Live news updates from April 22: S&P 500 drops the most in 7 weeks, Russia seeks to gain total control of Ukraine’s Donbas, says commander,

US stocks tumbled on Friday with the S&P 500 registering its biggest one-day loss since March as traders anticipated central banks on both sides of the Atlantic raising interest rates to curb inflation.

The 2.8 per cent decline in the benchmark S&P 500 came a day after Federal Reserve chair Jay Powell said a 0.5 percentage point interest rate rise was “on the table” in an effort to combat soaring inflation. The weekly decline was also 2.8 per cent.

The technology-heavy Nasdaq Composite lost 2.6 per cent, for a 3.8 per cent weekly decline as investors pulled out of growth stocks as inflation expectations have surged.

A closely watched gauge of market inflation expectations over the next decade — the US 10-year break-even — climbed to 3.08 per cent on Friday, its highest level in at least two decades.

Meanwhile the Cboe’s Vix volatility index, which measures expected swings in the S&P 500 and is known as Wall Street’s “fear gauge”, climbed to a one-month high of 28.3, a 20 per cent increase.

Following a broad sell-off in the US Treasury market on Thursday, the two-year US Treasury yield, which tracks interest rate expectations, was flat at 2.68 per cent. The yield on the note has this week repeatedly reached fresh three-year highs.

The yield on the 10-year Treasury note, which underpins borrowing costs worldwide, was steady at 2.9 per cent, also close to its highest level since late 2018.

Powell on Thursday sent his strongest signal yet that the Fed would raise borrowing costs rapidly to fight the highest US consumer price increases for 40 years. “It is appropriate in my view to be moving a little more quickly,” he said at an IMF panel.

Russia’s defence ministry said one person had died and 27 were missing after the sinking of the Moskva cruiser, Russia’s flagship vessel in the Black Sea.

Officials previously reported that the crew had been evacuated to safety.

The vessel sank on April 14. Ukraine claimed to have struck the ship with its missiles, while Russia said it sank after a fire on board.

Multiple families of crew members have since spoken out about their missing relatives, expressing frustration about the lack of official information surrounding the event.

One person died, 27 are reported missing and 396 were evacuated to safety, the defence ministry said late on Friday, according to state news agency Tass.

US and European stocks dropped as traders anticipated central banks on both sides of the Atlantic raising interest rates to curb inflation.

The S&P 500 share fell 2.1 per cent in New York afternoon trading, heading for a third straight weekly drop. The benchmark index had dropped 1.5 per cent on Thursday after Jay Powell, Federal Reserve chair, said that a 0.5 percentage point interest rate rise was “on the table” in an effort to combat soaring inflation.

The technology-heavy Nasdaq Composite shed 2 per cent, on track for a weekly loss of more than 3 per cent as investors pulled out of growth stocks as inflation expectations surged.

A closely watched gauge of market inflation expectations over the next decade — the US 10-year break-even — climbed to 3.08 per cent on Friday, its highest level in at least two decades.

Following a broad sell-off in the US Treasury market on Thursday, the two-year US Treasury yield, which tracks interest rate expectations, added 0.03 percentage points to 2.71 per cent. The note yield hit a three-year high this week.

The yield on the 10-year Treasury note, which underpins borrowing costs worldwide, was steady at 2.9 per cent, also close to its highest since late 2018.

Europe’s Stoxx 600 share index closed 1.8 per cent lower as the spectre of higher borrowing costs in the eurozone weighed on companies’ earnings prospects. It took the gauge’s decline for 2022 to more than 7 per cent.

Read more on the day’s market moves here

A hedge fund run by Odey Asset Management founder Crispin Odey is one of the world’s top performing funds this year, helped by bets against long-dated bonds.

The Odey European fund has gained about 78 per cent this year to mid-April, according to numbers sent to investors and seen by the Financial Times.

His performance stands in contrast to much of the $4tn hedge fund industry, which has on average lost 0.8 per cent in the first three months of this year, according to data group HFR, during a turbulent period for markets.

Odey has been bearish on long-dated bonds for some time, which have sold off sharply this year, and recently told the FT “there’s nothing holding down yields from here”.

Odey Asset Management declined to comment.

Russia is seeking to gain total control of Ukraine’s Donbas region, according to Rustam Minnekayev, a senior Russian military commander.

Controlling southern Ukraine would give Moscow access to Transnistria, a separatist enclave in Moldova where a small Russian contingent is based. Minnekayev said there were also “instances of oppression of the Russian-speaking population” in the Moldovan region.

Although Russia claimed to have captured Mariupol, it is refusing to allow civilians to evacuate safely from the city’s Azovstal steelworks, a senior Ukrainian government official said.

A leading UN official said that international humanitarian law had been “tossed aside” as Russian forces shelled and bombed populated areas.

UK Prime Minister Boris Johnson admitted that Russia could win the war, and that the UK may send tanks to Poland to replace those that the eastern European country could deploy to Ukraine. The UK will reopen its embassy in Kyiv next week.

EU council president Charles Michel held a call with Russian president Vladimir Putin in an effort to pressure the Kremlin to end the invasion.

