Aurelia Butler

BHP is in discussions on a revised bid for Anglo American to be made in coming weeks, the source said. The deliberations are ongoing and the group has not yet made a decision on the size and structure of the new proposal, the source added.BHP said it does not comment on what it called “rumour and speculation”, while Anglo American did not immediately respond to a Reuters request for comment.Anglo American rejected BHP’s $39 billion takeover offer on Friday, saying it significantly undervalued the miner and its future prospects.Under UK takeover rules, BHP has until May 22 to come back with a formal offer for Anglo American. It is expected to sweeten its 25.08 pounds per share offer to try to clinch a deal that would create the world’s biggest miner of copper, a metal central to the clean energy shift. Some Anglo American investors, who asked not to be named because of the sensitivity of the matter, told Reuters the company is worth around 30 pounds a share.Anglo shares closed at 26.43 pounds on Friday.Much of the focus of BHP’s bid has been on copper. A tie-up with Anglo would forge a group accounting for about 10% of global output of the metal, which due to its conductivity and resistance to corrosion is used in everything from electric vehicles and power grids to construction.A deal, if successful, would be the largest mining takeover globally in 2024 so far and would rank among the top 10 largest deals ever for the sector, LSEG data showed. More

LONDON (Reuters) – Russia’s industrial production and investments are stagnating, its exports of goods are continuing to deteriorate and profitability in most industries is declining, a think tank close to the government has said in a report.The Centre for Macroeconomic Analysis and Short-Term Forecasting issued its downbeat assessment on Saturday, also warning about a shortage of imported components and raw materials.Despite Russia’s ongoing war in Ukraine, its economic performance last year exceeded the expectations of officials and analysts. But in its monthly analysis of macroeconomic trends for April, the centre said it saw signs of a deterioration in many indicators at the end of 2023 and the beginning of 2024.The emerging trends are a cause for concern, it said, while long-term challenges to the economy need solutions “here and now.”“In most of the main types of activity, the transition to stagnation has either already occurred or is increasingly visible,” it noted, adding that high interest rates were beginning to slow the growth of consumer demand, seen as a key driver of economic growth. In January and February, consumer activity fell by 0.2%, excluding seasonality, according to think tank’s data.February was the fourth month in a row when investment activity had stagnated, it added, something it partly blamed on what it called the exhaustion of previous “growth ideas”.Earlier investment projects have focused on infrastructure, import substitution, the military-industrial complex and housing, but lending conditions are now tighter and profitability in a number of industrial sectors has dropped.Profitability could fall further, hurting investment prospects even more given the difficulties of private-public co-financing projects, the centre warned.Import restrictions due to Western sanctions over the war in Ukraine and problems with payments were a further obstacle as some businesses were critically dependent on the supply of components and raw materials, it said. “The possibilities of ‘cheap’ (non-capital-intensive and non-innovative) import substitution have largely been exhausted. Next, investments are needed,” the report said.Russia can no longer rely on energy revenues and cheap labour for economic growth due to sanctions on hydrocarbons and a shortage of personnel, it said.One solution, the report suggested, would be to increase labour productivity by further automation and the greater use of digital technology and robots. More

Russian President Vladimir Putin placed the Russian subsidiaries of Italian water heating company Ariston and German appliance maker BSH Hausgeraete under JSC Gazprom Household Systems, according to a decree published on Friday.”These measures, targeting legitimate economic activities, are yet another proof of Russia’s disregard for international law and rules,” a spokesperson for the EU’s diplomatic service said in a statement.It said the moves confirmed that Russia, which is waging war on Ukraine, was “an unpredictable actor also in the economic field, and has created a business climate which is arbitrary and hostile towards foreign investors”.”The European Union calls on Russia to reverse these measures and seek acceptable solutions with European companies targeted by them,” the statement said.Ariston said on Saturday it was “extremely surprised” by the move and was assessing the implications of the decree from a governance and managerial standpoint. More

