Aurelia Butler

MOSCOW (Reuters) – Russia’s central bank has proposed banning Russians with holdings worth less than $550,000 from buying foreign shares, as a step to protect investors after Western sanctions left them with billions of dollars in frozen accounts.Russia has had a retail investment boom since the COVID-19 pandemic, with small players seeking to make money amid a record number of domestic share flotations and low deposit rates.Many Russians also bought foreign shares, using accounts now frozen under Western sanctions imposed after Russia sent tens of thousands of troops into Ukraine on Feb. 24. Central Bank Deputy Chairman Philip Gabunia said more than 5 million people in Russia have foreign stocks in frozen accounts, worth a combined value of more than 320 billion roubles ($5.84 billion).Russia’s second largest bourse, SPB Exchange, which specialises in foreign shares, said in May up to 14% of U.S.-listed shares held by its clients should be transferred to a non-trading account, due to restrictions imposed by Brussels-based depository Euroclear.Seeking to minimise future risks for retail investors, Russia’s central bank has already reduced the maximum leverage they can use.New restrictions would tighten the requirements to obtain qualified status to buy foreign shares, Gabunia told a media briefing. In addition to requiring investors to have holdings worth more than 30 million roubles ($550,000), the change would also require them to pass a knowledge test.($1 = 54.7500 roubles) More

LONDON (Reuters) – World shares hit a three-week high on Wednesday and U.S. index futures were indicating a steady open on Wall Street as strong U.S. corporate earnings and the expected resumption of Russian gas supply to Europe tempered recession fears. The dollar was trading near two-week lows on lower U.S. rate hike expectations.Russian gas flows via the Nord Stream 1 pipeline are seen restarting on time on Thursday after the completion of scheduled maintenance but at lower than its full capacity, two sources told Reuters, reducing investors’ concerns about gas supply to Europe in tat-for-tat measures in response to the Ukraine conflict.Markets still expect a large 75-basis-point interest rate rise from the U.S. Federal Reserve next week to rein in white-hot inflation. But this represents a rowback from previous expectations of 100 bps. In contrast, Reuters reported European Central Bank policymakers are mulling raising rates by a bigger-than-expected 50 basis points on Thursday.”At the margins there is some good news like Nord Stream,” said Luca Paolini, chief strategist at Pictet Asset Management.”Overall, there is no reason why the market should rally that much, but it springs from inflation expectations.”S&P 500 futures and Nasdaq futures were flat, after a strong showing overnight on better-than-expected results from U.S companies including Netflix Inc (NASDAQ:NFLX).MSCI’s world stock index .MI WD00000PUS > gained 0.12% after rising 2% on Tuesday.Britain’s FTSE 100 rose 0.2%, buoyed by oil and mining stocks and shrugging off data showing UK inflation at a new 40-year high.European stocks hit near-six-week highs before reversing to trade 0.23% lower.The euro dropped 0.34% to $1.0188, after racking up its biggest one-day percentage gain in a month in the previous session on rising rate hike bets.The dollar gained 0.3% to 107 against an index of currencies, but remained close to two-week lows hit in the previous session. “The FX market has an even shorter-term focus than usual,” said Societe Generale (OTC:SCGLY) strategist Kit Juckes. “The Nordstream 1 pipeline reopening, Italian political stability and whether the ECB hikes by 25 bps or 50 bps tomorrow matter more than what might happen in 2023. With such a short-term focus, of course volatility stays high.”Italian Prime Minister Mario Draghi on Wednesday demanded unity among his coalition partners if they wanted him to stay in office, leaving his resignation threat hanging over parliament.But Italian 10-year bond yields fell 12 bps on the possibility Draghi might remain. [GVD/EUR]German 10-year bond yields fell 8 bps to 1.197%.A closely-watched part of the U.S. yield curve remained inverted, with the two-year yield last at 3.1727%, down from the previous close of 3.2310%.The yield on benchmark 10-year Treasury notes stood at 2.9707%, compared with its close of 3.019% on Tuesday.In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9%, driven by a 1.65% jump in resources-heavy Australia and 1.1% gain in Hong Kong stocks. Japan’s Nikkei surged 2.67%.Chinese shares rose 0.34%, lagging gains in other markets, as the central bank kept its benchmark lending rates unchanged amid a shaky economic recovery from COVID lockdowns.The Bank of Japan also delivers a policy decision on Thursday, but is not expected to make any changes to its ultra-easy stance. Oil prices slumped more than $1 a barrel, pressured by global central bank efforts to tame inflation and ahead of expected builds in U.S. crude inventories as product demand weakens.[O/R]U.S. crude fell 1.65% to $102.50 a barrel while Brent crude dropped 1.67% to $105.57 per barrel. Spot gold eased 0.13% to $1,708 an ounce. More