Russian investigators filed criminal charges against a prominent opposition activist, Vladimir Kara-Murza, under a new law banning “fake news” and “discrediting the Russian armed forces”.

The UK’s Metropolitan Police said it had received “dozens” of referrals for alleged war crimes in Ukraine, after it appealed for anyone with direct evidence of atrocities to come forward.

Economic developments:

• Belgian brewer Anheuser-Busch InBev is in discussions to sell its stake in a Russian joint venture to its Turkish partner, Anadolu Efes, which could result in the company taking a $1.1bn hit

• Schlumberger, the world’s largest oilfield services group, said the Ukraine war and rising oil prices were spurring global drilling

• The UK granted Russia’s Gazprombank a licence to receive payments for EU-bound gas, despite sanctions

• Brent crude, the international oil benchmark, fell 1.8 per cent to $106.34 a barrel 

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Military developments:

• The UK’s defence ministry said Russian forces in Ukraine had resorted to taking broken military equipment back to their home country for repairs, as they sought to replenish their depleted forces

• The mayor of Kyiv said Russian forces were likely to renew their attack on Ukraine’s capital if they succeeded in their offensive in the Donbas region

Ukrainian and Russian military claims cannot be independently verified.

Kimberly-Clark boosted its full-year sales guidance as it successfully passed on higher expenses to consumers, but warned that costs for most inputs including pulp and energy are set to rise further.

The Texas-based company behind Kleenex and Huggies expects full-year organic sales growth of between 4 to 6 per cent this year, compared with previous forecasts of 3-4 per cent. It also raised its net sales to a range of 2-4 per cent from 1 to 2 per cent previously.

Shares in Kimberly-Clark rose almost 9 per cent to $139.35.

The rosier outlook accompanied strong quarterly results as a 6 per cent increase in its net selling prices helped Kimberly-Clark to report a 10 per cent rise in organic sales.

“We continue to take the necessary actions to mitigate macro headwinds and remain committed to improving our margins over time,” said chief executive Mike Hsu.

Some of the world’s largest consumer brands, including Procter & Gamble and Heineken, have passed on rising costs to consumers through price increases in an effort to protect their margins.

But Kimberly-Clark on Friday warned of a further increase in costs. It expects key cost inputs to rise to $1.1bn to $1.3bn, up from $750mn to $900mn previously, saying “costs are projected to increase or remain elevated for most inputs including polymer-based materials and pulp as well as distribution and energy”.

First quarter net sales climbed 7 per cent from a year ago to about $5.1bn, ahead of analysts’ expectations of $4.9bn.

Kimberly-Clark’s personal care segment drove revenue in the quarter with sales increasing 11 per cent to $2.7bn. Net selling prices in the segment increased 8 per cent, which may have accounted for the jump in sales.

Net income slipped to $523mn or $1.55 a share, down from $584mn or $1.72 a share in the year ago quarter.

President Vladimir Putin claimed in talks with the head of the EU Council that he had cancelled plans to storm the Azovstal steel plant in Mariupol “out of humanitarian concerns” and complained that Ukraine had not taken him up on an offer to surrender.

Charles Michel spoke to the Russian president on the telephone on Friday as part of western efforts to add pressure on the Kremlin to end war in Ukraine.

Putin said the leaders of EU countries were “pandering to outright Russophobia”, blamed them for “ignoring Ukrainian forces’ many war crimes” and said their calls for military support to Ukraine were “irresponsible”.

Putin added that he would only meet his Ukrainian counterpart Volodymyr Zelensky if peace talks made progress and blamed the Ukrainian negotiators for “not seeking mutually acceptable solutions”, the Kremlin said.

Michel’s call with Putin comes a few days after the head of the EU Council visited the Ukrainian leader in Kyiv.

A number of EU leaders have gone to the Ukrainian capital in recent days. Spain’s prime minister Pedro Sánchez and his Danish counterpart Mette Frederiksen were there on Thursday.

International humanitarian law has been “tossed aside” as Russian forces “indiscriminately” shelled and bombed populated areas during the invasion of Ukraine, a leading UN official has said.

The warning from Ravina Shamdasani, spokesperson for UN High Commissioner for Human Rights Michelle Bachelet, came as the UN’s Human Rights Monitoring Mission in Ukraine verified at least 2,345 deaths of civilians and 2,919 injuries in the conflict so far.

Shamdasani said that the true numbers were “much higher”, adding that the scale of summary executions in areas previously occupied by the Russians, such as Bucha near Kyiv, was emerging.

Shamdasani made the remarks at a briefing on Friday in Geneva on what the UN office called the “human rights and humanitarian crisis” in Ukraine.

The attacks on populated areas had killed civilians and destroyed hospitals, schools and other civilian infrastructure and might amount to war crimes, Shamdasani said.

The April 8 attack on the railway station in Kramatorsk — in which missiles loaded with cluster munitions killed 60 civilians and injured 11 others — highlighted “the failure to adhere to the principle of distinction, the prohibition of indiscriminate attacks and the principle of precaution enshrined in international humanitarian law”, Shamdasani added.

The International Criminal Court said on March 2 it was investigating potential war crimes following Russia’s invasion of Ukraine on February 24. Ukrainian officials have made multiple claims about abuses by Russian forces.

