US stocks join global rally for biggest one-day jump since March

US stocks rallied by the most in nine months, joining in a wider rally that handed global equities their biggest one-day gain in more than a year.

The S&P 500 closed 2.1 per cent higher, bringing it within 0.5 per cent of the record closing price it hit before the new variant was first reported last month.

There were gains across the board, with more than 400 of the index’s constituents in the green. The tech-heavy Nasdaq Composite climbed 3 per cent while the small cap-focused Russell 2000 rose 2.1 per cent.

Investors across the globe were encouraged by signs that the Omicron coronavirus variant may prove less serious than feared as well as signals from Chinese authorities that they are willing to stimulate the country’s slowing economy.

That helped propel the FTSE All World share index up 2.1 per cent, marking its best day since November 2020.

Stock markets have whipsawed over the past fortnight, driven by concerns about Omicron and expectations that the US central bank could tighten monetary policy faster than previously predicted.

The gains in US markets followed a strong day in Europe and Asia. The Europe-wide Stoxx 600 closed up 2.4 per cent, with tech stocks and cyclical businesses rising. London’s FTSE 100 gained 1.5 per cent.

Read more on the day’s market moves here

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Congressional leaders strike deal paving way for raising US debt ceiling

Congressional leaders have struck a deal that paves the way to raising the federal government’s borrowing limit and averts another crisis over the US debt ceiling.

US Treasury secretary Janet Yellen has warned that the US government risks default as soon as next week if lawmakers are unable to reach an agreement to lift the debt ceiling, something she recently said would “eviscerate” the economic recovery.

The Democrat-controlled House of Representatives is expected to on Tuesday evening pass a measure that would allow the Senate to raise the debt ceiling by a simple majority vote, bypassing the upper chamber’s 60-vote “filibuster” threshold. Democrats currently control the Senate by the narrowest of margins, 50-50, with vice-president Kamala Harris able to cast the tiebreaking vote.

Mitch McConnell, the Senate’s top Republican, endorsed the plan, indicating he expected at least 10 Republican senators would support the procedural change. A Senate vote, expected later this week, would set the stage for a subsequent vote that would see the Democrats act unilaterally to raise the borrowing limit.

Republicans have repeatedly argued that Democrats should “go it alone” in raising the debt ceiling, despite supporting similar actions during the Trump administration.

“I think this is in the best interest of the country by avoiding default,” McConnell told reporters.

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Biden nominee to lead bank regulator withdraws from consideration

Saule Omarova, Joe Biden’s pick to lead a major US bank regulator, has withdrawn her nomination, dealing a blow to the White House after it defended her amid pushback from Congress and Wall Street over her academic writings and Soviet upbringing.

“I nominated Saule because of her deep expertise in financial regulation and her longstanding, respected career in the private sector, the public sector, and as a leading academic in the field,” Biden said on Tuesday in a statement.

“But unfortunately, from the very beginning of her nomination, Saule was subjected to inappropriate personal attacks that were far beyond the pale”. 

Biden in September announced he intended to appoint the Cornell University law professor as to lead the Office of the Comptroller of the Currency, which supervises US national banks.

She subsequently faced a backlash from Republicans and the banking industry, with critics focusing on her upbringing and her more recent career as an academic with proposals including a state-run bank account system.

Omarova in a letter said that while it had been a “great honour” to be nominated, “at this point in the process, however, it is no longer tenable for me to continue as a presidential nominee”.

In an interview with the Financial Times in October, Omarova, who was born in what is now known as Kazakhstan, had accused some of her critics of racism and of targeting her for being a minority candidate as well as a woman.

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US to demand halt to Nord Stream 2 if Russia invades Ukraine

The US is putting pressure on Germany to block Russia’s Nord Stream 2 gas pipeline as part of a package of sanctions that would be implemented in the event of Vladimir Putin invading Ukraine.

The demand for Berlin and Brussels to prevent the pipeline from becoming operational is part of a sanctions package the US is proposing as it tries to stave off further conflict in the region amid fears in the intelligence community that Putin is preparing for military action.

It comes as US president Joe Biden on Tuesday used a two-hour call with Putin to warn him of “strong economic and other measures” if the Russian leader sends troops into Ukraine.

The threat to Nord Stream 2, which is built but not yet pumping gas, would be included alongside a package of sanctions being proposed by the US, which would include financial measures such as blocking the conversion of roubles into dollars and further targeting Russian oligarchs, two officials briefed on the plan told the Financial Times.

Jake Sullivan, Biden’s national security adviser, who listened in to the call, said “If Vladimir Putin wants to see gas flow through that pipeline, he may not want to take the risk of invading Ukraine.”

“We’ve had intensive discussions with both the outgoing and the incoming German government on the issue of Nord Stream 2 in the context of potential invasion,” Sullivan added in a press conference after the Biden-Putin call.

Read more on the US’s planned sanctions package here

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Global shares rally after days of volatility

Stocks across the globe rallied on Tuesday, with investors encouraged by signs that the Omicron coronavirus variant may prove less serious than feared as well as signals from Chinese authorities that they are willing to stimulate the country’s slowing economy.

The FTSE All World share index rose 2.2 per cent, on pace for its best day since November 2020. In afternoon trading in the US, a 2.1 per cent advance for the S&P 500 put the benchmark within 0.5 per cent of the record closing level it hit before the new variant was first reported last month.

There were gains across the board, with more than 450 of the index’s constituents in the green. The tech-heavy Nasdaq Composite index climbed 3.2 per cent, putting it on track for its biggest one-day gain since March, while the small cap-focused Russell 2000 rose 3 per cent.

Stock markets have whipsawed over the past fortnight, driven by concerns about Omicron and expectations that the US central bank could tighten monetary policy faster than previously predicted.

