Economy

LONDON (Reuters) -The European Union said on Wednesday that its provisional deal to end the bloc’s heavy reliance on a post-Brexit London for clearing euro derivatives will help deepen mainland Europe’s capital market.The bulk of clearing in euro-denominated interest rate swaps (IRS), widely used by companies to hedge against unexpected moves in borrowing costs, is done by the London Stock Exchange Group (LON:LSEG).U.S. exchange operator ICE in London clears large amounts of Euribor futures.Clearing ensures that a stock, bond or derivatives trade is completed, even if one side of the transaction goes bust, and helps build liquidity in trading in a certain location.Brussels wants EU regulators to have direct oversight of euro clearing for banks and asset managers based in the bloc, particularly since Britain’s 2020 departure from the EU and requirement to comply with its financial rules.”This will bring more clearing services to Europe and enhance our strategic autonomy,” Vincent Van Peteghem, finance minister for current EU president Belgium, which helped to negotiate the agreement with the European Parliament, said in a statement.U.S. Nasdaq, Deutsche Boerse (ETR:DB1Gn) and Swiss SIX Group’s Madrid Exchange are already stepping up efforts to attract business from London.Markus Ferber, a German centre-right member of the parliament, was critical of the deal, saying the new rules amount to a “tiny step” because they include “preconditions, exemptions and review clauses”.”The big winner of last night’s agreement is the City of London that benefits from the status quo. In particular, the French government has once again not taken a European perspective, but has done the bidding of large U.S. investment banks,” Ferber said.Shifting significant volumes from London to mainland Europe could take several years given the huge positions involved, and some business has already gone to the United States.LSEG’s notional outstanding in euro IRS totalled 145.3 trillion euros on Tuesday, though only a minority of this was transacted between EU counterparties. Deutsche Boerse’s Eurex Clearing had a total of 14 trillion euros at the end of December.SOLID ACTIVE ACCOUNTThe deal sets a “solid active account requirement”, meaning banks and asset managers in the bloc must have an account with an EU-based clearing house to clear contracts such as euro interest rate swaps, the EU statement said.There were requirements to demonstrate that the accounts are actually being used, including for “counterparties above a certain threshold to clear trades in the most relevant sub-categories of derivatives of substantial systemic importance”.Banks and asset managers in the bloc should regularly clear “at least five trades” in each of the targeted categories of derivatives, the statement said.”Furthermore, a Joint Monitoring Mechanism is created to keep track of this new requirement.”The European Commission is required to take further measures in two years’ time if heavy reliance on London has not been reduced, EU lawmakers said in a separate statement.International banks have criticised the EU law, saying that being cut off from global pools of multi-currency liquidity at LSEG in London could damage their international competitiveness.LSEG said EU customers continue to share concerns about the requirement to open operational accounts at an EU clearing house.”We call for proportionality in the implementation of these requirements in order to ensure that EU firms are not negatively impacted,” LSEG said in a statement.ICE had no immediate comment.At the time of Brexit four years ago, UK-based clearing houses were given EU permission to continue serving customers in the bloc until June 2025. This raised pressure on market participants to shift clearing from London to centres such as Frankfurt, Madrid and Stockholm.The new rules will come into effect after EU states and full European Parliament have given formal approval to the deal.($1 = 0.9289 euros) More

BEIJING (Reuters) -China has replaced the head of its securities regulator, the official Xinhua news agency said on Wednesday, as policymakers struggle to stabilise the country’s main stock indexes after a plunge to five-year lows.The cabinet removed Yi Huiman as chairman of the China Securities Regulatory Commission (CSRC), replacing him with Wu Qing, a veteran securities regulator who had led the Shanghai Stock Exchange and served as a key deputy in Shanghai’s municipal government, Xinhua said.Yi’s removal comes as Chinese markets are on a knife edge as institutional and retail investors scramble to cut their losses, with the sputtering economy and a lack of forceful government stimulus measures weighing heavily on confidence.Numerous market-focused support moves such as restrictions on short-selling or reductions in trading duties have failed to staunch the selloff, as have a number of government statements promising support but lacking details.”As a knee-jerk reaction, I can see how this would be viewed as positive. But in addressing the well understood issues of the Chinese economy, it