Russia has dismissed reports of human rights abuses as misleading smears.

Non-residents will be allowed to enter Hong Kong from May 1, marking a relaxation of the territory’s heavily criticised zero-Covid policies that mirror those of mainland China.

The easing follows a fall in Hong Kong’s Covid-19 cases and will be seen as a relief for businesses, with overseas executives soon being able to visit the city.

Another policy relaxation from May 1 will be the easing of the criteria for a circuit breaker mechanism for incoming flights. The threshold for banning specific flight routes will be loosened from having three people on the same flight being infected with Covid-19 to five.

The mechanism has drawn much criticism as more than 20 routes have been banned from flying into the city this month alone, including flights operated by Emirates, Singapore Airlines and Cathay Pacific.

Hong Kong has endured a severe Covid outbreak since late December, with a record high death rate, especially among unvaccinated elderly people. Local officials have been criticised for not sufficiently encouraging vaccinations among the elderly and for repeated policy U-turns.

The UK may send tanks to Poland to replace those that the eastern European country could deploy in Ukraine, Boris Johnson has said, as he conceded that the Russian army could yet win the war.

Britain’s prime minister has been reluctant to send armoured vehicles directly to the Ukrainian government. But he said western countries needed to look at what more they could do militarily and economically to create “intensifying pressure” on President Vladimir Putin.

Johnson outlined a potential “backfilling” manoeuvre whereby the UK would compensate Poland if it provided its own T72 tanks to Ukraine.

“We are looking more at what we can do to backfill in countries such as Poland, who may want to send heavier weaponry to help defend the Ukrainians,” Johnson told a press conference in New Delhi. Western countries would not “watch passively” as Putin carries out his “onslaught” in Ukraine, he added.

“We are looking at sending tanks to Poland to help them as they send some of their T72s to Ukraine,” said Johnson.

Polish officials did not immediately respond to requests for comment.

But asked if Russia could win the war, Johnson admitted it was a “realistic possibility”, adding that Putin had a “huge army” and was determined to “grind the Ukrainians down”.

“The sad thing is that is a realistic possibility . . . the situation is, I’m afraid, unpredictable at this stage,” he said.

Johnson’s statement is the first admission by a major western leader that Russia could triumph in the war and marks a significant shift in his own rhetoric from just weeks ago.

A senior EU official said Johnson’s remark was “ridiculous” and would “make Kyiv irate”.

The UK has granted a licence that allows sanctioned Gazprombank to continue receiving payments for the purpose of securing the flow of Russian gas to the EU until the end of May.

The permit allows payments to Gazprombank and its subsidiaries for Russian gas bound for the EU under contracts signed before April 21 until the end of next month, according to a document released by the Treasury on Friday.

The licence also permits the opening and closing of accounts with Gazprombank — an activity that would be required for most buyers to pay for gas under Moscow’s proposed rouble payment mechanism.

The Kremlin last month passed a decree mandating “unfriendly nations”, which includes most of Europe, to open two accounts with Gazprombank, one in a foreign currency and one in roubles.

President Vladimir Putin has warned that the supply of gas will be cut off to those who do not comply with the method to pay in roubles. Payment for Russian pipeline gas delivered in April is mostly due at the beginning of next month, say gas market analysts.

The UK diverged from the EU in the early days of the conflict by imposing sanctions on Gazprombank, which is the main financial institution used to facilitate payments for Russian gas.

The EU has resisted placing Gazprombank under sanctions because such a move would be tantamount to sanctioning Russian gas exports, which the bloc relies on for 40 per cent of its needs.

Schlumberger, the world’s largest oilfield services group, said soaring oil prices and concerns around global energy security in the wake of the war in Ukraine was spurring a worldwide surge in drilling as it reported a jump in quarterly profits.

First-quarter profit of $510mn was up 70 per cent year on year and easily beat Wall Street expectations of $466mn, according to estimates compiled by S&P Capital IQ. Schlumberger also said it would boost its quarterly cash dividend payment by 40 per cent to 17.5 cents a share.

“The confluence of elevated commodity prices, demand-led activity growth, and energy security are resulting in one of the strongest outlooks for the energy services industry in recent times — reinforcing the market fundamentals for a stronger and longer multiyear upcycle — absent a global economic setback,” said Olivier Le Peuch, chief executive.

Oil has risen past $100 a barrel following Moscow’s invasion of Ukraine, prompting a ramp up in oil and gas drilling activity around the world that is fuelling higher demand for oilfield services. That has buoyed the share prices of and outlook for oilfield service providers whose finances were decimated by the pandemic-driven oil market downturn.

Schlumberger’s revenues in the quarter were $6bn, slightly higher than Wall Street estimates of $5.9bn and up 14 per cent compared with last year. The company’s shares, which are up nearly 30 per cent this year, rose 3 per cent in pre-market trading.

The British embassy in Kyiv will reopen next week, the UK prime minister has said, in recognition of Ukraine’s success in holding off the Russian army from the capital over the past two months.

The decision was a reflection of the “extraordinary fortitude and success of President [Volodymyr] Zelensky and the Ukrainian people in resisting the Russian forces in Kyiv”, said Boris Johnson on Friday.

