Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Good morning. Xi Jinping arrived in Europe yesterday on a mission to ease escalating tensions that threaten to ignite a trade war between China and the EU. On his first trip to the region since 2019, Xi will face tough talks in France on trade and Ukraine before enjoying a warmer welcome in Serbia and Hungary, where soaring Chinese investment underlines both the benefits of close ties with Beijing and EU divisions on international policy.“China is determined not to let its relationship with Europe slide further towards the direction of its ties with the US,” said Yu Jie, an analyst at UK think-tank Chatham House. “There will be a renewed charm offensive from Beijing, but it will equally give the EU tough warnings on trade protectionism”.Xi’s top priority for his six-day visit would be damage limitation, Chinese officials said. The president is intent on countering a litany of trade investigations by the EU into Chinese companies, including a blockbuster anti-subsidy probe into electric vehicles expected to conclude in weeks. But Xi also intends to play hardball. Behind the expected displays of public bonhomie and promises of Chinese investment, he would warn European leaders that duties on Chinese exports would elicit an uncompromising response, analysts added.Related: The EU is lobbying China to exclude agriculture from a series of escalating commercial disputes, calling for the “strategic sector” to be protected from trade tensions in the renewable energy and electric vehicle industriesHere’s what else I’m keeping tabs on today:Economic data: S&P Global publishes services purchasing managers’ indices for China and India, and whole economy PMI for Hong Kong and Singapore. Elections: Chad’s leader will seek to shore up his fragile position in today’s presidential election amid signs of his desire to dilute alliances with the west and pivot towards Russia and the United Arab Emirates.Japan/South Korea: Financial markets closed are closed for Children’s Day. Five more top stories1. European intelligence agencies have warned their governments that Russia is plotting violent acts of sabotage across the continent as it commits to a course of permanent conflict with the west. Assessments from three different European countries suggest Kremlin agents are preparing covert bombings, arson attacks and damage to infrastructure.Russian finance flows slump: A US crackdown on banks financing trade in goods for Vladimir Putin’s invasion of Ukraine has made it much more difficult to move money in and out of Russia, according to senior western officials and Russian financiers.2. Joe Biden’s attempt to challenge Chinese supremacy in commercial shipbuilding will probably do little to revive US shipyards, analysts say, but it could help producers in South Korea and Japan withstand competition from Beijing. The US president’s investigation into alleged unfair Chinese economic practices in shipbuilding and maritime logistics could lead to duties for Chinese-built ships calling at US ports.3. Israel’s far-right government has voted to shut down Al Jazeera, the Qatari-funded satellite channel, and prevent it operating in the country. The motion was passed unanimously during a cabinet meeting on Sunday, with Prime Minister Benjamin Netanyahu accusing it of being a “mouthpiece” for Hamas. Al Jazeera described the decision as a “deceptive and slanderous” move. Read the full story.4. Two of Hollywood’s biggest names have thrown their weight behind Skydance’s bid for Paramount. The endorsements from James Cameron, whose film Titanic is the biggest hit in Paramount’s history, and Endeavor chief executive Ari Emanuel come as exclusive talks end without a deal and Sony and private equity group Apollo push a rival $26bn offer.5. Warren Buffett said Greg Abel should have the final decision on investments at Berkshire Hathaway, making clear that his successor will have authority over not just takeovers but the sprawling conglomerate’s mammoth stock portfolio as well. Here’s more on Berkshire’s annual general meeting in Omaha on Saturday, where Buffett gave his most direct answer yet on how responsibilities will be doled out when he is no longer in charge. FT MagazineSoldiers taking part in a simulated anti-landing operation near the coast in New Taipei City, July 2023 More

(Reuters) – A look at the day ahead in Asian markets.Investor sentiment in Asia is set to open the week on a positive note on Monday, buoyed by last week’s upward momentum in global stocks, calmer currency markets, and a general easing of financial conditions. The main regional calendar events include services PMI figures from China and first-quarter GDP data from Indonesia, while Chinese President Xi Jinping is in Paris for talks with President Emmanuel Macron and European Commission President Ursula von der Leyen. Investors will be hoping the rise in risk appetite following Federal Reserve Chair Jerome Powell’s relatively dovish steer on the U.S. interest rate outlook on Wednesday continues into this week.Wall Street and the MSCI World index hit three-week highs on Friday – S&P 500 had its best day since Feb. 22 – while the MSCI Asia ex-Japan index climbed to its highest since February last year.Asian stocks’ trough-to-peak rise in the last two weeks has been an eye-catching 8%.U.S. earnings have, on the whole, been strong and company guidance generally bullish, the Fed appears reluctant to raise rates again and signs of softer economic data are keeping hopes of rate cuts this year