Economy

Finance Minister Ishaq Dar laid the proposals before parliament as the economic crisis-hit country continues negotiations with the International Monetary Fund (IMF) for the release of critical bailout funds.The bill also proposed to raise taxes on luxury items, first and business class air travel, cigarettes among other things.($1 = 266.1900 Pakistani rupees) More

Investing.com — The U.S. consumer price report has caused a rethink of the level at which the Federal Reserve will stop its interest rate hikes, and Wall Street is set to open lower as a result. Retail sales will be studied, while Apple will be in the spotlight after Warren Buffett expanded his stake in the iPhone maker. U.K. inflation surprised on the downside while surging U.S. crude inventories have hit the oil market. Here’s what you need to know in financial markets on Wednesday, 15th February.1. U.S. CPI prompts Fed peak resetU.S. inflation proved to be stickier than expected in January, with the headline consumer price index rising 6.4% on the year, instead of the expected 6.2%.The reading gives the Federal Reserve more impetus to keep hiking interest rates in the near term, prompting the market to shift higher its estimate of what level the U.S. central bank ends its series of interest rate hikes.The Fed lifted its target rate by a quarter of a percentage point to the 4.50-4.75% range at the start of this month.New York Federal Reserve President John Williams said on Tuesday a federal funds rate this year of between 5.00% and 5.25% “seems a very reasonable view,” but also noted after the CPI release that “our work is not yet done,” adding that “we will we stay the course until our job is done.”Richmond Fed President Thomas Barkin stated that “if inflation persists at levels well above our target, maybe we’ll have to do more,” while Federal Reserve Bank of Dallas President Lorie Logan said, “we must remain prepared to continue rate increases for a longer period than previously anticipated.”Officials in December penciled in a peak interest rate of just over 5% this year, but this looks likely to head higher in March.2. Buffett takes another bite of AppleThe sage of Omaha has spoken, and it’s good news for Apple (NASDAQ:AAPL).Warren Buffett’s investment vehicle, Berkshire Hathaway (NYSE:BRKa), has rejigged its holdings, according to regulatory filings, buying another 20.8 million Apple shares, worth $3.2 billion, raising its stake to 5.8%.Buffett has previously called Apple one of the four “giants” at his conglomerate, approving of the iPhone maker’s stock repurchase strategy and is its largest shareholder, outside of index and exchange-traded fund providers.On the flip side, Berkshire Hathaway slashed its stake in Taiwanese contract chipmaker TSMC (NYSE:TSM), just three months or so after it bought more than $4.1B worth of stock of the world’s largest contract chipmaker.3. U.S. stocks to open lower; retail sales dueU.S. stock markets are set to open lower Wednesday as investors digest the slightly higher-than-expected rise in the consumer price index [see above] ahead of the latest retail sales, a gauge of how consumers are holding up.By 06:00 ET (11:00 GMT), Dow Jones futures were down 85 points or 0.3%, S&P 500 futures were down 0.3%, and Nasdaq 100 futures were down 0.5%.The retail sales report for January is due out at 08:30 ET (13:30 GMT) and is expected to show the monthly