Speaking on a trade visit to India, Johnson paid tribute to British diplomats who had remained in Ukraine since the Russian invasion in February.

The British government started moving staff out of the Kyiv embassy in January as speculation grew about a likely invasion of Ukraine by President Vladimir Putin’s government. On February 18, six days before the invasion, remaining diplomats moved from Kyiv to offices in Lviv in the west of Ukraine as a “temporary” measure.

Short-term German and US government debt sold off as traders anticipated tighter monetary policy from the European Central Bank, after the Federal Reserve signalled plans to move aggressively to curb inflation.

The yield on the two-year German bond, which rises as its price falls and closely tracks eurozone interest rate expectations, touched 0.27 per cent in European morning trading — its highest since late 2013. The 10-year Bund yield rose 0.03 percentage points to 0.95 per cent, continuing a stellar ascent from near zero in early March.

In equity markets, Europe’s regional Stoxx 600 share index fell 1.4 per cent as the spectre of higher borrowing costs weighed on companies’ earnings prospects, taking the gauge’s loss for the year to date to more than 6 per cent. Germany’s Xetra Dax lost 1.9 per cent and the FTSE 100 in London fell 0.8 per cent.

Futures contracts tracking the S&P and the technology-heavy Nasdaq 100 slipped 0.3 per cent lower on Friday, following steep drops in the previous session.

In currencies, sterling fell 1.2 per cent against the dollar to $1.287 — its weakest since late 2020 — after official data showed UK retail sales declined rapidly in March as high inflation exacerbated the cost of living crisis.

In Asia, China’s CSI 300 share index added 0.4 per cent after the nation’s securities regulator urged domestic banks and insurers to support the stock market. Japan’s Topix fell 1.2 per cent.

Brent crude, the oil benchmark, fell 1.8 per cent to $106 a barrel.

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Russian investigators have filed criminal charges against a prominent opposition activist under a new law banning “fake news” and “discrediting the Russian armed forces” during their invasion of Ukraine.

Vladimir Kara-Murza, a longtime dissident and Washington Post columnist, is facing charges for “publicly spreading knowingly false information about the use of Russia’s armed forces”, his lawyer Vadim Prokhorov wrote on Friday.

Investigators did not immediately confirm the charges against Kara-Murza, who is in jail on a separate misdemeanour offence.

Kara-Murza is the most prominent activist to be charged under the new law after Russia passed it in March. It carries a maximum sentence of up to 15 years in prison for the strongest charges.

Kara-Murza was arrested last week and jailed for 15 days on unrelated charges of disobeying police orders when he left his house. Hundreds of Russia’s independent journalists and opposition activists have left the country since the law was passed.

In the two months since the war began, Russia has filed criminal charges against 32 people over the law, including an activist who replaced price stickers in a supermarket with antiwar messages and a police officer who condemned the war in private phone conversations with colleagues.

Russia is refusing to allow civilians to evacuate safely from the Azovstal steelworks in the city of Mariupol, a senior Ukrainian government official said.

Iryna Vereshchuk, deputy prime minister, on Friday said that 1,000 civilians, including children, were at the plant, where as many as 2,000 Ukrainian fighters are thought to be holding out, despite Russia’s claim on Thursday that it had captured Mariupol.

Russia has been bombing the grounds of the plant heavily since Monday, a day after demanding that troops inside surrender.

“There is such thing as a corridor for the military to surrender,” Vereshchuk said in a post on Telegram. “The Russians have provided one, but we don’t need it, as our military don’t want to surrender.

“There is also such a thing as a humanitarian corridor to evacuate the civilians out of the combat zone. We need such a corridor from Azovstal to evacuate women, children and the elderly,” she added.

Vereshchuk called on world leaders and the international community “to take every effort immediately to open a humanitarian corridor from Azovstal for women, children and the elderly”.

Russian and Ukrainian military claims cannot be independently verified.

The UK’s Metropolitan Police has said it has received “dozens” of referrals for alleged war crimes in Ukraine, after it appealed for anyone with direct evidence of atrocities to come forward.

The force on Friday said it had received “around 50” referrals and that it expected that number to rise as more refugees arrived in the UK from Ukraine.

The Met made an initial appeal for information on March 4, in the wake of the opening of an International Criminal Court investigation into potential war crimes on March 2.

The UK announcement comes after anti-terror prosecutors in France on April 5 opened investigations about potential war crimes against French citizens in the Ukrainian cities of Mariupol, Chernihiv, Kyiv and Hostomel.

The Met said the referrals were being assessed by specialist officers and detectives and mostly related to alleged attacks against the civilian population.

Dominic Murphy, head of operations for the Met’s Counter Terrorism Command, said the force had been “proactively” engaging with Ukrainian communities in the UK. “This is to make sure anyone here in the UK who has received direct evidence of potential war crimes knows that this can be reported to us, but also to make sure that anyone affected by these terrible events can also be given the support and help that they might need,” he said.

Murphy also appealed to anyone hosting Ukrainian refugees who might have witnessed or been victims of possible war crimes to encourage them to contact the Met.

