The EU will call on the US to seize a “once-in-a-generation” opportunity to forge a new global alliance, in a detailed pitch to bury the tensions of the Trump era and meet the “strategic challenge” posed by China. A draft EU plan for revitalising the transatlantic partnership, seen by the Financial Times, proposes new co-operation on everything from digital regulation and tackling the Covid-19 pandemic to fighting deforestation. The paper, prepared by the European Commission, says the EU-US partnership needs “maintenance and renewal” if the democratic world is to assert its interests against “authoritarian powers” and “closed economies [that] exploit the openness our own societies depend on”. Disquiet is growing over the way that Oxford university and AstraZeneca have handled the early readout from trials of their coronavirus vaccine, which much of the developing world may rely on to emerge from the pandemic. The results were hailed a success for showing an average efficacy of 70 per cent — a figure reached by pooling the results from cohorts on two different dosing regimens. One set of participants received two identical doses a month apart, while the other group received a half-dose, and then a full dose. The efficacy for the first, larger group was 62 per cent. In the second subgroup, it was 90 per cent. French tax authorities have begun demanding millions of euros from US technology groups as they push ahead with a new digital services tax that has enraged Washington. Facebook and Amazon are among the companies to have received communication from French authorities in recent days demanding payment of the tax for 2020, according to French officials, company executives and advisers. The collection of the tax, which Washington has said is an example of an unfair trade practice because it largely affects US companies, threatens to reignite the transatlantic trade tensions and trigger new tariffs on Europe weeks ahead of the inauguration of Joe Biden. US stocks surged to new highs on Tuesday, alongside global equities, as the path for a smooth transition of power in the US cleared and investors weighed the likely arrival of measures to bolster the world’s biggest economy. The Dow Jones Industrial Average climbed 1.5 per cent higher, pushing one of Wall Street’s oldest stock market indices beyond 30,000 for the first time. The wider S&P 500 gained 1.6 per cent to close at a new record peak of 3,635. A rotation into industries that are set to benefit most from an economic recovery propelled indices higher worldwide, with the energy and financials sectors leading gains. Shortly after Joe Biden picked Kamala Harris to be vice-president in August, Janet Yellen, the former Federal Reserve chair, briefed the pair on the slump triggered by the coronavirus pandemic and what they could do about it. According to one person briefed on the conversation, Ms Yellen told the Democratic ticket that interest rates were low and likely to stay there for a long time, creating considerable fiscal space for new stimulus and investment. The intervention was well-received by Mr Biden and Ms Harris, whose economic plan calls for billions of dollars of government spending. Now Ms Yellen, 74, is set to be nominated by Mr Biden to be the next US Treasury secretary, handing her a second act at the pinnacle of American economic policymaking. The coronavirus vaccine developed by Oxford university and AstraZeneca has proved effective in late-stage trials, giving another boost to hopes that the pandemic can be defeated. The successful results follow the positive trials of rival treatments this month from Pfizer/BioNTech and Moderna, which have lifted global stock markets and signalled a possible end to lockdowns that have wreaked havoc on the world economy. Under one dosing regime, the Oxford-AstraZeneca vaccine achieved 90 per cent efficacy, a measure of prevention of infection or severe disease. That required a half dose of the vaccine to be given followed by a full dose at least a month later. When the jab was given as two full doses at least one month apart, efficacy was only 62 per cent. The average efficacy, during trials in the UK and Brazil, was 70 per cent. Donald Trump’s legal options to challenge his election loss are about to significantly narrow, with three battleground states carried by Joe Biden due to certify their results in the wake of a crushing weekend courtroom defeat for the president and a departure from his legal team. Pennsylvania and Michigan could make their results official as early as Monday while Nevada has a Tuesday deadline to certify its vote. The milestones would further undermine Mr Trump’s unprecedented effort to overturn the results of the election. Mr Trump’s attempt to cling to office has been dealt several blows in recent days; Georgia Republicans confirmed Mr Biden won their state, a conservative judge in Pennsylvania tossed out a Trump campaign lawsuit, and one of his lawyers touted increasingly bizarre conspiracy theories. The US Treasury has decided not to extend several emergency lending facilities set up by the Federal Reserve at the start of the coronavirus pandemic, prompting a rare expression of disappointment from the central bank, which warned that the economy remained “strained and vulnerable”. In a letter to Fed chairman Jay Powell on Thursday Steven Mnuchin, Treasury secretary, asked the central bank to return unused funds from five emergency programmes that are set to expire in late December. The facilities that Mr Mnuchin is looking to end include: two schemes set up to purchase corporate debt; five facilities created to lend to medium-sized businesses, collectively known as the Main Street Lending Program; one programme to lend to state and local