Economy

The City of London Corporation, which runs the capital’s so-called “Square Mile,” said its New York outpost opened on Monday, with the Washington office set to open on Tuesday.The organization said its aim was to help Britain foster closer financial regulatory cooperation with the U.S., improve market access for British firms and attract greater U.S. investment into Britain.”Post Brexit, the business bandwidth between the U.S. and the U.K. has accelerated which made it incumbent upon us to have a physical office to keep these connections going,” Lord Mayor Michael Mainelli, ceremonial leader of the City of London, told Reuters.The U.K. is the second largest investment management centre outside the U.S. with 15% of global assets under management, and there is scope to grow that further by providing better business connectivity to London, Mainelli said.The move comes as Britain pursues a raft of reforms designed to boost capital inflow and regain lost ground to rival financial centres, after Brexit largely cut its access to one of its biggest markets – the European Union.British lawmakers last week criticised the package of reforms to date as a “damp squib”, arguing they were yet to make a substantial impact.Britain’s financial services minister, Bim Afolami, welcomed the City of London’s office openings in the U.S., adding that the British government wanted to encourage closer trade and investment between the two countries. More

(Reuters) – A look at the day ahead in Asian markets.Inflation data from India and Japan dominate the Asian calendar on Tuesday, with investors expecting contradictory signals – a significant cooling in Japanese wholesale inflation, and the first rise in Indian consumer inflation since July.These indicators come just hours ahead of the latest reading of U.S. CPI inflation, and a few days after figures from Beijing showed that China’s slide into deflation accelerated at a surprisingly fast rate in November. China’s yuan slid to a three-week low against the dollar on the back of that news, and Japan’s yen fell sharply on Monday after a media report citing sources said Bank of Japan officials are in no rush to scrap negative interest rates this month as they have not seen enough evidence of persistent wage growth. Their patience will be justified if the consensus forecast for Tuesday’s wholesale inflation report is borne out. Economists expect annual wholesale inflation to slump to 0.1% from 0.8% in October. That would be the lowest since February 2021, and a remarkable reversal from above 10% just over a year ago.Annual consumer price inflation in India, meanwhile, is seen rising to 5.7% in November from 4.87% in October on the back of higher food prices, which would be the first increase since July and further above the central bank’s target of 4%.As 2023 draws to a close, disinflationary forces across the Asia & Pacific region are mostly intensifying although, with headline inflation still above target in many countries, central banks are in no hurry to cut interest rates. The Reserve Bank of Australia is one. It delivered a ‘hawkish pause’ on interest rates earlier this month, and rates traders are only pricing in one quarter percentage point rate cut next year. And not until the fourth quarter too. RBA Governor Michele Bowman speaks on Tuesday morning and investors – and the Aussie dollar – will be keen to see if she maintains that hawkish stance, or if it softens at all. Investor sentiment was pretty neutral on Monday – U.S., Chinese and global stocks edged up but Asian stocks slipped, while bond yields and the dollar index were little changed on the day – but Japanese markets were more eye-catching.The yen lost around 1% against most major currencies, and the Nikkei jumped 1.5%. Japanese markets have been on edge since investors interpreted remarks from BOJ governor Kazuo Ueda last week as paving the way for a more rapid exit from ultra-loose monetary policy.Part of that reversed on Monday. What’s in store Tuesday?Elsewhere, U.S. Commerce Secretary Gina Raimondo told Reuters on Monday that the Biden administration is in discussions with Nvidia (NASDAQ:NVDA) about sales of some artificial intelligence chips to China but not its most advanced semiconductors.Here are key developments that could provide more direction to markets on Tuesday:- India CPI inflation (November)- Japan wholesale inflation (November)- RBA governor Michele Bullock speaks (By Jamie McGeever; Editing by Deepa Babington) More

