Aurelia Butler

This article is an onsite version of our Disrupted Times newsletter. Subscribers can sign up here to get the newsletter delivered three times a week. Explore all of our newsletters hereToday’s top storiesIsrael significantly softened its stance on the conditions for a hostage deal with Hamas, raising hopes of a breakthrough in diplomatic efforts to end the war in Gaza.Humza Yousaf quit as Scotland’s first minister, forcing his Scottish National party into a leadership contest ahead of the UK general election expected this year. UK chief political commentator Robert Shrimsley said a reckoning for the party was inevitable but its goal of Scottish independence remained popular.Pedro Sánchez said he would stay on as Spain’s prime minister after a pause in which he announced he was considering quitting amid a corruption probe into his wife.For up-to-the-minute news updates, visit our live blogGood evening.While Brussels attempts to close loopholes in its sanctions against Moscow and restrict its ability to wage war in Ukraine, western banks remaining in Russia are helping the Kremlin maintain financial stability.Financial Times analysis shows the largest banks still in the country paid more than €800mn in Russian taxes, a fourfold increase on prewar levels, despite promises to minimise their Russian exposure after the full-scale invasion of Ukraine. Combined profits of the seven top European institutions were more than €3bn — three times higher than in 2021, partly generated by funds that the banks cannot withdraw from the country.  Further evidence of the difficulties western leaders are coming up against when trying to follow through on pledges to close their operations came last week when a Russian court ordered the seizure of JPMorgan funds totalling $439.5mn a week after Kremlin-run lender VTB launched legal action against the US bank to recoup money stuck under Washington’s sanctions regime. Russia’s own banking sector appears to have recovered from the first wave of western sanctions, remaining one of the most important sources of the country’s non-energy revenues. State-controlled lender Sberbank last week announced its largest ever profit and a dividend payout of Rbs752bn ($8bn).Russian president Vladimir Putin has also been adept at strengthening relationships with allies as western sanctions tighten. Although foreign travel has become rare after the International Criminal Court issued an arrest warrant accusing him of war crimes, Putin plans to visit China next month. Trade between the two countries has shot up but there are signs that Chinese financial institutions are becoming increasingly wary of doing business with Russian companies for fear of falling foul of US secondary sanctions. US secretary of state Antony Blinken has also weighed in, warning that the US will take action unless China stops sending weapons-related technology to Russia.Putin has also revitalised links with North Korea, allowing Russian ports to be used by sanctioned North Korean tankers to collect oil and petroleum products in apparent payment for artillery shells for use in Ukraine.The west has been more successful in punishing Moscow when it comes to energy. As today’s Big Read details, Europe has been successful in weaning itself off Russian gas, albeit by creating potential new problems such as a heavy reliance on volatile markets for liquefied natural gas or LNG.Sanctions have also been able to limit Moscow’s ambitions on the battlefield.  As our latest military briefing explains, restrictions have made it harder for Russia to obtain the components needed for high-tech weapons, forcing it to rely on the lower-tech munitions it can mass-produce more easily. And with US aid finally on the way, Ukraine could expose the flaws in Russia’s attempts to overwhelm it with these low-quality weapons and a large but poorly trained army, albeit it with a massive superiority in numbers. Brussels meanwhile is turning the screw on European companies still operating in Russia with a new sanctions provision that could significantly affect they way they do business in the country. Multinationals are set to lose a carve-out that allowed them to provide their Russian subsidiaries with professional services like accounting, management consulting and legal advice.Still, concern remains that Russia is weathering most of what the west is throwing at it. The head of a UK parliamentary committee told the FT today that there’s a “general consensus that sanctions are not working in terms of their stated intent — causing real trouble for the Russian economy”. Dame Harriett Baldwin singled out the failure of items such as the US-led price cap on Russia’s oil sales and identified measures where the UK, in tandem with the US, EU and other allies, could do more, especially as some of the original batch of sanctions were more than two years old.