Economy

NEW DELHI (Reuters) – Britain is prioritising reaching a free-trade agreement with India, its foreign minister told Reuters on Saturday in his first visit to the country, but declined to give a new deadline after missing one this month.James Cleverly said after a meeting with his Indian counterpart S. Jaishankar in New Delhi that ties between the two countries would improve further under Rishi Sunak, who this week became Britain’s first prime minister with Indian roots.”I had a fantastic opportunity to talk about some incredibly important global issues, but also to talk about the strength of the bilateral partnership and about our plans to work more closely with India,” Cleverly said in an interview at the residence of the British High Commissioner.He declined to say what was holding up the trade deal, which both of Sunak’s predecessors in a turbulent few months in British politics, Boris Johnson and Liz Truss, had hoped would be signed by Monday’s festival of Diwali.Cleverly also declined to say whether it could be finalised this year.”But this is an important agreement for us and one that we are really prioritising and one that we will continue to ensure that our officials and our ministers speak about regularly and work hard to deliver,” he said.”We’ve got a lot of work done. And it’s incredibly important that we remember that an extensive free trade agreement like the one we’re negotiating, it’s never going to be simple, but it’s an incredibly important vehicle to build on our already strong relationship and to make it really future-focused.”Previous sticking points included a steep import duty on British whiskey for sale in India. New Delhi is also keen on easier British visa for Indians.Cleverly said “we want to make sure that our visa arrangements are quick and are easy, convenient”.The countries want to double bilateral trade by 2030, from more than $31 billion now.Asked about a G7 plan to cap Russian oil prices and its bid to get countries such as India to agree to it, Cleverly said Britain would not set New Delhi’s foreign policy. India and Russia have close defence ties and India has become a big buyer of Russian oil since the Ukraine war started.”I don’t think it would be right for me as a British politician to dictate policy to another country,” he said. More

So far, 2022 has not been a great year for the emerging economies of Asia. The immediate challenges of a strong dollar, rising interest rates and inflation in everything from food to fuel all show little sign of abating. Now a further complicating factor has emerged — from an unlikely source.The Inflation Reduction Act signed into law in August by President Joe Biden contained a sweeping climate initiative. It commits more than $369bn to subsidies and tax credits over a decade to encourage decarbonisation and cleaner energy.As a clear positive commitment by the US to carbon reduction and cleaner energy, this is very much a global good. But there is one unintended consequence — its impact on the climate change efforts of developing countries.Analysts and executives in some emerging markets such as India fear that one effect of the new law will be to raise the cost of renewable energy for them, making coal a more attractive alternative.“By handing out subsidies, the effect of this act may well be to distort the entire renewable energy supply chain,” says Mahesh Kolli, president and joint managing director at Greenko Group, a Hyderabad-based renewable energy firm.For example, he says suppliers of solar panels will be able to bill US customers far more than the price at which India imports panels. This means the price of solar panels will rise for developing countries, hindering a switch to renewable energy.“Taxpayers in the US (and Europe) are handicapping India and other emerging markets. Solar has never been reliable but in the past it was cheap. Now the incentive is to go back to coal,” says Kolli.In addition, some industry experts point out that the new US measures — particularly in solar power — are all about ramping up domestic production over time. The US wants to reduce global dependence on China for everything from batteries to the innards of the clean energy infrastructure, by giving both US firms and global firms an incentive to produce in the US.Today, for example, China has a more than 80 per cent global market share for solar panels, according to data from JPMorgan. The bank also says China accounts for 10 out of the top 15 wind turbine producers, with a total market share of about 55 per cent.One executive at a top Asian investor said: “It is America first protectionism.” And if China sent more of its production away from the US, that might affect other countries such as Malaysia, another major source of solar panels.To be sure, though, the US legislation will have differing impacts across Asia. In South Korea, there has been anger over the impact of the bill’s move to eliminate subsidies for electric vehicles assembled outside North America. It is feared that Hyundai and its electric vehicles will be at a disadvantage until the company begins production at a $5.5bn plant in the US state of Georgia in 2025. But South Korean producers of batteries with a presence in the US will benefit from subsidies there and likely increased demand.For some in countries like India, though, it is another example of how the burdens of climate change fall unevenly. Many countries such as Pakistan, India and Bangladesh have less ability and fewer resources to build resilience against global warming.India is looking ahead to when it takes over leadership of the G20 in mid-November. It is already positioning itself as the face of those emerging nations which believe it is developed countries that have been responsible for climate change, while the burden of reversing the harm falls largely on them. “A shift to low-carbon technologies can be successful only if developing countries have access to resources, including finance, on concessional terms,” said Anantha Nageswaran, chief economic adviser to the Indian government, in a co-authored column in the Mint newspaper. He said developing countries need support in meeting the transition costs of moving towards less carbon-intensive production in a shorter period than their developed peers. “The role of the latter in mobilising capital at reasonable or concessional terms for enabling this transition of developing countries is a sine qua non, and, quite frankly, part of their promise made at the Earth Summit in 1992 and as part of the Paris Agreement in 2015,” he added.The Inflation Reduction Act may be a breakthrough in the US for climate change but the burden of adjustment falls ever more heavily on many cash-strapped emerging markets. More