The gains in US markets followed a strong day in Europe and Asia. The Europe-wide Stoxx 600 closed up 2.4 per cent, with tech stocks and cyclical businesses rising. London’s FTSE 100 gained 1.5 per cent.

Read more on the day’s market moves here

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Omicron offshoot makes it harder to track global spread of variant

An offshoot of the Omicron variant could be harder to distinguish from other variants through routine PCR tests, scientists have warned, making it more difficult to track the global spread of the heavily mutated strain.

Omicron, first detected in southern Africa, can be identified by a certain type of PCR test because it does not possess one of the three coronavirus gene targets — the S gene — analysed by widely used commercial detection kits.

The World Health Organization has said this characteristic can be used as a marker to detect the variant without the need for full genome sequencing.

But an offshoot of Omicron, identified in at least seven cases across South Africa, Australia and Canada, no longer possesses this genetic quirk. This could make it more difficult to track the spread of Omicron globally, according to experts, especially for countries with limited access to genome sequencing.

Importantly, PCR tests would still be able to detect infection, and viral evolution has been seen both with other variants and other viruses altogether.

Prof Sarah Otto, a theoretical biologist at the University of British Columbia, said the S-gene dropout had been “hugely important” in tracking the early rise of Omicron in South Africa, and added that it “verified that Omicron can spread faster than Delta”.

The Omicron sibling possesses a series of other mutations, which could mean it spreads differently. But Dave Stuart, a professor of structural biology at Oxford university, said there was no reason for immediate concern.

“I don’t think there’s any reason to think that the new outlier is any more of a threat than the form of Omicron that’s knocking around at the moment in the UK, but it is terribly early,” he said. “If countries have access to good genome sequencing, then we’ll have a pretty good handle on it.”

Scientists and global health officials have warned that uneven access to genomic sequencing, either because of a lack of knowhow, reagents, or both, could seriously hamper and delay plans to track and contain any new variants.

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Trump chief of staff Meadows to no longer co-operate with January 6 panel

Donald Trump’s former White House chief of staff will no longer co-operate with the congressional committee investigating the January 6 attack on the US Capitol, in a U-turn that underscores the growing rancour between the former president’s allies and lawmakers.

Bennie Thompson, the Democrat chairing the January 6 select committee, said last month that Mark Meadows had been “engaging” with the panel of lawmakers through his lawyer, and had provided records to the committee and would provide a deposition following a congressional subpoena.

But George Terwilliger, Meadows’s lawyer, indicated on Tuesday that his client would no longer be co-operating, accusing the committee of not operating in “good faith”. In a letter sent to Thompson and obtained by the Financial Times, Terwilliger said the committee “had no intention of respecting boundaries concerning executive privilege”.

Terwilliger and a spokesperson for the January 6 committee did not immediately respond to a request for comment.

The U-turn from Meadows comes as the former chief of staff has come under fire from Trump loyalists over a forthcoming memoir in which Meadows details the then president’s bout with Covid-19. In the book, Meadows reportedly says Trump tested positive for the virus before a televised debate with Joe Biden.

Trump and his allies have sought to invoke “executive privilege”, a legal convention that means certain presidential communications are confidential, as grounds for not co-operating with the January 6 committee, which is comprised of Democratic lawmakers and just two Republicans: Liz Cheney of Wyoming and Adam Kinzinger of Illinois.

Trump has sued the panel in an effort to block the release of documents relating to his final days in office, while Steve Bannon, another Trump confidante, was indicted by a federal grand jury last month for contempt of Congress after failing to comply with a subpoena from the panel of lawmakers.

It remains unclear whether Meadows’s case will follow a similar trajectory. Meadows was a Republican congressman from North Carolina before being tapped as Trump’s fourth and final chief of staff.

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US stocks rebound sharply led by tech

Global equities moved sharply higher on Tuesday, as fears about the impact of the Omicron coronavirus variant abated and Chinese authorities signalled efforts to stimulate the country’s slowing economy.

The US’s technology-focused Nasdaq Composite index rose as much as 3 per cent in New York morning dealings. Shares in Chinese ecommerce group Pinduoduo rose by 13 per cent, while semiconductor companies ASML and Intel were up 6 per cent and 4 per cent respectively.

Tech stocks have traded choppily this month as Omicron concerns moved investors out of early-stage companies and prompted questions about coronavirus-related disruptions to semiconductor supply chains.

Wall Street’s broader-based S&P 500 index rose 2.1 per cent. The blue-chip gauge had closed 1.2 per cent higher on Monday, following more than a week of volatility driven by Omicron and expectations that the US central bank would tighten monetary policy.

In Europe, the regional Stoxx Europe 600 closed up 2.4 per cent, as shares in technology, consumer, industrial and financial businesses rose. London’s FTSE 100 gained 1.5 per cent.

Read more on the day’s market moves here

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Kellogg workers reject deal and extend two-month long strike

Striking workers at Kellogg cereal plants rejected the tentative agreement for an employment contract between the company and their union, the cereal maker said Tuesday.

Kellogg on Wednesday said it would move to permanently replace 1,400 workers across four states that walked off the job in early October.

The tentative deal, which was thought to signal the end of a high-profile, two-month-long strike, would have given pay raises to all employees, but maintained the cereal maker’s two-tiered benefit scheme with an added pathway for junior workers to earn so-called “legacy wages and benefits.” Eliminating that scheme and ending forced overtime work were the two major goals of the strike.

The vote was “overwhelming,” said the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM), which represents the Kellogg workers. The union also said it will continue to provide strike benefits to members.

“It appears the union created unrealistic expectations for our employees,” the company said in a statement.

The Kellogg strike was among the largest to emerge from the wave of labour actions organisers coined “Striketober,” though most others have now been resolved.

“The members have spoken,” says Anthony Shelton, BCTGM president. “The strike continues.”