alive.Global and emerging market financial conditions eased significantly last week, and are now the loosest since March 22, Goldman Sachs’s financial conditions indicators show.Liquidity will be lighter than usual on Monday as London markets are closed for a holiday. Could the Bank of Japan take advantage and show its hand in the FX market? The dollar plunged almost 5% against the yen last week on the back of two suspected bouts of intervention from Japan, one on Monday and one on Wednesday. U.S. futures market data show hedge funds cut back their historically high short yen positions in the week through last Tuesday. That was probably accelerated by the yen’s surge, and it is not unreasonable to think that some froth from the wider bearish Asia/bullish dollar trade has come off too.Indonesia’s GDP figures on Monday are expected to show the economy grew at an annual rate of 5.00% in the first quarter, a Reuters poll showed, slightly lower than Finance Minister Sri Mulyani Indrawati’s forecast of 5.17%.But seasonal factors are expected to mean GDP shrank 0.89% from the previous three months. Indonesia’s central bank last month delivered a surprise rate hike in a bid to support the rupiah which had fallen to a four-year low. Bank Indonesia’s 7-day reverse repurchase rate is now 6.25%, the highest since it became the main policy rate in 2016.On the political and diplomatic front, China’s Xi Jinping is in Europe – his first visit to the continent in five years – and trade is high on the agenda, with France’s Macron set to urge Xi to reduce trade imbalances. Here are key developments that could provide more direction to markets on Monday:- China Caixin services PMI- Indonesia GDP (Q1)- Chinese President Xi Jinping visits Europe (Reporting and Writing by Jamie McGeever; Editing by Diane Craft) More

It has also launched several probes into whether Chinese clean tech producers are dumping subsidised goods on its market and whether Chinese-owned companies unfairly benefit from subsidies while operating inside the EU. The European Commission, which is carrying out the investigations, says its aim is to prevent unfair competition and market distortion.Here’s what you need to know about the investigations:MEDICAL DEVICES The European Commission launched a probe into Chinese public procurement of medical devices, the EU’s official journal said on April 24.The investigation is the first under the EU International Procurement Instrument, which aims to prevent countries from unfairly favouring domestic suppliers.If the Commission finds that European suppliers don’t have fair access to the Chinese market, it could place restrictions on Chinese medical device companies bidding in EU public tenders.The investigation is to be concluded within nine months, although the Commission can extend this period by a further five months.WIND TURBINES The EU is investigating subsidies received by Chinese suppliers of wind turbines destined for Europe, the bloc’s anti-trust commissioner Margrethe Vestager said on April 9.It will look into wind park development in Spain, Greece, France, Romania and Bulgaria, Vestager said without naming specific companies.China said the probe was “discriminatory” against Chinese enterprises and endorsed protectionism.SOLAR PANELSThe Commission opened two investigations under the EU Foreign Subsidies Regulation (FSR) into whether two Chinese bidders benefited excessively from subsidies in their offers in a public tender for a solar power park in Romania, it said on April 3.The investigations concern a consortium composed of Romania’s ENEVO and a unit of China’s LONGi, and subsidiaries of Chinese state-owned Shanghai Electric Group.The Commission has until Aug. 14 to take a decision on whether to block the contract, accept commitments from the companies to eliminate the distortion of competition, or not to object.The Commission’s first investigation launched under the FSR, concerning a Chinese train maker’s participation in a Bulgarian tender for electric trains, ended after CRRC Qingdao Sifang Locomotive withdrew its tender.ELECTRIC VEHICLESThe Commission said on Sept. 13 it would launch an anti-subsidy investigation into Chinese electric vehicles to determine whether to impose punitive tariffs on them.It wants to find out if Chinese exports of EVs to the EU market are benefitting from excessive subsidies.China’s commerce minister Wang Wentao said in April that U.S. and European assertions of excess Chinese EV capacity were baseless, while a Chinese industry body said the probe was stacked against Chinese manufacturers.The investigation, officially launched on Oct. 4, will last up to 13 months. The Commission can impose provisional anti-subsidy duties nine months after the start of the probe. More

