Economy

BRUSSELS (Reuters) – European Union countries agreed on a 12th package of sanctions against Russia, the European Council said on Thursday, meaning that a phased ban on Russian diamond imports among other measures will come into effect from Jan. 1. The EU has been adding sectoral and individual sanctions since Russia’s invasion of Ukraine in February 2022 in an attempt to cut off revenues and military equipment feeding Moscow’s war machine. “The European Council welcomes the adoption of the 12th package of sanctions,” its concluding statements said. While the text of the package had been agreed by all countries earlier this week, diplomatic sources said, Austria held back on giving its final approval until late on Thursday. Austria said on Wednesday while it was not opposed, the capital needed time to examine the legal texts.However, sources familiar with the matter said the country had been attempting to have Raiffeisen Bank International, the biggest Western bank in Russia, struck off a Ukrainian blacklist in return for signing off on fresh European Union sanctions on Russia. Raiffeisen still appears on Ukraine’s list.The new sanctions package includes a direct ban on Russian non-industrial diamond imports from Jan. 1 and a phased ban on diamond imports from third countries starting from March in alignment with the Group of Seven (G7) countries. Other measures include tightening the proof required from companies who claim they adhere to the G7 Russian oil price cap. The package also added measures to prevent Russia from obtaining dual-use goods by making EU companies have their counterparties on certain products sign contracts prohibiting re-export to Russia.A notification procedure for Russian citizens or entities in Russia wishing to transfer more than 100,000 euro ($109,920.00) out of the EU was also included. ($1 = 0.9098 euro) More

In Brazil, stocks were partially driven by the local central bank’s rate cut on Wednesday evening, with board members indicating that 50-basis-point cuts will continue past its next meeting in January. Brazil’s equities benchmark index Bovespa settled up 1.06% on Thursday, reaching a new closing high of 130,842.09 points, after climbing to an intraday record of 131,259.81 earlier in the day. The previous records had been set in June 2021. The positive session was also helped by oil firm Petrobras’ shares, which were up 2.17% at close as oil prices trended higher.Mexico’s main stock index rose 3.39% to a historic close of 57,036.42 points, though it also inched even higher during trading to an intraday high of 57,077.52 points.The index was propelled by Mexico’s airport operators, a day after Grupo ASUR announced details of its 2024-2028 master development plan.Earlier in the day, Mexico’s central bank unanimously held the country’s interest rate at 11.25% and pointed toward more of the same “for some time.” More

WASHINGTON (Reuters) -More than two-thirds of the U.S. House of Representatives voted in favor of a defense policy bill on Thursday that includes a record $886 billion in annual military spending and authorizes policies such as aid for Ukraine and push back against China in the Indo-Pacific.The House backed the National Defense Authorization Act, or NDAA, by 310 to 118, with strong support from Republicans and Democrats. It was more than the two-thirds majority required to pass the measure and send it to the White House for President Joe Biden to sign into law.Separate from the appropriations bills that set government spending levels, the NDAA authorizes everything from pay raises for troops – this year’s will be 5.2% – to purchases of ships, ammunition and aircraft.Because it is one of the few major pieces of legislation that becomes law every year, members of Congress use it as a vehicle for a wide range of initiatives. It is also closely watched by major defense companies, such as Lockheed Martin (NYSE:LMT), RTX Corp and other firms that receive Department of Defense contracts.The vote for this year’s bill, which is nearly 3,100 pages long and authorizes a record $886 billion, up 3% from last year, meant that Congress has passed an NDAA for 63 straight years.The final version of the NDAA left out provisions addressing divisive social issues, such as access to abortion and treatment of transgender service members, that had been included in the version passed by the Republican-majority House over the objections of Democrats, threatening to derail the legislation.The Democratic-controlled Senate backed the NDAA, also with a strong bipartisan majority – 87 to 13 – on Wednesday. The fiscal 2024 NDAA also includes a four-month extension of a disputed domestic surveillance authority, giving lawmakers more time to either reform or keep the program, known as Section 702 of the Foreign Intelligence Surveillance Act (FISA).That provision faced objections in both the Senate and House, but not enough to derail the bill. The Senate defeated an attempt to remove the FISA extension from the NDAA on Wednesday before voting to pass the defense measure.The House and Senate had each passed their own versions of the NDAA earlier this year. The measure approved this week was a compromise between the two parties and two chambers.The bill extends one measure to help Ukraine, the Ukraine Security Assistance Initiative, through the end of 2026, authorizing $300 million for the program in the fiscal year ending Sept. 30, 2024, and the next one.However, that figure is a tiny compared to the $61 billion in assistance for Ukraine Biden has asked Congress to approve to help Kyiv as it battles a Russian invasion that began in February 2022.That emergency spending request is bogged down in Congress, as Republicans have refused to approve assistance for Ukraine without Democrats agreeing to a significant toughening of immigration law.Ukrainian President Volodymyr Zelenskiy met with lawmakers at the Capitol on Tuesday to make his case for the funding requested by Biden, but emerged from the meetings without Republican commitments. More