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Canada to mandate Covid vaccination for banking and telecommunications sectors

Canada is set to require vaccination against Covid-19 for all employees in federally regulated workplaces like banks and telecommunications from early next year.

Vaccine mandates are already in place for the public sector, including for workers in the air, rail and marine transportation sectors, which are subject to government oversight. Under those requirements, which were initially proposed in August, travellers on those modes of transport must be vaccinated, too.

The new mandate would cover additional industries. Labour minister Seamus O’Regan announced on Tuesday the government would propose regulations under the country’s labour code to make vaccination mandatory for workers in other federally regulated sectors, including banking, road transportation and telecommunications.

“It will help us finish the fight against Covid-19 and help us sustain a strong and stable economic recovery,” O’Regan said in a statement on Tuesday.

The Trudeau government said it would consult with key stakeholders, including representatives of small- and medium-sized employers in order to finalise the regulations, which would come into effect in “early 2022.”

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Global shares rally after days of volatility

Global equities moved sharply higher today, as fears about the impact of the Omicron coronavirus variant abated and Chinese authorities signalled efforts to stimulate the country’s slowing economy.

Wall Street’s S&P 500 index rose 1.4 per cent in early New York dealings. The blue-chip gauge had closed 1.2 per cent higher yesterday, following more than a week of volatility driven by Omicron and expectations that the US central bank will tighten monetary policy.

The US’s technology-focused Nasdaq Composite index added about 2 per cent. Tech stocks have traded choppily so far this month as Omicron concerns moved investors out of early-stage companies and prompted questions about coronavirus-related disruptions to semiconductor supply chains.

In European afternoon trading, the regional Stoxx Europe 600 added 1.9 per cent, as shares in technology, consumer, industrial and financial businesses rose. Germany’s Dax and France’s CAC 40 were both up more than 2 per cent. London’s FTSE 100 gained 1.2 per cent.

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Poland’s EU recovery funds unlikely to be approved this year

The EU is unlikely to approve Poland and Hungary’s applications for tens of billions of euros in pandemic-recovery financing before the end of the year, the commission’s executive vice-president has said.

Poland has applied for €36bn in loans and grants from the EU’s Covid-19 recovery fund, but Brussels has delayed its approval over fears that the country’s judicial system has been politicised by the ruling Law and Justice party.

The delay would mean Warsaw fails to secure 13 per cent of the amount, worth €4.7bn, in an initial disbursement of pre-financing, as many other EU members have already received.

“The work is ongoing . . . It is unlikely that we can finalise this work still this year,” said Valdis Dombrovskis, executive vice-president of the commission.

“Movement on the substance is what really determines the speed. As soon as we are there in the substance, we can move forward on the commission’s side,” he told reporters.

Warsaw and Brussels have been at loggerheads for years over Law and Justice’s reform of the judiciary. An EU assessment of the country said that some steps, including the creation of a chamber to punish judges, have endangered rule of law in the country.

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US trade deficit narrows to lowest level since April as exports jump

The US trade deficit retreated in October from a record high to its lowest level in six months as exports surged.

The trade deficit in goods and services narrowed to $67.1bn in October — the lowest level since April — from a record $81.4bn the previous month, the commerce department said today. That was slightly wider than economists’ expectations of $66.8bn.

“October’s sharp $14.3bn narrowing is the largest one-month contraction in the deficit since November 2008,” said Mahir Rasheed, economist at Oxford Economics.

The trade gap narrowed as exports rose by $16.8bn from the previous month to $223.6bn, driven by an increase in exports of crude oil, civil aircraft, soyabeans and consumer goods.

Meanwhile, imports rose by $2.5bn from the previous month to $290.7bn. Imports of passenger cars, mobile phones and other consumer goods all increased, while imports of semiconductors and civilian aircraft declined.

The deficit with China decreased $3.2bn to $28.3bn, while the trade gap with the EU fell by $2.1bn to $16.6bn. However, the deficit with Mexico widened to $9.7bn.

Economists expect stronger export growth and a moderation in imports next year, although the new Omicron coronavirus variant is “a key downside risk that threatens to distort trade flows by slowing the global recovery in early 2022”, Rasheed said.

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US companies have strongest pricing power in a generation, says Wells Fargo chief

Pricing power among US companies is the strongest it has been in at least a generation, Wells Fargo chief executive Charlie Scharf said today.

Inflation due to higher input costs and a tight labour market has increased costs across most industries, but so far companies have not found it difficult to pass on those extra expenses to customers whose cash balances are still 30-35 per cent higher than pre-pandemic levels, according to the bank’s data.

“In terms of the middle market customer many have pricing power that they say that they’ve never seen before,” Scharf said at an investor conference. “They say ‘we’ve never been able to raise price like this and get it’ and they’re getting it.”

The ability to raise prices without a material impact on demand should lead to strong economic growth heading into 2022, but monetary authorities should intervene soon, he said.

“There’s certainly a case to be made that [the Fed] should be moving faster than they’ve been moving,” he said. “We are more concerned about inflation than not, but there is a path forward.”

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American Airlines chief Doug Parker to retire and hand top job to Robert Isom

American Airlines chief executive Doug Parker will retire from the top post in March, handing over leadership to the airline’s president Robert Isom

Parker, who remains chair of the board, will hand over to Isom on March 31, who will then join the board.

“I have worked with Robert for two decades,” Parker said in a statement on Tuesday. “Robert is a collaborative leader with deep operational expertise and global industry experience. His efforts to guide and support our team throughout the pandemic have been nothing short of phenomenal.”

Parker, who has been an airline chief executive for two decades, added that American is “well positioned to take advantage of our industry’s recovery”.

American Airlines’ shares gained 3 per cent in pre-market trading.

