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Business

Goldman job cuts hit investment banking, global markets hard -source

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  • Mass redundancies, spending review beckons for Wall Street giant
  • Cuts to all major divisions expected, globally
  • Restructuring in Asian wealth unit kicks off Wednesday’s layoffs

NEW YORK/LONDON/HONG KONG, Jan 12 (Reuters) – Goldman Sachs (GS.N) began laying off staff on Wednesday in a sweeping cost-cutting drive, with around a third of those affected coming from the investment banking and global markets division, a source familiar with the matter said.

The long-expected jobs cull at the Wall Street titan is expected to represent the biggest contraction in headcount since the financial crisis. It is likely to affect most of the bank’s major divisions, with its investment banking arm facing the deepest cuts, a source told Reuters this month.

Just over 3,000 employees will be let go, the source, who could not be named, said on Monday. A separate source confirmed on Wednesday that cuts had started.

“We know this is a difficult time for people leaving the firm,” a Goldman Sachs statement on Wednesday said.

“We’re grateful for all our people’s contributions, and we’re providing support to ease their transitions. Our focus now is to appropriately size the firm for the opportunities ahead of us in a challenging macroeconomic environment.”

The cuts are part of broader reductions across the banking industry as a possible global recession looms. At least 5,000 people are in the process of being cut from various banks. In addition to the 3,000 from Goldman, Morgan Stanley (MS.N) has cut about 2% of its workforce, or 1,600 people, a source said last month while HSBC (HSBA.L) is shedding at least 200, sources previously said.

Last year was challenging across groups including credit, equities, and investment banking broadly, said Paul Sorbera, president of Wall Street recruitment firm Alliance Consulting. “Many didn’t make budgets.”

“It’s just part of Wall Street,” Sorbera said. “We’re used to seeing layoffs.”

The latest cuts will reduce about 6% of Goldman’s headcount, which stood at 49,100 at the end of the third quarter.

[1/3] A trader works at the Goldman Sachs stall on the floor of the New York Stock Exchange, April 16, 2012. REUTERS/Brendan McDermid/File Photo

The firm’s headcount had added more than 10,000 jobs since the coronavirus pandemic as markets boomed.

The reductions come as U.S. banking giants are forecast to report lower profits this week. Goldman Sachs is expected to report a net profit of $2.16 billion in the fourth-quarter, according to a mean forecast by analysts on Refinitiv Eikon, down 45% from $3.94 billion net profit in the same period a year earlier.

Shares of Goldman Sachs have partially recovered from a 10% fall last year. The stock closed up 1.99% on Wednesday, up around 6% year-to-date.

LAYOFFS AROUND GLOBE

Goldman’s layoffs began in Asia on Wednesday, where Goldman completed cutting back its private wealth management business and let go of 16 private banking staff across its Hong Kong, Singapore and China offices, a source with knowledge of the matter said.

About eight staff were also laid off in Goldman’s research department in Hong Kong, the source added, with layoffs ongoing in the investment banking and other divisions.

At Goldman’s central London hub, rainfall lessened the prospect of staff huddles. Several security personnel actively patrolled the building’s entrance, but few people were entering or leaving the property. A glimpse into the bank’s recreational area just beyond its lobby showed a handful of staffers in deep conversation but few signs of drama. Wine bars and eateries local to the office were also short of post-lunch trade, in stark contrast to large-scale layoffs of the past when unlucky staffers would typically gather to console one another and plan their next career moves.

In New York, employees were seen streaming into headquarters during the morning rush.

Goldman’s redundancy plans will be followed by a broader spending review of corporate travel and expenses, the Financial Times reported on Wednesday, as the U.S. bank counts the costs of a massive slowdown in corporate dealmaking and a slump in capital markets activity since the war in Ukraine.

The company is also cutting its annual bonus payments this year to reflect depressed market conditions, with payouts expected to fall about 40%.

Reporting by Sinead Cruise and Iain Withers in London, Selena Li in Hong Kong, Scott Murdoch in Sydney and Saeed Azhar in New York; Editing by Josie Kao and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

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Business

Asia shares up on Fed rate wagers, China reopening lifts yuan

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  • https://tmsnrt.rs/2zpUAr4
  • U.S. share futures edge up, Nikkei futures gain
  • Hopes U.S. CPI report will make case for smaller Fed hikes
  • Earnings season kicks off with major banks on Friday
  • Dollar nurses losses, yuan at highest since mid-August

SYDNEY, Jan 9 (Reuters) – Asian shares rallied on Monday as hopes for less aggressive U.S. rate hikes and the opening of China’s borders bolstered the outlook for the global economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 2.0% to a five-month top, with South Korean shares (.KS11) gaining 2.2%.

