Asian Markets Dip as Fed Rate Cut Looms and Investors React to Tech Trade Developments

BHP Group has agreed to sell a 49% stake in the inland power network used by its Western Australia iron-ore business to BlackRock's Global Infrastructure Partners for $2 billion.

The deal will create a trust entity for BHP's inland power infrastructure, with BHP retaining a 51% controlling stake. Under the agreement, BHP will pay the entity a tariff linked to its share of Western Australia Iron Ore's (WAIO) inland power over a 25-year period.

BHP Chief Executive Mike Henry said the transaction "enables BHP to access capital and maintain operational and strategic control of a critical part of WAIO's infrastructure."

The world's largest miner by market value is seeking to free up capital as it increases spending on new projects to boost copper production and expand into potash.

BHP's Western Australia Iron Ore business, in which the company holds an 85% stake, is one of the world's leading sources of iron ore, a key ingredient in steel production.

The transaction requires regulatory approvals and is expected to be completed toward the end of BHP's fiscal 2026, which concludes on June 30, 2026.

Source: Investing

The soaring cost of schooling children with conditions including autism and attention deficit hyperactivity disorder has driven borrowing by local authorities to record levels amid warnings that many councils are heading for insolvency.

Official data shows that total net borrowing by municipal governments hit £16.4 billion ($21.9 billion) in the 12 months through October, a level not seen since records began in 1946. The Office for Budget Responsibility expects a total of £41 billion between 2025-26 and 2027-28, with special educational needs and disabilities (SEND) accounting for a significant chunk.

Long-running pressures on local administrations from adult social care, homelessness, inflation and post-2010 cuts to grants from central government led to high-profile bankruptcies in recent years, including at councils in Birmingham, Woking and Nottingham. It's forced many to hollow out services from public swimming pools to arts centers, with some granted "exceptional financial support" that allows them to borrow to meet day-to-day spending.

The crunch is now being made worse by spending on special educational needs, which the Institute for Fiscal Studies estimates is on track to reach £15 billion a year by 2029 - bigger than some Whitehall departments. Councils are being forced to borrow billions to cover a shortfall in the SEND funding they get from the central government.

The cost is piling further financial pressure on an already embattled sector. Official figures show local government debt has ballooned to over £147 billion — 60% higher than levels a decade ago. Almost 20 authorities in England from Leeds in the north to Croydon in London have debts of at least £1 billion, government data show.

"The special educational needs system in England is a mess — with big fiscal costs as well as costs to children, their families and their schools," said Darcey Snape, research economist at the IFS.

She warned against writing off council debts from SEND but said the government needs to "stop these cumulative deficits from pushing dozens of councils towards effective bankruptcy."

The emerging crisis was laid bare last month by the OBR, which said the number of children and young people with education, health and care plans — those with high needs — has jumped from 256,000 in 2016 to 639,000 in 2025. Experts say the rise is being driven by conditions such as autism, ADHD and mental health problems.

Last week Health Secretary Wes Streeting launched an independent review into what's driving demand for mental health, autism and ADHD services and how to address the pressures.

Councils are legally required to meet their day-to-day spending with revenues but have been given a override to keep SEND deficits off their books until 2028 when the central government plans to take on those costs from local authorities.

Until then, however, they will need to borrow, reduce spending elsewhere or run down their reserves to address the pressures. Crucially, from 2028 they will need to recognize an expected £14 billion of historic SEND deficits on their balance sheets, potentially pushing many into issuing section 114 notices effectively declaring bankruptcy.

The OBR described the looming cost as "an insolvency risk" to the local government sector.

The fiscal watchdog now estimates local authority borrowing for the 2025-26 fiscal year at £16.4 billion, almost triple its estimate from March. Of that, SEND accounts for around £2.5 billion, a hole forecast to rise to £3.7 billion next year and almost £5 billion in 2027-28.

Councils largely borrow through commercial banks, from other local authorities or the government's Public Works Loan Board, whose interest rates are set at various margins over gilt yields. Some of the extra borrowing is short-term to deal with the cash flow crunches caused by the SEND deficits.

"Because these deficits are financed by cash, the sector incurs substantial cash flow costs," said a spokesperson for the Local Government Association. "These are primarily due to lost interest received but may also include additional interest paid if councils are forced to supplement their cash flow by borrowing."

Source: Bloomberg Europe

Volvo Car AB is looking for partnerships for its new central software stack that'll run on all of its future electric models, a sign the carmaker has overcome earlier coding glitches that delayed vehicle launches and sparked recalls.