American was among the US airlines, including Delta, Southwest and United Airlines, to note in September that demand had pulled back in August, clouding the outlook for the industry’s recovery from the pandemic.

Isom was named president in 2016 and has 30 years of industry and leadership experience. Parker and Isom were both previously at US Airways.

“Over the past several years, our airline and our industry have gone through a period of transformative change,” Isom said. “And with change comes opportunity.”

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Covid vaccine mandates ‘last resort’, says WHO Europe regional director

The director of the World Health Organization in Europe has said that vaccine mandates should be a last resort, despite rising infections across the continent and the spread of the Omicron variant.

“Mandates around vaccination are an absolute last resort and only applicable when all other feasible options to improve vaccination uptake have been exhausted,” said WHO regional director Hans Kluge during a press briefing today.

“The effectiveness of mandates is very context specific, the effect that mandating vaccination could have on public confidence and public trust as well as vaccination uptake must be considered,” he added.

Kluge also said that although the Omicron variant is spreading in Europe, the Delta variant remains the continent’s main concern.

“[Wherever] we succeed against Delta today, is a win over Omicron tomorrow,” he said.

One-in-ten people across Europe and central Asia will have been infected by coronavirus by the end of this week, according to Kluge.

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No evidence of a wage-price spiral, Yellen tells FT Global Boardroom conference

US Treasury secretary Janet Yellen sees no evidence to support fears that the combination of a tight labour market and rising prices will create a spiral effect that could entrench high inflation.

“I don’t see any evidence that that is happening,” the former Fed chair said today at the Financial Times Global Boardroom. “But it would be appropriate to the Fed to take actions to make sure that doesn’t happen.”

She told the conference she was not concerned that the unprecedented levels of fiscal support pumped into the US economy to weather the coronavirus pandemic would be the cause of sustained inflation, or that its withdrawal would create a downturn.

“We had a real jolt of spending and fiscal stimulus in the year 2021 due to the American rescue plan and its predecessors, and that’s not going to be repeated,” she said. “So we’re going to see in the years ahead fiscal drag rather than a repeat of that stimulus.”

Yellen added: “I’m frankly not worried about a downturn in the US economy as fiscal stimulus ebbs. I do think there’s going to be plenty of demand to support growth.”

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Spain to start vaccinating 5 to 11-year-olds

Spain will begin vaccinating children between five and 11-years-old, in line with a recent decision by the European Medicines Agency.

The move, announced today, comes as the sixth wave of the pandemic in the country affects that age group proportionally more than any other.

As of yesterday, infection rates among children aged 11 and younger were running at 412 per 100,000 over 14 days — far higher than for any other age group. This compares with a rate of 248 for the population as a whole.

Vaccinations of the under 12s are set to begin on December 13.

Spain has one of the best vaccination records in the EU, although it has yet to begin administering booster shots to the under-60s.

According to yesterday’s data, 89 per cent of people aged 12 and above are now fully vaccinated, while 69 per cent of the over 70s have received a booster shot.

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What to watch in the Americas today

Biden-Putin call: US president Joe Biden is expected to warn Russian president Vladimir Putin against any invasion of Ukraine in a planned video summit today. Biden consulted with European allies yesterday to secure their backing ahead of his call with Putin. The two leaders are also expected to discuss a range of other topics including cyber security.

Holmes trial: Elizabeth Holmes’ criminal fraud trial will resume, with the Theranos founder expected to return to the stand for cross examination. Holmes faces 11 counts of wire fraud and conspiracy to commit wire fraud, each of which carries a maximum prison sentence of 20 years. Prosecutors are expected to finish their cross-examination early this week.

Bank CEOs: Brian Moynihan, chief executive of Bank of America, and Charlie Scharf, chief executive of Wells Fargo, are due to speak at the Goldman Sachs financial services conference.

Data: The US commerce department is expected to say that the trade deficit in goods and services narrowed to $66.8bn in October, from a record $80.9bn the previous month, thanks to a surge in exports.

Markets: US stock futures are suggesting an upbeat start for equity markets, with the S&P 500 up 1.3 per cent and the Nasdaq up 1.8 per cent. Wall Street equities rebounded yesterday, led higher by travel stocks, as fears about Omicron-driven lockdowns eased.

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ECB plans bank inspections to check on leveraged loan exposure

The European Central Bank plans to conduct on-site inspections of banks with high exposures to riskier activities, such as lending to private equity and hedge funds, to check how they would be hit by a rise in interest rates.

The ECB announced the move today as it set priorities for the next three years at its banking supervisory unit, which oversees the biggest 113 eurozone lenders.

“The low interest rate environment, extraordinary fiscal and monetary policy support measures and the search for yield have led to stretched valuations in several financial market segments, sometimes disconnected from economic fundamentals,” the Frankfurt-based central bank said.

It said supervisors were concerned about banks’ exposure to a potential sell-off in financial markets if fiscal and monetary policy support was withdrawn, adding: “This situation might exacerbate the likelihood of a repricing [of] risk in government and corporate bonds or equity markets.”

It plans to conduct “targeted on-site inspections” to examine banks’ exposure to riskier areas, such as leveraged lending and prime brokerage — where the recent collapse of the family office Archegos left its prime brokers including Credit Suisse nursing heavy losses.

ECB supervisors plan to carry out an in-depth assessment of banks’ exposure to sectors hit hardest by the pandemic, such as commercial real estate, and of their vulnerability to climate change risks via a targeted stress test of lenders next year.

Other priorities include a review of the “suitability and diversity” of banks’ governance and managements and a benchmarking of their digital transformation to identify lenders that are falling behind in the race to boost profits and better compete with technology groups.

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South African economy shrinks for first time in a year

South Africa’s gross domestic product fell 1.5 per cent in the third quarter as the worst post-apartheid violence and looting destroyed businesses, blocked major roads and throttled exports.