With Shopify, Mercari and other retailers rolling out chatbots to help buyers, this holiday shopping season is the first to be powered by A.I.To help with my holiday shopping this year, I recently turned to a new personal assistant online. “I’m looking for a Christmas present for my mother, who spends long hours working,” I typed. “Is there something she can use in her office every day?”“Of course!” came the instant reply. “Does your mother have any specific preferences or needs for her office? For example, does she need organization tools, desk accessories, or something to help her relax during breaks?”So began my conversation with Shop A.I., a new chatbot from Shopify, an e-commerce marketplace. Over 10 minutes, Shop A.I. and I engaged in a question-and-answer session. I told the chatbot my budget and more about my mother, such as her need to alleviate back pain. Shop A.I. also asked me about my mother’s preferred design and color for an office chair.More people may eventually replicate this kind of shopping experience. A year after ChatGPT debuted, retailers around the world have started rolling out chatbots that are powered by generative artificial intelligence. That makes this holiday season the first when a slew of A.I. chatbots can help shoppers brainstorm and find presents for their friends and loved ones.In addition to Shopify, chatbots have come out over the past 12 months from Instacart, the delivery company; Mercari, a resale platform; Carrefour, a retailer; and Kering, which owns Gucci and Balenciaga. Walmart, Mastercard and Signet Jewelers are also testing chatbots, which may become publicly available as soon as next year.“In a way, it’s recreating an in-store environment, but online,” said Carl Rivera, a vice president at Shopify who oversees its Shop app, which hosts Shop A.I. He said the chatbot broke down people’s questions into key terms and searched relevant products from Shopify’s millions of sellers. It then recommends products based on reviews and a shopper’s purchase history.Retailers have long used chatbots, but previous versions lacked conversational power and typically answered just a few preset questions, such as the status of an order. The newest chatbots, by contrast, can process prompts and generate tailored answers, both of which create a more “personalized and authentic interaction,” said Jen Jones, the chief marketing officer of the platform Commercetools.Whether shoppers want this technology remains a question. “Consumers like simplicity, so they don’t necessarily want to have five different generative A.I. tools that they would use for different purposes,” said Olivier Toubia, a marketing professor at Columbia Business School.Nicola Conway, a lawyer in London, tried Kering’s luxury personal shopper, Madeline, in August to search for a pink bridesmaid dress for a spring wedding. Madeline was “intuitive and novel,” she said, but it gave only one recommendation, an Alexander McQueen corset dress. Ms. Conway did not end up buying it.Kering did not respond to requests for comment.Maggie Weber, a shopping influencer who uses the social media handle @refashionedhippie, said she tried Mercari’s chatbot, Merchat A.I., in May. She asked the chatbot to show her baseball cards, but she was instead offered baseballs — and then hats, bats and jerseys.“Merchat is still in its infancy,” Ms. Weber, 34, said. She added that she worried that if she gave the chatbot too much information, it would start directing personalized ads to her.A Mercari spokeswoman said Merchat used chat history only to recommend products and did not use personally identifiable information. She added that the search bar could be faster for customers who want a specific item, while the chatbot helped those who want “inspiration for gifts.”Such inspiration was exactly what I needed this season as I had only vague ideas for what to buy my 53-year-old mother and my 17-year-old cousin, Jenny.A screenshot of our reporter’s conversation with Merchat A.I., a chatbot that helps shoppers.So I tried Shop A.I. After telling the chatbot about my mother’s back pain and asking what I could buy to help her relax, Shop A.I. offered to find an ergonomic chair and asked my budget. When I said $100, it came back with a few pages of product results.“Can you help me to narrow it down?” I typed. Shop A.I. then asked about my preferred color for a chair. I said black.Shop A.I. returned more than 300 results, including a $159 camp chair from ROAM Adventure, a $179.99 reclining massage office chair from homrest and a $269.99 CosyGaming executive chair.“These don’t seem to be under $100,” I wrote, annoyed.“As a new chatbot, I’m still learning and sometimes the search results may not be accurate,” Shop A.I. replied. “Let me try again and find some black ergonomic chairs within your budget.”Shop A.I. returned more than 300 results for black ergonomic chairs, though few were under $100.Then, it added, “It seems that I’m having trouble finding black ergonomic chairs within your budget at the moment.”I ended up typing “black ergonomic chair” into the search bar myself and set a $100 price range. A $66.81 Victory Furniture gaming chair and a $47.96 massage office chair popped up, though they were too big and heavy to be gifts.Eventually, I asked Shop A.I. for alternative ideas and received five options, including seat cushions and standing desk converters.I chose the standing desk converter and gave Shop A.I. my $100 budget. This time, the chatbot showed options within my price range, including a $99 Risedesk standing desk converter. But most of the products did not have reviews, which I rely on while shopping online. I didn’t buy anything.Shop A.I. provided alternative gift recommendations, including standing desk converters.Shop A.I. was not great at finding a gift for my cousin, either. I wanted to buy Jenny some college dorm decorations featuring her favorite anime series, Violet Evergarden, which follows a character named Violet as she recovers from an unidentified war.But Shop A.I. appeared to decide that anything the color violet was connected to my query. It showed me wall art of purple mountains and posters of purple BMW cars.So I turned to Mercari’s Merchat. After asking for my cousin’s hobby (anime), age (17) and what she might prefer for college (dorm decorations), Merchat offered three gift ideas: wall tapestries, string lights and desk accessories in the theme of Violet Evergarden.Merchat showed me four products under each category, all of which were under my budget of $50. I ended up buying an $18 Violet Evergarden poster scroll for Jenny. (She later told me she wished I had gotten her something quirkier.)Emboldened by the experience, I asked Merchat to help find a present for my mother. “Would she benefit from a back support cushion, a heating pad or maybe a massage chair pad?” it asked.“What are the pros and cons of each?” I typed.Merchat said it couldn’t provide specific pros and cons for individual items. I changed my question to: “Which one is the easiest to use?”This time, Merchat was definitive: the back support cushion, which was portable. Merchat detailed the differences between a memory-foam cushion and a firmer one, then further grouped memory-foam cushions into three categories and displayed the top four results for each, all under $100.While I didn’t buy any because the styles were limited, it was a great starting point.“Thank you,” I wrote.“You’re welcome!” Merchat replied. “Happy shopping and have a wonderful time with your family!” More