doesn’t address anything at all,” said Tim Graf, the head of EMEA macro strategy at State Street (NYSE:STT).The {{28930|FTSE ChChina A50 Index Futures edged up after the announcement, with a gain of 0.2% as of 1027 GMT. Hong Kong’s Hang Seng futures were little changed on Wednesday evening.Foreign investors sold a net 18.2 billion yuan ($2.5 billion) in Chinese equities last month to notch a sixth straight month of outflows, and the central bank has been persistently supporting the yuan currency.World stocks went up 20% last year, gold rose 13% and bitcoin 155%. China’s blue-chip CSI300 (.CSI300), fell 11% and collapsed to a five-year low in recent sessions.Fresh vows of support by state-linked buyers and a Bloomberg report that President Xi Jinping would meet market regulators drove a sharp rally on Wednesday, but the mood remains fragile and investors sceptical.Yi, a veteran of the Industrial and Commercial Bank of China – which he joined as a junior loan officer at a branch in Zhejiang in 1985 – was appointed to head the CSRC in January 2019.Chinese markets have been roiled by near constant turmoil since – first by a trade spat with Washington, then by the collapse of developer China Evergrande (HK:3333) under debts emblematic of the crisis that has enveloped the real estate market.A series of regulatory crackdowns on sectors from technology to education has also tested investors’ patience and China’s underwhelming recovery from COVID-19 pushed them to outright flight.”The selloff is clearly the last straw for Yi – it’s not the first time China fired a CSRC chairman during a market rout. Thus change signals leaders’ willingness to turn the market around,” said Xu Tianchen, senior economist at the Economist Intelligence Unit (EIU).In 2015, a plunge in China’s stock market and a surprise devaluation of the yuan roiled global markets, and a botched stock market rescue attempt tarnished Beijing’s pledges of reforms and broad policy-making credentials.In early 2016, China removed Xiao Gang, then head of its securities regulator, appointing a top state banking executive as his replacement, as leaders sought to restore confidence in the economy.EIU’s Xu said that Wu’s appointment ends the practice where commercial bankers head the CSRC.”Wu’s previous experience in the securities industry – across regulators and exchanges – will hopefully bring some changes towards ‘leaving it to the professionals,’ said Xu.Wu also replaced Yi as the Communist Party chief at the regulator, according to Xinhua.The announcement comes without a common term of “to be appointed to other roles” which usually suggests an outgoing chairman is moving to fill in another position, a former CSRC official said.($1 = 7.1941 Chinese yuan renminbi) More

1. Futures subduedU.S. stock futures were muted on Wednesday, as investors weighed an ongoing slew of corporate earnings and fresh interest rate commentary from Federal Reserve policymakers.By 05:06 ET (10:06 GMT), the Dow futures contract and S&P 500 futures were mostly unchanged, while Nasdaq 100 futures had inched up by 13 points or 0.1%.The main averages on Wall Street ended Tuesday slightly higher after spending much of the session in the red. The benchmark S&P 500 added 0.2% following a surge in shares in GE HealthCare Technology (NASDAQ:GEHC), which posted stronger-than-expected fourth-quarter earnings. The S&P 500 healthcare sector, an index tracking the industry, subsequently jumped to a new all-time high.Despite facing pressure from a dip in chip stocks — particularly California-based Rambus (NASDAQ:RMBS) — the tech-heavy Nasdaq Composite gained 0.1%. The Dow Jones Industrial Average advanced by 0.4%, with hopes for solid air travel demand lifting airlines.Dampening sentiment were comments from Cleveland Fed President Loretta Mester and Minneapolis Fed President Neel Kashkari. Mester said an uncertain inflation outlook had clouded the timing for potential rate cuts, while Kashkari argued that the central bank’s fight to tame elevated inflation is “not done yet.” Both echoed a similar recent stance taken by Fed Chair Jerome Powell that has all but dashed hopes for an imminent reduction in borrowing costs.2. Ford drives higher; Snap slumpsShares in Ford Motor (NYSE:F) climbed in premarket U.S. trading on Wednesday after the automotive giant unveiled a revenue outlook that topped analysts’ expectations and vowed to return more cash to its stakeholders.Michigan-based Ford guided for annual pre-tax income of $10 billion to $20 billion, above Bloomberg consensus estimates of $9.5 billion. The company added that it would deliver a supplemental dividend of $0.18 per share for the first quarter, along with a regular pay-out of $0.15.But executives told analysts that they were slowing investments on next-generation electric vehicles due to price changes around non-combustion cars in the past year.Elsewhere, Snap (NYSE:SNAP) shares plummeted by more than 30% after the social media group reported quarterly revenue of $1.36B, missing projections.Unlike bigger rivals such as Facebook-owner Meta Platforms (NASDAQ:META), the Santa Monica-headquartered business has struggled to overcome a downturn in digital advertising spending during a time of tighter financial conditions. Snap, which detailed plans to lay off 10% of its workforce earlier this week, flagged that its operating environment has been “challenging.”A parade of company results marches on later today, highlighted by big names like media titan Walt Disney (NYSE:DIS), ride-sharing firm Uber Technologies (NYSE:UBER), and chip designer Arm Holdings (NASDAQ:ARM).3. ESPN, Fox, Warner Bros. Discovery announce joint sports streaming ventureWalt Disney’s ESPN, Warner Bros Discovery (NASDAQ:WBD) and Fox have said they plan to team up to launch a new streaming service that will offer lucrative live sporting events.The as-yet unnamed joint venture will bundle each group’s sports networks, certain direct-to-consumer sports services and sports rights, according to a statement from the companies.They said that the platform aims to provide a “new and differentiated experience,” particularly to sports fans who are ditching pay-television for streaming options. The businesses noted that each one would own an equal one-third share of the joint venture, adding that independent management would oversee the service. No pricing was unveiled.Cord-cutting and weakness in pay-TV demand has increasingly persuaded media groups to consider moving their valuable sports portfolios away from traditional — and expensive — cable packages. “This new product […] will help prove out how many households that have cut the cord would like to subscribe to a sports-centric and lower priced bundle,” analysts at Morgan Stanley said in a note.4. Moody’s downgrades New York Community BancorpNew York Community Bancorp’s (NYSE:NYCB) long-term and some short-term issuer ratings have been downgraded to “junk” status by Moody’s, sending shares in the regional bank tumbling premarket on Wednesday.The stock, which has already fallen by more than 50% since it reported steep losses from real estate loans last week, touched its lowest level in over two decades following the announcement.Moody’s said the decision stemmed from issues related to “financial, management and risk management” at NYCB, adding that the mid-sized lender did not have enough provisions on hand to cover possible loan losses. The bank has been under scrutiny as well in the wake of the recent departure of its chief risk officer.NYCB’s troubles have threatened to reignite concerns over the exposure regional lenders have to a post-pandemic drop in commercial property values. For its part, NYCB has said it is taking “decisive actions” to fortify its balance sheet and strengthen risk management processes.5. Oil prices rise with Middle East conflict, U.S. production in focusOil prices rose slightly in European trade on Wednesday as investors sought more cues on U.S. production and inventories from official data due later in the day, while focus remained on ongoing ceasefire negotiations in the Israel-Hamas war.Forecasts for a potential drop in U.S. output from record highs has spurred some strength this week in oil prices, which were otherwise reeling from steep losses fueled by speculation over an end to disruptions in the Middle East.A softer dollar also afforded some relief to crude prices, with the greenback retreating from almost three-month highs reached earlier in the week. The strength in the dollar was driven chiefly by expectations of higher-for-longer U.S. interest rates.Brent oil futures expiring in April gained 0.6% to $79.09 a barrel, while West Texas Intermediate crude futures edged up 0.7% to $73.86 per barrel by 05:07 ET (10:07 GMT). Both contracts slumped over 7% each last week. More

Twisted and charred aluminum mixed with shards of glass still lines the floor of the industrial warehouse where Victoria Martocci once operated her scuba diving business. After a wildfire tore through West Maui, all that remained of her 36-foot boat, the Extended Horizons II, were a pair of engines.That was six months ago, but Ms. Martocci and her husband, Erik Stein, who are weighing whether to rebuild the business, which he started in 1983, said the same questions filled their thoughts. “What will this island look like?” Ms. Martocci asked. “Will things ever be close to being the same?”In early August, what began as a brush fire burst into the town of Lahaina, a popular tourist destination, all but leveling it, destroying large swaths of West Maui and killing at least 100 people in the nation’s deadliest wildfire in more than a century.The local economy remains in crisis.Rebuilding the town, according to some estimates, will cost more than $5 billion and take several years. And tense divisions still remain over whether Lahaina, whose economy long relied almost entirely on tourism, should consider a new way forward.Debates about the ethics of traveling to decimated tourist destinations played out on social media after an earthquake in Morocco and wildfires in Greece last year. But the situation is particularly dire for Maui.State and federal officials scrambled last summer to find shelter for thousands of residents who had lost their homes, relocating people to local hotels and short-term rentals where many still live, often sharing a wall with vacationing families whose realities feel far from their own. Other displaced residents live in tents on the beach, and some restaurant owners pivoted to working out of food trucks.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