KARACHI (Reuters) – An International Monetary Fund mission is expected to visit Pakistan this month to discuss a new programme, the lender said on Sunday ahead of Islamabad beginning its annual budget-making process for the next financial year.Pakistan last month completed a short-term $3 billion programme, which helped stave off sovereign default, but the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer term programme.”A mission is expected to visit Pakistan in May to discuss the FY25 budget, policies, and reforms under a potential new programme for the welfare of all Pakistanis,” the IMF said in an emailed response to Reuters.Pakistan’s financial year runs from July to June and its budget for fiscal year 2025, the first by Sharif’s new government, has to be presented before June 30.The IMF did not specify the dates of the visit, nor the size or duration of the programme. “Accelerating reforms now is more important than the size of the program, which will be guided by the package of reform and balance of payments needs,” the IMF statement said.Pakistan narrowly averted default last summer, and its $350 billion economy has stabilised after the completion of the last IMF programme, with inflation coming down to around 17% in April from a record high 38% last May. It is still dealing with a high fiscal shortfall and while it has controlled its external account deficit through import control mechanisms, it has come at the expense of stagnating growth, which is expected to be around 2% this year compared to negative growth last year. Earlier, in an interview with Reuters, Finance Minister Muhammad Aurangzeb said the country hoped to agree the contours of a new IMF loan in May.Pakistan is expected to seek at least $6 billion and request additional financing from the Fund under the Resilience and Sustainability Trust.(This story has been corrected to change the month to June from August in paragraph 4) More

(Reuters) – Stock markets in the Gulf ended higher on Sunday, led by the Qatar index, after slowing U.S. jobs growth in April raised hopes of early interest rate cuts by the U.S. Federal Reserve.The Labor Department’s employment report showed the U.S. economy added fewer jobs than expected, while the unemployment rate ticked higher and wage growth unexpectedly cooled.The report prompted investors to raise bets the Fed would implement its first rate reduction in September.Most Gulf currencies are pegged to the dollar, and any U.S. monetary policy changes are usually followed by Saudi Arabia, the United Arab Emirates and Qatar.The Qatari benchmark index bounced back after three straight sessions of losses and ended 0.8% higher with all sectors in the positive territory. Qatar National Bank, the region’s largest lender, rose 1.2% and Industries Qatar gained 0.7%.Saudi Arabia’s benchmark index was up for a second straight session and rose 0.2%, lifted by gains in finance, industry, consumer discretionary and energy sectors.Al Rajhi Bank, the world’s largest Islamic lender, and Saudi National Bank, the kingdom’s biggest lender climbed 1.5% each.Among other gainers, Thob Al Aseel advanced 3.5%, after the garments supplier reported a 44% rise in quarterly net profit. Meanwhile, Saudi Arabia’s non-oil business activity grew at a steady rate in April despite a slowdown in new order growth, a survey showed on Sunday, with domestic demand driving output.SAUDI ARABIA up 0.2% to 12,373 KUWAIT added 0.2% to 7,667 QATAR rose 0.8% to 9,690 EGYPT Closed BAHRAIN added 0.1% to 2,031 OMAN gained 0.7% to 4,805 More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The Bank of England is expected to keep interest rates steady at a 16-year high of 5.25 per cent on Thursday but traders will be on the lookout for signs of a possible cut next month.Rob Wood, chief UK economist at Pantheon Macroeconomics, expects the BoE will signal that it plans “to cut interest rates faster and by more than markets are currently pricing”.Swaps markets have sharply scaled back their expectations for interest rate cuts this year, removing nearly 1.5 percentage points worth of cuts by the end of 2024, on fears that inflation may linger.But the Monetary Policy Committee has been split over how soon to lower rates, with members Dave Ramsden and Huw Pill offering different assessments over the outlook for inflation.Sanjay Raja, economist at Deutsche Bank, expects Ramsden to vote for a rate cut after he said inflation could hold around the BoE target of 2 per cent for the next three years. That forecast is more benign than the BoE’s current inflation outlook, which forecasts a rise by the end of the year. Raja said the meeting would “set the stage for a June rate cut”.Official data released on Friday is expected to show that the BoE’s February forecast about economic growth in the first three months was too gloomy. While the bank forecast the economy at near stagnation with a 0.1 per cent increase compared with the previous quarter, analysts polled by Reuters forecast a stronger 0.4 per cent expansion.Either way, a positive change in GDP would officially mark the end of last year’s technical recession. Valentina RomeiWhat will corporate earnings tell us about the confidence of US consumers?First-quarter earnings reports will continue next week, and updates from companies including Anheuser-Busch InBev, Tyson Foods and Disney should give investors some insight into the health of US consumer spending and the economy.Corporate earnings for the first three months of the year have been relatively strong, with big blockbuster reports from the likes of technology giant Apple. But elsewhere there are some signs of stress. Starbucks this week reported a big miss in sales and profit, with same-store sales down 3 per cent. The company’s stock has fallen by roughly 16 per cent since the release.While Starbucks’ chief executive blamed bad weather and a weak economic outlook, the results suggested that consumption — at least in some segments of the economy — may be starting to weaken. Reports in mid-May from Walmart and Target, two of the biggest US retailers, will give more evidence of consumer trends. Other consumer-facing brands, including AB InBev, the maker of Budweiser beers, and Tyson Foods, one of the largest meat producers in the US, may offer some insight. Zacks Research expects both