reading rising 1.8% from December after falling 1.1% the prior month.Quarterly results are expected from the likes of Biogen (NASDAQ:BIIB), Kraft Heinz (NASDAQ:KHC), Cisco (NASDAQ:CSCO) and Shopify (NYSE:SHOP), while Airbnb (NASDAQ:ABNB) stock soared premarket after the house rental company beat fourth quarter estimates on both the top and bottom lines, and provided healthy guidance as healthy demand for travel underpinned bookings.Similarly, TripAdvisor (NASDAQ:TRIP) stock rose premarket after the online travel company produced strong quarterly numbers, with travelers looking to spend money on experiences.4. U.K. inflation eases pressure on Bank of EnglandWhile U.S. inflation proved resilient in January, data released earlier Wednesday showed that British inflation fell by more than expected in the same month, admittedly from a higher base.The U.K. CPI rose 10.1% from a year ago in January, the lowest since September, and down from 10.5% the month before.This figure is still more than five times above the Bank of England’s targeted level, suggesting more monetary tightening is still likely.However, this release backs up the comments from the U.K. central bank earlier this month that it saw signs that the surge in consumer prices had turned a corner, so perhaps it is moving close to ending its run of interest rate hikes.5. Crude slumps as U.S. inventories surgeCrude oil prices slumped Wednesday after an industry report pointed to a hefty jump in U.S. inventories, raising fears about a drop-off in demand at the world’s largest consumer.The American Petroleum Institute reported that U.S. crude stocks rose by a massive 10.5M barrels last week, much more than expected.The official numbers from the Energy Information Administration are due later in the session and will be studied for confirmation.However, there was some good news for the market Wednesday, as the International Energy Agency boosted forecasts for global oil demand as China reopens its economy following years of anti-COVID lockdowns.”World oil supply looks set to exceed demand through the first half of 2023, but the balance could quickly shift to deficit as demand recovers and some Russian output is shut in,” the agency said.By 06:00 ET, U.S. crude futures were down 1% at $78.25 a barrel, while Brent crude was down 0.8% at $84.88 a barrel. 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Western intelligence shows Russia is amassing aircraft close to the border with Ukraine, an indication that Moscow is preparing to throw its jets and helicopters into the war as part of a new offensive.As much as 80 per cent of Russia’s air force remains in good condition after nearly a year of fighting, according to western intelligence.Speaking after a meeting of more than 50 Ukraine allies at Nato’s headquarters in Brussels yesterday, US defence secretary Lloyd Austin said efforts to improve Ukraine’s air defences were under way.“We want to make sure they [Ukrainian soldiers] have the ability to protect themselves in the event Russia decides to introduce its air force into the fight,” said Austin.Ukrainian and Nato officials have also warned in recent days of ammunition shortages as the war approaches its first anniversary on February 24.Kyiv’s forces are estimated to be firing more than 5,000 artillery rounds every day — equal to a smaller European country’s orders in an entire year in peacetime.