(Reuters) – A look at the day ahead in Asian markets.Asian markets are set to end the week on the front foot as another steep slide in the dollar and U.S. bond yields extends the Fed-fueled buying frenzy, although some investors may be tempted to take some chips off the table ahead of the weekend.The Dow climbed to a fresh all-time high on Thursday and the S&P 500 and Nasdaq made new 2023 highs, while the MSCI emerging market and Asia ex-Japan indexes both rose around 2%.Unless the MSCI World index slumps around 2.5% on Friday it will chalk up its seventh weekly rise in a row, its best run in six years.That should provide enough momentum to keep Asia in the green on Friday, although a batch of Chinese economic indicators and central bank decision on one-year lending rates could knock markets off course.The latest Chinese retail sales, industrial production, business investment, unemployment and house price data for November will be released, and investors will be looking for signs of growth or, in some cases, accelerating growth.China’s central bank, meanwhile, is expected to keep its one-year lending rate steady but increase liquidity injections.But sentiment around China’s economy and markets is bleak, and it will take more than a few data points to lift meaningfully. The underperformance of Chinese stocks is the main reason Asian markets have lagged their U.S. and global peers.Since the last week of October, in which time U.S. and global indexes have jumped 15% or more, the MSCI emerging and Asia ex-Japan indexes have risen 10%.The Chinese blue chip CSI 300 index is in the red, down 13% this year, and is near a five-year low.The bullish narrative global markets are running with, however, is that the U.S. economy will achieve its ‘soft landing,’ giving the Fed room to pivot towards rate cuts earlier and more aggressively than many had thought.That was given an implicit seal of approval by the Fed itself in the revised Summary of Economic Projections.But as is invariably the case, markets may have overshot. The two-year U.S. yield is down 35 basis points this week, the 10-year yield has crashed below 4% and markets are pricing in 150 bps of Fed rate cuts next year – twice as much as the Fed’s median forecasts indicate.There are other reasons to warrant caution – the European Central Bank and Bank of England don’t appear to be willing to follow the Fed’s dovish lead, Norway’s central bank raised rates on Thursday, and oil jumped more than 3% on Thursday.And next week we have the Bank of Japan’s policy meeting, potentially the biggest curveball of the year.Here are key developments that could provide more direction to markets on Friday:- China retail sales, unemployment, house prices, business investment, industrial production (November)- Japan flash PMIs (December)- Australia flash PMIs (December) (By Jamie McGeever; Editing by Josie Kao) More

