Aurelia Butler

The leftist president’s remarks during a summit of Mercosur leaders in Argentina came as he took temporary presidency of the bloc, which comprises Brazil, Argentina, Paraguay and Uruguay.The Mercosur has been holding negotiation rounds for trade deals with the three countries mentioned by Lula for years now, according to the Organization of American States (OAS), with advances seen especially since 2018.In addition to those three nations, Lula said, Mercosur could also “explore new negotiation fronts” with China, Indonesia, Vietnam and countries in Central America and the Caribbean.The Brazilian leader reaffirmed he is committed to completing the trade agreement struck in 2019 between the bloc and the European Union, but again called some addenda proposed by EU “unacceptable”.He singled out for criticism an addendum introducing penalties for nations failing to comply with climate goals and a procurement clause allowing European companies to sell to Brazil’s public sector.Lula, who has been pushing for greater integration between Latin American countries, said he also sees room for more trade between Mercosur nations and Chile, Colombia, Ecuador and Peru, while also calling for Bolivia’s accession to the bloc.”It is urgent that Bolivia becomes a full member of Mercosur,” he said, adding he would work to get Brazil’s Congress to approve the neighboring country’s accession.The heads of the Mercosur decided to accept Bolivia as a full member in 2015, but its entrance needs to be authorized by congresses of the full members.Bolivia is currently an “associated state,” the same status held by Chile, Colombia, Ecuador, Guyana, Peru and Suriname. Venezuela ascended to full membership in 2012 but ended up suspended five years later. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.The most important Asian economic indicator from a pretty packed calendar on Wednesday, and biggest potential market-mover, will be China’s services purchasing managers index report for June, which comes amid the latest ratcheting up of U.S.-Sino tensions. Traders will also have Japanese, Australian and Indian services PMIs to digest, as well as the latest inflation data from Thailand and the Philippines, and can expect trading volume to return to more normal levels after the July 4 U.S. holiday. Currency traders are on high alert for intervention from authorities in Beijing and Tokyo to slow the slide in the yuan and yen, respectively, while Asian stocks ex-Japan will be looking to rise for a fourth day in a row – a winning streak not seen for two months.The main focus, however, will be on China. The economy has sputtered this year, triggering downward revisions to GDP growth estimates, widespread underperformance of Chinese assets, and increasing calls for fiscal and monetary stimulus. China’s economic surprises index shows just how much recent data have undershot analysts’ expectations – it is deeply negative, tumbling fast, and at its lowest in six months. Service sector activity, however, has held up reasonably well and has expanded every month this year, according to the PMI data. A solid number could help soothe investors’ concerns.The yuan rose to a one-week high against the dollar on Tuesday as the central bank fixed the currency higher and major state banks again lowered their dollar deposit rates as authorities stepped up efforts to arrest the yuan’s slide.The political backdrop to this is the latest flare up in U.S.-Sino tensions. China abruptly announced on Monday a series of curbs from Aug. 1 on exports of some metals widely used in semiconductors and electric vehicles, ramping up a trade war and potentially causing more disruption to global supply chains.This comes ahead of a planned visit to Beijing by U.S. Treasury Secretary Janet Yellen this week. Elsewhere in local FX markets, the Australian dollar rose for a fourth day on Tuesday after the Reserve Bank of Australia left its benchmark cash rate on hold at 4.10%. This was the second time in the RBA’s tightening cycle it has stood pat on rates following April’s shock pause, but was far less of a surprise – money markets had put only a one-in-three probability on a hike to 4.35%.Aussie bulls latched onto the RBA’s warning that further tightening might be needed to tame inflation, and overnight swaps are still pointing to almost 50 basis points of further tightening this year. Here are key developments that could provide more direction to markets on Wednesday:- China, Japan, India, Australia services PMIs (June)- Philippines CPI inflation (June)- Thailand CPI inflation (June) (By Jamie McGeever; Editing by Alistair Bell) More

Former finance ministry official Gabriel Galipolo’s nomination for director of monetary policy was approved by a vote of 39 to 12 in the Senate’s plenary. The nomination of central bank official Ailton de Aquino for supervising director was approved by 42-10.Earlier on Tuesday, Galipolo and Aquino had been approved by the Senate Economic Affairs Committee. Galipolo told a committee hearing that his government has set the stage for easier monetary policy.Lula, who has criticized the bank for long holding its interest rate at a cycle high of 13.75%, will eventually replace all nine members of the bank’s board, which decides monetary policy.Galipolo, former executive secretary of the Finance Ministry, told the hearing that Lula’s team has implemented measures that could lead to monetary easing.”The market is already anticipating lower interest rates and future rate cuts,” he said.Addressing the issue of foreign reserves, whose management would fall under his responsibility in the new role, Galipolo highlighted Brazil’s advantage compared to neighboring countries facing potential balance of payments crises. Brazil currently holds over $340 billion in foreign reserves, which have provided a “much greater” degree of economic policy freedom, serving as a “significant buffer against external shocks.”Galipolo also hailed prospects for a common currency for Brazil and other trading partners, without specifying who they would be, saying the proposal was not to replace national currencies but to establish a unit to facilitate trade relationships between countries. Current central bank chief Roberto Campos Neto has criticized the common currency plan, which Lula has already mentioned as an alternative aimed at enhancing trade within both the Mercosur trade bloc and the BRICS group, comprising Brazil, Russia, India, China, and South Africa.Aquino emphasized that improved projections by private economists for economic growth and inflation demonstrate the agents’ confidence in the current government’s economic management.Campos Neto, picked by former President Jair Bolsonaro, will complete his term in December 2024 under an autonomy law passed in 2021. More