Russia aims to seize the whole of Ukraine’s Donbas region and capture territory linking it to the annexed Crimean peninsula, a senior military commander has said.

The acting commander of Russia’s central military district said on Friday that troops began a “second phase” of the war “two days ago” and that “one of the Russian army’s tasks is establishing total control of the Donbas and southern Ukraine”, according to Interfax.

Rustam Minnekayev’s comments appeared to indicate Russian president Vladimir Putin has more ambitious targets for the latest offensive than previously admitted.

Russia has claimed all along its main goal is to “liberate” the Donbas, an eastern border territory mostly controlled by Moscow-backed separatists. Troops launched a major offensive to capture the region this week after attempts to seize Kyiv and other central Ukrainian cities failed.

Capturing southern Ukraine would “allow us to set up a land corridor to Crimea and affect vital parts of the Ukrainian economy”, Minnekayev said.

Russia captured territory north of the Crimean peninsula, which it annexed in 2014, in the early days of the war but has failed to make further gains or link it with the broader front.

Capturing the port city of Mariupol, which Putin claimed to have “liberated” on Thursday even as fighting persisted there, would be a significant step in connecting the Donbas to Russia’s forces in the south, analysts say.

Minnekayev added that controlling southern Ukraine would open “another way to Transnistria”, a separatist enclave in Moldova where a small Russian contingent is based and where he claimed “there are also instances of oppressing the Russian-speaking population”.

Eurozone services activity drove momentum this month but rising costs, supply disruptions and cooling demand hit manufacturing production, a survey that could prompt policymakers to take a more hawkish turn has shown.

The region’s S&P Global flash composite purchasing managers’ index, a measure of the health of manufacturing and services, rose to a seven-month high of 55.8 from 54.9 in March. Friday’s reading beat the 53.9 forecast in a Reuters poll and is above the 50 mark that indicates a majority of businesses reporting increased activity compared with the previous month.

Chris Williamson, chief business economist at S&P Global, said that April showed a “two-speed eurozone economy”.

Supply constraints, rising prices and more cautious spending due to the war in Ukraine made manufacturing come close to stalling. The services sector however rose at its fastest pace in eight months as Covid-19 restrictions were eased.

Greater cost pressures, driven by soaring energy, raw material costs and rising wages, was common in both sectors, he added. Average prices for goods and services rose at an unprecedented rate as customers bore the brunt of these higher costs, signalling that inflationary pressures are building.

The PMIs show that the eurozone has started the second quarter “on a stronger than anticipated footing”, said Williamson, which could prompt policymakers to “tilt to a more hawkish stance, reflecting the persistence of unprecedented inflationary pressures at a time of encouragingly robust economic growth”.

France and German services sectors surpassed analysts’ expectations but manufacturing activity in the eurozone’s biggest economy contracted.

The PMI figures, based on interviews collected between April 8 and 20, are published a week ahead of gross domestic product data for the first quarter. Analysts predict growth of 0.3 per cent in the first three months, the same pace as in the last month.

The pound shed nearly 1 per cent to hit a near 18-month low after March retail sales fell more than expected to extend a decline into a second month.

Sterling shed 0.9 per cent against the US currency to trade at $1.2917 in early dealings on Friday, its weakest level since November 2020.

Retail sales missed forecasts as soaring inflation hammered household incomes. The volume dropped 1.4 per cent between February and March, the Office for National Statistics said on Friday, worse than the 0.3 per cent decline predicted in a Reuters poll.

“Downside risks for the pound are building with a host of specific negative developments providing reason for sterling sentiment to worsen over the coming days and weeks,” said Derek Halpenny, an analyst at MUFG.

Uncertainty caused by scandal in the Johnson government over alleged lockdown parties and “renewed tensions with the EU” concerning Northern Ireland could place the currency under further pressure, Halpenny added.

Sterling has fallen 4 per cent against the dollar this year, in line with the euro, as expectations the Federal Reserve will need to increase interest rates has prompted a broad rally in the US currency.

Belgian brewer Anheuser-Busch InBev is in discussions to sell its stake in a Russian joint venture to its Turkish partner, Anadolu Efes, in a transaction that could see the world’s largest drinks company taking a $1.1bn hit.

On Friday, AB InBev said it was seeking to sell its non-controlling interest in joint venture AB InBev Efes to its Turkish partner, which global rating agency Fitch downgraded last month citing a “challenging macroeconomic environment in the company’s two largest markets of Turkey and Russia as well as in Ukraine”.

As part of the deal, the Belgian brewer has asked that the sale of Bud, one of its best-known beer brands, be suspended in Russia. AB InBev said it would take a $1.1bn non-cash impairment charge as a result of the sale.

The brewer’s decision to withdraw from Russian markets comes as multiple western brands have left the country in protest against its invasion of Ukraine or because of the resulting sanctions and supply chain problems.

The planned acquisition by Anadolu Efes represents the first big example of a Turkish company stepping in to fill a gap caused by the exodus of western companies.

Turkey, a Nato member that has forged close relations with both Moscow and Kyiv in recent years, has condemned the Russian invasion and has supplied the Ukrainian military with armed drones. But Ankara has also sought to maintain what it calls a “balanced” stance in the conflict, to avoid damaging its economic, energy and defence ties with Russia.

