(Bloomberg) — Ukraine’s president said Moscow-led forces were continuing attacks on military and civilian targets on the second day of their invasion after the U.S. and its allies imposed new sanctions on Moscow and U.S. President Joe Biden warned of “a dangerous moment for all of Europe.”
European Union leaders backed a broad sanctions package late Thursday that they said will limit Russia’s access to Europe’s financial sector and restrict key technologies. Leaders from the North Atlantic Treaty Organization will hold virtual talks on the alliance’s next steps starting at 3 p.m. in Brussels.
President Volodymyr Zelenskiy said Ukraine’s military had so far prevented Russia from achieving its objectives. “Russia will have to talk to us sooner or later, talk about how to end the fighting and stop this invasion,” Zelenskiy said in a morning address. “The sooner this conversation begins, the smaller the losses to Russia itself.”
Key Developments
- Putin Unbowed as Russia Presses Ahead With Invasion Toward Kyiv
- Details of the U.S., EU and U.K. Sanctions Against Russia
- How War in Ukraine Threatens the World’s Economic Recovery
- Wheat Soars to Highest Since 2008, Adding to Inflation Worries
- China Leaves Russia’s War Off Front Pages as Xi Stays Silent
European Stocks Inching Higher (11:46 a.m.)
European stocks advanced on Friday and crude oil advanced while U.S. equity futures slipped after Thursday’s late surge on Thursday.
The Stoxx Europe 600 Index added as much as 1.2%, rebounding from a technical correction on Thursday after Moscow-led forces attacked military and civilian targets in Ukraine, triggering the worst security crisis in Europe since World War II.
EU Leaders Still Discussing Cutting Off Russia From Swift (11:30 a.m.)
Leaders of the European Union discussed stronger options, including cutting Russia off the Swift international payments system, during their summit on Thursday night, according to an EU official. Several leaders urged their counterparts to adopt the measure as part of the second package of sanctions, the official said.
But several other governments, including those of Germany, France and Italy, have strongly opposed a Swift cut-off amid concerns about the impact of such a move on their financial operations and economies, including jeopardizing payments for gas from Russia.
U.S. President Joe Biden said Thursday that removing Russia from Swift “is always an option.”
UEFA Moves Champions League Final to Paris (10:56 a.m.)
The European football governing body, UEFA, will move the final of its flagship Champions League tournament scheduled for May 28 from Saint Petersburg, Russia, to Paris’s Stade de France. The decision was made at an Executive Committee meeting following the “grave escalation of the security situation in Europe,” UEFA said in a statement.
Merkel Calls Invasion ‘Profound’ Turning Point (11 a.m.)
Former German Chancellor Angela Merkel called Russia’s invasion of Ukraine “a profound turning point in European history,” and said Vladimir Putin’s “war of aggression” must be stopped.
During Merkel’s 16-year chancellorship that ended in late 2021, she was seen as a pillar of global stability and worked hard to promote the rules-based international democratic order. She played a central role in establishing the Minsk agreement seeking a peaceful resolution to the Russia-Ukraine conflict.
“There is no justification whatsoever for this blatant breach of international law, and I condemn it in the strongest possible terms,” Merkel said, according to the news agency DPA, in some of her first public comments as a private citizen. “My thoughts and my solidarity are with the Ukrainian people and the government led by President Zelenskiy in these frightful hours and days.”
As War Rages, Europe Laps Up Russian Gas (10:48 a.m.)
Russian gas exports to Europe through Ukraine jumped almost 38% on Thursday and are expected to increase by another 24% on Friday as the EU finalizes a package of sanctions that largely spared Moscow’s energy industry.
The higher flows are an awkward reminder of Europe’s dependency on Moscow for energy. Russia is the continent’s biggest gas supplier, providing more than a third of the region’s needs. About a third of those shipments typically transit via Ukraine.
EU Economy Chiefs Warn of Domestic Sanctions Impact (10:41 a.m.)
The EU’s top economy officials warned that the effects of the new sanctions package targeting Russia will be felt domestically as well. “Clearly if we’re applying a massive sanctions package against Russia, it’s also going to have certain consequences on the European economy,” EU Executive Vice President Valdis Dombrovskis said on Friday before a meeting of the bloc’s finance ministers.