“The longer sanctions are in place, the more ways people find to get around them, and it’s pretty obvious that patterns of trade are changing to allow exactly that,” she said. Need to know: UK and Europe economyUK ministers announced plans to squeeze benefits claimed by millions of people with long-term disabilities and health conditions, as part of a drive to cut a soaring welfare bill. Britons are spending less money boozing in pubs and bars than at any time since lockdown ended, according to new research that highlights continuing pressures from the cost of living crisis. Chief economics commentator Martin Wolf says UK policymakers should ask more searching questions about the causes and impact of the surge in prices.Corporate legal investigations have been thrust into the spotlight after a rash of high-profile cases of alleged misconduct or company failings and accusations of whitewashing.German inflation picked up unexpectedly from 2.3 per cent to 2.4 per cent in April, although core inflation, which excludes volatile energy and food prices, slowed from 3.3 per cent to 3 per cent.Eleven EU members including France and Italy are set to breach Brussels’ rules on government spending which only allow budget deficits up to 3 per cent of GDP.Need to know: global economyA sharp rebound in the yen triggered speculation that Japanese authorities had intervened to support the currency after weeks of warnings.Chris Dodd, former US senator and current adviser to President Joe Biden, said Washington could pass legislation this year for more free trade deals with Latin American countries to counter China’s success in the region.Admiral John “Lung” Aquilino, commander of US forces in the Indo-Pacific, accused China of pursuing a “boiling frog” strategy, raising tensions in the region with increasingly dangerous military activity. Need to know: businessShares in Dutch health technology group Philips surged more than 30 per cent after it said it had reached a $1.1bn settlement over personal injury litigation claims filed in the US relating to its sleep apnoea devices.Tesla chief Elon Musk met Chinese Premier Li Qiang and struck a deal with China’s Baidu search giant to deploy mapping and navigation in the world’s biggest auto market. Leading Japanese and Korean carmakers have also announced tie-ups with Chinese tech groups.A new analysis suggests the EU would need to impose huge tariffs of about 50 per cent to stem imports of cheap Chinese electric vehicles. Global airlines have been privately lobbying the EU to weaken plans to monitor non-CO₂ emissions including vapour trails, nitrogen oxides and sulphur.Vinted, Europe’s largest online marketplace for used clothes, reported an annual profit for the first time. Founded in 2008, the Lithuanian start-up was last valued at €3.5bn in May 2021 and has been looking at finance options including a secondary share sale ahead of a potential stock market listing.The World of WorkAverage US executive pay has jumped 9 per cent to $15.7mn in the past year, widening the gulf with rewards in the UK. Several British bosses have warned of a talent exodus unless their pay is more competitive.Do women in financial services have the same chance of getting ahead as men? An FT analysis finds little improvement in recent years, but there are some bright spots including childcare and workplace flexibility.AI tools used by recruiters may be doing more harm than good. CV screening systems for potential bias, for example, are liable to filter out candidates from certain postcodes, a recipe for racial discrimination.Columnist Emma Jacobs speaks to advocates of active commuting — combining a journey to work with physical activity — about its benefits, not just to fitness but mental health. Some good newsA major study reveals that global immunisation efforts have saved at least 154mn lives over the past 50 years or six lives every minute of every year. The vast majority of lives saved were those of infants.Recommended newslettersWorking it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up hereThe Climate Graphic: Explained — Understanding the most important climate data of the week. Sign up hereThanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here to receive future issues. And please share your feedback with us at [email protected]. Thank you More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.German inflation rose slightly more than forecast in April on the back of strong food and energy prices in Europe’s largest economy, curbing investors’ hopes of a string of interest rate cuts this year.Consumer prices in Germany increased 2.4 per cent in the year to April, rising from 2.3 per cent a month earlier, according to EU harmonised data released by the federal statistical agency Destatis on Monday. Economists polled by Reuters had expected a flat reading.However, excluding underlying energy and food prices, Destatis reported core inflation had fallen from 3.3 per cent to 3 per cent.With Spain reporting a similar uptick in headline inflation coupled with a cooling of core price growth, the German figures chipped away at investors’ confidence about the extent of European Central Bank rate cuts this year.The uptick in German inflation was “a good reminder of how difficult the last mile of bringing inflation sustainably back to 2 per cent will be for the ECB”, said Carsten Brzeski, an economist at ING. Government bond yields, which move inversely to their prices, rose slightly on the news as investors trimmed their bets that the ECB will start cutting rates in just over a month. Despite the rise, Germany’s benchmark 10-year bond yield was still down almost 5 basis points at 2.53 per cent.Senior ECB policymakers have said they are likely to cut rates for the first time in five years at their next policy meeting on June 6 as long as wages and price pressures keep cooling in line with their forecasts for inflation to drop to the bank’s 2 per cent target by next year.A June rate cut by the ECB “still looks like a done deal”, Brzeski said.Eurozone inflation is expected to remain flat at 2.4 per cent, while core inflation in the bloc is expected to fall from 2.9 per cent to 2.7 per cent when that data is released on Tuesday.Any overshoot could cause traders to doubt whether the ECB will start cutting rates in June, especially after hotter than forecast US inflation prompted them to reduce bets on the scale of Federal Reserve easing this year.Recent business and consumer surveys show the eurozone