Global stocks heading for strongest week in a year as investors bet on end of interest rate hikes – business live | Business

On the markets, stocks and oil prices are heading higher today, notching up modest gains.

The UK’s FTSE 100 index rose 16 points, or 0.2%, to 7,463 while Germany’s Dax added 0.3%, France’s CAC edged up 0.1%, and Italy’s FTSE MiB advanced nearly 0.5%.

Richard Hunter, head of markets at interactive investor, said:

After a dismal October for markets, November has opened with a different narrative and a very different performance.

That the Federal Reserve held rates this week was no surprise, but the accompanying comments from Chair Powell lit the fire under stocks, with a noticeable fall in Treasury yields providing further fuel. While leaving the door slightly ajar to further rate rises should inflation unexpectedly tick higher once more, sentiment has switched to the belief that the hiking cycle is now over.

Today, yields (interest rates) on US government bonds, known as Treasuries, edged higher again, with the two-year yield climbing above 5%, after tumbling the day before, on relief that the US government announced smaller-than-expected increases in Treasury supply.

In the oil market, Brent crude, the global benchmark, rose 0.5% to $87.30 a barrel.

The Russian rouble edged up 0.4% to 92 versus the dollar, as the market digested the impact of the latest round of US sanctions against Moscow, following its invasion of Ukraine in February last year. Vladimir Putin’s decree on mandatory foreign currency sales for some exporters is still lending some support to the currency.

Yesterday, the US imposed new measures against Russia over its war in Ukraine, targeting its future energy capabilities, sanctions evasion, seven Russia-based banks and dozens of industrial businesses.

The US tech billionaire Elon Musk has warned that technology could eventually replace all human jobs, as Rishi Sunak, the UK prime minister, announced that the most advanced technology companies will allow governments to vet their artificial intelligence tools for the first time.

Musk, the founder of the electric carmaker Tesla and owner of Twitter, now known as X, said:

We are seeing the most disruptive force in history here. There will come a point where no job is needed. You can have a job if you want a job … but the AI will be able to do everything.

Companies including Meta, Google DeepMind and OpenAI have agreed to allow regulators to test their latest AI products before releasing them to the public, in a move that officials say will slow the race to develop systems that can compete with humans.

Sunak made the announcement yesterday after a two-day summit at Bletchley Park at which a diverse group including the world’s richest man, the vice-president of the US and a senior Chinese government official agreed that AI poses a grave risk to humanity.

Speaking to reporters at the end of the summit, Sunak said:

I believe the achievements of this summit will tip the balance in favour of humanity.

The prime minister also announced international support for an expert body inspired by the Intergovernmental Panel on Climate Change, to be chaired by one of the “godfathers” of modern AI.

The moves were welcomed afterwards by Musk in a conversation between the pair in central London, during which Musk described what he sees as a dramatically different future for humanity.

Over in the United States, Sam Bankman-Fried, the founder of now-bankrupt crypto exchange FTX, was found guilty on all counts of defrauding his customers in Manhattan federal court.

The one-time mogul stood with his hands clasped facing the jury as he was found guilty on seven counts of wire fraud and conspiracy to launder money. He faces decades in prison at a sentencing hearing that US district Judge Lewis Kaplan set for 28 March 2024. The verdict, reached after just four hours of jury deliberation, brought an end to nearly a month of court proceedings that featured stunning testimony from his closest allies and the disgraced entrepreneur himself. He maintained his innocence until the end.

Mark Cohen, Bankman-Fried’s lawyer, said in a statement:

We respect the jury’s decision. But we are very disappointed with the result. Mr Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him.

The Danish shipping giant A.P. Moller-Maersk is to cut 10,000 jobs, after posting a steep drop in profits and revenue in the third quarter, as it battles with lower freight rates and lower demand for container shipping.

The Danish company now expects to revenues and operating profits to come in at the lower end of its forecast range.

Chief executive Vincent Clerc said:

Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base.

Since the summer, we have seen overcapacity across most regions triggering price drops and no noticeable uptick in ship recycling or idling.

In August, Maersk warned of a steeper decline in global demand for shipping containers by sea this year, due to slow economic growth and de-stocking in the wake of the Covid-19 pandemic.