“Of course we will pay a price economically for this war,” said Paolo Gentiloni, the EU’s economy commissioner. “It will have an impact, but the costs of reacting to this invasion, to this violation of international law, are costs we must afford.”
EU Members Report Increased Traffic over Ukraine Border (10:27 a.m.)
Poland’s border service said 38,200 people entered the country from Ukraine over the last 24 hours, with traffic almost three times the pre-invasion average. Romania registered 5,300 entries, including Romanian and foreign citizens, on Thursday, more than double the figure the previous day.
War in Ukraine Risks Displacing 1 Million, Straining East EU
In Hungary, Prime Minister Viktor Orban signed an executive order exempting Ukrainian refugees from his country’s harsh asylum restrictions, which the EU’s top court has called illegal. Slovakia, another border state, opened four reception centers along its eastern frontier.
Ukraine Reports Dangerous Fighting Close to Kyiv (10:19 a.m.)
Russian forces continue to advance closer to Ukraine’s capital, Kyiv, along the western bank of the Dnieper river, where they are being engaged by Ukrainian forces, presidential spokesman Oleksiy Arestovych said.
The most dangerous situation is now near the towns of Dymer, Ivankiv, Vorzel and Bucha, the last two of which are about 20 miles (32 km) from the center of Kyiv, he said. Ukrainian air defense forces shot down two missiles and a Russian SU-27 fighter jet overnight near Kyiv as Russian forces continued to attack airfields and military bases across the country.
Ukraine stopped Russian attacks on the eastern side of the Dnieper near Chernihiv and Sumy in Ukraine’s east, where they were no longer attacking, while battles continued in southern Ukraine as well, Arestovych said.
Sanctions Seen Causing Rate Hikes, Possible Recession in Russia (10:00 a.m.)
New U.S. and European sanctions are likely to force Russia’s central bank to sharply increase interest rates and could trigger a recession, according to economists.
Elina Ribakova, deputy chief economist at the Institute of International Finance in Washington, said she sees a “high likelihood” of a recession as the central bank will have to raise its key rate to the mid-teens from the current 9.5%.
“A recession should not be excluded,” Morgan Stanley strategists, led by Alina Slyusarchuk, said in a report Friday. They forecast the key rate will rise to more than 13%, with an emergency hike possible if instability rises. The government, they said, will likely tap the $175 billion wealth fund to support state companies and hard-hit sectors.
Russia Bans U.K. Planes From Its Airspace (9:45 a.m.)
Russia banned British planes from its airspace, effective immediately, the aviation watchdog said in a statement. The measure — which includes transit flights — was taken in response to similar step from the British side, it said.
Among other things, the airspace bans are an issue for long-haul flights between Europe and Asia, forcing carriers to take longer alternate flight paths.
EU to Adopt New Sanctions Package Later Friday (9:34 a.m.)
EU ambassadors on Friday plan to finalize a new package of sanctions to limit Russia’s access to Europe’s financial sector and to key technologies. Foreign affairs ministers will meet in Brussels at 3 p.m. to formally adopt the measures.
The sanctions are aimed at restricting Moscow’s access to international markets and would also introduce export controls on dual-use and high-tech goods in an effort to hobble the Russian economy.
Russian Chip Supply at Risk From U.S-led Export Controls (9:25 a.m.)
Key chip-making countries Japan, Taiwan and South Korea have signaled they’ll follow suit with export controls announced by the U.S. that will target Russia’s ability to buy semiconductors and other technologies.
The measure would cut Russia off from components crucial to its military, biotechnology and aerospace industries. Uncertainty remained over whether Chinese chip companies, such as Shanghai-based Semiconductor Manufacturing International Corp., will also take action.
Swift Still in Sanctions Toolbox; U.K. Presses Other Nations (9:15 a.m.)
Even though EU leaders didn’t agree to include Swift in the new package of sanctions announced Thursday, it’s still an option, said French Finance Minister Bruno Le Maire.