Chinese blue chips (.CSI300) added 0.7%, while Hong Kong shares (.HSI) climbed 1.4%. China’s yuan also firmed to its highest since mid-August under 6.8000.

Japan’s Nikkei (.N225) was closed for a holiday but futures were trading at 26,215, compared with a cash close on Friday of 25,973.

S&P 500 futures added 0.2% and Nasdaq futures 0.3%. EUROSTOXX 50 futures gained 0.6%, while FTSE futures firmed 0.3%.

Earnings season kicks off this week with the major U.S. banks, with the Street fearing no year-on-year growth at all in overall earnings.

“Excluding Energy, S&P 500 EPS (earnings per share) is expected to fall 5%, driven by 134 bp of margin compression,” wrote analysts at Goldman Sachs. “Entering reporting season, earnings revision sentiment is negative relative to history.

“We expect further downward revisions to consensus 2023 EPS forecasts,” they added. “China reopening is one upside risk to 2023 EPS, but margin pressures, taxes, and recession present greater downside risks.”

A sign of the strain came from reports Goldman would start cutting thousands of jobs across the firm from Wednesday, as it prepares for a tough economic environment. read more

In Asia, Beijing has now opened borders that had been all but shut since the start of the COVID-19 pandemic, allowing a surge in traffic across the nation. read more

Bank of America analyst Winnie Wu expects China’s economy, the second-largest economy in the world, to benefit from a cyclical upturn in 2023 and anticipates market upside from both multiple expansion and 10% EPS growth.

FADING THE FED

Sentiment on Wall Street got a boost last week from a benign blend of solid U.S. payroll gains and slower wage growth, combined with a sharp fall in service-sector activity. The market scaled back bets on rate hikes for the Federal Reserve.

Fed fund futures now imply around a 25% chance of a half-point hike in February, down from around 50% a month ago.

That will make investors ultra sensitive to anything Fed Chair Jerome Powell might say at a central bank conference in Stockholm on Tuesday.

It also heightens the importance of U.S. consumer price index (CPI) data on Thursday, which is forecast to show annual inflation slowing to a 15-month low of 6.5% and the core rate dipping to 5.7%.

“We at NatWest have lower than consensus CPI forecasts, and if right that will likely solidify the market pricing of 25bps vs 50bps,” said NatWest Markets analyst John Briggs.

“In context, it should still be seen as a Fed that is still likely to hike a few more times and then hold rates high until inflation’s decline is guaranteed – to us that means a 5-5.25% funds rate.”

Friday’s mixed data had already seen U.S. 10-year yields drop a steep 15 basis points to 3.57%, while dragging the U.S. dollar down across the board.

Early Monday, the euro was holding firm at $1.0673 , having bounced from a low of $1.0482 on Friday. The dollar eased to 131.48 yen , away from last week’s top of 134.78, while its index was flat at 103.600 .

The Brazilian real had yet to trade after hundreds of supporters of far-right former President Jair Bolsonaro were arrested after invading the country’s Congress, presidential palace and Supreme Court. read more

The drop in the dollar and yields was a boon for gold, lifting it to an eight-month peak around $1,877 an ounce .

Oil prices were steadier, after sliding around 8% last week amid demand concerns.

Brent bounced 80 cents to $79.37 a barrel, while U.S. crude rose 78 cents to $74.55 per barrel.

Reporting by Wayne Cole; Editing by Bradley Perrett and Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

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Business

Historic UK satellite launch may spur military appetite

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Jan 8 (Reuters) – A mobile air-launched rocket system to be used in Britain’s first domestic satellite launch could sow the seeds for a globally dispersed rapid-response capability to put extra eyes in space in times of war, executives and analysts said.

Virgin Orbit (VORB.O), part-owned by billionaire Richard Branson, plans to launch nine satellites from a LauncherOne rocket attached under the wing of a modified Boeing 747, to be flown from a new spaceport in Cornwall on Monday.

Barring delays, it will be the first time a satellite has departed from western European soil.

For now the focus is on commercial payloads from companies such as Space Forge, which is developing in-orbit manufacturing.

But the launch is also seen by many as a blueprint for quicker launches of limited satellite capacity for tactical military purposes, in what planners call “Responsive Launch”.

“Ukraine woke up the world in a lot of ways,” Virgin Orbit Chief Executive Dan Hart told a news conference in southwest England on Sunday.

“Clearly there is a hope of a pan-European, as well as a U.S. collaboration … and that we have responsiveness so that if something happens in the world, we can get assets there right away,” he told the pre-launch briefing, monitored online.

Virgin Orbit said last year Britain’s Royal Air Force was doing exercises to demonstrate the value of “Responsive Launch”.