Europe’s top central bankers insisted on Thursday it was too soon to let down their guard against high inflation despite an extraordinary volte-face hours before by Jay Powell, chair of the US Federal Reserve. While the European Central Bank and the Bank of England appear determined to push back against rate-cutting speculation, their protests risk being drowned out as investors bet they will follow the Fed in signalling cuts to borrowing costs in 2024. “Major central banks can deviate from the Fed in principle, but doing so in a significant way for an extended period historically has been difficult to do,” said Nathan Sheets, a former US Treasury official who now heads global macroeconomic research at PGIM Fixed Income.“What the Fed is doing is setting the tone and if you have the Fed shifting more dovish, it’s going to be harder for other major central banks to remain as hawkish as they have been.”The Fed’s shift landed with a bang on Wednesday, sparking a sharp surge in stocks and bonds as investors cheered the prospects of an earlier move to lower borrowing costs. The dovishness of Powell’s comments caught many members of the ECB governing council off guard as they gathered in Frankfurt on Thursday, according to one person involved in the discussions. “It was surprising for a lot of us,” said the person, adding that by lowering global bond yields, the Fed’s pivot could slow the pace at which inflation falls. “It makes life more difficult.”Soft landing? Monetary policymakers are turning their thoughts to alleviating downside risks for the economy More

The European Central Bank held interest rates steady for the second meeting in a row, as it revised its growth forecasts lower and announced plans to shrink its balance sheet.
“The Governing Council’s future decisions will ensure that its policy rates will be set at sufficiently restrictive levels for as long as necessary,” it said in a statement.

BRUSSELS, BELGIUM – NOVEMBER 27: Christine Lagarde, President of the European Central Bank speaks during the European Parliament’s Committee on Economic and Monetary Affairs (ECON) meeting in Brussels, Belgium on Nevember 27, 2023. (Photo by Dursun Aydemir/Anadolu via Getty Images)
Anadolu | Anadolu | Getty Images

The European Central Bank on Thursday held interest rates steady for the second meeting in a row, as it revised its growth forecasts lower and announced plans to speed up the shrinking of its balance sheet.
The bank was widely expected to leave policy unchanged in light of the sharp fall in euro zone inflation, as investors instead chase signals on when the first rate cut may come and assess the ECB’s plans to shrink its balance sheet.

