Aurelia Butler

The head of the World Health Organization has warned that China’s zero-Covid strategy is unsustainable, as new modelling showed the country risked unleashing a “tsunami” of coronavirus infections and causing 1.6mn deaths if it abandons the policy. “As we all know, the virus is evolving, changing its behaviours, becoming more transmissible. With that changing behaviour, changing your measures will be very important. When we talk about the zero-Covid strategy, we don’t think it’s sustainable,” Tedros Adhanom Ghebreyesus, WHO director-general, said on Tuesday. He said the WHO had discussed the issue with Chinese experts, adding that “considering the behaviour of the virus I think a shift [in China’s strategy] will be very important”. The remarks came as modelling projections by researchers at Shanghai’s Fudan University estimated that an unchecked surge of the Omicron coronavirus variant could result in 112mn symptomatic infections, 2.7mn intensive care admissions and almost 1.6mn fatalities between May and July. The study, published in the scientific journal Nature, underscored fears that China would be hit hard by a large Omicron wave if restrictions were eased, because of its low vaccine uptake among older groups and reliance on less effective jabs.

Thanks for reading FirstFT Asia. Here’s the rest of the day’s news — EmilyFive more stories in the news1. Musk says he would reverse Trump’s Twitter ban Elon Musk has said he would reverse Donald Trump’s ban from Twitter, accusing the social media company of leftwing bias that had aggravated political divisions in the US. “I think it was a morally bad decision, and foolish in the extreme,” Musk said. Watch Musk’s interview with FT’s Peter Campbell here.

Elon Musk said Twitter had aggravated political divisions in the US © Em Fitzgerald/FT

2. Putin preparing for ‘prolonged conflict’ in Ukraine, warns US The US believes Russian president Vladimir Putin has not changed his aims in Ukraine and that his focus on the south-eastern Donbas region is a temporary shift “to regain the initiative” after failing to capture Kyiv.More on the war: Ukraine has upgraded its war aims and is now looking to push Russian forces out of the country.3. CVC pushes back IPO plans amid market turmoil Europe’s biggest private equity group CVC Capital Partners has pushed back plans for a stock market listing in the first half of this year, with market turbulence standing in the way of a multibillion-euro flotation that it had hoped to carry out in June. Sign up to our Due Diligence newsletter for the latest corporate finance and private equity news. 4. Nintendo announces surprise 10-for-1 stock split The Kyoto-based games maker announced a 10-for-one stock split to address longtime investor calls to improve corporate governance. The unexpected move would finally allow retail investors to invest in the creator of Mario and Donkey Kong by making shares cheaper to acquire. More companies news: Coinbase’s trading volumes fell more than 40 per cent in the first quarter, as its worse than expected earnings and bleak outlook underscored the fallout from the crypto bear market. 5. Emerging markets hit by rising rates and slower growth Emerging market currencies have fallen by their most since the early stages of the pandemic as a “toxic” mix of rising US interest rates and slowing Chinese growth dims the outlook for developing economies around the world.The day aheadChina April CPI and PPI data Last month’s consumer price index and producer price index figures are set to be released.Australian TV debate The third leaders’ debate between Scott Morrison and Anthony Albanese will take place Wednesday, 10 days before the election. (SBS News) Earnings Compass, ITV, Panasonic, Suzuki Motor Corporation, Takeda, Thyssenkrupp, Toyota, Tui Travel and Walt Disney Company are among the companies reporting results Wednesday. Disney’s results are poised to show whether the Disney+ streaming service has extended the strong growth it reported in its first quarter, or suffered a Netflix-style meltdown.What else we’re readingSouth Koreans seek ways to counter North’s nuclear threat Ahead of his inauguration South Korean president Yoon Suk-yeol pledged to “dramatically strengthen” his nation’s defences against the rapidly developing nuclear forces of North Korea. His comments highlight an intensifying debate over whether to push for a return of US nuclear weapons to the Korean peninsula.

South Korean president Yoon Suk-yeol offered Pyongyang ’an audacious plan that will vastly strengthen North Korea’s economy’ if it committed to denuclearisation in his inauguration address © Getty Images

New Zealand’s jobs law will cause ripples beyond its shores Legislation going through New Zealand’s parliament aims to make bad jobs better by setting a minimum floor for pay and conditions. Sarah O’Connor says the bill represents a huge shift in the labour market — and its success or failure will have an impact on the wider world.Kishida’s pitch for corporate Japan faces toughest test at home While Prime Minister Fumio Kishida woos foreign investors, he will have to overcome resistance among domestic households to deploying excess cash, writes Leo Lewis. While US household financial assets have tripled over the past decade, Japanese household financial assets increased only 1.4 times.The race to mine lithium in America’s backyard China dominates the supply chain for the manufacturing of lithium batteries, including the processing of minerals. But as the US attempts to surge ahead in the global race to build green batteries, Washington is encouraging companies to break ground on mining projects — even amid criticism from environmentalists.Bored Ape creator’s next windfall The start-up behind Bored Ape Yacht Club, the non-fungible token collection of digital art snapped up for millions of dollars by celebrities and crypto-enthusiasts, has an ambitious new idea: selling plots of virtual land in its own metaverse, an alternative to platforms being built by Silicon Valley companies such as Apple and Meta. Things to do in Tokyo Japan is home to eight winners of the Pritzker Prize, widely considered architecture’s highest honour. No country has more. Explore Globetrotter’s list of the 12 highlights in Tokyo’s constellation of starchitecture.