governments; and another to support asset-backed securities. Global debt rose at an unprecedented pace in the first nine months of the year as governments and companies embarked on a “debt tsunami” in the face of the coronavirus crisis, according to new research. The pace of debt accumulation will leave the global economy struggling to reduce borrowing in the future without “significant adverse implications for economic activity”, the Institute of International Finance warned on Wednesday. The total level of global indebtedness has increased by $15tn this year, leaving it on track to exceed $277tn in 2020, said the IIF, which represents financial institutions. It expects total debt to reach 365 per cent of global gross domestic product by the end of the year, surging from 320 per cent at the end of 2019. Global policymakers are examining the role hedge funds played in the mayhem that enveloped the $20tn US Treasury market in March, warning that the Federal Reserve’s intervention could fuel more aggressive trading. A report from the Financial Stability Board prepared ahead of this weekend’s G20 leaders summit underscores how central banks and regulators remain deeply uneasy over the turmoil this spring in one of the world’s most important financial markets. The FSB, a rulemaking body composed of leading central bank and finance ministry officials, explored the role that “non-bank financial institutions” played in the crisis, and highlighted several areas that needed further study — and possible policy action. The fight against Covid-19 got a big boost when US biotech group Moderna said its vaccine had more than 94.5 per cent efficacy in clinical trials — a week after another set of positive results for a rival coronavirus jab. The Moderna finding, which follows the successful clinical trials of a vaccine from Pfizer and Germany’s BioNTech, has raised hopes that the world can turn the corner in the management of the pandemic. Stéphane Bancel, Moderna’s chief executive, said the moment was “pivotal” and “has given us the first clinical validation that our vaccine can prevent Covid-19 disease, including severe disease”. The US economy is facing an accelerating surge in coronavirus cases and harsh new restrictions on business activity without the cushion of meaningful fiscal support, raising fears of a blow to the recovery. Even though equity markets have rallied on advances in vaccine development, the deteriorating health situation across the country presents an imminent threat to the US economy as the winter months approach. The US has recorded more than 1m new coronavirus cases this month, with the healthcare system in parts of the country now under severe strain. Lockdown measures have been introduced in a number of states and major cities in an attempt to contain the spread.edit. Three of the world’s top central bankers predicted the breakthrough on a coronavirus vaccine would lift the uncertainty weighing on the global economy, while calling for more short-term public support to bridge the gap to a recovery. Jay Powell, chair of the US Federal Reserve, said this week’s vaccine breakthrough was “certainly good and welcome news for the medium term”. But he warned that “significant challenges and uncertainties remain” on its timing, production, distribution and efficacy. “From our standpoint it’s just too soon to assess with any confidence the implications of the news for the path of the economy,” Mr Powell said at the ECB’s annual forum on central banking, which is being held online for the first time this year. Anthony Fauci, the leading US infectious disease expert, predicted positive data from a second Covid-19 vaccine could come quickly on the heels of this week’s strong trial results from Pfizer and BioNTech. Dr Fauci told the FT Live Global Pharmaceutical Summit on Wednesday that he was optimistic about a forthcoming update on the vaccine from biotech group Moderna and would “be surprised if we didn’t see a similar degree of efficacy” to the positive results released by Pfizer and BioNTech on Monday. Moderna said later on Wednesday that it now had enough cases to begin the interim analysis of data from its phase 3 trials. Hedge fund manager Bill Ackman has put on another bet that companies will struggle to pay their debts, just eight months after he cashed in a $2.6bn profit from a similar trade at the start of the pandemic. The founder of Pershing Square told attendees at the Financial Times’ Dealmakers conference on Tuesday that markets had once again become too complacent about the coronavirus. At the start of this week he put on a new trade hedging his equity exposure with insurance against corporate defaults, he said. “I hope we lose money on this next hedge,” Mr Ackman said. “We’re in a treacherous time generally and what’s fascinating is the same bet we put on eight months ago is available on the same terms as if there had never been a fire and on the probability that the world is going to be fine.” A Covid-19 vaccine being developed by Pfizer and Germany’s BioNTech has been found to be more than 90 per cent effective, in a breakthrough that could make the shot available for use by the end of the year if drug authorities give it the green light. The finding was the result of the first independent analysis of any Covid-19 vaccine in phase 3 trials — the final stage before commercial licensing. Out of the 43,000 trial participants, the small number who were infected enabled the independent evaluators to calculate the effectiveness after two doses. “To me, this is the best possible outcome,” Ugur Sahin, co-founder and chief executive of BioNTech told the Financial Times, while Pfizer boss Albert Bourla said it was “a great day for science and humanity”. The drug is expected