Britain had a brief foray into space launch activities in the late 1960s and early 1970s, when its Black Arrow rocket was cancelled after just one successful mission.

The rocket’s four launches took place in Australia in an era when commercial satellites barely existed.

Now, constellations of miniaturised satellites are heading an explosion of commercial activity in low Earth orbit.

‘FLEXIBLE AND AGILE’

Lobbing small satellites into low orbit at short notice would do little more than fill temporary gaps in coverage from large spy satellites, but experts say the technology has some dual civil and military potential and could spread costs.

“It gives you greater resilience or redundancy or duality of systems, whether that’s for position, navigation and timing or quicker access … as we’ve seen in Ukraine,” Ian Annett, deputy chief executive of the UK Space Agency, told Sunday’s briefing.

“It’s a natural transition that helps us develop security capabilities, but also, for government, keeps costs down whilst providing commercial opportunities as well.”

Elon Musk’s SpaceX activated its Starlink constellation over Ukraine after Russia’s invasion last February. Its communication links have been used by civilians and by Ukraine’s military.

Luxembourg said in October it had signed a letter of intent with Virgin Orbit to develop a “rapid and flexible response to different threats”, for NATO and other allies.

Its defence ministry has called for “new, more flexible and agile satellite launch procedures and techniques from Europe”.

Britain’s own 2022-25 space roadmap calls for dual-use capabilities in Earth Observation and Space Domain Awareness.

Virgin Orbit is also talking to Japan and Australia.

Questions remain, however, over how quickly the mobile launch concept could work its way into actual budgets, which are dwarfed by U.S. spending on space.

“Everyone is playing up military space as the next big thing,” said UK-based defence analyst Francis Tusa. “But ministries of defence have eyes larger than their stomachs.”

The system’s liquid propellant and final rocket assembly also require some local infrastructure, and Europe’s crowded airspace has thrown up significant regulatory obstacles.

“At the moment, it’s a bit bigger on the commercial side, but we see the defence and national security side growing so I think in this steady state, it’ll probably end up being 50/50,” Hart told Reuters.

Reporting by Tim Hepher; Additional reporting by Joey Roulette; Editing by David Holmes

Our Standards: The Thomson Reuters Trust Principles.

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Business

Dollar set for biggest one-day gain in three months, equities rally

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  • Global shares edge up
  • Correlation with dollar softens
  • Yen takes a breather from recent rally

LONDON, Jan 3 (Reuters) – The dollar headed for its largest one-day rise in over three months on Tuesday, while equities rallied in a macro-packed week that could offer a steer on when, and at what level, U.S. interest rates might peak.

The MSCI All-World index (.MIWD00000PUS) was roughly unchanged, although European stocks, led by hefty gains in anything from financials, to oil and gas stocks, to healthcare, bounced to two-week highs.

Typically, stocks tend to fall when the dollar gains, but that negative correlation between the two softened on Tuesday to its weakest since early September. The dollar index was last up 1% at 104.69.

The euro was the worst-performing currency against the dollar , falling by the most since late September, after German regional inflation data showed consumer price pressures eased sharply in December, thanks in large part to government measures to contain natural gas bills for households and businesses.

Data on U.S. payrolls this week are expected to show the labour market remains tight, while EU consumer prices could show some slowdown in inflation as energy prices ease.

“Energy base effects will bring about a sizeable reduction in inflation in the major economies in 2023, but stickiness in core components, much of this stemming from tight labour markets, will prevent an early dovish policy ‘pivot’ by central banks,” analysts at NatWest Markets wrote in a note.

They expect interest rates to top out at 5% in the United States, 2.25% in the EU and 4.5% in Britain and to stay there for the entire year. Markets, on the other hand, are pricing in rate cuts for late 2023, with fed fund futures implying a range of 4.25 to 4.5% by December.

“The thing that makes me nervous about this year is that we still do not know the full impact of the very significant monetary tightening that’s taken place across the advanced world,” Berenberg senior economist Kallum Pickering said.

“It takes a good year, or 18 months, for the full effect to kick in,” he said.

Central banks have expressed concern about rising wages, even as consumers have struggled to keep up with the soaring cost of living and companies are running out of room to protect their profitability by raising their own prices.

But, Pickering said, the labour market tends to lag the broader economy by some time, meaning that there is a risk that central banks could be raising interest rates by more than the economy can withstand.

“What central banks are inducing is essentially excess cyclicality, which is – they overstimulated in 2021 and triggered an inflationary boom and then overtightened in 2022 and triggered a disinflationary recession. It’s exactly the opposite of what you want central banks to do,” he said.

Investors will get their first insight into central bank thinking later this week when the Federal Reserve releases the minutes from its December policy meeting.