NEW YORK (Reuters) – A bounce in U.S. stocks that has defied a barrage of major earnings disappointments faces a key test in the coming week, when the Federal Reserve’s next meeting could shed light on how long it will stick to the aggressive monetary policies that have crippled asset prices in 2022. Betting on a less hawkish Fed has been a dangerous undertaking this year. Stocks have repeatedly rebounded from lows on expectations of a so-called Fed pivot, only to be crushed anew by fresh evidence of persistent inflation or a central bank bent on maintaining its pace of rate increases. Pockets of softness in the U.S. economy have fueled recent hopes of a tempering of rate hikes, along with signs that some of the world’s central banks may be nearing the end of their rate hiking cycles. Meanwhile, cash-heavy investors afraid of missing out on a sustained rally have contributed to the bullish move, market participants said.“The market is starting to believe that there is an endgame in sight for this huge global tightening cycle,” said Keith Lerner, co-chief investment officer at Truist Advisory Services.The S&P 500 was on pace to end the week with a gain of over 3%, as investors shrugged off brutal earnings reports from companies such as Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Google parent Alphabet (NASDAQ:GOOGL) and Facebook (NASDAQ:META) parent Meta Platforms.The benchmark index is up over 8% from its most recent low, a move that has been accompanied by a sharp rally in U.S. Treasuries and a weakening of the dollar, reversing trends that have prevailed for most of the year. A smaller than expected rate increase by the Bank of Canadaadded to hopes of a peak in global central bank hawkishness, as did comments from a Bank of Mexico board member cautioning against increasing monetary policy to excessively restrictive levels.While investors have broadly factored in a 75 basis point rate hike on Wednesday at the end of the Fed’s two-day meeting, many will be looking for hints of future policy moves in Chairman Jerome Powell’s press conference, as his comments have swayed asset prices this year. For example, stocks rallied ahead of the Fed’s conference in Jackson Hole, Wyoming, in August, only for the market to decline anew after Powell warned about economic fallout from the Fed’s efforts to fight inflation.”If his tone is as terse and as hawkish as it was in August at Jackson Hole, that would certainly change the narrative rather rapidly,” said Art Hogan, chief market strategist at B. Riley Wealth.Next week will also test whether stocks can continue to weather disappointing earnings news. More than 150 S&P 500 companies are due to report quarterly results next week, including Eli Lilly (NYSE:LLY), ConocoPhillips (NYSE:COP) and Qualcomm (NASDAQ:QCOM).Investors will also closely watch next Friday’s monthly jobs report for signs of whether the Fed’s actions have tempered the labor market.Plenty of investors believe it’s too early to hope for a slowing of rate hikes. Analysts at UBS Global Wealth Management said the Fed has yet to see evidence of cooling inflation and labor market conditions and that they “continue to think that it is too early to expect the Fed to signal a more dovish stance.” “Conditions for an equity market bottom, including that rate cuts and an economic trough need to be on the horizon, are not yet in place,” the UBS analysts said in a note. Lerner, of Truist, on Friday issued a report downgrading his view on equities to “less attractive” from “neutral” following the rebound. He said that while stocks have become cheaper on an absolute basis this year, “they have actually become more expensive relative to bonds given the sharp rise in interest rates.”For now, however, it appears the bulls are emboldened. One example of investor enthusiasm can be seen in the options market, where the one month average daily volume of S&P 500 puts, typically used for defensive positioning, outnumbers bullish calls by the smallest margin in at least four years, according to Trade Alert data. “The market is thinking good things,” said Kristina Hooper, chief global market strategist at Invesco. “Jay Powell will either confirm that or dispel that next week.” More

Centrais Eletricas Brasileiras SA, as the company is formally known, said the voluntary layoff program will apply to 2,312 employees and will cost up to 1 billion reais ($189 million). At the end of June, the firm had 10,508 workers.Electrobras said the offer included cash payments equivalent to three years’ healthcare, a year of food aid, and nine months’ salary, as well as a compensation companies must pay out in cases of unjustified dismissal.The move is part of a major overhaul after the Brazilian government privatized its largest utility through a 33.68 billion-real ($6.54 billion) offering, and brought back its former chief executive Wilson Ferreira Junior to the company’s helm..In a securities filing, Eletrobras said the program is a measure to streamline its costs and expenses and it expects to recoup the money it spends in around 11 months.($1 = 5.2949 reais) More

WASHINGTON (Reuters) – Mexico is making progress towards recovering its Category 1 aviation rating, but the U.S. Federal Aviation Administration (FAA) has not yet approved a plan, a source familiar with the matter told Reuters on Friday.Mexico’s Foreign Ministry said earlier in a statement that U.S. authorities had approved its plan. More