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The move is aimed at drawing $9 billion in corporate investment, as New York jockeys to host a new national semiconductor technology center.Gov. Kathy Hochul of New York announced on Monday a plan to invest $1 billion to expand chip research activities in Albany, N.Y., as the state aims to continue as a global semiconductor center.The plan is expected to create 700 new permanent jobs and retain thousands more, and includes the purchase of a new version of one of the world’s most expensive and sophisticated manufacturing machines, along with the construction of a new building to house it.At an event in Albany, Gov. Hochul positioned the investment as a national priority. “The Chinese are attempting to dominate this industry,” she said. “We have no intention of letting that happen. “The initiative should draw $9 billion in additional investments from chip-related companies, according to state officials. They expect it to boost New York’s chances to be selected to host a new National Semiconductor Technology Center, a planned centerpiece of the research portion of federal money that Congress allocated in 2022 as part of the CHIPS Act.“We’re hoping that this level of investment will attract more investment from the U.S. CHIPS Act to make it even bigger,” said Mukesh Khare, an IBM vice president who is general manager of its semiconductor operations.Besides IBM, which has long conducted chip research in Albany, companies participating in the project include Micron Technology, Applied Materials and Tokyo Electron.The focus of the effort is the Albany Nanotech Complex, a cluster of research buildings owned and operated by a state-affiliated nonprofit called NY CREATES. The state plans to spend about $500 million to build a new 50,000-square-foot clean room building.A different building is needed to accommodate the next major advance in a technology called lithography, which projects patterns of circuitry on silicon wafers to make chips. Advances in such equipment are needed to create smaller transistors and other circuitry to boost the power of computers and other devices.The most sophisticated chips are currently made using technology called extreme ultraviolet, or EUV, lithography. The Dutch company ASML is the dominant supplier of the machines, which officials in the United States and the Netherlands have prevented from being sold to China as part of an effort to limit that country’s progress in chip manufacturing.Albany Nanotech has owned prototype EUV tools and currently operates a commercial version. Under the new plan, New York will invest $500 million to purchase a next-generation EUV system — known by the phrase “High NA,” for numerical aperture — that will allow the center to develop much more advanced chips.Besides permanent research jobs, state officials estimated that the Albany project would generate 500 to 600 temporary construction jobs over roughly two years.Albany NanoTech won’t be the first to use the High NA tool. Intel has ordered the first system from ASML, which is expected to begin installing it in early 2024. The comparable machine is expected to arrive in Albany in late 2025, Mr. Khare said.The effort is unusual in several ways, including that the new machine will be owned by the state and operated as a public resource to help the broader U.S. semiconductor industry, he added.States in the Northeast United States seem destined to play a big role in the chip industry’s evolution. U.S. Commerce Department officials also said Monday that BAE Systems in New Hampshire will receive the first grant under the manufacturing portion of the CHIPS Act.Micron, a Boise, Idaho, company that is the only American maker of chips used to store data, has also said it will spend up to $100 billion over a decade or more to develop a new manufacturing site near Syracuse, N.Y. More

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MOSCOW (Reuters) – Russia will raise interest rates to 16% on Friday, a Reuters poll showed on Monday, with inflation pressure exacerbated by labour shortages and lending growth forcing the central bank to extend its monetary tightening cycle to one last hike. The expected 100 basis point increase at the Bank of Russia’s final meeting of the year should mark the end of a tightening spree that began in July, when rates were as low as 7.5%. Stubbornly persistent inflation pressure, aggravated by the rouble’s dramatic weakening earlier this year, as well as labour shortages, government spending and high lending, has pushed rates to their current level of 15%. Twenty-three of 27 analysts and economists polled by Reuters on Monday predicted that the Bank of Russia would raise its key rate to 16% at Friday’s meeting. Three predicted a sharper hike, one forecast a hold at 15%.The bank surprised analysts in late October with a stronger-than-expected 200 basis point hike to 15%. Alexander Fetisov, head of Rosselkhozbank’s analytics department, forecast a 100-basis point hike, with higher credit growth and increasing inflation expectations creating grounds for the central bank to make another hike and maintain tight rhetoric. “A more radical increase cannot be ruled out with the aim of mitigating likely inflation trends at the start of 2024 and to maintain the inflation forecast range for 2024 at 4-4.5%,” Fetisov said. Monthly inflation accelerated in November at its fastest pace since April 2022, data showed on Friday, all but cementing analyst expectations for a hike. Annual inflation stood at 7.48% last month, well above the bank’s 4% target and almost exceeding its 7-7.5% forecast range for 2023. “The overheated labour market, growing state spending and active issuance of subsidised mortgages are leading to significant inflationary pressure,” said Sovcombank, forecasting a hike to 16%. Inflation and high interest rates are among challenges facing Russia’s economy as President Vladimir Putin prepares for a March presidential election, though Moscow’s success in evading a Western oil price cap is helping drive a recovery in economic growth and easing pressure for now. In late February 2022 Russia ramped up its benchmark rate to 20% in an emergency move after Moscow despatched tens of thousands of troops to Ukraine, which led to increasingly wide-ranging Western sanctions being imposed in response.The key rate was then gradually cut to 7.5%, before the bank started hiking in July. More