companies to report strong earnings. Kate DuguidWill Australia signal a change in interest rate outlook?Economists are expecting a change of tone from the Reserve Bank of Australia when its meeting ends on Tuesday, after economic data all but erased hopes of early interest rate cuts.The annual consumer price inflation figure of 3.6 per cent for the first quarter provided further evidence that price growth was easing towards the RBA’s target band of 2 to 3 per cent. However, it was above market expectations of 3.5 per cent.That prompted some economists to argue that the central bank’s strategy was not working.Judo Bank’s Warren Hogan, who called the RBA’s moves in 2023 better than his peers, now expects that there will be three interest rate rises in 2024. That would push Australia’s 4.35 per cent interest rate above 5 per cent, and closer to rates in the UK, US and New Zealand.Rabobank also joined the hawks with a forecast of two more rises to 4.85 per cent. HSBC said the inflation data had moved the calculus of an interest rate change towards up rather than down.Others were less sure, citing the impact of demand for tickets to Taylor Swift’s Australian tour this month on retail data. That would give the RBA more time to sit on its hands.Yet for all the excitement, the May meeting is likely to leave rates where they are, with economists pencilling in potential rises from August. Instead, all eyes will be on the outlook and how the RBA manages expectations. Nic Fildes More

PARIS (Reuters) -French President Emmanuel Macron will likely urge China’s President Xi Jinping, who arrives in Paris on Sunday for a rare visit, to reduce trade imbalances and to use his influence with Russia over the war in Ukraine.Macron’s hopes are unlikely to be easily fulfilled during a time of mounting trade disputes between Europe and China.France is backing a European Union probe into Chinese electric vehicle exports, and in January, Beijing opened an investigation into mostly French-made imports of brandy, a move widely seen as a tit-for-tat retaliation for a growing set of EU probes.”We want to obtain reciprocity of exchanges and have the elements of our economic security taken into account,” Macron said in an interview with French newspaper La Tribune on Sunday ahead of Xi’s two-day visit, his first trip to the region in five years.Xi was due to arrive at around 4 p.m. (1400 GMT). His official meetings will include talks with Macron and European Commission chief Ursula von der Leyen.The EU’s 27 members – and in particular France and Germany – are divided on their attitude towards China. German Chancellor Olaf Scholz will not join Macron and Xi in Paris due to prior commitments, sources said. “In Europe, we are not unanimous on the subject because certain players still see China as essentially a market of opportunities,” Macron said, without naming any countries.These divisions could undermine the EU’s ability to influence the Asian giant.France will also seek to make progress on opening the Chinese market to its agricultural exports and resolve issues around the French cosmetic industry’s concerns about intellectual property rights, officials said.France has been keen to nudge China into pressuring Moscow to halt operations in Ukraine, with little progress apart from Xi’s decision to call Ukraine’s President Volodymyr Zelenskiy for the first time shortly after Macron visited Beijing last year.A French diplomatic source said: “If the Chinese seek to deepen the relationship with European partners, it is really important that they hear our point of view and start taking it seriously.”On Tuesday, Macron will take Xi to the Pyrenees, a mountainous region dear to him as the birthplace of his maternal grandmother. Xi will then head to Russia-friendly Serbia and Hungary. More

Xi Jinping arrives in Europe on Sunday on a mission to ease escalating tensions that threaten to ignite a trade war between China and the EU.On his first trip to the region since 2019, Xi will face tough talks in France on trade and Ukraine before enjoying a warmer welcome in Serbia and Hungary, where soaring Chinese investment underlines both the benefits of close ties with Beijing and EU divisions on international policy.“China is determined not to let its relationship with Europe slide further towards the direction of its ties with the US,” said Yu Jie, an analyst at UK think-tank Chatham House. “There will be a renewed charm offensive from Beijing, but it will equally give the EU tough warnings on trade protectionism”.Xi’s top priority for his six-day visit would be damage limitation, Chinese officials said. The president is intent on countering a litany of trade investigations by the EU into Chinese companies, including a blockbuster anti-subsidy probe into electric vehicles expected to conclude in weeks. EU officials have told the Financial Times that preliminary duties on EVs could be imposed in May, while permanent tariffs that need the support of a majority of member states could follow in November. Researchers at the Rhodium Group said the duties on Chinese EV imports to the EU could range from 15 to 30 per cent.“China cannot afford the closure of the European market to Chinese companies,” said Abigaël Vasselier at Merics, a Berlin-based think-tank. “The main question is . . . how successful President Xi can be in altering the current trajectory on Europe-China relations.”From left, French President Emmanuel Macron, Chinese President Xi Jinping and European Commission head Ursula von der Leyen in Beijing last year More