Workers at a Trader Joe’s store in Brooklyn have voted against unionizing, handing a union its first loss at the company after two victories this year.The workers voted 94 to 66 against joining Trader Joe’s United, an independent union that represents employees at stores in Western Massachusetts and Minneapolis. Workers at a Trader Joe’s in Colorado filed for an election this summer but withdrew their petition shortly before a scheduled vote.“We are grateful that our crew members trust us to continue to do the work of listening and responding to their needs, as we always have,” Nakia Rohde, a company spokeswoman, said in a statement after the National Labor Relations Board announced the result on Thursday.The result raises questions about whether the uptick in union activity over the past year, in which unions won elections at several previously nonunion companies like Starbucks, Amazon and Apple, may be slowing.Union supporters recently lost an election at an Amazon warehouse near Albany, N.Y., and the pace of unionization at Starbucks has dropped in recent months, though the union has won elections at over 250 of the company’s 9,000 corporate-owned U.S. stores so far.Workers at a second Apple store recently won an election in Oklahoma City, however, and unions have upcoming votes at a Home Depot in Philadelphia and a studio owned by the video game maker Activision Blizzard in upstate New York.As of June, Trader Joe’s had more than 500 locations and 50,000 employees across the country and was not unionized. Early in the pandemic, the company’s chief executive sent a letter to employees complaining of a “current barrage of union activity that has been directed at Trader Joe’s” and arguing that union supporters “clearly believe that now is a moment when they can create some sort of wedge in our company.”The company has said it is prepared to negotiate contracts at its unionized stores. An employee involved in the union, Maeg Yosef, said the two sides were settling on bargaining dates.Union supporters at the Brooklyn store had said they were seeking an increase in wages, improved health care benefits and paid sick leave as well as changes that would make the company’s disciplinary process more fair.Before union supporters had a chance to talk with all their colleagues, management became aware of the campaign and announced it in a note posted in the store’s break room in late September. The company also fired a prominent union supporter a day or two later.Amy Wilson, a leader of the union campaign in the store, said organizing had become more difficult after the firing and the note from management.“The last core of people hadn’t been spoken to directly by their co-workers, and we lost them instantly,” she said, referring to the note. “It undermined the trust, the relationship. They felt excluded and offended.”Ms. Rohde, the Trader Joe’s spokeswoman, did not respond to a question about why management posted the break room note. She said that while she couldn’t comment on the firing of the union supporter, “we have never and would never fire a crew member for organizing.”Trader Joe’s is known for providing relatively good wages and benefits for the industry, though workers have complained that the company has made its health care and retirement benefits less generous over the past decade. More

Britain’s spending on foreign aid is set at 0.5% of national income. The government had cut its foreign aid spending two years ago as the country faced a huge hit to public finances due to the coronavirus pandemic. Sunak, who was finance minister at the time, had said last year that foreign spending should return to 0.7% of economic output by 2024-2025.However, according to the Telegraph report, officials are considering extending the foreign aid spending cut by another two years to 2026-2027. The report added there was scope for deeper cuts alongwith an option to peg foreign aid spending to inflation for three years in the future.The report comes as the government draws up spending cuts and cancels tax cuts as the rising cost of mortgages, food, fuel and heating squeezes many household budgets.UK’s Treasury department did not immediately respond to a request for comment. More

BUENOS AIRES/LONDON (Reuters) – Argentina reached a deal to restructure some $1.97 billion it owes the Paris Club, Argentina’s government and the creditor group said on Friday, which will push repayments back as far as 2028 and bring relief of some $248 million to the country.”Today, Argentina successfully completed an agreement with the Paris Club to normalize relations between our country, our companies, and our workers with the countries of the European bloc,” Argentine Economy Minister Sergio Massa said.The deal would see the current 9% interest rate on the debt cut to a weighted average of 4.5%, according to a document shared with Reuters by officials. Payments would start from December with interest gradually stepping up from 3.9%.Argentina would pay around 40% over the next two years, the government said in the document, a payment profile it said was “sustainable and did not compromise the process of strengthening international reserves.” (Graphic: Argentina: Paris Club deal, https://graphics.reuters.com/ARGENTINA-PARISCLUB/zdvxdyaxrvx/chart.png) Argentina, which has restructured over $100 billion in debts with private creditors and the International Monetary Fund in the last two years, remains in a precarious position with scarce foreign currency reserves it is trying to rebuild.Argentina’s restructured dollar bonds, which are trading in deeply distressed territory, rose after the deal with the 2029 up 2.4 cents to 22 cents on the dollar and the 2046 up 2.1 cents to 21 cents. The euro-denominated bonds were little changed on the day.Ratings agency Fitch downgraded the country’s debt this week, citing rising default risks.The Paris Club, whose members include the United States, Japan and Germany, last year gave Argentina more time to repay the debt while it carried out an ultimately successful negotiation with the IMF over a new $44 billion program.The Paris Club said in a statement the two sides had revamped the debt deal to clear remaining payments over a six-year period between December 2022 and September 2028.”The amendment consists of a rescheduling of 100% of the total amounts of principal and interest due and not paid as of 30 May 2022 inclusive and a reduction of the interest applicable after 30 May 2022,” it said. (Graphic: Argentina’s U.S. dollar bonds, https://graphics.reuters.com/ARGENTINA-ECONOMY/DEBT/lbvggrlglvq/chart.png) More