Economy

HONG KONG (Reuters) – The Hong Kong Monetary Authority (HKMA) on Thursday raised its base rate charged through the overnight discount window by 75 basis points to 4.25%, hours after the U.S. Federal Reserve delivered a rate hike of the same margin. Hong Kong’s monetary policy moves in lock-step with the United States’ as the city’s currency is pegged to the greenback in a tight range of 7.75-7.85 per dollar. More

LONDON (Reuters) – The Bank of England looks on track to raise interest rates by three quarters of a percentage point to 3% later on Thursday, its biggest rate rise since 1989 as it battles the highest inflation in 40 years.The BoE has faced political and financial market turmoil since its last rate rise on Sept. 22, a day before former Prime Minister Liz Truss’s government launched an unfunded 45 billion-pound ($52 billion) package of tax cuts. The policy was aimed at staving off recession and spurring long-term growth – but instead it pushed sterling to a record low against the U.S. dollar, forced the BoE to prop up the bond market and led to Truss’s resignation.Markets are now more stable, with British government borrowing costs broadly back to where they were before the upheaval. On Tuesday, the BoE was able to begin selling bonds from its 838 billion-pound quantitative easing stockpile.However, fundamental problems for Britain’s economy remain. Consumer price inflation returned to a 40-year high of 10.1% in September and is likely to have risen further last month when regulated energy prices jumped, despite costly subsidies.At the same time, the economy is slowing sharply. Purchasing managers’ data slid in October to its weakest since January 2021 when the economy was mired in a COVID-19 lockdown.”The BoE is faced with an incredibly difficult balancing act of orchestrating large rate hikes in a recessionary economy,” said Shweta Singh, a senior economist at British fund manager Cardano.Forty-six of 53 economists polled by Reuters expected the BoE to raise rates to 3% this month.Other Western central banks face similar challenges. Inflation has rocketed due to labour shortages, COVID-19 supply-chain bottlenecks and – in Europe’s case – soaring energy bills since Russia invaded Ukraine in February. The U.S. Federal Reserve raised its key interest rate by 0.75 percentage points on Wednesday to a range of 3.75% to 4.0%, and the European Central Bank increased its deposit rate by the same amount to 1.5% last week. But the Fed said future rate rises might come in smaller steps.”STUMBLING IN THE DARK”The BoE’s task is made especially tricky by a lack of clarity over government policy.While most of Truss’s tax cuts have been reversed, and new Prime Minister Rishi Sunak has indicated there will need to be a squeeze on public spending and potentially higher taxes, the scale will not be clear until a fiscal statement on Nov. 17.The government’s energy subsidies are due to cease in April, so the BoE may forecast a fresh peak for inflation when it updates its forecasts on Thursday.”If September’s dilemma for the Bank was that they might not be doing enough tightening, November’s dilemma is that they end up doing too much. It seems therefore that the Monetary Policy Committee is still stumbling around in the dark,” Cardano’s Singh said.Investors expect the BoE’s Bank Rate to hit 3.5% in December and 4.75% next May – the highest since 2008 though below the peak of around 6% projected during last month’s market turmoil.Despite the weak economy, the BoE is worried about inflation pressures from a tight labour market and expectations that consumer price inflation will only slowly return to its 2% target.Unemployment in the three months to August was the lowest since 1975 at 3.5%, partly due to record numbers of workers quitting the job market, while average wages were 6% higher than the year before.($1 = 0.8730 pounds) More