The minutes will likely show many members saw risks that interest rates would need to go higher for longer, but investors are conscious of how much they’ve risen already.

On the markets, European shares rose thanks to gains in classic defensive sectors, such as healthcare and food and beverages. Drugmakers Novo Nordisk (NOVOb.CO), Astrazeneca (AZN.L) and Roche (ROG.S) were among the biggest positive weights on the STOXX 600 (.STOXX), along with Nestle (NESN.S)

The STOXX, which lost 13% in 2022, rose 1.1%. The FTSE 100 (.FTSE), the only major European index not to trade on Monday, rose 1.3%.

U.S. stock index futures gained between 0.4-0.5% , , pointing to an upbeat start at the opening bell.

Markets have for a while priced in an eventual U.S. easing, but they were badly wrong-footed by the Bank of Japan’s shock upward shift in its ceiling for bond yields.

The BOJ is now considering raising its inflation forecasts in January to show price growth close to its 2% target in fiscal 2023 and 2024, according to the Nikkei.

Such a move at its next policy meeting on Jan. 17-18 would only add to speculation of an end to ultra-loose policy, which has essentially acted as a floor for bond yields globally.

The policy shift has boosted the yen across the board, with the dollar losing 5% in December and the euro 2.3%.

The yen took a breather on Tuesday, easing 0.3% against the dollar to 130.96. The dollar earlier touched a six-month low of 129.52 yen . Against the dollar, the euro fell 1.1% to $1.05395, having dropped by as much as 1.4% earlier in the day.

“A theme we’ve often noticed is the euro’s negative seasonality in January, down around 1.3% since 1980 on average in January, with a 64% hit ratio. If history is any guide, it’s a rough month for euro longs,” Nomura strategist Jordan Rochester said.

Oil succumbed to the strength of the dollar, and reversed course, falling as concern about demand in China, the world’s second largest economy, added to the downward momentum.

A batch of surveys have shownChina’s factory activity shrank at the sharpest pace in nearly three years as COVID infections swept through production lines.

“China is entering the most dangerous weeks of the pandemic,” warned analysts at Capital Economics.

Brent crude lost 0.9% to trade around $85.15 a barrel, having hit a session high of $87.00 earlier on.

Reporting by Wayne Cole; Editing by Bradley Perrett, Sam Holmes and Chizu Nomiyama

Our Standards: The Thomson Reuters Trust Principles.

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World

The New Year rings in as Asia then Europe usher out 2022

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Dec 31 (Reuters) – With fireworks planned in Paris, hopes for an end to war in Kyiv, and a return to post-COVID normality in Australia and China, Europe and Asia bid farewell to 2022.

It was a year marked for many by the conflict in Ukraine, economic stresses and the effects of global warming. But it was also a year that saw a dramatic soccer World Cup, rapid technological change, and efforts to meet climate challenges.

For Ukraine, there seemed to be no end in sight to the fighting that began when Russia invaded in February. On Saturday alone, Russia fired more than 20 cruise missiles, Ukrainian officials said, with explosions reported throughout the country.

Evening curfews remained in place nationwide, making the celebration of the beginning of 2023 impossible in many public spaces. Several regional governors posted messages on social media warning residents not to break restrictions on New Year’s Eve.

In Kyiv, though, people gathered near the city’s central Christmas tree as midnight approached.

“We are not giving up. They couldn’t ruin our celebrations,” said 36-year-old Yaryna, celebrating with her husband, tinsel and fairy lights wrapped around her.

Oksana Mozorenko, 35, said her family had tried to celebrate Christmas to make it “a real holiday” but added: “I would really like this year to be over.”

In a video message to mark the New Year, Ukrainian President Volodymyr Zelenskiy, Time Magazine’s 2022 Person of the Year, said: “I want to wish all of us one thing – victory.”

Russian President Vladimir Putin devoted his New Year’s address to rallying the Russian people behind his troops fighting in Ukraine.

Festivities in Moscow were muted, without the usual fireworks on Red Square.

“One should not pretend that nothing is happening – our people are dying (in Ukraine),” said 68-year-old Yelena Popova. “A holiday is being celebrated, but there must be limits.” Many Muscovites said they hoped for peace in 2023.

Paris was set to stage its first New Year fireworks since 2019, with 500,000 people expected to gather on the Champs-Elysees avenue to watch.

Like many places, the Czech capital Prague was feeling the pinch economically and so did not hold a fireworks display.

“Holding celebrations did not seem appropriate,” said city hall spokesman Vit Hofman, citing “the unfavourable economic situation of many Prague households” and the need for the city to save money.

Heavy rain and high winds meant firework shows in the Netherlands’ main cities were cancelled.