STOCKHOLM (Reuters) – Sweden’s central bank could cut rates as early as the first half of this year, but there are risks that inflation might prove stubborn, delaying policy easing, the minutes of the central bank’s most recent meeting, published on Wednesday, showed.The Riksbank kept its key interest rate unchanged at 4.00% on Feb. 1, but said it could start loosening policy much earlier than its previous forecast.The shift in policy reflects growing confidence among central bankers that inflation – which peaked in Sweden at over 10% at the end of 2022 – is now under control after a series of rate hikes. The economy is slowing, while mortgage borrowers and commercial real estate firms are feeling the pinch from higher interest payments. The central bank said it did not rule out a cut in the first half of this year and Deputy Governor Per Jansson said that could even come at the next meeting in March, though May or June were “significantly more realistic”.”The inflation outlook is favourable, which is why we expect the first rate cut in May and see the policy rate at 2.50% year-end 2024,” Nordea said in a note.The positive message from the Riksbank was tempered by a note of caution, however.”Experiences of previous episodes of high inflation clearly show the risks that can arise if the central bank lowers its guard too soon,” Governor Erik Thedeen said.He said any monetary policy easing would be “carried out with caution, and with a constant vigilance regarding the risk of setbacks”.The Riksbank is worried that companies still plan price hikes and that geopolitical tensions could hurt supply chains. The weakness of the Swedish currency – which has lost ground against the euro since the Feb. 1 rate decision – is also a major concern. “If the krona weakens once again, caution would indicate taking a wait-and-see stance with regard to monetary policy,” Thedeen said.Sweden’s currency strengthened slightly against the euro after the minutes were published.Markets have priced in a strong chance of a cut by June and for the policy rate to end the year around 3.00%.The Riksbank’s next policy decision is published on March 27. More

(Reuters) – Abu Dhabi Investment Authority (ADIA), the largest sovereign wealth fund in the United Arab Emirates (UAE), is setting up a $4-5 billion fund to invest in India through a tax-neutral finance hub in Prime Minister Narendra Modi’s home state of Gujarat, according to two sources with direct knowledge of the matter.The regulatory authority for financial services at Gujarat International Finance Tec-City, or GIFT City, has granted in-principle approval to ADIA to set up the fund, sources said, declining to be identified as they are not authorised to speak to media.ADIA’s intention to establish a presence in the hub was first announced last July in a joint statement by India and UAE. The amount of investment planned and the approval from the regulatory authority has not been previously reported.A spokesperson for ADIA declined comment. An email to the International Financial Services Authority (IFSCA), which regulates financial services in the hub, was not answered.With the approval, ADIA will become the first sovereign wealth fund to begin investing in India via GIFT City. The greenlight comes days before Modi is set to visit Abu Dhabi to inaugurate a large temple.Since becoming prime minister a decade ago, Modi has visited UAE six times, strengthening ties with India’s third-largest trading partner.Trade between India and the UAE totalled $85 billion for the financial year ending March 2023, according to Indian government data. The Arab nation is host to one of the largest Indian diaspora populations in the world at 3.5 million, which constitute almost 35% of UAE’s total population.”By the middle of this year, ADIA could start investing through this fund. The allocated funds would be invested in India over a period of time,” said the first of the two sources, without elaborating. Funds which set up at GIFT City can invest in Indian and foreign equities and debt securities, among other assets.Modi’s government has in recent months tried to boost activity at the GIFT City, including by allowing firms which are unlisted in India to list shares directly at exchanges there.Finance Minister Nirmala Sitharam, while announcing the federal budget this month, said the government aims to build up GIFT City as a “gateway for global capital and financial services for the economy’.The zone offers a 10-year tax holiday for companies setting up there, no taxes on the transfer of funds from overseas jurisdictions and closeness to Indian markets.ADIA and its wholly-owned subsidiaries has specifically been exempt from long-term capital gains taxes from Indian investments via a special provision introduced in 2020 and applicable till March 2025.Fund management activities via the hub have picked up after a slow start. As December 2023, it had 95 local and global funds with commitments of $30 billion and investments of over $2.93 billion.”IFSCA is in early stages of discussions with other sovereign wealth funds to set up operations in GIFT City,” said the second of the two sources cited earlier in the story. More