Tadao Ando’s ‘subterranean spaceship’ features an egg-shaped structure with an oval atrium © James Hand-Cukierman More

In a floor speech, McConnell said of Bedoya: “He is an essentially foolish choice – foolish – when the American people handed this administration a 50-50 Senate. I would urge my colleagues on both sides to stop this awful nomination so the president can reconsider and send us somebody suitable.”McConnell said Bedoya has publicly criticized police, among other allegations.Votes on the nomination could come as early as Wednesday.Senate Democratic Leader Chuck Schumer has said Bedoya was needed on the five-member commission – now 2-2 between Democrats and Republicans – in order for the agency to investigate oil companies Democrats say are gouging consumers with high gasoline prices.The commission cannot move forward with a contemplated action on a tie vote.The U.S. Chamber of Commerce, which speaks for business, said they opposed Bedoya and wanted a fifth commissioner who would rein in FTC Chair Lina Khan, a progressive who has advocated tough antitrust policies and steps to end what she considers abuses, such as companies making it easy to sign up for subscriptions but difficult to cancel.”Rather than a rubber stamp, a fifth commissioner at the Federal Trade Commission must serve as a check on Chair Khan’s radical agenda,” said Chamber Executive Vice President Neil Bradley, who accused Khan of actions that “undermine the rule of law” and push up prices.Bedoya, a visiting law professor at Georgetown University, is a former chief counsel of the U.S. Senate Judiciary subcommittee on privacy, technology and the law. More

NEW YORK (Reuters) – In the wake of the 50-basis-point interest rate hike by an increasingly hawkish Federal Reserve, markets have gyrated wildly ahead of this week’s U.S. economic data, which will be closely parsed for signs that inflation is peaking. Price growth has soared to the highest level since the early 1980s due to the collision of a post-pandemic demand boom and a gummed up global supply chain, and has stoked fears that the Fed’s aggressive attempts to rein it in could lead the economy into recession.The Labor Department’s jobs report on Friday provided the first potential sign of a plateau, with monthly wage growth decelerating to 0.3% from 0.5% and holding steady at 5.5% year-on-year.On Wednesday, analysts expect the consumer price index (CPI) to show a sharp pullback in monthly growth, cooling to 0.2% in April from 1.2% in March — the biggest monthly jump in more than 16 years — and an annual increase of 8.1%, 0.4 percentage point lower than the prior 8.5%, which was the hottest reading since December 1981.Energy and food prices were the culprit, exacerbated by fallout from the Russia-Ukraine war.”Russia’s invasion of Ukraine has magnified the pace of inflationary pressures this year and the Fed can’t do much about that,” said David Carter, managing director at Wealthspire Advisors in New York. Energy prices posted an 11% monthly jump in March, with gasoline surging by a jaw-dropping 18.3%. Average prices at the pump hit a record high in March, according to motorist group AAA. Food eaten at home rose 1.5% on a monthly basis, and grocery prices rose by 10% year-on-year, the fastest annual growth in more than four decades. Stripping out food and energy prices, so-called “core” CPI is expected to have edged up by 0.4% last month, but cooling to 6.0% from 6.5% on an annual basis. GRAPHIC: Inflation (https://graphics.reuters.com/USA-STOCKS/akvezykzypr/inflation.png) Any sign of deceleration would be welcomed by markets.”If inflation prints at expectations, it would be the first meaningful decline in the annualized inflation rate since the depths of the COVID recession,” writes Matt Weller, global head of research at StoneX Financial.Thursday’s producer prices (PPI) data, which reflects the prices U.S. companies receive for their goods and services at the figurative factory door, are predicted to tell a similar tale.Consensus estimates forecast a sharp deceleration in headline PPI, and a shallower slowdown when stripped of food and energy items.Recent survey data, particularly from the Institute for Supply Management’s (ISM) purchasing managers’ indexes (PMI) reveal that two main drivers of inflation — supply scarcity and the ongoing worker drought — remained significant headwinds in April.On Tuesday, while 32% of survey participants in the National Federation of Independent Business’ (NFIB) Business Optimism survey rated inflation their top concern — a record-high reading — fewer respondents reported raising prices and hiking wages. GRAPHIC: Inflation worries and prices paid (https://graphics.reuters.com/USA-STOCKS/zgpomlgmypd/nfibism.png) So far, many companies have been able to pass input costs along to their customers. In fact, the S&P 500 12-month forward profit margin is increasing.As of May 6, that figure was 13.4%, higher than the early May readings going back at least 12 years, according to Refinitiv Datastream. “Corporations have been able to pass on higher costs as demand remains strong,” Carter added. “However, if the Fed’s interest rate increases cool demand, companies will be unable to pass along higher costs and margins will shrink.”How will the markets react to the data?The S&P 500 slipped 0.3% on April 12, when March’s dire — although largely expected — CPI report was released. Any number at or below consensus on Wednesday would likely be welcomed by investors.”Under the hood, there continue to be signs that inflation, labor market tightness, and supply chain woes may all have peaked,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. “The market is in ‘prove it’ mode, and those early signs are still far from adequate proof to calm the markets.”(This story refiles to add graphics) More