But several European cities were experiencing record warmth for the time of year. The Czech Hydrometeorological Institute said it was seeing the warmest New Year’s Eve on record, with the temperature in Prague’s centre, where records go back 247 years, reaching 17.7 Celsius (63.9 Fahrenheit).

It was also the warmest New Year’s Eve ever recorded in France, official weather forecaster Meteo France said.

[1/7] People gather on the Champs Elysees avenue during the New Year’s Eve celebrations near the Arc de Triomphe in Paris, France, December 31, 2022. REUTERS/Sarah Meyssonnier

In Croatia, dozens of cities, including the capital Zagreb, cancelled fireworks displays after pet lovers warned about their damaging effects, calling for more environmentally aware celebrations.

The Adriatic town of Rovinj planned to replace fireworks with laser shows and Zagreb was putting on confetti, visual effects and music.

‘SYDNEY IS BACK’

Earlier, Australia kicked off the celebrations with its first restriction-free New Year’s Eve after two years of COVID disruptions.

Sydney welcomed the New Year with a typically dazzling fireworks display, which for the first time featured a rainbow waterfall off the Harbour Bridge.

“This New Year’s Eve we are saying Sydney is back as we kick off festivities around the world and bring in the New Year with a bang,” said Clover Moore, lord mayor of the city.

Pandemic-era curbs on celebrations were lifted this year after Australia, like many countries around the world, re-opened its borders and removed social distancing restrictions.

In China, rigorous COVID restrictions were lifted only in December as the government reversed its “zero-COVID” policy, a switch that has led to soaring infections and meant some people were in no mood to celebrate.

“This virus should just go and die, cannot believe this year I cannot even find a healthy friend that can go out with me and celebrate the passage into the New Year,” wrote one social media user based in eastern Shandong province.

But in the city of Wuhan, where the pandemic began three years ago, tens of thousands of people gathered to enjoy themselves despite a heavy security presence.

Barricades were erected and hundreds of police officers stood guard. Officers shuttled people away from at least one popular New Year’s Eve gathering point and used loudspeakers to blast out a message on a loop advising people not to gather. But the large crowds of revellers took no notice.

In Shanghai, many thronged the historic riverside walkway, the Bund.

“We’ve all travelled in from Chengdu to celebrate in Shanghai,” said Da Dai, a 28-year-old digital media executive who was visiting with two friends. “We’ve already had COVID, so now feel it’s safe to enjoy ourselves.”

In Hong Kong, days after limits were lifted on group gatherings, tens of thousands of people met near the city’s Victoria Harbour for a countdown to midnight. Lights beamed from some of the biggest harbour-front buildings.

It was the city’s biggest New Year’s Eve celebration in several years. The event was cancelled in 2019 due to often violent social unrest, then scaled down in 2020 and 2021 due to the pandemic.

Malaysia’s government cancelled its New Year countdown and fireworks event at Dataran Merdeka in Kuala Lumpur after flooding across the nation displaced tens of thousands of people and a landslide killed 31 people this month.

Celebrations at the capital’s Petronas Twin Towers were pared back with no performances or fireworks.

Reuters 2022 Year in Review

Reporting by Reuters bureaux around the world; Writing by Neil Fullick, Frances Kerry and Rosalba O’Brien; Editing by Hugh Lawson, David Holmes and Daniel Wallis

Our Standards: The Thomson Reuters Trust Principles.

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World

Wall St stocks fall, oil rises as China drops quarantine rule

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NEW YORK/LONDON, Dec 27 (Reuters) – Wall Street’s benchmark S&P 500 and the Nasdaq fell on Tuesday after the release of U.S. economic data, while oil prices rose after China said it would scrap its COVID-19 quarantine rule for inbound travellers, which was seen as a major step in reopening its borders.

U.S. Treasury yields rose after economic data that showed the advance goods trade deficit for November narrowed to $83.35 billion from the prior month’s $98.8 billion, while a separate report pointed to continued struggles for the housing market as home prices fell under rising mortgage rates.

Oil pared gains as some U.S. energy facilities shut by winter storms began to restart after the commodity earlier hit a three-week high as China’s latest easing of COVID-19 restrictions spurred hopes of a recovery in demand.

On the first day of the holiday-shortened trading week, the rise in U.S. rates put pressure on shares in the heavy-weight rate sensitive technology sector, according to Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.

“It’s a lack of anybody with the conviction to step in and buy right now,” said O’Rourke, who said further pressure came from a sharp decline in shares of electric car maker Tesla Inc (TSLA.O).

The Dow Jones Industrial Average (.DJI) rose 113.48 points, or 0.34%, to 33,317.41, the S&P 500 (.SPX) lost 5.67 points, or 0.15%, to 3,839.15 and the Nasdaq Composite (.IXIC) dropped 90.23 points, or 0.86%, to 10,407.64.

