high, as nervous investors seek a safe haven.

This has pulled the pound down by half a cent to $1.351, with the euro down 0.3% at $1.132, their lowest levels in around a week.

Carlo Alberto De Casa, external market analyst at Kinesis Money, says the Ukraine crisis is

Tensions between Russia and the West are the main market driver today.

For months inflation, central banks and monetary policy have been the main topics for investors. The situation has suddenly changed in the last few days, as tension over Ukraine rose.

On the currency markets, the US Dollar remains strong, while both WTI (West Texas Intermediate), and Brent (the benchmark for the oil of the North European Sea) are traded above $94/barrel.

The 100-dollar mark does not seem too far and this, of course, could push inflation even further.

Russia and Ukraine’s government bonds are falling heavily this morning, on concerns that an invasion could be imminent.

Reuters has the details:

Both country’s bonds fell to the lowest of the crisis so far, with Ukraine’s government bonds losing as much as 7 cents, or roughly 10%, and Russia’s bonds down as much as 3.1 cents.

The selloff is gathering pace in London, with the FTSE 100 index now down 1.9%.

The blue-chip index has shed around 150 points to 7510, with travel stocks and banks still leading the fallers in the City.

Victoria Scholar, head of investment at interactive investor says:

“Geopolitical tensions between Russia and Ukraine have sparked nervousness at the start of the week with European markets opening in the red, falling to three-week lows driven by travel & leisure and the banking sector.

The weekend has provided no let up for markets after Wall Street’s sell-off on Friday when the S&P 500 slumped nearly 2%. The FTSE 100 is under pressure, heading back down towards 7,500 as the next major support level. While most stocks in the index are in the red, precious metals miner Fresnillo is among a handful of stocks in the green as investors flock to its relative safety.”

British Airways parent company, IAG, is leading the FTSE 100 fallers, with its shares tumbling 7.5%.

Rolls-Royce, which makes and services jet engines, has fallen 4.5%.

Financial stocks are also leading in the fallers, with Barclays down 4.7%, Lloyds down 4% and NatWest off 3.8%.

The Ukraine crisis could drive Brent crude oil over $100/barrel for the first time since September 2014, analysts say.

Naeem Aslam, chief market analyst at Avatrade, explains:

The potential jump in oil prices depends on what sort of sanctions the United States of America and its allies are likely to impose on Russia if it actually invades its neighbour.

Even before the conflict, oil prices were under pressure as demand was rapidly climbing because of the global economic recovery and supply-side constraints and lower inventories. The price of Brent crude oil is currently trading around $95.70 per barrel, while the price of WTI crude oil is nearly $94.61 per barrel.

In Moscow, the benchmark RTS share index has dropped around 2.9% in early trading, to around a two-week low.

The dollar-denominated RTS is down around 10% since the start of 2022, having hit a one-year low in January when fears of conflict in Ukraine rattled markets.