SYDNEY (Reuters) – Australia will introduce laws giving workers the right to ignore unreasonable calls and messages from their bosses outside of work hours without penalty, with potential fines for employers that breach the rule.The “right to disconnect” is part of a raft of changes to industrial relations laws proposed by the federal government under a parliamentary bill, which it says would protect workers’ rights and help restore work-life balance.Similar laws giving employees a right to switch off their devices are already in place in France, Spain and other countries in the European Union.A majority of senators have now declared support for the legislation, Employment Minister Tony Burke from the ruling centre-left Labor party said in a statement on Wednesday.The provision stops employees from working unpaid overtime through a right to disconnect from unreasonable contact out of hours, Burke said.”What we are simply saying is that someone who isn’t being paid 24 hours a day shouldn’t be penalised if they’re not online and available 24 hours a day,” Prime Minister Anthony Albanese told reporters earlier on Wednesday.The bill is expected to be introduced in parliament later this week. The bill also includes other provisions like a clearer pathway from temporary to permanent work and minimum standards for temporary workers and truck driver.Some politicians, employer groups and corporate leaders warned the right to disconnect provision was an overreach and would undermine the move towards flexible working and impact competitiveness.The left-wing Greens, which supports the rule and was the first to propose it last year, said it was a big win for the party. A deal had been reached between Labor, smaller parties and independents to support this bill, Greens leader Adam Bandt said on Twitter.”Australians work an average of six weeks unpaid overtime each year,” Bandt said. That equated to more than A$92 billion ($60.13 billion) in unpaid wages across the economy, he added.”That time is yours. Not your boss’.”($1 = 1.5300 Australian dollars) More

BANGKOK (Reuters) – Thailand’s central bank left its key interest rate unchanged for a second straight meeting on Wednesday, as expected, resisting government pressure to reduce borrowing costs to help revive faltering growth.The Bank of Thailand’s (BOT) monetary policy committee in a 5-2 vote decided to hold the one-day repurchase rate at 2.50%, the highest in more than a decade. It had raised the rate by 200 basis points since August 2022 to curb inflation. Two members voted for a cut of 25 basis points. All 27 economists in a Reuters poll had predicted the BOT would the rate steady on Wednesday, while saying the first rate cut was more likely to come earlier than they expected. “The current policy interest rate is consistent with preserving macro-financial stability,” the BOT said in a statement.”Most members thus voted to maintain the policy rate at this meeting. Two members voted to cut the policy rate by 0.25 percentage point, to reflect a lower potential growth as a result of structural challenges.”The central bank said it stood ready to adjust rates as appropriate. It said the economy was growing slower than expected and would be supported by domestic demand, though structural impediments, particularly deteriorating competitiveness, would further hamper growth.The baht was down slightly at 35.580 after the announcement. The decision will be a disappointment for the government, coming a day after Prime Minister Srettha Thavisin called again for a rate cut to jumpstart Southeast Asia’s second-largest economy, which he has described as in crisis, a depiction the BOT chief has rejected. Srettha, who is also the finance minister, has been at loggerheads with the central bank over the direction of monetary policy, arguing the economy needed support amid negative inflation. BOT Governor Sethaput Suthiwartnarueput recently told Reuters that monetary policy was “broadly neutral” and while growth would be slower than expected this year, the economy was not in crisis.On Wednesday, the BOT lowered its 2024 growth outlook to 2.5-3% from 3.2%. The economy expanded 2.6% in 2022. Consumer prices have fallen for four consecutive months year-on-year through January, driven by government energy subsidies, below the central bank’s target range of 1% to 3%.The central bank said it saw headline inflation near 1% this year and saw inflation picking up in 2025. (This story has been corrected to fix 0.25 basis points to 25 basis points in paragraph 3) More