Maersk said it intends to cut its workforce from 110,000 in January to below 100,000, which will result in saving $600m next year. It declined to comment on the impact on UK jobs.

There was chaos at the Australian airline Qantas’s annual general meeting, where shareholders shouted “shame on you” at the board’s chairman, Richard Goyder, as investors overwhelmingly rejected the embattled company’s executive pay deal.

That result, which marked one of Australia’s largest ever protest votes against executive pay, came after Goyder and the airline’s chief executive, Vanessa Hudson, apologised to investors for a year of sagas that had seen the company’s share price plummet.

Qantas has been grappling with several potentially costly issues, including a looming compensation bill for illegally outsourcing ground handling jobs and regulatory action over allegations it sold tickets to thousands of already-cancelled flights.

In Germany, exports fell more than expected in September amid weaker global demand, according to figures from the federal statistics office.

Exports fell 2.4% from the previous month, worse than the 1.1% decline forecast by economists, while imports were down 1.7%. Most of Germany’s exports went to the US despite a 4% drop, and most imports came from China, down 0.9%. Exports to the UK rose 2.3% to €6.3bn, while imports from the UK rose by 5.2% to €3.2bn.

Germany is normally an exports powerhouse but exports have been a drag on the economy in four out of six quarters since the start of last year.

Carsten Brzeski, global head of macro at ING, said:

Things are still looking pretty downbeat for Germany’s economy.

The cooling of global demand is currently worsening the structural problems and the weakening of the euro since the summer is still too small to have any significant impact on exports. Export order books remain weak. Last but not least, recently German technology groups warned that they were being hit by customs delays for exports to China. As a result, trade is no longer the strong resilient growth driver of the German economy that it used to be, but rather a drag.

Maybe the only upside of today’s disappointing data is that things can hardly get worse. However, as positive signals remain absent, the base case for the German economy over the next months remains stagnation at best.

Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.

Global stocks are on course for their biggest weekly gain in a year as investors are betting that there won’t be any more interest rate hike in major economies, while bonds rallied.

World stocks, as measured by the MSCI ACWI, which captures large and mid cap stocks across 23 developed markets and 24 emerging markets, are up 4.3% so far this week, the biggest rise since November 2022.

On Wall Street, the Dow Jones industrial average jumped 564 points, or 1.7% yesterday, its best day since May. Investors are hoping that there won’t be any more interest rate hikes, although central banks are signalling that rates will stay high for an extended period – painful for people with mortgages.

The US Federal Reserve left interest rates unchanged at a 22-year high on Wednesday as inflation continues to fade from its highest level in a generation – but its chairman Jerome Powell cautioned that the Fed’s campaign to bring down price growth had “a long way to go,” leaving the door open for further hikes.

The Bank of England kept its main interest rate at 5.25% yesterday for the second meeting in a row, the highest level since the 2008 financial crisis. It warned the economy will be on the brink of recession in an election year and signalled rates will stay high for a while to tackle stubborn inflationary pressures.

It’s US jobs day! We will get the latest US non-farm payrolls figures at lunchtime.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said:

The Federal Reserve hinted that the rate hikes could be coming to an end because the recent surge in US long term [bond] yields helped them tighten the financial conditions without the need for another rate hike.

US growth is strong, and the jobs market remains healthy. The Fed thinks that solid labour-force participation and immigration explain the resilience of the jobs market.

Any strength in job additions or wages growth data could bring bond trades back to earth and remind them that if the US jobs market – and the economy – remains this strong, the Fed could turn hawkish again. But strong jobs data in a context of higher supply is not necessarily inflationary.

Also coming up:

We have the UN global food index later this morning, and several Bank of England speeches at the Bank’s Watchers’ conference organised by Kings College.

The Agenda

• 9am GMT: UN Food index for October

• 9am GMT: Bank of England Andrew Hauser keynote speech at conference

• 9.30am GMT: UK S&P Global/CIPS Services PMI final for October

• 10am GMT: Eurozone unemployment for September

• 12.15pm GMT: BOE chief economist Huw Pill speaks

• 12.30pm GMT: US Non-farm payrolls for October (forecast: 180,000)

• 2pm GMT: US ISM Services PMI for October