Markets in some regions including London, Dublin, Hong Kong and Australia remained shut after the Christmas holiday.

The pan-European STOXX 600 index (.STOXX) rose 0.19% and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) gained 0.03%.

Emerging market stocks (.MSCIEF) rose 0.27%. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 0.53% higher, while Japan’s Nikkei (.N225) rose 0.16%.

Benchmark 10-year notes were up 7.5 basis points at 3.822%, from 3.747% on Friday. The 30-year bond was last up 9 basis points to yield 3.9116%, from 3.822%. The 2-year note was last up 6.4 basis points to yield 4.387%, from 4.323%.

The dollar pared losses on Tuesday after China said it would scrap its COVID-19 quarantine rule for inbound travellers, which also boosted risk-related currencies such as the Australian dollar.

The dollar index , which measures the greenback against a basket of major currencies, was down 0.01%, with the euro up 0.14% at $1.065.

The Japanese yen weakened 0.37% versus the greenback at 133.36 per dollar, while Sterling was last trading at $1.2019, down 0.34% on the day.

Commodity currencies such as the New Zealand and Australian dollars also moved higher. read more

In energy futures, U.S. crude recently rose 0.98% to $80.34 per barrel and Brent was at $84.81, up 1.06% on the day.

Gold prices rose as optimism surrounding decisions by top consumer China to ease COVID-19 restrictions weighed on the dollar, while resilient U.S. yields cast a shadow over non-yielding bullion’s advance.

Spot gold added 1.5% to $1,824.29 an ounce. U.S. gold futures gained 1.09% to $1,815.50 an ounce.

Reporting by Sinéad Carew in New York, Nell Mackenzie in London
Additional reporting by Xie Yu and Ankur Banerjee
Editing by Simon Cameron-Moore and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

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World

European Parliament kicks out VP Kaili over Qatar graft scandal

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  • Kaili was one of four people arrested in Belgium
  • Greek politician’s lawyer says she denies wrongdoing
  • Police uncovered cash in raids, some in suitcase in hotel
  • European Parliament’s role as bloc’s moral compass at risk

STRASBOURG, Dec 13 (Reuters) – The European Parliament removed Greek MEP Eva Kaili as a vice president of the assembly on Tuesday after she was accused of accepting bribes from Qatar in one of the biggest graft scandals to hit Brussels.

Kaili has denied any wrongdoing, but European lawmakers have moved rapidly to isolate her, worrying that the Belgian investigation will badly dent the assembly’s efforts to present itself as a sound moral compass in a troubled world.

“There will be no sweeping under the carpet. Our internal investigation will look at what has happened and how our systems can be made more watertight,” European Parliament President Roberta Metsola said as 625 MEPs voted to deprive Kaili of her VP role, with only one voting against and two abstaining.

Kaili, who is in police detention, was one of 14 vice presidents in the parliament.

Belgian prosecutors charged her and three Italians at the weekend of taking part in a criminal organisation, money laundering and corruption.

A source close to the investigation has said they are believed to have pocketed money from World Cup host Qatar. The Gulf state has denied any wrong doing.

Police have raided numerous buildings in Brussels, including parliament offices and 19 homes, discovering around 1.5 million euros ($1.58 million), some of it stashed in a suitcase in a hotel room, a source close to the investigation said.

Kaili’s lawyer in Greece, Michalis Dimitrakopoulos, said on Tuesday that she was innocent. “She has nothing to do with financing from Qatar, nothing, explicitly and unequivocally,” he told Open TV in a first public comment.

Several MEPs nonetheless called for the 44-year-old Socialist politician to quit the assembly altogether.

“Given the extent of the corruption scandal, it is the least we could expect of her,” said MEP Manon Aubry, who co-chairs the Left group.

Ali bin Samikh Al Marri, Qatar’s minister of labour, speaks with Greece’s Eva Kaili, vice president of the European Parliament, during a meeting in Qatar, October 31, 2022 in this social media handout image. Twitter/Ministry of Labour – State of Qatar via REUTERS

CORRUPTION

Countries which have faced criticism from the assembly said it had lost the moral high ground.

“From now on the European Parliament will not be able to speak about corruption in a credible manner,” Hungary Foreign Minister Peter Szijjarto wrote on Facebook.

Belgian prosecutors said they had suspected for more than four months that a Gulf state was trying to buy influence in Brussels. Although no state was publicly named by prosecutors, a source with knowledge of the case said it was Qatar.

None of the four people charged have been formally identified, but their names were rapidly leaked to the press.