Africa’s most industrialised economy contracted for the first time in a year in the July-September quarter from the previous three-month period, statistics revealed today.

Unrest that President Cyril Ramaphosa called a “failed insurrection” held back a recovery from the depths of the pandemic.

Manufacturing, trade and farming activity declined during the quarter, when the government brought back lockdown measures to deal with a fresh wave of infections driven by the Delta variant.

Hundreds died in South Africa’s unrest in July, which was linked to infighting in the ruling African National Congress over the brief jailing of Jacob Zuma, the former president, for contempt of court.

South African exports fell nearly 6 per cent in the three-month period, the first decline since coronavirus-related restrictions in the second quarter of last year.

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UK alcohol-related deaths rise at fastest pace as Covid effects hit hard

UK alcohol-related deaths increased at the fastest pace on record during the pandemic, according to official data that raises concerns about the wider impact of Covid-19 restrictions on people’s wellbeing.

The UK registered nearly 9,000 deaths from alcohol-specific causes last year, an 18.6 per cent increase compared with 2019 and the highest annual increase since the data time series began in 2001, the Office for National Statistics said today. The rate is more than four times the previous record pace and is in sharp contrast with contractions in 2019 and 2018.

The rise pushed up alcohol-related deaths for 100,000 people to 14 in 2020, up from 11.8 in the previous year and the highest on record.

Changes in alcohol consumption patterns could be a factor together with “increases in loneliness, depression and anxiety during the pandemic”, said James Tucker from the ONS.

The figures point to the hit of Covid-19 restrictions to mental health, resulting from increased anxiety and low interactions with family and friends.

ONS data showed that the rate of alcohol-specific deaths for males in 2020 remained more than double the rate for females as for previous years.

Scotland and Northern Ireland had the highest rates of alcohol-specific deaths in 2020 with the former registering strong increases together with England.

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UAE shifts weekend days to align with western working week

The United Arab Emirates government has shifted the national weekend to Saturday and Sunday, putting in place a four-and-a-half day working week that from January 1 will end at noon on Fridays.

Changes to the working week, which run Sunday to Thursday, are intended to “boost work-life balance and enhance social wellbeing, while increasing performance to advance the UAE’s economic competitiveness”, the government said in a statement.

The move, which the government said is the first such move away from the global five-day week, applies to UAE federal entities, which will work from 07:30 to 15:30 on Monday to Thursday and 07:30 to 12:00 on Friday.

The Dubai government said it would follow suit. If, as expected, educational establishments adopt a similar week, then the private sector is likely to shift.

Friday sermon and prayers, an important day of collective Islamic worship and family gathering, will start at 1:15pm across all seven emirates, the UAE said.

Employees will have the flexibility to work from home on Fridays or arrange working hours on a flexible basis, the statement added.

The UAE has been introducing a series of secular-minded reforms to align itself more closely with international norms as the Gulf monarchy seeks to accelerate growth out of the pandemic by attracting higher skilled expatriates.

National changes have been accelerating since neighbouring Saudi Arabia, which is instituting its own social and economic reforms, has been attracting some of the businesses and sectors that have thrived for decades in the UAE.

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Defence contractor Babcock swings to profit

Babcock International, Britain’s second-biggest defence contractor, swung to a profit in the first half of its financial year, as the hit from Covid-19 eased and growth in its marine and nuclear sectors boosted revenues.

Babcock posted an operating profit of £75.4m in the six months to September, compared with a £785.3m loss in the same period last year. Revenues rose 8 per cent to £2.2bn.

“The pandemic had a very significant impact on revenue in the first few months of last year,” said the company in a statement. “Conversely, Covid-19 led to slightly more revenue in marine as activity levels were increased, for example for the design and manufacture of ventilators.” 

The company’s marine division was boosted by work on the Type 31 frigate programme, which aims to increase the number of ships in the UK’s Royal Navy, while the nuclear business benefited from “infrastructure work and increased submarine support activity”. 

Babcock said its contract backlog totalled £10.9bn on September 30.

Chief executive David Lockwood noted the company had “an agreement for potentially significant work in Ukraine, supported by both the UK and the Ukrainian governments”.

However, Babcock said it remained cautious about its ability to maintain its activity levels following the spread of the Omicron variant of coronavirus, and inflationary and supply chain pressures.

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European stocks rise after higher Wall Street close

European equities opened higher on Tuesday, as fears about the impact of the Omicron coronavirus variant waned and Chinese authorities signalled they were ready to stimulate the nation’s slowing economy.

The regional Stoxx Europe 600, which has heavy weightings of industrial, financial and consumer goods businesses, added 1.2 per cent in early dealings. London’s FTSE 100 gained 0.8 per cent.

Wall Street’s S&P 500 index closed 1.2 per cent higher on Monday, following more than a week of volatility driven by Omicron and bets of the US central bank tightening monetary policy.

An index of value stocks listed on the S&P, which offer higher dividend yields and are expected to rise when economic growth prospects improve, ended Monday’s session 1.5 per cent higher.

China’s central bank on Monday reduced the level of deposits lenders must set aside, in a move to add liquidity into the financial system, while the government’s top decision-making body pledged “flexible” monetary policy.

“With both actions and words, China’s policymakers are becoming more willing to ease policy to counter the sharp slowdown in growth,” Gavekal analyst Wei He commented in a note to clients.

Hong Kong’s Hang Seng share index rose 2.6 per cent while Tokyo’s Topix closed 2.2 per cent higher.

In government debt markets, the yield on the benchmark 10-year US Treasury note rose 0.02 percentage points to 1.45 per cent as its price fell.

Brent crude gained 1.8 per cent to $74.37 a barrel.