economy is tentatively emerging from its recent stagnation and data on Tuesday is expected to show gross domestic product in the region expanded at a quarterly rate of 0.2 per cent in the three months to March.But despite economic activity improving, most economists expect the fact that Easter was in March rather than April this year to lower airfare and package holiday prices in the past month, bringing down eurozone services inflation for the first time in six months.The earlier Easter seemed to contribute to lower German services inflation, which fell back to 3.4 per cent, having accelerated to 3.7 per cent in March. Ralph Solveen, an economist at Commerzbank, predicted German inflation would rise later this year “as companies in the service sectors in particular will pass on the massive rise in wage costs to their customers”.Destatis said energy prices fell 1.2 per cent in April — a much smaller annual decline than the drop of 2.7 per cent recorded in March — while food prices rose 0.5 per cent after falling the previous month.Spain’s statistics office said rising gas and food prices — after the removal of government subsidies — helped to push up its inflation rate to 3.4 per cent in April, compared with 3.3 per cent a month earlier. But core inflation, excluding energy and fresh food, slowed from 3.3 per cent to 2.9 per cent. More

BERLIN (Reuters) -German inflation rose slightly in April due to higher food prices and a smaller drop in energy prices than in previous months, preliminary data from the federal statistics office showed on Monday.German consumer prices, harmonised to compare with other European Union countries, rose 2.4% in April, compared with 2.3% year-on-year in March.”The downward trend in the German inflation rate that has been observed for a year and a half may have come to an end for the time being,” Commerzbank (ETR:CBKG) economist Ralph Solveen said, adding that the inflation rate is likely to rise again in coming months. Economists pay close attention to German inflation data, as Germany publishes its figures before the wider euro zone inflation release, expected on Tuesday.Euro zone inflation is expected to remain at 2.4%, unchanged from the previous month, according to economists polled by Reuters.The European Central Bank has clearly signalled it will start lowering borrowing costs in June. Core inflation in Germany, which excludes volatile food and energy prices, eased to 3.0% in April from 3.3% in March.Commerzbank expects the core inflation rate to stabilise around current levels, as companies in the service sector in particular pass on large rises in wage costs to their customers. More

(Reuters) -U.S. stocks were poised for a higher open on Monday as Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL) led gains in megacap companies, while investors exercised caution ahead of the Federal Reserve’s interest rate decision later in the week. Tesla shares shot up nearly 14% premarket after the U.S. electric vehicle maker cleared some key regulatory hurdles that had long hindered the roll-out of its self-driving software in China, its second-largest market. Apple added 2.6% after a report that the iPhone maker had renewed discussions with OpenAI about using the startup’s generative artificial intelligence (AI) technology. Bernstein upgraded the stock to “outperform”.U.S. stocks closed higher on Friday, buoyed by moderate inflation data and a rally in megacap growth stocks following robust quarterly results from technology heavyweights Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT).Also offering support, Israel-Hamas peace talks in Cairo eased fears of a wider conflict in the Middle East.Focus will now shift to the Fed’s interest rate decision due on Wednesday, ahead of a key jobs report on Friday that could set the tone for market direction in the near-term. “Markets are a little fragile right now and people are hanging on every data point and are still trying to figure out whether the inflation numbers in the three months were a beginning of a trend and whether GDP last month was a significant slowdown or a one-off,” said Chris Jackson, senior vice president at UBS Wealth Management.Money markets are pricing in just about 36 basis points (bps) of interest rate cuts this year, down from about 150 bps seen at the beginning of the year, according to LSEG. At 08:23 a.m., Dow E-minis were up 51 points, or 0.13%, and S&P 500 E-minis were up 14 points, or 0.27%. Nasdaq 100 E-minis were up 79 points, or 0.44%.Earnings season is in full swing, with adjusted blended earnings for the first quarter estimated to grow 8.7% on a year-over-year basis, according to LSEG data. Domino’s Pizza (NYSE:DPZ) jumped 6.6% after topping Street expectations for first-quarter same-store sales, as consumers in the United States tapped into the pizza chain’s spruced-up loyalty program and other promotional offerings. Of the 229 companies in the S&P 500 that have reported quarterly earnings as of Friday, 77.7% surpassed analyst expectations, compared with a long-term average of 66.7%.Reports from 3M, Coca-Cola (NYSE:KO), Apple, Amazon.com (NASDAQ:AMZN) and Mastercard (NYSE:MA) are expected later in the week.Among other movers on Monday, Paramount Global gained 5.1% after a report that the Redstone family and Skydance Media CEO David Ellison have made concessions to make a potential change in control of the streaming firm more appealing for other investors. A fall in bitcoin prices pulled down cryptocurrency-linked stocks in premarket trading. Crypto exchange Coinbase (NASDAQ:COIN) Global and crypto miners Riot Platforms (NASDAQ:RIOT) and Marathon Digital (NASDAQ:MARA) were down between 1.3% and 3.6%. More