Turkish officials have stated repeatedly that they will not sign up to western sanctions packages against Moscow, and some Turkish business groups and executives have said that they see the withdrawal of western companies from the Russian market as an opportunity for their country.

British retail sales fell much more than expected and for a second consecutive month, as faster inflation squeezed household incomes.

The volume of retail sales in Great Britain fell 1.4 per cent between February and March, the Office for National Statistics said, a figure that was worse than the 0.3 per cent drop forecast in a Reuters poll.

Darren Morgan, ONS director of economic statistics, said that retail sales fell back “notably” in March, adding that rises in the cost of living had hit consumers’ spending.

Online sales were hit particularly hard as discretionary spending fell. They were 7.9 per cent down compared with the previous month.

Fuel sales also fell substantially, by 3.8 per cent, with evidence suggesting some people reduced non-essential journeys as a result of record high petrol prices. Food store sales volumes fell by 1.1 per cent and have fallen each month since November 2021.

Separate data by the research company GfK showed that, in April, UK consumer confidence plunged to a near record low since records began in 1974, underlining the impact of the cost of living crisis.

Erin Brookes, head of the retail and consumer practice at the management consulting company Alvarez & Marsal, said that the impact of inflation on consumer prices was already being felt across all retail sectors as the cost of living squeeze led consumers to make choices about how and where they spent their money.

The UK’s defence ministry said that Russian forces in Ukraine had resorted to taking broken military equipment back to their home country for repairs, as they seek to replenish their depleted forces.

In its daily intelligence update on the war in Ukraine, the MoD also said Russia had advanced further towards the towns of Krasnyy Lyman, Buhayikva, Barvinkove, Lyman and Popasna in the Donbas region of eastern Ukraine.

It added that Russia’s decision to blockade the Azovstal steel plant in Mariupol, where the last pocket of Ukrainian forces are holding out, suggested that Moscow wanted to free up troops to fight elsewhere in the east of the country as a full ground assault on the plant “would likely incur significant Russian casualties”.

The last Ukrainian fighters are holding out in underground passageways at the Azovstal complex alongside about 1,000 civilians.

Vladimir Putin, Russian president, on Thursday ordered his forces to “block off” the steelworks as he claimed success in the city after a two-month battle.

French prosecutors have issued an international arrest warrant for Carlos Ghosn and four people linked to an Omani auto dealer following an investigation into whether they helped divert funds from carmaker Renault for the former executive’s personal use.

The warrants were issued against Ghosn, the architect of the Renault-Nissan alliance who is now a fugitive from Japanese authorities in Lebanon, and the current owners and former managers of Suhail Bahwan Automobiles, a distributor for the car companies in Oman, according to the prosecutor’s office in Nanterre, outside Paris.

Ghosn, who holds French, Lebanese and Brazilian citizenship, cannot be extradited to France from Beirut, where he fled in late 2019. He was arrested in Japan in late 2018 on charges of financial misconduct at Nissan, which he denied, but later escaped, meaning he will not undergo a criminal trial in Tokyo.

A spokesman for Ghosn had no immediate comment.

Prosecutors in France have been looking into alleged misuse of funds at Renault since 2020. They have probed the role of the Omani car distributor and financial flows between the company and Ghosn.

According to internal investigations, including at Nissan, some of this money is alleged to have been diverted, including to purchase a luxury yacht, people with knowledge of the matter have previously said.

Prosecutors in Nanterre are also looking into spending on lavish parties held in the grounds of the palace of Versailles. French investigating judges have travelled to Beirut to question Ghosn over the allegations. The former car executive has said he welcomed the investigation as part of a bid to clear his name.

The warrants were first reported in the Wall Street Journal.

Japan’s core consumer prices rose at the fastest pace in more than two years last month, government data showed on Friday, piling pressure on the administration of Fumio Kishida to help households deal with the rising cost of living.

Coming just months before the upper house election in July, the news also adds pressure on the Bank of Japan ahead of its rate review meeting next week.

With the yen hovering near 20-year lows, the bank has stuck to an aggressive monetary easing programme in stark contrast with other developed economies, which have been raising interest rates.

The price hikes could help the BOJ hit its 2 per cent inflation target, but they also add to worries that the tanking yen is increasing the burden on households, driving up the costs of imported food, energy and raw materials, and hitting businesses that include retailers, furniture makers and even suppliers to car manufacturers. 

The main drivers behind the 0.8 per cent jump in the consumer price index in March were increases in the costs of food, household durable goods and mobile phone fees, the data showed. The index does not include volatile fresh food prices but it does consider fuel and broader energy costs. 

The CPI has posted a year-on-year increase every month since September. Last month’s jump was the fastest rise since January 2020.

The leaders of North and South Korea exchanged letters this week, marking an abrupt change of tone following recent tensions over the nuclear weapons programme of Kim Jong Un.

North Korean state news agency KCNA reported on Friday that country’s leader had “exchanged personal letters with the president of South Korea Moon Jae-in”.