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Raab defends record on Afghan withdrawal against whistleblower claims

Deputy prime minister Dominic Raab has defended his record at the Foreign Office during the withdrawal from Afghanistan over the summer after a whistleblower has claimed the system for evacuating Afghans as the Taliban advanced was chaotic and badly managed.

“I think anyone would expect us to conduct the basic checks” on identity and validity of claims, Raab, who was foreign secretary at the time of the Afghan withdrawal, told Sky News.

“The real challenge in the evacuation was the operational situation on the ground to get people to the airport that was extremely difficult,” Raab said on Tuesday. “And secondly checking identity to make sure that . . . we’re not, through generosity of spirit, lifting anyone that might harm the UK.”

While the then-foreign minister has claimed the UK’s evacuation efforts were second only to those of the US, Raphael Marshall, a former desk officer at the Foreign Office, has claimed that thousands of evacuation requests were left unread, that there was no consistent system for prioritising evacuees and the operation was chronically understaffed.

He estimated that, of the 150,000 applications received, only about 5 per cent received assistance, the rest were left behind as the Taliban advanced.

“The real questions that need answering are: ‘Where was everybody?’” said Tom Tugendhat, chair of parliament’s foreign affairs select committee, said on BBC Radio 4’s Today programme.

Marshall, the Foreign Office employee turned whistleblower, claimed that at various points he was alone dealing with a huge case of emails in “a Foreign Office that was effectively a Marie Celeste”, Tugendhat said. “If that is true, that is very concerning,” adding that this was “clearly a situation in which all hands needed to be on deck.”

Tugendhat added: “You wouldn’t expect people to be away from their posts where they could deal with this situation as quickly as possible. By the backlog it strongly suggests that whatever the working arrangements were, they weren’t working,” he added.

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Liontrust strikes deal to buy Majedie Asset Management

Two well-known London-based asset management boutiques have announced a tie-up, as consolidation sweeps across the industry.

FTSE 250-listed Liontrust said on Tuesday it had agreed to acquire Majedie Asset Management for £80m initially, plus an additional deferred consideration of up to £40m.

The deal, which is set to complete next April, will increase Liontrust’s assets under management by £5.8bn to more than £42.3bn, and boost its position in the institutional market.

Majedie is a boutique equities manager that has carved out a reputation as a strong stockpicker at a time when many active managers have lost out to the rise of passive funds.

John Ions, chief executive of Liontrust, said in a statement: “Given the growing demand from institutional investors for global equity managers, we believe we can expand this client base further for the Majedie investment team, as well as take advantage of Majedie’s institutional expertise.”

The deal shows how asset managers are striking mergers and acquisitions to increase scale, looking for growth and tapping into new markets or distribution, in an environment of declining fees and rising costs.

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UK house prices surge at fastest three-month pace in 15 years

UK house prices have registered the strongest three months in 15 years, boosted by short supply, low mortgage rates and a strong labour market.

The average price rose to a record £272,992 last month, up 1 per cent from October and 8.2 per cent above the average price in the same month in the previous year, the mortgage provider Halifax said on Tuesday.

In the three months to November, house prices registered a 3.4 per cent increase compared with the previous three-month period, the fastest pace since 2006.

Line chart of £ '000 showing Halifax UK house price rise sharply in November

“The performance of the market continues to be underpinned by a shortage of available properties, a strong labour market and keen competition amongst mortgage providers keeping rates close to historic lows,” said Russell Galley, managing director at Halifax.

“November’s strong buyer demand has reduced the supply of properties available for sale which, at the end of November, was 12 per cent lower than the same time last year,” said Guy Gittins, chief executive of estate agency Chestertons. “The market has seen a 30 per cent drop in sellers willing to lower their asking prices.”

Halifax figures confirm the fast pace of house price growth anticipated by the mortgage provider Nationwide. Both indices are based on the mortgages approved by the companies.

Galley added that the outlook for house prices is clouded by the spectre of an interest rate rise, low affordability, shrinking disposable income and fears over the Omicron variant.

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EU rules to force gig economy companies to prove workers are free agents

Gig economy companies will be forced to prove that their workforces are self-employed contractors, not employees, for the first time under new draft legislation set to be published on Wednesday

Following months of discussions with unions and gig economy companies, the European Commission will set out new rules stating that the burden of proof of workers’ status will lie with the platforms, which have to demonstrate that they do not “control the performance of work”.

Until now, gig economy workers are generally by default considered self-employed, and therefore not entitled to a minimum wage, sick pay or holiday leave. If they are unhappy with their rights they have to take companies to court.

Companies such as Deliveroo, Cabify and Just Eat will have to prove that workers are able to choose their own schedule and able to work for others as key criteria used to challenge an employment status claim.

EU regulators said the overhaul in the law will mean that up to 4.1m individuals are expected to be reclassified as workers, a move that would grant them access to “rights and protections” in line with those in more secure forms of employment.

Brussels also estimated that by reclassifying workers, people who earn below the minimum wage would see a collective increase of up to €484m in earnings a year.

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UK competition watchdog to probe tie-up between Veolia and Suez

The UK competition regulator is planning to open an in-depth probe into the tie-up between Veolia and Suez, two of the world’s largest waste and water companies, intensifying the pressure on one of the most fraught takeover battles in French history.

Paris-based Veolia struck the deal to buy arch-rival Suez in April, kickstarting a series of antitrust probes. The deal has attracted interest from the UK competition watchdog due to the size of both companies’ businesses in Britain and the number of waste management and recycling contracts they have with local authorities.

Unless both offer suitable remedies within five working days, the Competition and Markets Authority will open the probe.

The CMA on Tuesday said it had received a “large number of complaints from local authorities, some of whom expressed concerns that the merged entity would be the only company that could credibly service complex waste management contracts in the UK”.