According to a source familiar with the case, the other accused are former EU lawmaker Pier Antonio Panzeri, Kaili’s partner Francesco Giorgi, who is a parliamentary assistant, and Niccolo Figa-Talamanca, secretary-general of a human rights campaign group.

There were no replies to calls and emails made by Reuters to their respective offices or homes.

Kaili was among a stable of young aspiring Greek politicians who emerged in the debilitating debt crisis which swept Greece from 2010 to 2015. The Greek socialist PASOK party has said it will expel her from its ranks.

In a speech in the European Parliament on Nov. 21, at the start of the month-long World Cup, she lashed out at Qatar’s detractors and hailed the energy-rich Gulf state as “a frontrunner in labour rights.”

Qatar has faced fierce criticism of its human rights record in the run up to the World Cup, including its treatment of migrant workers.

Additional reporting by Phil Blenkinsop, Karolina Tagaris, Clement Rossignol, Max Schwarz, Lefteris Papadimas, Michele Kambas, Alan Charlish, Giselda Vagnoni; Writing by Ingrid Melander; Editing by Edmund Blair and Crispian Balmer

Our Standards: The Thomson Reuters Trust Principles.

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Business

Dollar gains as inflation pressures persist; eyes on c.bank meetings

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SINGAPORE, Dec 12 (Reuters) – The dollar climbed on Monday after data on Friday showed U.S. producer prices had risen more than expected last month, pointing to persistent inflationary pressures and a chance the Federal Reserve would keep interest rates higher for longer.

The dollar rose 0.35% against the Japanese yen to 137.05. Against a basket of currencies, the U.S. dollar index eked out a 0.12% gain at 105.18.

The euro was last 0.2% lower at $1.0509.

Sterling fell 0.31% to $1.2229 in Asia trade on Monday, while the Aussie edged 0.34% lower to $0.6773.

The kiwi similarly slipped 0.34% to $0.6393.

The U.S. producer price index for final demand in November was up 0.3% from the previous month and 7.4% from a year earlier, data released on Friday showed, a slight upside surprise from forecasts of a 0.2% and 7.2% increase, respectively.

“There were a little bit of concerns about how inflation would be persistently high and would encourage the Fed to keep policy at a restrictive level for even longer than previously expected,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA).

Traders were also kept on edge in the run up to key risk events this week, including U.S. inflation data and a slew of major central bank meetings.

The Federal Reserve once again takes centre stage, and is widely expected to raise interest rates by 50 basis points, though focus will be on the central bank’s updated economic projections and Fed Chair Jerome Powell’s press conference.

“If he does talk more about the risks to the economy … I think that will probably be considered dovish by markets and, of course, markets love dovish comments and how the FOMC will pay more attention to downside risks to the economy,” said CBA’s Kong.

The Bank of England and the European Central Bank (ECB) will also meet this week, and each is likewise expected to deliver a 50 bp rate hike.

“ECB officials have been telling us that they care more about the underlying inflation, which has remained elevated,” said Kong of the upcoming ECB meeting.

“If they do hike by 50 bps … they might follow up with some pretty hawkish comments in Lagarde’s post meeting conference.”

Ahead of the FOMC meeting, November’s U.S. inflation figures are due on Tuesday, with economists expecting core annual inflation of 6.1%.

“The market reaction to U.S. inflation surprises has been asymmetric so far in 2022, with downside surprises having a larger effect than upside ones,” said analysts at Barclays.

“The inflation print will likely be the bigger driver of the two, (given) the Fed’s guidance toward smaller hikes,” they added, referring to influences on the U.S. dollar.
The offshore yuan eased slightly to 6.9798 per dollar, further pressured by worries over a potential spike in COVID cases as China eases its stringent COVID-19 restrictions.

Reporting by Rae Wee; Editing by Lincoln Feast and Bradley Perrett

Our Standards: The Thomson Reuters Trust Principles.

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World

China’s Xi on ‘epoch-making’ visit to Saudi as Riyadh chafes at U.S. censure

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RIYADH, Dec 7 (Reuters) – Chinese President Xi Jinping began a visit to Saudi Arabia on Wednesday that Beijing said marked its biggest diplomatic initiative in the Arab world, as Riyadh expands global alliances beyond a long-standing partnership with the West.

The meeting between the global economic powerhouse and Gulf energy giant comes as Saudi ties with Washington are strained by U.S. criticism of Riyadh’s human rights record and Saudi support for oil output curbs before the November midterm elections.

The White House said Xi’s visit was an example of Chinese attempts to exert influence, and that this would not change U.S. policy towards the Middle East.

“We are mindful of the influence that China is trying to grow around the world,” White House National Security Council spokesperson John Kirby told reporters.