Investors are pushing back their expectations of interest rate cuts around the world, as the US Federal Reserve’s battle with price pressures complicates other central banks’ loosening plans.As the US reported the latest in a string of poor inflation figures, markets reined in their forecasts for rate cuts by the European Central Bank and the Bank of England, as well as by the Fed itself.“The Fed’s inflation problems have a global dimension and other central banks cannot ignore them,” said James Knightley, chief international economist at ING in New York. “In particular, if the Fed can’t cut rates soon it could stoke up dollar strength, which causes stress for the European economy and constrains other central banks’ ability to cut rates.” He added: “Plus there is a worry that what is happening on inflation in the US could surface in Europe as well.” Senior officials at the ECB and BoE argue they are not confronting the same inflation problems as the US, implying they have more scope to cut rates earlier.But shifts in the futures market indicate the global impact of the persistent US inflation problem. Traders now expect the ECB to cut rates by an average of about 0.7 percentage points this year starting at its next policy meeting on June 6, while two weeks ago they expected cumulative cuts of 0.88 points. At the beginning of the year, when US inflation appeared on a firmer downward path, they expected cuts of 1.63 points.Markets now anticipate BoE cuts of 0.44 percentage points this year compared with 0.56 points two weeks ago and 1.72 points at the start of the year.The backdrop for the shift has been the market’s reduced expectations for the Fed, which is set to keep rates at their 23-year-high at its meeting next week. While at the start of the year investors had expected as many as six quarter-point cuts, this year, they now expect one or two.The US and its European counterparts have diverged in the past. But if other regions cut rates more aggressively than the Fed, they risk harming their own economies because of the impact on exchange rates, import costs and inflation.“There’s a good macro case for divergence, but ultimately there’s a limit on how far it can go,” said Nathan Sheets, chief economist at US lender Citi. He added that it was “more challenging” for the ECB to “cut aggressively in an environment where the Fed is waiting”. Fed chair Jay Powell conceded this month that US inflation was “taking longer than expected” to hit its target, signalling that borrowing costs would need to stay high for longer than previously thought.In figures on Friday, the Fed’s preferred inflation metric came in higher than expected at 2.7 per cent for the year to March, and a minority of traders are now even betting on Fed rate rises in the next 12 months. Marcelo Carvalho, global head of economics at BNP Paribas, said the ECB was neither “Fed-dependent” nor “Fed-insensitive”. Despite the market’s expectations that high US borrowing costs will limit their freedom of manoeuvre, top European central bankers insist their less serious inflation problem requires a different response.“It is a different kind of animal we are trying to tame,” ECB president Christine Lagarde said this month in Washington.She said the “roots and drivers” of the two regions’ price surges were different — with Europe affected more by energy costs and the US by big fiscal deficits. BoE governor Andrew Bailey has also argued that European inflation dynamics were “somewhat different” from the US. Top officials from the ECB and BoE have signalled rates will still be cut this summer, despite the inflation data that has led investors to price in the first Fed rate reduction in November. The shift is a marked contrast to earlier this year when the Fed was seen as leading the way down. “The ECB and BoE are operating in a much weaker growth environment, so I suspect they will have no compunctions about cutting rates earlier,” said Mahmood Pradhan, head of global macroeconomics at Amundi Asset Management.But ECB policymakers have given divergent indications on how big a rate gap with the Fed they can tolerate. Banque de France governor François Villeroy de Galhau told Les Echos that he expects continued cutting “at a pragmatic pace” after June. However, Austria’s central bank head Robert Holzmann warned: “I would find it difficult if we move too far away from the Fed.” The euro has fallen 3 per cent against the dollar since the start of the year to just above $1.07, but investors have increased bets it could drop to parity with the US currency. Such a fall would add about 0.3 percentage points to eurozone inflation over the next year, according to recent ECB research. The bank’s vice-president, Luis de Guindos, said this week it would “need to take the impact of exchange rate movements into account”. The far-reaching impact of US policy is already highly visible in Japan, where investors are increasing bets that the Bank of Japan will need to keep raising borrowing costs as a weaker yen fuels inflation. The yen has dropped to 34-year lows against the dollar, pushing up the price of imported goods. But some EU policymakers argue that if a more hawkish Fed leads to tighter global financial conditions, it could bolster the case for easing in the eurozone and elsewhere.“A tightening in the US has a negative impact on inflation and output in the eurozone,” Italy’s central bank boss Fabio Panetta said on Thursday, adding that this was “likely to reinforce the case for a rate cut rather than weakening it”.Tighter US policy also affects global bond markets, with Germany’s 10-year Bunds often mirroring movements by the 10-year US Treasury.BNP Paribas estimates that if European bond yields were driven half a percentage point higher by the fallout from US markets, it would require an extra 0.2 percentage points of rate cuts by the ECB to offset the impact of tighter financial conditions. Similarly, it would require 0.13 points of extra cuts by the BoE.Tomasz Wieladek at T Rowe Price in London argued that the ECB and BoE “need to actively lean against this tightening in global financial conditions to bring their domestic financial conditions more in line with the fundamentals in their own economies”.Additional reporting by George Steer in London More

The U.S. House of Representatives has passed a bill allowing the Biden administration to confiscate Russian assets held in American banks and transfer them to Ukraine, something the Kremlin has said would be illegal and trigger retaliation. In response to Russia’s war in Ukraine, the United States and its allies prohibited transactions with Russia’s central bank and finance ministry and blocked about $300 billion of sovereign Russian assets in the West, most of which are in European not American financial institutions.The Group of Seven (G7) major democracies is also looking at what it may be able to do around the frozen Russian assets. Medvedev, a close ally of President Vladimir Putin and the deputy chairman of Russia’s Security Council, said on Saturday that Russia would not be able to retaliate in kind against any U.S. seizure of its reserves. “The reason is clear – we do not have a significant amount of American state property, including money, rights and other US assets. Therefore, the answer can only be asymmetrical. It is not a fact that it will be any less painful,” Medvedev wrote on his official Telegram channel.”We are talking about the foreclosure, for example by a court decision, on the property of private individuals located in the jurisdiction of Russia (money, real estate and movable property in kind, property rights).””Yes, this is a complex story, since these individuals usually acted as investors in the Russian economy,” Medvedev said. “And we guaranteed them the inviolability of their private property rights. But the unexpected happened – their state declared a hybrid war on us. This must be answered.”He said the law in Russia would need to be changed to allow such asset seizures in favour of the Russian state.Russian Central Bank governor Elvira Nabiullina said on Friday Moscow would defend its legitimate interests in the event that its assets were confiscated, but did not disclose the strategy and tactics. More

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