(Reuters) -Robinhood Inc posted a smaller-than-expected quarterly loss on Wednesday as the brokerage’s margin trading business benefited from rising interest rates, while increased volatility in the markets helped its equity and options segments.Net interest revenue doubled to $128 million for the third quarter as annual margin interest rates jumped to 5.75% for Robinhood (NASDAQ:HOOD) Gold customers and 9.75% for non-Gold customers.Robinhood Gold is the company’s subscription service, which gives investors access to premium features.”We anticipate Q4 net interest revenues will be up by roughly $25 million from Q3,” Chief Financial Officer Jason Warnick said on a post-earnings call.Trading in options rose 10%, while that in equities was up 7% sequentially as investors repositioned their portfolios to take advantage of rising interest rates. Those factors helped the company post revenue of $361 million in the three months ended September, comfortably beating estimates of $355 million, while narrowing its net loss to $175 million from $1.32 billion a year earlier. Stripping off one-time items, Robinhood reported a loss of 20 cents a share, narrower than 31 cents estimated by analysts, according to data from Refinitiv IBES.Trading in cryptocurrencies, however, fell 12% sequentially to $51 million as a rout in the broader market forced investors to shun other speculative assets. It had surged 860% to $51 million a year earlier.”This is better than their competitor Coinbase (NASDAQ:COIN), which Robinhood has taken market share from this year,” said Michael Ganian, analyst at research firm YipitData.The commission-free brokerage also saw monthly active users fall to 12.2 million, sequentially. A year ago, it reported 18.9 million users when Robinhood’s easy-to-use interface made it a hit among young investors trading from home on cryptocurrencies and stocks such as GameStop Corp (NYSE:GME) amid the COVID-19 pandemic. More

“Blocking roads in Brazil obstructs our right to come and go, which is in our constitution,” he said in one part of the video. “I want to make an appeal: clear the roads.” More

Global bankers are all “very pro-China”, UBS chair Colm Kelleher said at a financial forum in Hong Kong, where Chinese officials sought to woo rattled international investors yesterday. Hong Kong is seeking to boost its status as an international financial centre at the conference, after a clampdown on civil society and years of strict pandemic restrictions triggered an exodus and raised concerns the city was losing business to rival Asian hub Singapore.Chinese officials used pre-recorded video interviews to reassure international investors of the country’s economic strength as it battles a property sector crisis and flagging growth induced by its strict zero-Covid policy. “We’re not reading the American press, we actually buy the [China] story,” said Kelleher, chair of the world’s biggest wealth manager. “But it is a bit [of a matter of] waiting for zero-Covid to open up in China to see what will happen.” His reference to the media was an apparent joke and a nod to earlier remarks made by Fang Xinghai, vice-chair of the China Securities Regulatory Commission, who told attendees: “I would advise international investors to find out what’s really going on in China and what’s the real intention of our government by themselves. Don’t read too much of the international media.”Go deeper: Hong Kong is struggling to persuade CEOs it is open for business as recent events intended to attract finance leaders were overshadowed by remaining Covid rules.Thank you to readers who took yesterday’s poll. Responses were mixed, with 44 per cent of respondents saying they did not agree with Xi Jinping’s move to ban celebrity endorsements. — Emily Five more stories in the news1. Powell warns US rates will peak higher than expected Speaking after the central bank increased its main interest rate by 0.75 percentage points for the fourth time in a row, Federal Reserve chair Jay Powell warned the Fed had “some ways to go” in its quest to tame soaring prices and pointed to a string of economic reports suggesting it has yet to make a dent in inflation.Market news: US stocks sank after Federal Reserve chair Jay Powell cautioned that it was still “very premature” to think about pausing interest rate rises as the central bank delivered its fourth supersized increase in a row.2. Russia agrees to rejoin Ukraine grain exports deal Grain shipments from Ukraine resumed yesterday after Russia agreed to rejoin a UN-backed initiative to allow exports via the Black Sea, ending a stand-off that threatened to reignite a global food crisis. More news from the Ukraine war: Russia has said preventing a military clash between nuclear powers is its “highest priority” despite recently making nuclear threats.3. Chinese stocks boosted by planned inhalable Covid vaccine Chinese pharmaceutical stocks and the broader market received a boost yesterday after local authorities approved CanSino Biologics’s inhalable vaccine to tackle coronavirus, amid rumours that Beijing was looking at relaxing its zero-Covid policy. Shares in CanSino Biologics rose as much as 70 per cent in Hong Kong.4. South Korea responds with missile tests after North fires barrage South Korea has fired three air-to-surface missiles towards its maritime border with North Korea, hours after its communist neighbour launched 10 missiles in its biggest daily barrage. 5. US Republicans slam plan to pull F-15 force from Okinawa Republican lawmakers have criticised a plan by the Pentagon to replace F-15 fighter jets permanently based in Okinawa with a temporary rotating force, saying it would send the wrong signal to China about US deterrence.The day aheadGerman chancellor visits China Olaf Scholz will arrive in China today ahead of a high-stakes meeting with President Xi Jinping today. At home, Scholz is facing pressure to rethink Germany’s relationship with China. (Nikkei) Bank of England rate decision The central bank is expected to raise rates by 75 basis points today to 3 per cent. Rates have severely hampered homeowners, with spillover into the rental market. Here are four things to watch ahead of the decision.Earnings Companies reporting third-quarter earnings today include BNP Paribas, BT Group, ConocoPhillips, Enel, Hybe, ING, Kellogg, Moderna, Motorola Solutions, Orsted, PayPal, Petrobras, Solvay and Stellantis.Netflix’s new streaming strategy Netflix’s advertisement-supported service will launch today without the full range of programmes found on its premium platform, as studios negotiate with the streaming service for higher revenues for the rights to their shows.What else we’re readingIncreasingly cosmopolitan Singapore clings to conservative values As the ruling People’s Action party — in power since independence in 1965 — prepares for new leadership, it has redoubled efforts to protect the cultural status quo, according to experts. But its popularity is in decline and its stance ignores the views of a more liberal, younger generation of Singaporeans.The robo-minister tasked with helping Japan go digital Since being entrusted with the job of weaning the nation off its analogue addiction in August, Taro Kono, 59, has looked like a man facing down a cavalry charge with sharpened segments of peach. But now that he has the weaponry he needs, he risks becoming a national bogeyman, writes Leo Lewis. Shein copycats chase its explosive growth The ascent of China’s Shein, set to become the world’s largest fast-fashion specialist retailer, has spawned imitators looking to profit from Gen Z’s growing appetite for cheap clothing. Temu and If Yooou seek to ride coattails of Chinese fast-fashion giant.How Arizona became ground zero for election deniers In 2020, conspiracists jumped on every detail of the US election process in an attempt to cast doubt on its legitimacy. Nowhere was this more pronounced than in Arizona. While the defences around election integrity held, in 2024 the system could be less secure.Geopolitics is the biggest threat to globalisation How might globalisation end? Some seem to imagine a relatively peaceful “decoupling” of economies, writes Martin Wolf. But it is likely that the fracturing will be both consequence and cause of deepening global discord. If so, a more destructive end is likely.