Andrea Coscelli, chief executive of the CMA, said: “Councils spend hundreds of millions of pounds on waste management services. Any loss of competition in this market could lead to higher prices for local authorities, leaving taxpayers to foot the bill.”

Veolia earned €2.1bn in UK and Ireland revenue last year on worldwide turnover of €26bn.

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Activist investor Elliott attacks SSE over renewable energy plans

Hedge fund Elliott Management has called for sweeping changes at Scottish energy group SSE, including the appointment of two new independent directors, in a searing attack on SSE’s energy transition strategy.

In a 10-page letter to SSE chair Sir John Manzoni, published on Tuesday, the US activist fund criticised the performance of longstanding chief executive Alistair Phillips-Davies and described a set of reforms to better fund the renewables business as a “missed opportunity”.

The letter is Elliott’s first public comment on SSE’s strategy since it acquired a stake in the business this year and began to privately lobby management to split the electricity networks and renewables divisions into two separate listed companies.

The SSE campaign marks the second big FTSE 100 company that the hedge fund has targeted this year, after attempting a shake-up at UK healthcare group GlaxoSmithKline.

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What to watch in Europe today

Russia: Russian president Vladimir Putin and US president Joe Biden will speak on a phone call on Tuesday, following a meeting of their top diplomats at which the two countries traded warnings over escalating tensions on the Russia-Ukraine border. Washington has warned that Moscow could launch an invasion in early 2022. The Kremlin has repeatedly denied it plans to attack Ukraine and has called the warnings inflammatory.

EU: The economic bloc publishes revised third-quarter gross domestic product data. Growth rose faster than expected to 2.2 per cent in the three months to September, following a rise of 2.1 per cent in the previous quarter, meaning the euro area is now just 0.5 per cent smaller than in the final quarter of 2019 before the coronavirus pandemic hit.

UK: Halifax publishes its latest house price index on Tuesday. The index from rival lender Nationwide rose a strong 0.9 per cent last month compared with October, taking the average value of a UK home to £252,687, the highest since records began.

Markets: US stocks rose on Monday, with the broad-based S&P 500 index closing up 1.2 per cent and the technology-focused Nasdaq Composite index 0.9 per cent higher at the bell. Asian markets tracked the US, with Hong Kong’s Hang Seng index and Japan’s Topix rising more than 2 per cent in the afternoon. Markets in Australia, China and South Korea also gained. In Europe, FTSE 100 futures were up 0.2 per cent and Euro Stoxx 50 futures were up 0.6 per cent.

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Embassies in Seoul call for recognition of foreigners vaccinated overseas

Foreign embassies in Seoul, including those of the US and the UK, have called on the South Korean government to grant “urgent recognition” of foreign nationals vaccinated overseas against Covid-19, as a dispute over the country’s jabs policy intensifies.

The embassies — which also included those of Australia, Canada, India and New Zealand as well as the EU mission — said that foreign nationals should have the “same access rights to public facilities as those Korean nationals fully vaccinated overseas”.

South Korea’s current Covid-19 restrictions require proof of vaccination to enter a number of public spaces. Vaccinations administered in the country are recognised, as are those given overseas to South Korean nationals.

But vaccinations given overseas to foreign nationals, including those with South Korean residency, are recognised only when the recipient has been granted a quarantine exemption to enter the country.

South Korea on Friday halted quarantine exemptions granted to double-vaccinated international arrivals to help prevent the spread of the Omicron variant of the coronavirus.

The government also widened its mandate to require proof of vaccination at restaurants and cafés, while lowering the age of exemption from 18 to 11.

The US embassy said the “discriminatory policy . . . brings undue hardship to US citizens vaccinated outside Korea”, adding that it had raised it with the South Korean government “at the highest levels”.

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Hong Kong researchers develop a Covid-killing stainless steel

Researchers at the University of Hong Kong said on Tuesday they have developed a stainless steel that kills the Sars-Cov-2 virus that causes Covid-19.

A project team at the university’s engineering faculty said it had “made significant breakthroughs” in the production of lift buttons, doorknobs and handrails for further tests and trials.

The researchers, led by Huang Mingxin of the mechanical engineering department and Leo Poon of the university’s Centre for Immunity and Infection, said the stainless steel inactivates 99.75 per cent of the virus within three hours.

The surface also has long-term anti-pathogen properties against the H1N1 influenza A virus subtype and the common bacteria Escherichia coli, they said.

Antiviral stainless steel can be produced by existing powder metallurgy methods, according to the researchers’ findings, which were first published in Chemical Engineering Journal.

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Australia’s reserve bank sounds upbeat on economy but not on inflation

A man pushes a trolley towards the Reserve Bank of Australia office in Sydney
The RBA said leading indicators point to a strong recovery in employment but pick-up in wages growth is still expected to be only gradual © Bloomberg

The Reserve Bank of Australia on Tuesday left its key monetary policy settings unchanged and sounded upbeat on the prospects for the labour market and the economy.

However, the central bank did not change its outlook on inflation or message on patience with the cash rate as it noted that household consumption and the outlook for business investment have improved.

The pandemic-hit economy is expected to return to its pre-Delta variant path in the first half of 2022, the bank said, noting that the Omicron variant is a new source of uncertainty but is not expected to derail the recovery.

The RBA said leading indicators point to a strong recovery in employment but pick-up in wages growth is still expected to be only gradual. The bank also appeared unperturbed by global concerns over inflation, saying pressures are less than they are in many other countries.

The RBA left its options open on the future of its bond purchase program open, reiterating the three criteria it would use when making a decision in February 2022.

There was a shift in commentary on housing prices, with the RBA noting the rate of price gains has eased over recent months, and the value of housing loan commitments has declined from high levels.

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Samsung Electronics heralds generational change with management reshuffle

Samsung Electronics has reshuffled its management for the first time in four years as it steps up its push into non-memory chips and artificial intelligence.

