​​Russia – Ukraine

​​​​Volodymyr Zelensky has told a group of Russian independent journalists that he is ready to discuss neutrality talks with Moscow if certain conditions are met. Chiefly, this will require the Kremlin to remove all Russian troops from Ukraine in addition to meeting certain security guarantees. If such conditions are met, Kyiv will relinquish their desire to join Nato and adopt a neutral stance. However Zelensky stipulated that such a stance (the specific details of which remain unclear) would have to go to a referendum – guaranteed by third parties. This news comes ahead of the next set of diplomatic discussions in Turkey on Thursday, although little progress has been made in similar discussions thus far.

The Russian bombardment of critical food and fuel infrastructure has increased over the weekend, with cities such as Kharkiv in the east and Lutsk in the west suffering significant damage. The situation in the strategically valuable port city of Mariupol also remains dire as Ukraine’s Deputy Prime Minister has said that 40,000 people have been removed from the city by Russian forces.  Meanwhile Russian shelling of Kyiv has continued, with over 30 separate strikes reported. As a result, it is now estimated that over 3.8m people have left Ukraine as the humanitarian crisis worsens.

The FT has more:


Later this week Opec+ are meeting to discuss production levels which are expected to increase by 400,000 b/d in May. According to analysts around ¼ of Russian oil has been disrupted – which roughly equates to some 2% of global production (or around 2m b/d). Hence, even if Opec+’s increase in supplies meet market expectations, it will do little to address the wider cut in global supplies. Oil prices have come off by around 4% this morning however, following the news that 25m people around the Shanghai area have gone into a nine-day lockdown.

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Shanghai Enters Lockdown
This is China’s largest lockdown since the start of the pandemic and is indicative of China’s zero-tolerance Covid stance. Thus far, authorities have been reluctant to impose a city-wide lockdown given Shanghai’s economic importance. Indeed, Shanghai is China’s most populous city and has the largest GDP of all of the country’s cities with the services sector accounting for around 70% of their output. Hence, while previously authorities have enforced targeted lockdowns across specific parts of the city, today’s city-wide lockdown represents a significant move. As a result, the Shanghai Composite fell as the Asian markets reacted to the news, before rebounding to trade around 0.3% lower than the previous session.

Comparatively speaking, the number of cases that the authorities are recoding still remains low with Shanghai’s registering 3,500 cases yesterday and the country itself recording 5,702.

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UK Covid Cases
Over in the UK, recent data from the ONS suggest that one in every 16 people in England and Wales were infected with Covid in the week ending 19th March while in Northern Ireland and Scotland it was one in 17 and one in 11 respectively. This equated to around 4.3m people which was a significant rise from 3.3m in the previous week as the BA.2 variant of Omicron continues to spread around the country. As a result, covid related staff absences across the NHS were up 31% from the previous week.   Of course, these figures come as the government plans to end free testing in England later this week.

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Looking Ahead
In terms of economic news, later this morning Governor Bailey is delivering a speech where he is expected to give some more colour on the BoE’s monetary policy coming into May. On Wednesday morning, data will also be released on consumer confidence across the Eurozone, where the market will be looking to assess the impact of the war in Ukraine and inflationary pressures on the cost of living. Wednesday will also see annualised GDP figures out of the US where the market is predicting Q4 figures to come in at 7.1% as well as UK GDP Q4 figures expected to come in at 1%. This is ahead of Nonfarm payrolls on Friday, which is forecasted to come in at 475,000 new jobs – a slowdown from last month’s print of 678,000 which far surpassed market expectations.


Have a great day.


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