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But Russia is estimated to be firing four times that amount each day as it seeks to gain territory in the east of the country. Moscow has mobilised 300,000 fresh reservists in recent weeks for the expected new offensive. Fierce fighting continues, with heavy losses on both sides, particularly around the town of Bakhmut in the Donbas region where conditions have been compared to the first world war.Military briefing: Western intelligence suggests Russia will deploy more air power when it launches a new offensive but in some parts of Ukraine, it has already begun.‘We are for peace’: Pleas by the US and its European allies to Latin American leaders for old Russian military equipment to be sent to Ukraine have been rebuffed. Five more stories in the news1. Developing story: Scotland’s first minister Nicola Sturgeon quits Nicola Sturgeon, the first woman to hold the position of Scotland’s first minister, has resigned after eight years as leader of the devolved government in Edinburgh. The decision follows a backlash over her strategy for securing Scottish independence and criticism of a proposed gender law. This is a developing story and for more updates you can visit our live blog.

Nicola Sturgeon took over from Alex Salmond as leader of the Scottish National party in November 2014 © Russell Cheyne/Reuters

2. US stocks stabilise after inflation data Despite falling as much as 1 per cent after the release of January inflation data, the S&P 500 closed yesterday’s session flat. US consumer prices rose 6.4 per cent year on year last month — a slight slowdown from the previous month but higher than economists had expected.3. US bank executives raise hopes for ‘soft landing’ Executives at some of Wall Street’s biggest banks said the US economy was holding up better than corporate leaders had anticipated and that the mood was more optimistic than it was a few months ago. The comments from top brass at Goldman Sachs, Bank of America and Wells Fargo reflect the growing belief that the Federal Reserve may achieve a so-called soft landing for the US economy this year. 4. Exclusive: Billionaire set to launch $3.75bn bid for Tottenham Hotspur The Iranian-American billionaire Jahm Najafi is preparing a blockbuster $3.75bn takeover bid for Tottenham Hotspur, the Premier League football club, according to two people with direct knowledge of the plans. A takeover could see the North London-based club spend more to challenge for the Premier League and other trophies.5. TSMC shares decline after Buffett’s Berkshire dumps stock Shares in the world’s largest contract manufacturer of computer chips dropped more than 3 per cent, after Warren Buffett’s Berkshire Hathaway revealed it had trimmed its stake. According to an SEC filing, Berkshire also reduced its holdings in Activision Blizzard after Microsoft’s agreed purchase came under regulatory scrutiny. But Berkshire acquired more Apple shares in the final three months of 2022, the filings show.The days aheadEconomic data Figures released later are expected to show retail sales rose last month compared with December. Economists also expect industrial production to increase while the National Association of Home Builders will report a rise in its home builder confidence survey, according to economists.Corporate earnings Food and beverage group Kraft Heinz, online gaming platform Roblox, biotech company Biogen and motor fuel company Sunoco will report their latest quarterly earnings before the opening bell. Insurance group AIG, internet real estate technology group Zillow, digital communications company Cisco, ecommerce platform Shopify, and software maker Synopsys will report earnings after the market closes.US budget The non-partisan Congressional Budget Office is expected to publish new reports on the country’s budget and economic outlook, as well as a likely date the Treasury could begin defaulting on debt payments unless the Congress approves an increase in the government’s borrowing limit.What else we’re reading Opinion: New interventionism could threaten global trade Security concerns are driving the fashion for active industrial policy, but there are potential downsides, writes Martin Wolf. In practice, it is quite difficult to make such interventionism work, and while fragmentation is very easy to start, it will be hard to control and even harder to reverse.US airlines poach pilots from regional affiliates There is an ongoing industry battle for cockpit talent that has seen salaries for pilots rise but service levels for smaller communities fall. Regional carriers lose about 20 per cent of their pilots in a normal year to mainline carriers, but last year it was more than two-thirds, reports Claire Bushey.‘Big Bang 2.0’: Reviving the City of London Ministers and financiers hope a series of proposals to loosen EU-derived rules can be a blueprint for the post-Brexit era, and there is political pressure to show that leaving the EU has brought benefits. But can the reforms make London more competitive against rival financial capitals?Syrians left to fend for themselves after quake The international community responded immediately to the devastating February 6 earthquake by sending hundreds of millions of dollars in supplies and rescue teams to disaster-hit southern Turkey. But in the rebel-held Syrian town of Jinderes, no international aid arrived for nearly a week, leaving shell-shocked victims to fend for themselves.It is possible to hate your job but love your work “More and more, I meet people who say they love their work but hate their jobs,” writes Sarah O’Connor. People find meaning in all kinds of employment — but that can be eroded by low pay, bureaucracy and squeezed resources.Do you find meaning in your job? Tell us in our poll below.

Take a break from the newsIt is not easy to get changed outside for a swim in a Scottish loch. Especially when it is January, the air temperature is hovering around minus 1C and you are trying to preserve some shred of modesty among the strangers who surround you. “This bare-cheeked frozen misery marked the start of one of the best weekends of my life,” writes Isabel Berwick, who shares why interest in ice swimming is heating up.

Swimming in the River Spey More

The bank said it had now increased its U.S. terminal rate forecast to 5.6% from 5.1%, with two extra 25 basis point rate hikes anticipated in June and July.Data on Tuesday showed U.S consumer prices accelerated in January, pushing two year Treasury yields to their highest since November as investors braced for inflation proving stickier than hoped. More

