Escalating U.S.-China Tensions

Structural Tensions and Geoeconomic Realities

Safe-Haven Currencies Strengthen

Cryptocurrency Market Hit by Risk-Off Sentiment

Source: Reuters

AI as a Growth Engine

Publicis’ Strong Performance in the Market

Raising the Forecast

Source: Reuters

The UK labor market showed further signs of stabilization in fresh data on Tuesday, with employers appearing to be over the worst of the shake-out triggered by the £26 billion ($34.7 billion) payroll tax increase that hit in April.

The number of employees on payrolls dropped 10,000 in September following a revised increase of 10,000 the month before, the Office for National Statistics said. It was in line with the fall economists had predicted and less sharp than the cuts seen over the summer.

Meanwhile, wage growth in the private sector slowed to 4.4% in the three months through August, the lowest since the end of 2021 and below expectations. However, the figure is well above the 3% or so the Bank of England reckons is compatible with its 2% inflation target. Job vacancies fell just 9,000 in the three months to September.

The figures are likely to fuel the debate at the central bank over whether inflation that has surged to almost double the 2% target could trigger feedback loop by fueling wage demands that then lead to more price increases.

Policymaker Megan Greene highlighted the risk of second-round effects in a speech on Monday, and markets are all-but ruling out further rate cuts this year. However, others believe the disinflation process remains in tact, potentially leaving the decision with Governor Andrew Bailey as the crucial swing voter on the Monetary Policy Committee.

Bailey, who has struck a fine balance in recent comments, is due to speak in Washington later Tuesday, one of a number of appearances by BOE policymakers this week.

Job cuts in response to tax and minimum-wage increases in April have slowed in recent months, and the loss has been smaller than originally estimated. The figure chime with a key survey from Recruitment & Employment Confederation and KPMG that found the labor market stabilizing in September across a number of metrics.

Economists are officials are now paying more attention to private-sector polls and the payrolls data, which are based on tax records, after a collapse in response rates to the ONS’s Labour Force Survey raised questions about the reliability of official readings.

Source: Bloomberg Europe

The Hanwha Philly Shipyard in Philadelphia, Pennsylvania.

China has threatened further retaliatory measures against US curbs on its shipping sector, after sanctioning American entities of a South Korean shipping giant.The Ministry of Commerce said Tuesday it was placing limits on five US entities of Hanwha Ocean Co., one of South Korea’s biggest shipbuilders. The company’s shares dipped as much as 8% in Seoul, their biggest decline in about two months.The moves are a marked escalation in a long-standing dispute between the world’s two largest economies over maritime dominance. It comes after tensions between the US and China escalated in recent weeks as President Donald Trump threatened additional 100% tariffs on imports from the Asian nation in response to new Chinese export controls.

This week, retaliatory levies on American-owned ships arriving in China came into effect as a tit-for-tat move by the Xi administration, causing concern across the global maritime sector. Beijing’s new curbs forbids any individual and entity from doing business with the five companies.Meanwhile, the Ministry of Transport said that it was conducting a probe into the impacts from the US Trade Representative’s Section 301 investigation into China’s maritime sector, and may implement retaliatory measures in due time.

That dispute has consequences for global economy, as vessels are involved in 80% of worldwide trade. Washington announced in April plans to curb China’s shipbuilding prowess even as it sought to build up American capabilities. That had forced Chinese yards to lose some market share, while Chinese shipping lines faced severe penalties for calling at US ports.At the same time, South Korean shipbuilders have offered Washington sweeteners to help the US revive its shipbuilding sector. Hanwha Ocean was the first Korean yard to acquire an American one, and has been seeking to transfer some of that know-how to American shores.

The five firms curbed by China are Hanwha Shipping LLC, Hanwha Philly Shipyard Inc., Hanwha Ocean USA International LLC, Hanwha Shipping Holdings LLC and HS USA Holdings Corp.

Spokespersons for Hanwha Ocean in Seoul and Hanwha USA didn’t

Source: Yahoo Finance

France’s Sebastien Lecornu will address parliament for the first time as prime minister on Tuesday, a make-or-break moment for his fledgling government in its effort to pass a budget and bring some political stability.

The 39-year-old premier, who was reappointed on Friday, just four days after resigning amid political infighting, will deliver the closely-watched policy speech to the National Assembly at 3 p.m. Paris time, after presenting a draft budget to cabinet in the morning.

Marine Le Pen’s far right and the far left have vowed to try to topple Lecornu in no-confidence ballots later this week, regardless of what he says. That leaves his survival as prime minister dependent on the concessions he offers on Tuesday to convince an array of other parties to abstain.

If Lecornu fails, he would become the third prime minister to be forced to resign in less than a year, leaving President Emmanuel Macron with few options other than calling another legislative election. Last year’s snap vote and the ensuing fiscal and political uncertainty already triggered selloffs of French assets that have pushed up the country’s borrowing costs compared to peers.

“Our sole mission is to rise above and move beyond this political crisis in which we find ourselves — a crisis that has left part of our fellow citizens stunned, and perhaps also a part of the world watching us,” Lecornu told new cabinet ministers at a meeting on Monday.

With his premiership hanging by a thread, pressure is on Lecornu to cede to demands to pick apart eight years of Macron’s economic policies, even as tries to cut the deficit and reassure investors.

The Socialists, who have a pivotal role in this week’s no-confidence votes, are demanding a new wealth tax and higher levies on companies, smaller budget cuts, and a suspension of the president’s signature 2023 law that is gradually raising the minimum retirement age to 64 from 62.

The pension reform has crystallized debate in recent days and so far the center-left group has dismissed Macron’s proposal, made last Friday, to delay rather than suspend the application of the measures.

“If he sticks with his proposal, we won’t enter into debate on the budget and we will censure immediately,” Socialist Party leader Olivier Faure said in an interview with La Tribune Dimanche. “It’s time to choose.”

But for Lecornu, capitulating would test the support of what remains of Macron’s centrist Renaissance party in parliament, as well as center-right lawmakers who have said they are against repealing the changes to the pension system. Although unlikely, if they were to vote in favor in a no-confidence motion Lecornu would fall even if the Socialists abstained.

“It’s painful because it’s a reform Renaissance lawmakers and I completely committed to,” Equality Minister Aurore Berge said Monday on RMC radio.

Lecornu must also compromise with demands for less belt-tightening after the Socialists were among groups that voted in September to topple former premier Francois Bayrou over his plan to narrow the deficit to 4.6% of economic output in 2026 from 5.4% expected this year.

However, Lecornu has diminished control over the fiscal plans since he pledged not to use a constitutional tool known as article 49.3 to adopt bills in parliament without a vote. Still, he has said the target must not slip to any wider than 5% if France is to remain credible on markets.

Source: Bloomberg

Details of the Sanctions

The Impact on Hanwha Ocean

Source: CNBC