Investors are pressing oil and gas producers to expand their inventories following Exxon Mobil (NYSE:XOM)’s $60 billion deal for Pioneer Natural Resources (NYSE:PXD) and Chevron (NYSE:CVX)’s $53 billion agreement for Hess (NYSE:HES) in October.Houston-based Occidental (NYSE:OXY) will finance the purchase of privately-held oil and gas producer CrownRock with $9.1 billion of new debt, the issuance of about $1.7 billion of common equity and the assumption of CrownRock’s $1.2 billion of existing debt.The CrownRock deal would be Occidental’s first major acquisition since its widely criticized and debt-laden purchase of rival Anadarko Petroleum (NYSE:APC) in 2019. Occidental had about $18.60 billion in debt as of Sept. 30, according to a company filing. The deal, expected to close in the first quarter of 2024, will immediately add to Occidental’s free cash flow and give the company more than 94,000 net acres in the Midland basin of Texas – part of the Permian, the largest U.S. oil-producing area. Shares of Occidental fell 1.2% in premarket trading. Reuters first reported in September that CrownRock was preparing to explore a sale that could value it at well over $10 billion including debt. More

Nadia Calviño, newly-appointed head of the European Investment Bank, told CNBC one of her priorities will be speeding up procedures and making the EU financing arm more efficient.
She will also look to increase co-operation and discussion between global multilateral development banks to create a “global safety net” fit to meet new challenges.

The incoming head of one of the world’s largest development banks says it must become faster and more efficient in order to finance priorities such as the climate transition and Ukraine rebuild.
Nadia Calviño, Spain’s finance minister and deputy prime minister, was appointed head of the European Investment Bank Friday — in what has been touted as a boost for Spanish influence within the European Union. Known as the EU’s lending arm it approved some 75.86 billion euros ($81.6 billion) in new projects in 2022.

“One of my priorities when I get to the European Investment Bank will be to see how to speed up procedures, how to make the institution, not leaner, but more efficient in funding, public and private investment,” Calviño told CNBC’s “Squawk Box Europe” on Monday.
“We also have a European Union with 27 member states, and it is a complex construction. But still, it leads the green transition in the world, it has a leading role in many of today’s debates, and I think this leading role should be preserved going forward.”
The organization “has the capability, the ability, to mobilize large amounts of investment, public and private investment, in the areas of the green transition, the rebuilding of Ukraine, and all other European priorities. So indeed, I do think that we need an EIB which is fit for purpose to support European policies going forward,” she said. She said she will also look to increase co-operation and discussion between global multilateral development banks to create a “global safety net” fit to meet new challenges.
Calviño said that Spain had launched a “massive” investment program using funds from the NextGenerationEU pandemic recovery instrument.
“What we see is that we launched strategic projects in the area of electric vehicles, or precision health, or agri-tech … or chips. And this is actually attracting large private investments that see Spain as a great opportunity for them to set their bases and invest in R&D [research and development] and the development of new technologies. So I do think there is a chance for us to crowd in private investment if we do things right,” she said.

‘Global standard’ on AI

Asked about the negative reaction by some tech leaders to landmark new EU regulation around artificial intelligence, Calviño was firm that the bloc had reached the “right balance.”
The rules, agreed in an initial form by lawmakers Friday, divides AI into categories including “unacceptable” uses that must be banned, along with high, medium and low-risk. High-risk technologies will be required to comply with various requirements, including an impact assessment, in order to access the EU market.
“Some parts of the industry may not want to have any regulation whatsoever. But, you know, citizens are also expecting the public sector to ensure that the development and the innovation in this area is going to preserve human rights, our values and actually go in the direction of improving humankind’s living conditions … from this point of view, I think that we’ve struck the right balance.”
“There is proportionality in the rules for smaller players and for large platforms. We’re going step by step, starting with artificial intelligence having to show that something, a picture, a video, has been created through artificial intelligence, to start with … It is a very important step forward so that Europe is also leading standard-setting at the global level.”
On whether the rules risked hampering the ability of Europe’s technology firms to grow and compete on the global stage, Calviño said: “This debate took place when we adopted the general data protection regulation. And many people said, well, companies are going to abandon Europe.”
“Actually, that has become the global standard. And I think it’s going to be something similar in artificial intelligence. But I agree, we need a global standard. And that’s why it’s important that the United Nations is also looking into these issues.” More