Sterling weakened and UK government bonds rallied after UK inflation fell more than forecast to a five-month low, raising the chances that interest rate rises would pause sooner than investors had previously expected.Data on Wednesday showed UK inflation slowed to 10.1 per cent in January, more than expected. Core inflation fell to 5.8 per cent, much lower than the 6.2 per cent forecast by economists. London’s FTSE 100 was flat and sterling shed 0.6 per cent against the dollar to $1.209.The inflation figures have boosted expectations that the Bank of England will pause its monetary tightening campaign later in the spring, and come as the UK teeters on the edge of recession. The UK economy stagnated in the final quarter of 2022 after contracting in the previous three months. Having risen steadily since early February, two-year gilt yields fell 0.11 percentage points to 3.69 per cent following Wednesday’s inflation figures, while 10-year gilt yields fell by 0.1 percentage points to 3.41 per cent. Bond yields move inversely to prices.The BoE this month increased interest rates by half a percentage point to a 15-year high of 4 per cent, but it hinted that February’s increase might be its last. Services inflation had “probably peaked”, said James Smith, developed markets economist at ING, who added he still expected a quarter percentage point rate increase in March, but that there would be a “strong argument” in favour of pausing in May if inflation continued to slide.Tuesday’s stronger than expected US inflation figures dominated investor attention elsewhere. Europe’s region-wide Stoxx 600 added 0.2 per cent and Germany’s Dax rose 0.4 per cent as fund managers and economists digested news that US consumer prices rose 6.4 per cent year on year in January, more than expected. Annual core inflation, which strips out volatile food and energy prices, was also slightly above expectations. The disappointing US data reverberated throughout financial markets, raising the level at which investors expect US rates to peak and lowering the number of rate cuts forecast for later this year. Pricing in the futures market shows traders expect rates to peak at 5.27 per cent in July, up from 5.18 per cent before the data was released. A measure of the dollar’s strength against a basket of six peers gained 0.3 per cent.Futures on Wall Street’s benchmark S&P 500 and those tracking the tech-heavy Nasdaq 100 fell 0.4 per cent ahead of the US open.“[A] slowing of inflation progress . . . means we get to the 2 per cent target further out in the future, which means the [Federal Reserve] will stay higher for even longer,” said Mike Zigmont, head of trading and research at Harvest Volatility Management. “There is no urgency for the Fed to cut rates if inflation is taking longer to get down where the Fed wants it.”Salman Ahmed, global head of macro at Fidelity International, said a combination of the slowing pace of inflation and resilience in the “super hot” US labour market — which added more than half a million jobs in January, almost triple the consensus forecast — meant the Fed “is likely to up its hawkishness” in the coming months. US government bonds rallied on Wednesday as equities sold off, with the two-year Treasury yield falling 0.02 percentage points to 4.6 per cent. The 10-year Treasury yield declined 0.01 percentage points to 3.74 per cent as the price of the debt rose. In Asia, Hong Kong’s Hang Seng index shed 1.4 per cent, China’s CSI 300 lost 0.5 per cent, Japan’s Topix declined 0.3 per cent and South Korea’s Kospi shed 1.5 per cent.Prices for Brent crude, the international oil benchmark, slipped 1.2 per cent to $84.51 a barrel. More

WASHINGTON (Reuters) – The Congressional Budget Office (CBO) on Wednesday will provide some clarity on when the United States may default on its payment obligations if lawmakers fail to raise the federal borrowing limit amid a tense partisan spending stand-off.The non-partisan fiscal referee agency’s 2023 baseline budget forecast also will reveal its first comprehensive analysis of federal deficits in the wake of recent spending legislation, including President Joe Biden’s $430 billion climate and healthcare act and a military-heavy $1.66 trillion government funding package with more aid to Ukraine.Those 10-year forecasts could enflame the debate over spending in Congress and prompt calls for deeper cuts from Republicans who now control the House of Representatives.A second CBO report will describe the “current debt situation and CBO’s expectation about when the Treasury will no longer be able to pay its obligations fully if the debt limit is not raised.”After hitting the $31.4 trillion borrowing cap on Jan. 19, Treasury Secretary Janet Yellen said the Treasury can keep up payments on debt, federal benefits and make other outlays at least through June 5 using cash receipts and extraordinary cash management measures.Some fiscal analysts say that Treasury can last further into the summer, but the CBO forecast will provide a reliable benchmark, said Shai Akabas, economic policy director at the Bipartisan Policy Center, a centrist think tank in Washington.”This will be a good-level set of the discussion because the only point in time out there now is the June 5 reference in Secretary Yellen’s letter, which is not an X-date projection,” Akabas said, using a common term in Washington for when the Treasury will begin to default.YEAR OF THE DEBT LIMIT So far in 2023, not a day has gone by on Capitol Hill without lawmakers jousting over the debt limit, as Democrats press for a quick, clean increase in Treasury borrowing authority and Republicans insist on first nailing down significant reductions in future government spending.Social Security and Medicare, the government’s popular pension and healthcare programs for the elderly, are at the center of the debt limit/government funding debate, as both parties also jockey to define the contours of the 2024 presidential and congressional campaigns.     “There has been a Republican drumbeat to cut Social Security and Medicare,” Senate Majority Leader Chuck Schumer, a Democrat, reminded reporters on Tuesday.    Republican Leader Mitch McConnell has labored, without much success so far, to smother such talk.”Let me say one more time. There is no agenda on the part of Senate Republicans to revisit Medicare or Social Security. Period,” he said at a press conference. More