Adding that Kim had received a letter from Moon on Wednesday, KCNA stated that the North Korean leader sent a reply the following day. Moon’s office later confirmed the report.

Moon has made diplomacy with North Korea a centrepiece of his presidency, which ends on May 9.

The son of refugees from the North, he met Kim at a series of inter-Korean summits in 2018. But diplomatic efforts to curb North Korean nuclear weapons development have stalled since the collapse of a summit in Hanoi in 2019 between Kim and then US president Donald Trump.

Speaking at a conference on Friday where Chinese officials expounded their views on the global economic order, China’s central bank governor promised greater support for small companies amid the country’s worst coronavirus outbreak since the pandemic began.

People’s Bank of China governor Yi Gang told the Boao Forum — China’s answer to the World Economic Forum in Davos — that the economy was facing dual pressures from rising global inflation and the pandemic.

He said the central bank would meet those challenges by deploying further monetary policy support, without providing further details. He also acknowledged that the latest outbreak was affecting the country’s financial markets, after the latest series of lockdowns spooked investors.

“China’s financial market is not immune to the external shocks and the domestic Covid-19 situation is also putting more downward pressure on growth,” Yi said.

The country’s benchmark CSI 300 index is down more than 18 per cent this year, prompting the securities regulator to send a letter to institutional investors on Thursday urging them buy domestic stocks.

Yi spoke via video link one day after Chinese leader Xi Jinping addressed the forum, which is intended to project China’s role in global affairs. Xi mentioned the “indivisible security” of nations, a concept also favoured by Russia in discussions of its invasion of Ukraine.

Xi also condemned the use of “long-arm jurisdiction” and “unilateral sanctions” without explicitly mentioning the conflict in Ukraine.

Asian equities sank on Friday, following their US counterparts lower as investors priced in the prospect of further monetary tightening from the US Federal Reserve this year.

Hong Kong’s Hang Seng index fell 2.4 per cent and China’s CSI 300 of Shanghai and Shenzhen-listed stocks dropped 0.7 per cent in early trading.

Australia’s S&P/ASX 200 and South Korea’s Kospi shed as much as 1.7 per cent and 1.8 per cent, respectively. Japan’s Topix fell as much as 1.4 per cent.

The drop-offs followed losses in the US, where stocks and government bonds sold off on Thursday after Federal Reserve chair Jay Powell said that an interest rate increase would be considered at the US central bank’s May meeting.

Powell, in a panel discussion at the IMF, said that it was appropriate to move “a little more quickly” in the fight against inflation and said that a 0.5 percentage point interest rate increase was on the table in May.

The S&P 500 closed 1.4 per cent lower on Thursday while the Nasdaq Composite dropped 2.1 per cent.

US government debt also sold off, with the two-year Treasury yield reaching 2.73 per cent, its highest level since December 2018, while the 10-year Treasury yield rose to a high of 2.95 per cent before retracing some of that move.

Oil also fell on Friday, with Brent crude, the international benchmark, shedding 0.8 per cent to hit $107.51 a barrel.

India: Boris Johnson will offer increased defence co-operation to Narendra Modi during talks in New Delhi on Friday, in a bid to break India’s reliance on Russian weaponry.

Japan: Inflation figures released in the morning showed that core consumer prices, which exclude fresh foods but include fuel costs, rose 0.8 per cent in March. The yen hit a 20-year low of 129 against the US dollar this week.

Markets: Australian, Japanese and South Korean equity indices sank more than 1 per cent on Friday morning following drops in the US the day before. The S&P 500 closed 1.4 per cent lower on Thursday while the Nasdaq Composite fell 2.1 per cent. US government debt also sold off as investors priced in more aggressive policy tightening by the Federal Reserve. The two-year Treasury yield reached 2.73 per cent, its highest level since December 2018, while the 10-year Treasury yield rose to a high of 2.95 per cent, before retracing some of that move.

Snapchat’s parent company observed a slowdown in advertising growth in response to the war in Ukraine, representing one of several macroeconomic concerns that could weigh on its revenue outlook in the months ahead.

Los Angeles-based Snap said that before Russia’s invasion of Ukraine on February 24, year-over-year revenue growth in the quarter was 44 per cent, which “exceeded” its expectations. A “large number” of advertisers then paused their campaigns after the invasion.

The majority of clients resumed their campaigns “within 10 days” of the invasion, chief financial officer Derek Andersen said on Thursday, but the year-on-year revenue growth, at 32 per cent, remained below pre-invasion levels for the remainder of the first quarter.

Anderson said “macro headwinds”, such as supply chain disruptions, labour shortages, rising interest rates and inflationary pressures, were further complicated by the war and remain challenges in the current quarter.

The impact of the war on “input costs, marketing budgets and overall economic confidence has been significant”, Andersen said. “The operating environment ahead could be even more challenging, leading to further campaign pauses or advertiser budget reductions.”

Snap forecast revenue will increase 20-25 per cent year on year in the current quarter, below analysts’ expectations of 28 per cent. Revenue rose 38 per cent to $1.06bn in the first quarter, slightly missing Wall Street’s forecast of $1.07bn.