“Swift is one of the options,” Le Maire told reporters in Paris Friday before a meeting with his EU counterparts. “It’s the very final option but it is an option on the table.” Dutch Finance Minister Sigrid Kaag concurred, saying “it’s important that all measures remain on the table, including Swift.”
The U.K. continues to push other nations to exclude Russia from Swift. “We want it switched off, other countries do not. We only have so many options. We are going to work all day to try and get it,” Defense Secretary Ben Wallace told BBC Radio.
Zelenskiy Says He’s No. 1 Target But Staying in Kyiv (8:23 a.m.)
Ukrainian President Volodymyr Zelenskiy said his intelligence services have identified him as Russia’s top target, yet he’s staying in Kyiv with his ruling team and his family will also remain in the country.
“According to our information, the enemy marked me as the number one target,” Zelenskiy said in an early-morning video address in which he assessed the first day of the Russian invasion. “My family is the number two target. They want to destroy Ukraine politically by destroying the head of state.”
As his government reported that fighting is raging north of the capital, Zelenskiy said saboteurs had entered Kyiv and urged people there to follow curfew rules. Zelenskiy had calls early Friday with U.K. Prime Minister Boris Johnson, Polish President Andrzej Duda and Finnish President Sauli Niinisto.
Ruble Gains, Russian Stocks Rebound (8:10 a.m.)
The onshore ruble advanced for the first time in three days and Russia’s benchmark stock index rebounded as investors assessed Western sanctions on Russia that were less severe than some initial expectations.
The ruble gained about 0.6% to 84.70 against the dollar in onshore trading on Friday, pulling back from a record low of 89.60 on Thursday. The MOEX stock index opened 21% higher in Moscow after Thursday’s 33% plunge.
Meanwhile, oil pushed higher on concern that Russia’s invasion may impede global energy shipments, with Brent crude rising 2% to hold above $101 a barrel. European natural gas prices halted a record-breaking rally, as Russian flows to the continent ramped up. Benchmark gas futures fell as much as 21%, after four consecutive day of gains.
Russian Central Bank Pledges Aid for Sanctioned Lenders (7:30 a.m. CET)
The Bank of Russia said it’s ready to help shore up the big lenders on which the U.S. and its allies are imposing sanctions, assuring depositors that they’ll still be able to access ruble and foreign-currency deposits.
The central bank said about 80% of the balance sheets of the banks are in rubles and it’s prepared to provide the local and foreign-currency funds necessary to support them. The lenders had developed plans in preparation for sanctions, which the U.S. has been threatening for months, the Bank of Russia said without elaborating.
The U.S. announced sanctions on Russia’s biggest banks, Sberbank and VTB, as well as several other smaller institutions, late Thursday in what Biden said were the most severe limits imposed on the country to date. Sberbank mistakenly published a statement Thursday morning, before Biden announced the measures, that it was on the list.
China Oil Importers Pause Seaborne Buying (7:20 a.m.)
Oil importers in China, the world’s biggest buyer of Russian crude, are briefly pausing new seaborne purchases as they assess the potential implications of handling the shipments following the Ukraine invasion, according to refiners and traders who sell into the region.
While Russian energy exports were spared from U.S. sanctions, some European banks have begun to impose restrictions on commodity-trade finance linked to the two countries. Oil rose in Asian trading on concern that financial sanctions on Russia may impede global fuel supply chains.
Ukraine Envoy Wants China to Push Putin (6:27 a.m)
Ukraine Ambassador to Japan Sergiy Korsunsky called on China to use its influence with Putin to help convince him to stop his attack, adding if the situation around the Chernobyl nuclear power site isn’t managed properly, it could be a massive problem for all.
“I do believe that China can play much more active role to work with Putin in a matter we expect civilized countries to do,” he told reporters at the Foreign Correspondents’ Club in Tokyo.
China refused to condemn Russia’s attack on Ukraine, instead urging restraint by “all parties” and repeating criticism that the U.S. was to blame for “hyping” the prospect of war in Eastern Europe. At the same time, state TV said the 6,000 or so Chinese citizens living in Ukraine faced increasing security challenges, and the embassy in Ukraine has told them to start registering for evacuation flights.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