Investor fears that the Federal Reserve may deliver a 100bp rate hike at the July FOMC meeting after red-hot inflation data for June are baseless, according to Citi’s Isfar Munir.The fact that FOMC speakers “came out in force at the end of last week,” likely signals that the Fed “has all but guaranteed a 75bp hike in July.”The strong pushback against market expectations of a 100bp rate hike will likely translate into the Fed hiking by 75 bps once again, Munir added.BofA economist Michael Gapen agrees as he expects a 75bp rate hike in July.“If the Fed wanted a larger rate hike, it likely would have signaled clearly in advance,” Gapen said in a client note.“The Fed has no problem surprising financial markets on rate cuts, but it strongly dislikes surprising on rate hikes. Hence, if the Fed were inclined to lift rates by 100bp in July, we think it would likely have signaled its intent prior to entering the blackout period last week, particularly since financial markets had already priced in a larger move. We see little in the way of incoming data between now and next Wednesday that might lead the Fed to change its course and maintain our baseline outlook for a 75bp hike,” Gapen added.The economist also sees no change in policy as far as the balance sheet reduction is concerned. More

EY’s global boss said a break-up of the Big Four firm would win its consulting division up to $10bn in extra fees by liberating it from conflicts of interest that block partnerships with the world’s largest tech groups.Pressure is building on the accounting firm to decide whether to pursue a historic split as its global leaders meet in New York this week and its competitors continue to stand by their model of combining audit and consulting.EY dominates the auditing of large US tech companies, checking the accounts of Amazon, Google, Oracle, Salesforce and Workday.In an interview with the Financial Times, EY’s global chair and chief executive Carmine Di Sibio said the firm’s position in the tech audit market was “both a blessing and a curse”.While its strength was positive for the audit business, Di Sibio said this was also a “negative” because it meant EY was prevented by conflict of interest rules from entering alliances to work alongside some of the world’s biggest technology companies on projects for their other clients.Over time, the standalone advisory business would win between $5bn and $10bn a year in consulting fees that are currently “off the table” because conflicts rules restrict it from working alongside the likes of Amazon or Salesforce, he added.EY global leaders meet this week, with the firm yet to make a final decision on whether to go ahead with a split, which would be the biggest shake-up of the accounting industry in two decades. “It would reshape the industry,” Di Sibio said.He said that he expected a decision “in the next couple of weeks or so”. Any split would then be voted on by the partners in each of EY’s national member firms, most likely in October or November, he added.Go deeper Inside EY’s break-up plan: why it could radically reshape the Big FourFive more stories in the news1. Judge fast-tracks Twitter-Musk trial Chancellor Kathaleen McCormick set a timetable for a fast-track trial to start in October, siding with Twitter in its legal battle against Elon Musk. It was an early victory for Bill Savitt, the rock-star litigator who hopes to bring Musk to heel. Would a long wait have threatened Twitter’s business? Have your say in our latest poll.Go deeper: Images emerged on Monday of the Tesla chief partying on a yacht in Greece. Just 24 hours later, the judge put a crimp in his holiday, Sujeet Indap writes.