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Health and wellnessOne dose of psilocybin, the active ingredient in the psychedelic class A drug “magic mushrooms”, has a sustained and significant effect in treating cases of depression that are unresponsive to other drugs, a study has found. More

The world is on the road to “hyperinflation” and could be heading towards its worst financial crisis since the second world war, according to Elliott Management, one of the world’s biggest and most influential hedge funds.The Florida-based firm, which was founded by billionaire Paul Singer and manages about $56bn in assets, has warned its clients of an “extremely challenging” situation for the global economy and for financial markets where investors will find it difficult to make money.An “extraordinary” set of financial extremes that come as the era of cheap money draws to a close “[has] made possible a set of outcomes that would be at or beyond the boundaries of the entire post-WWII period”, it wrote in the letter, which was seen by the Financial Times. “Investors should not assume they have ‘seen everything’” just because they have experienced financial crises such as the 1970s bear market and oil price shock, the 1987 market crash, the dotcom bust or the 2008 financial crisis, it added.Elliott declined to comment.The group’s warning comes during a dismal year for markets, in which global equities have shed $28tn in value, according to Bloomberg data, and bonds have also tumbled, leaving investors with few places to seek shelter. The fund manager laid much of the blame for the looming crisis on central bank policymakers, which it said had been “dishonest” about the causes of high inflation by blaming it on supply chain bottlenecks in the wake of the pandemic, rather than on ultra-loose monetary policy put in place at the height of the coronavirus crisis in 2020. The world is “on the path to hyperinflation”, it said, which could lead to “global societal collapse and civil or international strife”. While such an outcome is not certain, this is currently the direction that the world was headed, it added.Its warnings come as investors try to assess the economic damage likely to be felt from a rapid series of large interest rate increases in the US and elsewhere, as central bankers race to try to curb soaring inflation.The S&P has dropped 20 per cent since its peak at the start of this year, while the Nasdaq is down by one-third since its high a year ago.However, Elliott said markets had not fallen far enough, given the many risks present, and warned of a further reversal of the so-called “everything rally” seen near the top of the bull market of recent years, as sky-high investor exuberance lifted all manner of risky assets.There are so many “frightening and seriously negative possibilities” that it is hard not to think that “a seriously adverse unwind of the everything bubble” is coming, it said.The hedge fund estimates a 50 per cent fall from peak to trough would be “normal”, suggesting further large falls to come in major equity markets, although it added it was impossible to know whether or when that would happen.