Snap’s net loss widened to $360mn in the first quarter from a $287mn loss a year ago, mostly because of an increase in costs. Analysts forecast a $29mn loss.

In a bright spot, Snap’s daily active users rose 18 per cent to 332mn in the first quarter, surpassing analyst expectations for 329mn. The company guided to 343mn-345mn DAUs in the current quarter, above Wall Street’s forecast for about 340mn.

Shares were up 1 per cent in after-hours trade, but had swung between negative and positive territory.

Russian president Vladimir Putin claimed the “liberation” of the port city Mariupol, but a senior Kyiv official challenged Russia’s victory claim as “premature”, insisting Ukrainian forces were holding out in a steelworks.

Despite a pledge by Putin there would be no “storming” of the Azovstal steelworks complex after Moscow claimed to have captured the city, Ukrainian officials said Russian forces continued to bomb and shell the plant that is sheltering civilians.

The US will provide an additional $800mn in military aid — including heavy artillery and tactical drones — and $500mn in economic aid to Ukraine.

The Spanish prime minister Pedro Sánchez and his Danish counterpart Mette Frederiksen were the latest European leaders to visit Kyiv for talks with Ukrainian president Volodymyr Zelensky.

In an address to Portugal’s parliament, Zelensky called for more military aid and an EU ban on Russian energy imports.

Janet Yellen, US Treasury secretary, urged caution over a proposed EU ban on Russian energy because of the harm such a move could inflict on the global economy.

Economic developments:

• The UK announced trade sanctions against Russia and will increase tariffs by 35 per cent on some Russian and Belarusian goods

• G7 finance ministers pledged more than $24bn in further support for Ukraine and condemned Russia’s inclusion in the group of nations

• Italian energy group Eni signed a deal with Republic of Congo and Angola in an effort to wean itself off Russian gas

• Austrian oil refiner OMV ended all purchases of Russian oil

• Carlsberg announced it would take a $1.4bn hit from the sale of its Russian business

• German exports to non-EU countries fell in March due to the war in Ukraine 

Military developments:

• Ukrainian president Volodymyr Zelensky said Russia’s armed forces must be recognised internationally as “terrorist” organisations

• The mayor of the Ukrainian city of Mariupol accused Russia of digging mass graves to hide what he called “war crimes”

• Nearly 8mn Ukrainians have been displaced by the Russian invasion, according to the UN migration agency

Russian and Ukrainian military claims cannot be independently verified.

Jay Powell sent his strongest signal so far that the Federal Reserve is prepared to raise rates by half a percentage point at its meeting next month as it ramps up efforts to stamp out soaring inflation.

“It is appropriate in my view to be moving a little more quickly,” the Fed chair said on Thursday at a panel hosted by the IMF. “We make these decisions at the meeting and we’ll make them meeting by meeting, but I would say that 50 basis points will be on the table for . . . May.”

Powell’s comments underscore a shift in tone from several Fed officials, who have recently embraced the need for the central bank to take more forceful action to tame the highest inflation in more than 40 years.

The view that the Fed should “front load” increases to its main policy rate so it quickly reaches a “neutral” level that does not stimulate growth was previously held only by the most hawkish officials, but it has become more widely accepted.

Powell on Thursday indicated tacit support for that approach, suggesting multiple half-point interest rate increases could be implemented this year.

Markets are currently pricing in three half-point interest rate increases for the next three policy meetings leading up to July, before the Fed reverts to quarter-point rate rises after that point so the federal funds rate reaches 2.77 per cent by the end of the year.

Its current target range is 0.25 to 0.50 per cent, a level reached in March after the Fed delivered its first interest rate increase since 2018.

Ukraine’s president has appealed to Europe to toughen sanctions against Russia and increase military aid, telling Portugal’s parliament his country was fighting for its survival.

“We want heavy armaments to end the occupation of our cities,” Volodymyr Zelensky said during a video address on Thursday. “I appeal for your help to accelerate and strengthen sanctions and [to increase] military aid.”

Zelensky asked Portugal to press for a European ban on Russian oil and gas imports and to support Ukraine’s bid to join the EU. He also accused the Russian military of committing widespread atrocities, saying its air force deliberately bombed civilian areas.

In Mariupol, he said, Russian troops were trying to “hide their war crimes so that we have no proof”.

In almost two months of war, “more than 1,000 Ukrainian localities have been occupied by the invaders” who have “abducted 500,000 of our people and deported them to remote camps in Russia”, Zelensksy added. “Millions of people have had to flee. It’s as if the whole of Portugal had to leave their country.”

In a reference to the 1974 military coup that restored Portugal to democracy after 48 years of authoritarian rule, the Ukrainian president said: “Your Carnation Revolution freed you from dictatorship. You know how we feel.”

During a visit to Kyiv earlier on Thursday, the prime ministers of Spain and Denmark pledged to increase military aid to Ukraine.

Pedro Sánchez of Spain told Zelensky his country would send 200 tonnes of ammunition and other equipment, double the amount of military supplies it had sent so far.

Mette Frederiksen, his Danish counterpart, said her country would increase military aid to Ukraine by DKr600mn ($87.4mn), bringing its total contribution in arms since the Russian invasion to DKr1bn.