2. Netflix loses 1mn subscribers The streaming leader continued to lose subscribers in the second quarter but tried to assuage investor fears about its business prospects. The loss was smaller than the 2mn users Netflix had forecast would cancel their accounts as the company was helped in part by the release of a new season of the hit show Stranger Things.3. BoE and ECB discuss half-point rate raises Bank of England governor Andrew Bailey has raised the possibility of increasing interest rates by half a percentage point at the central bank’s next meeting in early August. UK inflation rose to a fresh 40-year high of 9.4 per cent in June, it was confirmed earlier today. Bailey’s comments come as the European Central Bank this week plans to broach raising interest rates by the same amount.4. JPMorgan takes on direct lenders with leveraged loans unit JPMorgan Chase’s investment bank is committing a “significant chunk of capital” to hold leveraged loans on its balance sheet. The bank began making the loans in 2021 and has completed about 20 deals, with the size ranging from $50mn to about $500mn, Kevin Foley, JPMorgan’s head of global debt capital markets, told the Financial Times. 5. Ukraine and Russia near deal on grain blockade The sides are close to agreeing a deal to secure safe passage for millions of tonnes of grain through the Black Sea, but they remain at odds over security for ports and ships along the crucial food export route, according to people familiar with the UN-led negotiations.More on the war: The White House has warned that Russia is planning to annex parts of southern Ukraine by holding stage-managed referendums.On the streets: Drone footage from Irpin, a suburb of Kyiv, reveals just how scarring Russia’s invasion has been — and the task that rebuilding it will involve.The day aheadCompany earnings Electric carmaker Tesla is due to report quarterly results after the closing bell. Earlier this month the company reported parts shortages and production shutdowns at its Shanghai plant causing a drop in vehicle deliveries. United Airlines, Abbott Laboratories, Nasdaq, CSX and Harley-Davidson also report.Economic data Canada’s consumer price index is expected to rise to 8.4 per cent during June after hitting 7.7 per cent the previous month, the quickest pace in almost four decades. In the US, existing home sales are expected to have dropped for the fifth straight month to a rate of 5.38mn in June from 5.41mn the previous month, against a backdrop of rising mortgage rates and record prices weakening demand from potential buyers.Market outlook US stock markets are expected to extend a rally when they open later after recording their strongest performance in a month on Tuesday. In Europe equity markets were flat as investors balanced worries about the economic outlook with stronger than expected earnings from Netflix.Tory leadership race The battle to succeed Boris Johnson will be cut to two candidates today. Trade minister Penny Mordaunt and foreign secretary Liz Truss will battle it out over who will compete in a head-to-head fight with former chancellor Rishi Sunak. The new leader will be named on September 5.Live Q&A: What’s next after the crypto market crash? FT markets news editor Adam Samson and digital assets correspondent Scott Chipolina will be answering readers’ questions throughout the day on FT.com. Submit your question at the bottom of this story.What else we’re reading and listening toUS consumers are bending but not breaking as prices soar. Can it last? Hopes have risen in recent days that the Federal Reserve could engineer a soft landing for the US economy. Jamie Dimon said this week the consumer was in “great shape”. Executives from Burberry to Kroger have hailed the continued appetite for costlier items. But at the other end of the income scale signs of strain are evident. “The trouble ahead lies somewhere in the middle of next year, not any time in the next six months,” said one banker. Why young investors are not ready to give up on risk After struggling over the past decade to accumulate wealth through traditional means, many DIY traders are speculating in riskier corners of financial markets despite the meltdown in cryptocurrencies. Having come of age after the financial crisis, they no longer want to play by old rules.Western democracies have a talent problem Rishi Sunak does politics as though he is just back from a residential course called How to Do Politics. In the US, the two most senior Democrats are a pensioner and his maladroit vice-president. Germany’s last election was a pageant of nondescriptness and none of the last six Australian premiers have impressed enough to log four years in office. Able people of a liberal or moderate bent don’t go into politics, argues Janan Ganesh. Hot Money: Inside porn’s star chamber In the season finale of the FT’s Hot Money podcast, Alex Barker and Patricia Nilsson discover how Visa and Mastercard became the reluctant rulers of porn, and explore what the influence of credit card companies means for the industry today.Hong Kong’s animal shelters at capacity Charities in Hong Kong are conducting an online campaigning blitz, as they struggle to offload the animals they have received after an exodus of residents from the city. The tightening of already severe Covid-19 restrictions has meant people are packing up for good ⁠ — and leaving their furry companions behind.PropertyDan Shannon, managing partner at New York City architecture firm MdeAS, has gained a reputation as one of the city’s foremost practitioners of what architects and developers refer to as “repositioning” or breathing new life into old buildings. He talked to Josh Chaffin about redeveloping some of New York’s landmark buildings.