Elliott, which is up 6.4 per cent in 2022 and which has only lost money in two calendar years since launch in 1977, pointed to a handful of areas of potential stress that could accelerate market falls. It highlighted banks’ losses on bridge financing, potential markdowns of collateralised loan obligations and leveraged private equity as areas of potential risk for markets.The firm was also critical of investors who believed market falls will always prove shortlived and can be “ignored”.The idea that “‘we will not panic because we have seen this before’ does not comport with the current facts”, it [email protected] More

Today’s top storiesThe US Federal Reserve announces its decision on interest rates at 2pm ET/6pm UK. Check FT.com for the details and market reaction.Grain shipments from Ukraine are set to resume after Russia agreed to rejoin a UN-backed initiative to allow exports via the Black Sea, ending a stand-off that had fuelled fears of a global food crisis.The head of AP Møller-Maersk, the world’s second-largest container shipping group, said global trade would slow this year as western economies slide into recession. “Every indicator we are looking at is flashing dark red,” he said.For up-to-the-minute news updates, visit our live blogGood evening,“A number of changes are occurring simultaneously that could affect the future of the broad automotive industry . . . It’s hard to look six months ahead.”Those are the words of Kenta Kon, executive vice-president of Toyota, the world’s largest carmaker, speaking after yesterday’s announcement of a 25 per cent plunge in quarterly profits. Aston Martin followed suit today, blaming supply chain problems as it cut sales and profit forecasts for the year, sending its shares plummeting.It’s been a tough few months for the autos industry. While traditional carmakers have been struggling with problems such as a shortage of semiconductors, electric vehicle manufacturers are fighting to secure supplies of metals used for batteries.The birth pangs of the nascent sector have also been on display in the UK. Battery technology company Britishvolt today secured a funding lifeline after teetering on the brink of collapse on Monday. The company, which aims to build a £3.8bn gigafactory in the north-east of England, is months from receiving firm orders and has been struggling to raise money this year because of tumultuous market conditions.While the UK’s attempt at building an industry champion is on the edge, cars from China, the world’s biggest market for EVs, are set to take Europe by storm, with up to a dozen brands set to launch, leaving other countries at risk of being left behind.The big problem for the electric car industry remains the struggle for raw materials, highlighted by our story yesterday revealing Tesla held talks (now foundered) with Glencore about buying up to 20 per cent of the Swiss commodities group. Glencore is the world’s biggest producer of cobalt, which is used to manufacture batteries, through its operations in the Democratic Republic of Congo, Australia and Canada.Indonesia, the world’s largest producer of nickel, has even suggested setting up an Opec-style cartel for nations that are rich in the resources needed to make electric cars. Any such attempt would not be an easy task: Russia supplies a fifth of the high-purity nickel used in batteries, while Canada and Australia are also big producers.Add to that, says the Lex column (for Premium subscribers), the fact that Indonesia’s output depends on producers such as Xiang Guangda’s Tsingshan Holdings, which is headquartered in China. Nickel miners based in the west, such as Glencore and BHP, could also face legal challenges if they join a sellers’ club.There is also a much darker side to the struggle for the supplies of these minerals, exemplified in the tragedy of the DRC. The central African country is rich in minerals but remains one of the poorest in the world and has also become the battleground of a deadly proxy war over resources.Need to know: UK and Europe economyFancy taking charge of the UK’s finances? Try our new “plug the fiscal hole” interactive to see what options chancellor Jeremy Hunt has as he prepares for his Autumn Statement on November 17. Spending cuts aside, the nation’s households are set for a “very, very hard winter”, according to the National Grid chief.