The shake-up comes as Lee Jae-yong, the group’s third-generation heir, has started playing an active management role four months after being released from prison.

Lee, who spent 19 months in jail for bribing former president Park Geun-hye, still faces charges of stock manipulation linked to the 2015 merger of two Samsung units engineered to consolidate his control.

He is expected to meet customers of Samsung’s 5G telecommunications and construction businesses on a trip this week to the Middle East following a high-profile visit to the US last month.

After Lee’s trip, Samsung announced it would build a $17bn chip plant in Texas to help Washington expand US chip production, a national security priority for Joe Biden’s administration.

Lee’s shake-up outlined on Tuesday included merging Samsung’s consumer electronics and mobile divisions to take on competitor Apple, which boasts a fully integrated line of devices. He promoted Han Jong-hee, head of Samsung’s visual display business, to take charge of the new division.

Read more about the Samsung reshuffle.

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Travel stocks lead gains in Australia as fears ease over Omicron severity

A board displays Qantas Airways flights at the company’s headquarters in Sydney
A board displays Qantas Airways flights at the company’s headquarters in Sydney © Bloomberg

Travel stocks led a rally in Australian equities on Tuesday after investors reacted to headlines that the new Omicron variant of coronavirus might be less severe than feared.

Shares in Qantas, Australia’s flag carrier, gained as much as 5 per cent, while travel groups Flight Centre and Corporate Travel Management both rose more than 6 per cent.

The increases, alongside strong gains for payments company Zip, helped pushed Australia’s benchmark S&P/ASX 200 up as much as 0.9 per cent.

Anthony Fauci, the top US health official, on Sunday called early signals about the severity of Omicron “encouraging”, telling CNN “we feel certain that there will be some degree and maybe a considerable degree of protection” with booster jabs.

Australia’s rally was followed by stocks in Japan, where the Topix gained as much as 0.8 per cent. In South Korea, the Kospi dipped, notching losses of up to 0.4 per cent.

Futures in mainland China edged higher and were up 1.7 per cent in Hong Kong, where markets closed 1.8 per cent lower on Monday.

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What to watch in Asia today

Japan: The country announces its household spending figures for October, an important gauge of activity and confidence in the economy. It is forecast to be 2.8 per cent higher than in September, but still 3.9 per cent lower than October last year.

Australia: The Reserve Bank of Australia makes its monetary policy decision today, setting the country’s cash rate target. It will also deliver its assessment of the country’s current economic situation in its monetary policy statement. The target is forecast to remain unchanged, at 0.1 per cent, where it has been set since November 2020.

Markets: Wall Street equities rose on Monday, led higher by travel stocks, as fears that the Omicron coronavirus variant would lead to fresh lockdowns eased. The broad-based S&P 500 index rose 1.2 per cent on Monday, after closing down 0.8 per cent on Friday. The technology-focused Nasdaq Composite index closed 0.9 per cent higher on Monday. Australian stocks rose in early trading while futures in Hong Kong were up.

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Travel stocks lead Wall Street higher as markets reassess Omicron risks

Wall Street equities rose on Monday, led higher by travel stocks, as concerns the Omicron coronavirus variant would lead to fresh lockdowns eased.

The broad-based S&P 500 index rose 1.2 per cent on Monday, after closing 0.8 per cent lower on Friday.

Travel-related stocks rallied with shares in Norwegian Cruise Line, United Airlines, Royal Caribbean Cruises and Carnival all rising by more than 8 per cent.

Dr Anthony Fauci, US president Joe Biden’s chief medical adviser, on Sunday called early signals about the severity of Omicron “encouraging”.

He told CNN that “we feel certain that there will be some degree and maybe a considerable degree of protection” with booster jabs. Market swings about Omicron are likely while scientists await conclusive data.

The technology-focused Nasdaq Composite index closed 0.9 per cent higher on Monday. The narrower gain continued a trend over the past fortnight, in which the Nasdaq has trailed the S&P 500.

The yield on the benchmark 10-year Treasury note rose 0.09 percentage points to 1.43 per cent as the price of the debt fell.

Read more on the day’s market moves here.

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Saudi Aramco to raise $15.5bn by selling stake in natural gas pipeline business

Saudi Aramco sign at the oil facility in Abqaiq, Saudi Arabia
The sale is Aramco’s second big pipeline deal this year © Reuters

Saudi Aramco announced a deal to raise $15.5bn by selling a minority stake in a newly formed gas pipeline venture to a consortium of investors.

The world’s largest oil producer said on Monday it would sell the stake to a group led by BlackRock and the investment management arm of the General Organization for Social Insurance, a Saudi government body.

The transaction marks Aramco’s second big pipeline deal this year as it tries to monetise assets to generate cash for the government, its main shareholder.

The announcement followed a call earlier in the day from the company’s chief executive, speaking at the World Petroleum Congress in Houston, for global leaders to continue investing in fossil fuels in the years ahead or run the risk of spiralling inflation and social unrest that would force them to jettison emissions targets.

Read more on Saudi Aramco’s warning here.

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BuzzFeed shares endure volatile debut on the Nasdaq

BuzzFeed’s first hours of trading as a listed company proved volatile, with shares swinging into negative territory from an early gain of more than 50 per cent.

The media group went public on Monday through a merger with a blank cheque company, or Spac, from which most of the investors in that vehicle had pulled their money out before the listing.

BuzzFeed shares jumped as much as 53.5 per cent to an intraday high of $14.77 in the first hour of trading on Monday. By late morning, they hit $8, representing a 16.8 per cent drop from the Spac’s adjusted closing price on Friday of $9.62.

Shares were down 8.9 per cent in late-afternoon trading.

Spacs had been one of the hottest products on Wall Street earlier this year, but have more recently fallen out of favour with investors.

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