to be submitted to authorities for emergency approval in the third week of November, ahead of other vaccine developers. Former vaccine frontrunner Moderna does not expect to have the trial data required to go for approval until November 25, while AstraZeneca’s partnership with the University of Oxford expects results by the end of this year. Joe Biden said he intended to “restore the soul of America” as the president-elect delivered a victory speech in which he urged the country to come together following one of the most divisive periods in US history. Speaking in Wilmington, Delaware, on Saturday evening, Mr Biden struck a note of bipartisanship and sketched out a vision of his presidency where Democrats and Republicans would work together to “build prosperity” and bring the pandemic under control. Following a bruising race, Mr Biden said he had won a “convincing victory” — he received a record 75m votes — but held out an olive branch to supporters of his rival, Donald Trump. “To those of you who voted for President Trump, I understand the disappointment,” said Mr Biden, who twice tried to win the Democratic presidential nomination before succeeding this year. Kamala Harris cemented her place in history on Saturday, becoming the first woman, and the first woman of color, to be elected as vice president of the United States. The 56-year-old California senator, who is the daughter of immigrants from India and Jamaica, brings with her a litany of firsts: She will be the first woman vice president, the first Black vice president and the first South Asian vice president. Joe Biden has been elected the Next President of the USA getting over 290 votes (270 required) on Saturday morning. Votes continues to be counted and current President Trump refuses to adit that he lost. Democrat Joe Biden has won the critical swing state of Wisconsin but Donald Trump’s campaign said it would request a recount as the tabulation of votes in the US presidential election stretched into Wednesday. The Associated Press said Mr Biden had won the Midwestern state, which became increasingly important after Mr Trump had taken Florida and Ohio. Mr Biden also leads in Nevada and Michigan but lags the president in Pennsylvania, Georgia and North Carolina. With millions of absentee ballots still to be counted, neither candidate had secured the 270 electoral college votes needed to win the presidency. Mr Biden could reach the threshold by maintaining his leads in Nevada and Michigan, assuming that any recount upheld his victory in Wisconsin. The Federal Reserve has kept monetary policy steady with interest rates at rock bottom and no changes to its bond purchases, as chairman Jay Powell warned the rise in coronavirus cases around the world was “particularly concerning”. In a statement on Thursday, the Federal Open Market Committee said it would hold the federal funds rate at its lowest level between 0 per cent and 0.25 per cent — and reiterated its pledge to keep it there until the pandemic-hit economy reached full employment with higher inflation. In his press conference, Mr Powell emphasised the risk stemming from increasing infection rates. “The recent rise in new Covid-19 cases both here in the United States and abroad is particularly concerning,” he said. Even in the absence of widespread lockdowns there could be a hit to economic activity from consumers retrenching after they had just started returning to bars, restaurants and hotels, he said. It was a night of high drama in the US as early expectations of a “blue landslide” win for Joe Biden gave way to uncertainty over the final outcome. Financial markets reacted to the move, with both the equity and currency markets starting to price in the possibility of a Trump win. Meanwhile, legal challenges to the electoral process mounted. China has suspended the $37bn listing of Ant Group, which had been set to become the world’s largest IPO, one day after regulators had grilled Jack Ma, who founded the company. China’s largest financial technology company was set to list on Thursday in Shanghai and Hong Kong in a record-breaking IPO that had attracted huge interest from institutions and smaller investors. The Shanghai Stock Exchange said in a statement that Mr Ma, who also founded Alibaba, had been called in for “supervisory interviews”. There had been “other major issues”, including changes in “the financial technology regulatory environment”, the stock exchange said. “This material event may cause your company to fail to meet the issuance and listing conditions or information disclosure requirements,” it added. “Our exchange has decided to postpone the listing of your company.” On November 3, the day of the 2020 presidential election, the Democratic party nominee Joe Biden was polling narrowly ahead of incumbent Republican president Donald Trump in key battleground states, although his lead had narrowed since earlier in the campaign. Fresh lockdowns announced across Europe in recent days to contain the resurgence of the coronavirus pandemic have triggered a flurry of downgrades to economic growth forecasts as restrictions on activity threaten the continent’s recovery. The eurozone economy is now expected to shrink by 2.3 per cent in the fourth quarter of this year, according to economists surveyed by the Financial Times — a worse performance than they had predicted before the restrictions were announced. The bloc rebounded from its coronavirus-induced recession in the three months to September, recording record quarterly gross domestic product growth of 12.7 per cent, figures published on Friday showed, but output was still well below pre-pandemic levels. |
PurposeMajor markets news headlines which captured the markets. Archives
March 2021
Categories |