The BOE is considering the plan as a part of a review of the collapse earlier this year of U.S. bank Silicon Valley Bank, the newspaper reported, citing people familiar.The move could reduce the thresholds requiring foreign banks with corporate business in the country to set up subsidiaries, the paper said. It noted that subsidiaries, such as SVB had in London, are easier for local regulators to seize control of in case of failure. Nathanael Benjamin, the BOE’s executive director for authorizations and international banks on Monday said the central bank will reflect on the threshold for a foreign bank branch to become a subsidiary. Following the collapse of its parent company in the United States, Silicon Valley Bank’s UK arm was sold to HSBC in March to avoid disrupting its customers in Britain.The Bank of England did not immediately respond to a request for comment. More

Good morning. Trade officials have been assessing the fallout from the latest escalation in the US-China technology battle after Beijing said it would impose curbs on exports of metals used in chipmaking. South Korea’s commerce ministry convened an emergency meeting to discuss China’s decision to control exports of gallium and germanium, metals used in chips, electric vehicles and a range of telecoms products. “We can’t rule out the possibility of the measure being expanded to other items,” said Joo Young-joon, South Korea’s deputy commerce minister.Taiwan’s deputy foreign minister Roy Lee said the export controls “will be a kind of accelerator for countries including Taiwan, South Korea and Japan to reduce our dependence on China for supplies of those critical materials”.South Korea and Taiwan are home to Samsung and TSMC, companies that dominate semiconductor manufacturing, while Japanese groups play a critical role in the chip supply chain.Beijing’s announcement on Monday showed how President Xi Jinping’s administration is willing to target western interests in response to Washington tightening curbs on China’s access to sophisticated technology. The metal restrictions are significant because China dominates the production of many raw materials critical to modern technology and infrastructure.“This looks like a punch from China thrown at the US — a warning about what supply chain disruptions can do to inflation, interest rates and the presidential election,” said CW Chung, an analyst at Nomura, in Singapore.Looking ahead: US Treasury secretary Janet Yellen’s visit to Beijing begins on Thursday, a trip billed as a bid to stabilise the turbulent US-China relationship. Here’s what else I’m keeping tabs on today:Chinese services data: The Caixin Services purchasing managers’ index (PMI) is expected to show a reading of 56.2, down from 57.1 in May, according to a Bloomberg poll. Services figures are also due from the EU, France, Germany, India, Italy, Japan and the UK. Turkish economy: Inflation data for June is due to be released amid signs of a cooling economy as President Recep Tayyip Erdoğan returns to more orthodox economic policies. Five more top stories1. FT Investigation: Three women who used to work for internationally renowned architect Sir David Adjaye have accused him and his firm of different forms of exploitation — from alleged sexual assault and sexual harassment by him to a toxic work culture — that have gone unchecked for years. Read the full story. 2. Meta is expected to launch its own rival to Twitter as soon as Thursday in a direct challenge to Elon Musk’s group, which is facing backlash from users over his management of the social media platform. Meta’s new app, called Threads, is “expected July 6”, according to a listing on the Apple App Store. Read more on the Twitter-like app from Meta.3. Eight people were injured after a Palestinian driver rammed his car into pedestrians in Tel Aviv, a day after Israeli security forces killed at least 10 Palestinians in the biggest raid in the occupied West Bank for two decades. Here are more details on the latest escalation in the Israeli-Palestinian conflict. 4. Toyota plans to halve the size, cost and weight of batteries for its electric vehicles following a breakthrough in its solid-state battery technology. Solid-state batteries have long been heralded by industry experts as the most promising technology to solve EV battery problems such as charging time, capacity and the risk of catching fire. 5. The UK and US governments condemned Hong Kong authorities for issuing bounties totalling $1mn this week for eight exiled political activists. China responded by accusing the UK and US of “harbouring criminals” and “interfering with the rule of law” in the territory.ExplainerThe world’s central bankers have tried to raise interest rates to tame inflation © FT montage/AFP/Getty Images/BloombergCentral banks have been raising interest rates at the fastest pace since the 1990s, but the most severe bout of inflation in a generation is yet to be tamed. Both the chair of the US Federal Reserve and the president of the European Central Bank have said they do not expect inflation rates to return to their 2 per cent targets before the start of 2025. What explains inflation’s persistence in the face of aggressive rate rises?We’re also reading . . . ‘People are nervous’: As China ratchets up its military intimidation campaign against Taiwan, some Taiwanese are quietly exploring options to protect their wealth and prepare a way out. Iran’s protests: The gap between each surge and decline in dissent is getting shorter. The regime knows this is only a momentary reprieve, writes Kim Ghattas.France’s runaway police force: Profound reform of the police is needed, as is forceful engagement with racial discrimination and abuses, writes Shahin Vallée. Chart of the dayAs Chinese stocks rocketed higher in January after stringent Covid restrictions were lifted, strategists at Goldman Sachs made the case that a 46 per cent rise in a matter of weeks was only the beginning. But despite optimistic predictions, the market was already nearing the top. Chinese stocks have now fallen more than 20 per cent from their peak in late January. Here’s what equity markets got wrong. Take a break from the newsFilm critic Danny Leigh lists his six best films of the year so far. What are your favourite films of 2023? Share your picks in the comments below the story.

Scarlett Johansson in ‘Asteroid City’

Additional contributions by Gary Jones and Gordon Smith More