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The Bank of England has become the first major central bank to sell bonds back to financial markets as it unwinds its quantitative easing programme. The BoE announces its decision on interest rates tomorrow.The war in Ukraine has exposed Germany’s decades-long reliance on Russian gas but, as our Big Read details, the country has an even deeper dependence on China, a country that has long been one of the biggest markets for its machinery, chemicals and cars.

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Denmark’s centre-left prime minister Mette Frederiksen has secured an ultra-slim majority after the country’s parliamentary election but faces an uphill struggle to form a viable government coalition.Need to know: Global economyJair Bolsonaro vowed to follow Brazil’s constitution without explicitly conceding defeat to presidential election victor (and former president) Luiz Inácio Lula da Silva. Investors await news on Lula’s fiscal plans, but the FT editorial board said his priorities should be addressing low growth, ratifying a stalled trade deal between the Mercosur bloc and the EU, and tackling Amazon deforestation.Our second comeback kid is Israel’s former prime minister Benjamin Netanyahu after a partial count of parliamentary elections put his rightwing bloc on course to win a majority in the Knesset.China’s strict zero-Covid policy was on display again as Shanghai authorities rushed to trace and test visitors to its Disneyland theme park after a single guest tested positive. Hong Kong, meanwhile, faces a challenge persuading global investors to return. Saudi Arabia unveiled its first integrated economic zone with the aim of becoming the region’s top logistics hub and attracting foreign investment as it diversifies away from oil. Most multinationals’ regional HQs are based in the UAE.Chief economics commentator Martin Wolf ponders the end of globalisation. A relatively peaceful “decoupling” of economies so closely stitched together is unlikely, he argues.

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Need to know: businessSaudi Aramco and BP became the latest Big Oil companies to announce a bumper set of earnings, fuelling calls for more windfall taxes in the UK and the US, where President Joe Biden accused the majors of “war profiteering”.Columnist Helen Thomas discusses the disastrous impact of Brexit on the UK food industry. Exports have collapsed as businesses try to cope with the estimated 15 to 20 per cent higher costs of sending goods to continental Europe.US pharma groups CVS Health and Walgreens agreed to pay almost $10bn to settle lawsuits over their prescription of powerful opioid painkillers. They are the first settlements by pharmacy chains in the opioids crisis, which has led to hundreds of thousands of deaths.The rise of Chinese retailer Shein — poised to become the world’s largest fast-fashion company — has spawned a range of imitators targeting Gen Z’s growing appetite for cheap clothing.The World of WorkUnilever is the biggest company yet to offer a vote of confidence in a four-day working week, extending a trial from New Zealand to staff in Australia. “We’ve had strong business performance, high engagement, people feeling happier, and time spent in meetings also coming down,” a spokesperson said.Can you run a company without managers? The Working It podcast discusses flat hierarchies (aka holacracy). Get the latest worldwide picture with our vaccine trackerSome good newsA rewilding initiative in ancient Canterbury woodland in south-east England has delivered an unexpected bonus: a baby bison — an animal on the brink of extinction in Europe after the first world war. The Wilder Blean Project is raising money on JustGiving to fund its work on combating the climate and biodiversity crises.The welcome addition to the Wilder Blean herd was unexpected for rangers, as bison conceal their pregnancies to avoid being targeted by predators © Gemma Day, courtesy of Kent Wildlife Trust/Wildwood Trust More