Most recently Dan Shannon oversaw the project to revive the Black Rock building on Sixth Avenue More

The rate of UK inflation rose to a fresh 40-year high of 9.4 per cent in June as sharp rises in food and petrol prices drove the rate towards double digits for the first time since 1982.The UK’s rate was again the highest among the G7 group of large advanced economies even before recent wholesale rises in energy prices are reflected in the inflation measure in October. The June rate was up from a 9.1 per cent rate in May and higher than the 9.3 per cent figure economists had expected.The figure will intensify pressure on the Bank of England for a forceful response. Nadhim Zahawi, the new chancellor, said on Wednesday he was “working alongside” the Bank to “bear down” on inflation.Andrew Bailey, governor of the central bank, said on Tuesday that a 0.5 percentage point interest rate rise was “on the table” for its next meeting in just over two weeks’ time. The BoE is worried that inflation rates well above its 2 per cent target will become embedded in corporate pricing policies and wage rises over the months ahead. Pipeline inflation pressures were also highlighted by the ONS, with the rate of inflation of manufactured goods leaving factories rising to a 45-year high of 16.5 per cent in June. The Office for National Statistics said that the main driver of higher annual inflation in June was petrol prices rising by 18.1 pence per litre, the largest rise since equivalent records began in 1990. Food prices rose 9.8 per cent in the year to June, the highest rate in this category since 2009. The cost of food increased by 1.2 per cent in the month of June alone. There was a similarly large monthly rise in the price of restaurant meals, with the annual rate increasing to 8.6 per cent.These price rises outweighed downward forces on inflation from second-hand cars and audiovisual equipment.In the detailed categories, only 6 per cent of the 277 categories checked by the ONS had seen price reductions over the past year and only 29 per cent of categories were rising in price by an annual rate less than 4 per cent, still double the BoE’s inflation target. Yael Selfin, chief UK economist at KPMG, said that “with further energy bill increases due to take effect from October, the peak in inflation is still some way off, and is not expected to return to the 2 per cent target before mid-2024”.But some economists drew some comfort from evidence that price rises were increasingly concentrated in food, energy and fuel, suggesting that even though inflation had further to rise, it was no longer spreading much more widely through the economy. Samuel Tombs, UK economist at Pantheon Macroeconomics, said that although inflation was set to peak at nearly 12 per cent in October, “core inflation . . . will remain on a downward path, easing to about 5 per cent by year-end and to around 2 per cent or so in one year’s time”.The peak of inflation, coming with the next rise in the energy price cap in October, will put increasing strains on households’ cost of living, even after the government’s support package of a £400 discount to gas and electricity bills and £650 for households receiving means-tested benefits such as universal credit and pension credit.

Jamie O’Halloran, an economist at Pro Bono Economics, an organisation helping the charitable sector, said poorer families were under severe pressure with bills even if they were working. “This stifling pay squeeze is fuelling spiralling demand for charities’ services,” he said. “Charities and the people they support face little respite from the mounting pressure.” More