China, the world’s biggest energy consumer, is a major trade partner of Gulf oil and gas producers. Bilateral ties have expanded under the region’s economic diversification push, raising U.S. concerns about growing Chinese involvement in sensitive infrastructure in the Gulf.

Energy Minister Prince Abdulaziz bin Salman on Wednesday said that Riyadh would remain a “trusted and reliable” energy partner for Beijing and that the two countries would boost cooperation in energy supply chains by establishing a regional centre in the kingdom for Chinese factories.

Saudi Arabia is China’s top oil supplier and Xi’s visit takes place while uncertainty hangs over energy markets after Western powers imposed a price cap on sales of oil from Russia, which has been increasing volumes to China with discounted oil.

On Wednesday Chinese and Saudi firms signed 34 deals for investment in green energy, information technology, cloud services, transport, construction and other sectors, Saudi state news agency SPA reported. It gave no value for the deals, but had earlier said the two countries would seal agreements worth $30 billion.

‘EPOCH-MAKING VISIT’

Xi was met on arrival by the governor of Riyadh, the kingdom’s foreign minister and the governor of sovereign wealth fund PIF.

Crown Prince Mohammed bin Salman is expected to offer him a lavish welcome, in contrast with the low-key reception for U.S. President Joe Biden whose censure of Saudi Arabia’s de facto ruler formed the backdrop for a strained meeting in July.

Xi will hold bilateral talks with Saudi Arabia and Riyadh will later host a wider meeting with Gulf Arab states and a summit with Arab leaders which will be “an epoch-making milestone in the history of the development of China-Arab relations”, foreign ministry spokesperson Mao Ning said.

The Chinese president said he would work with the Gulf Cooperation Council and other Arab leaders “to advance Chinese-Arab relations and Chinese-GCC relations to a new level”, SPA reported.

For Riyadh, frustrated by what it sees as Washington’s gradual disengagement from the Middle East and a slow erosion of its security guarantees, China offers an opportunity for economic gains without the tensions which have come to cloud the U.S. relationship.

“Beijing does not burden its partners with demands or political expectations and refrains from interfering in their internal affairs,” Saudi columnist Abdulrahman Al-Rashed wrote in the Saudi-owned Asharq Al-Awsat newspaper.

Unlike Washington, Beijing retains good ties with Riyadh’s regional rival Iran, another supplier of oil to China, and has shown little interest in addressing Saudi political or security concerns in the region.

Saudi Arabia, birthplace of Islam, had supported China’s policies in Xinjiang, where the U.N. says human rights abuses have been committed against Uyghurs and other Muslims.

Saudi officials have said that regional security would be on the agenda during Xi’s visit. The United States has for decades been Saudi Arabia’s main security guarantor and remains its main defence supplier, but Riyadh has chafed at restrictions on U.S. arms sales to the kingdom.

Riyadh has said it would continue to expand partnerships to serve economic and security interests, despite U.S. reservations about Gulf ties with both Russia and China.

Reporting by Eduardo Baptista in Beijing and Aziz El Yaakoubi in Riyadh; Additional reporting by Ghaida Ghantous and Maha El Dahan in Dubai and Steve Holland and Doina Chiacu in Washington; Writing by Dominic Evans and Ghaida Ghantous; Editing by Nick Macfie, Toby Chopra and Alistair Bell

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Business

California offshore wind auction bids top $460 mln on day two

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Dec 7 (Reuters) – The first ever auction of offshore wind development rights off the coast of California entered its second day on Wednesday, with high bids topping $460 million.

The Biden administration’s sale is a major milestone in the its goal to put turbines along every U.S. coastline and a critical test of developer appetite for investment in floating wind turbines, an emerging technology necessary in locations where the ocean floor is too deep for fixed equipment.

The Interior Department’s Bureau of Ocean Energy Management (BOEM) is auctioning five lease areas equal to a combined 373,267 acres (151,056 hectares) off the state’s north and central coasts. Previous federal offshore wind auctions have all been for leases in shallower waters of the Atlantic Ocean.

After 22 rounds of bidding, high bids totaled a combined $462.1 million. Two leases off the central coast had commanded high bids of more than $100 million, with the remaining leases attracting high bids in a range of $62.7 million to $98.8 million, according to live auction results on the BOEM web site.

The identities of the bidders are not disclosed during the auction, but 43 companies had been approved to participate.

They include established offshore wind players like Avangrid Inc (AGR.N), Orsted (ORSTED.CO) and Equinor (EQNR.OL), which are all developing projects on the U.S. East Coast, as well as potential new entrants including Swedish floating wind developer Hexicon (HEXI.ST) and Macquarie (MQG.AX) unit Corio.

Reporting by Nichola Groom; Editing by Alexander Smith

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