“The Governing Council’s future decisions will ensure that its policy rates will be set at sufficiently restrictive levels for as long as necessary,” it said in a statement. However, the ECB switched language around inflation from describing it as “expected to remain too high for too long,” saying instead that it will “decline gradually over the course of next year.”
The latest staff macroeconomic projections see average real GDP expanding 0.6% in 2023, from a prior forecast of 0.7%. They estimate GDP will expand by 0.8% in 2024, from 1%, previously. The forecast for 2025 was unchanged, at 1.5%.
Headline inflation is meanwhile seen averaging 5.4% in 2023, 2.7% in 2024 and 2.1% in 2025. It had previously forecast readings of 5.6% this year, 3.2% in 2024 and 2.1% in 2025. The ECB now also released a new estimate for 2026, at 1.9%.
The ECB cautioned that domestic price pressures remain elevated, primarily because of growth in the cost of labor. Members see core inflation, excluding energy and food, averaging 5% this year and 2.7% in 2024, 2.3% in 2025, and 2.1% in 2026.
It said that tighter financing conditions were dampening demand and helping control inflation, adding that growth would be subdued in the short term before recovering due to the rise in real incomes and improved foreign demand.

The decision keeps the central bank’s key rate at a record high of 4%.
The ECB also announced that reinvestments under its pandemic emergency purchase programme (PEPP), a temporary asset purchase scheme, would complete at the end of 2024.
The transition will be gradual, with a reduction in the PEPP portfolio by 7.5 billion euros ($8.19 billion) per month on average over the second half of 2024, it said, after the Governing Council agreed to “advance the normalisation of the Eurosystem’s balance sheet.” It means all the tools the central bank uses to determine monetary policy are now in tightening mode, after it stopped reinvestments this summer under its Asset Purchase Program, a bond-buying stimulus package started in mid-2014 to tackle low inflation.
“I think most people thought [the announcement on PEPP] would come a little bit later, might come in the rate cut debate and was the sort of price that the doves would have to pay,” James Smith, developed market economist at ING, told CNBC’s Joumanna Bercetche after the announcement.

Fall in inflation

Euro zone year-on-year inflation has moderated from 10.6% in October 2022 to 2.4% in the most recent reading in November. That has put the ECB’s 2% target within grasp, even as officials note the threat that wage pressures and energy market volatility will cause a potential resurgence.
It has also fueled bets on cuts next year, with some analysts and market pricing both suggesting trims could come before the summer.
Asked about the timing of cuts at a news conference following the announcement, ECB President Christine Lagarde told CNBC’s Annette Weisbach that the central bank was “data dependent, not time dependent.”
“Clearly when we look at our inflation outlook, look at the projections, we see inflation at 2.1% in 2025 … and the path to get there is flatter than it was before, which lowers the risk of inflation expectations deanchoring,” Lagarde said.
“A lot of indicators are showing that underlying inflation comes below expectations, with a decline across all components.”
She continued, “So, should we lower our guard? We ask ourselves that question. No, we should absolutely not lower our guard.”
A major reason for that is the continued risk from domestic inflation, Lagarde said, adding that there is a need to assess fresh wage data in the spring.

Market reaction

European exchanges gained ground through Thursday, with the regional Stoxx 600 index reaching its highest level since January 2022, while European bonds rallied.
After the ECB news, the euro extended gains to trade 0.8% higher against the dollar at $1.095. It also moved from a slight loss to trade flat against the British pound.
The moves partly reflected the U.S. Federal Reserve’s Wednesday decision to hold rates steady and release the latest “dot plot” rate trajectory from its members, triggering expectations of a dovish pivot from major central banks.
Gains held after the Bank of England also announced a rate hold at midday U.K. time, even as its committee said monetary policy was “likely to need to be restrictive for an extended period of time.” More

Stay informed with free updatesSimply sign up to the More