BEIJING (Reuters) -China said on Wednesday that U.S. high altitude balloons flew over its Xinjiang and Tibet regions, and that it will take measures against U.S. entities that undermine Chinese sovereignty as a diplomatic dispute festered.Washington and Beijing are locked in a tussle over flying objects after the U.S. military this month shot down what it called a Chinese spy balloon over the coast of South Carolina. Beijing says its balloon was a civilian research vessel mistakenly blown off course, and that Washington overreacted.This week, China countered that U.S. balloons had flown over its airspace without permission more than 10 times on round-the-world flights since May 2022.”Without the approval of relevant Chinese authorities, it has illegally flown at least 10 times over China’s territorial airspace, including over Xinjiang, Tibet and other provinces,” Wang told a regular daily briefing on Wednesday.The White House has disputed China’s allegations.Washington has added six Chinese entities connected to Beijing’s suspected surveillance balloon program to an export blacklist.”The U.S. has abused force, overreacted, escalated the situation, and used this as a pretext to illegally sanction Chinese companies and institutions,” Wang said.”China is firmly opposed to this and will take countermeasures against relevant U.S. entities that undermine China’s sovereignty and security in accordance with the law,” Wang said, without specifying the measures.The balloon dispute has delayed efforts by both sides to mend relations, although U.S. President Joe Biden has also said that he does not believe ties between the two countries were weakened by the incident.U.S. Secretary of State Antony Blinken, who postponed a planned trip to Beijing over the balloon, is considering meeting China’s top diplomat Wang Yi in Munich this week, sources have said. More

Dutch chip toolmaker ASML has revealed an employee in China recently stole information about its technology which may have resulted in export controls being violated, in an incident that underscores the company’s importance in the global battle to produce advanced semiconductors.ASML, the international leader in the production of so-called lithography machines that use light to etch semiconductors, said in its annual report on Wednesday that it had been “subject to misappropriation of data relating to proprietary technology by a (now) former employee in China”. “Although we do not believe that the misappropriation is material to our business, certain export control regulations may have been violated,” it added, given that recent international export controls relate to the supply of information as well as physical tools. The company said it had reported the incident to the Dutch and US authorities.ASML, the largest tech company in Europe with a market capitalisation of €248bn, holds a unique and crucial position in the chip supply chain as the only company able to make highly sophisticated extreme ultraviolet lithography (EUV) machines. It has also found itself entangled in the trade war between Washington and Beijing since 2019 when a shipment of one of its EUV machines to China was blocked.

Peter Wennink: ‘If countries or trade blocks withdraw into their own territories, then innovation will be less effective and more expensive’ © SeongJoon Cho/Bloomberg

The issue of IP theft and tech transfer is not new to ASML. Its last annual report flagged concerns that a Chinese company specialising in products to improve chip yields had potentially infringed its intellectual property, though the incident in question took place in 2015. After a concerted lobbying effort by the US, the Dutch and Japanese governments agreed last month to further tighten their restrictions on certain tools and technologies that could support the expansion of China’s advanced chip sector.Peter Wennink, ASML’s chief executive, said in a statement accompanying the report that he understood that these new measures “cover advanced lithography tools as well as other types of equipment”.“On a geopolitical level, the bifurcation of socio-economic blocks — with the associated export and import controls — is threatening the development of the global village that contributed so much to a lot of the innovation we have seen in recent years,” he said. “If countries or trade blocks withdraw into their own territories, then innovation will be less effective and more expensive.” 

He noted however that he did not expect these new measures to have a material impact on ASML’s business for 2023.Last month, the toolmaker reported a record order backlog of more than €40bn and forecast that sales would increase by 25 per cent this year. Wennink said that any sales lost through export controls could be recouped by selling to customers in its growing backlog. Given ASML’s effective monopoly on the advanced machines required to make advanced chips, some analysts have questioned whether intensifying restrictions could turbocharge China’s efforts to develop its own domestic toolmaking industry.In December of last year, Huawei reportedly filed a patent application for one of the most advanced facets of an EUV machine. More