The manufacturer is open for pacts including licensing of the "superset" system that operates via a handful of high-performance computers, according to Volvo's Chief Engineering & Technology Officer Anders Bell. While a number of carmakers including Volkswagen AG have struggled to move to their own centralized software, those that have managed in-house can potentially tap new revenue streams.

"I am very open to collaborations in this area. The phones are on and the mailboxes are active," Bell said in an interview.

Carmakers, with a history of deep rivalries and spotty success on partnerships, have started to cooperate more on costly new technologies. This follows misses on developing in-house software systems, prompting model delays at the likes of VW and Stellantis NV.

VW last year turned to Rivian Automotive Inc. for a $5.8 billion technology tie-up for Western markets, after mounting setbacks in its Cariad software unit. It set up a similar venture for China with Xpeng Inc. Others, like Ford Motor Co., have scaled back projects that targeted architectures with centralized software functions.

While Volvo, based in Sweden and owned by China's Geely, is shopping its new code, geopolitics means pacts will be limited to partners outside of China, said Bell, who rejoined Volvo in 2022 after six years at Tesla Inc. In the US, regulators are also examining how Volvo's Chinese ownership intersects with data and cybersecurity rules.

Volvo suffered its own pitfalls in the shift from hardware maker into software with bruising delays of the EX90, the brand's flagship SUV: integrating a fully centralized software brain proved far more complex than anticipated, and customers reported a litany of errors. Bell said he's confident that Volvo's next EV, the mid-size EX60 to debut in January, won't have the EX90's problems.

"It has been an extremely big journey to become a software company, and unfortunately we had a spillover effect on customers in the early days of the EX90," Bell said.

The executive compared Volvo's transition to how Apple has built iOS or macOS, and how a central system is configured for successive iPhone or MacBook generations. "Which means: the bugs we solved once for the EX90 are already solved for the EX60."

Bell said he expected the broader industry to mirror moves by VW and Rivian, which are developing an EV and software platform they may sell to other carmakers in the future.

"It's a very interesting example of collaboration that may be unconventional, but it's completely in line with where I believe the development will go," Bell said about the initiative. "You can see carmakers that made big software bets, then went back and adjusted or found a collaboration."

Volvo is also open to sharing its new EV underpinnings, the SPA3 platform.

We're "completely open for business when it comes to collaboration," he said, citing the example of Ford licensing VW's EV platform for Europe. "You can absolutely create a unique customer experience on a technology platform that has been developed more generically."

Volvo's first vehicle made on the new architecture is the EX60, billed as the manufacturer's most important launch in decades. Sister brand Polestar will also produce cars on the platform and other brands owned by Volvo parent Zhejiang Geely Holding Group "may follow," Bell said.

While Volvo has resolved internal issues on software, it still needs to clear broader geopolitical hurdles that in a worst-case scenario could upset sales in the US.

The manufacturer is talking with the Commerce Department a proposed US ban on sales of vehicles that include software developed by Chinese-backed companies. The rules are set to take effect for the 2027 model year, and in a worst-case scenario could mean several Chinese-owned carmakers — including Geely-owned brands such as Polestar and Lotus — could face a sales ban.

Volvo Chief Executive Officer Hakan Samuelsson has repeatedly said he expects the issue to be resolved, though the US government shutdown that ended last month likely delayed the process, according to Bell.

"There is a distinct line between East and West that we have to relate to," Bell said. "Technically, we could open up our entire stack to the whole world. But legally, we cannot."

Source: Bloomberg Europe

Oil prices edged down on Tuesday, extending losses from the 2% drop in the previous session, with markets keeping a close eye on peace talks to end Russia's war in Ukraine and a looming decision on US interest rates.

Brent crude futures were down eight cents, or 0.1%, to US$62.41 (RM257.03) a barrel at 0409 GMT. US West Texas Intermediate crude was at US$58.75, down 13 cents or 0.2%.

Both contracts fell by more than US$1 a barrel on Monday after Iraq restored production at Lukoil's West Qurna 2 oilfield, one of the world's largest.

"Brent's slip back towards the US$62 (is) aligning seamlessly with the broader December narrative," said Phillip Nova's senior market analyst Priyanka Sachdeva. "The noise around potential Iraqi disruptions faded overnight, and the market quickly reverted to its core theme of ample supply and cautious demand expectations."

Ukraine will share a revised peace plan with the US after talks in London between its President Volodymyr Zelenskiy and the leaders of France, Germany and Britain.

"Oil is keeping to a tight trading range until we get a better idea of which way the peace talks will go," KCM Trade chief market analyst Tim Waterer said.

"If the talks break down, we expect oil to move higher, or if progress is made, and there is a likelihood of Russian supply to the global energy market resuming, prices would be expected to drop," he added.

According to sources familiar with the matter, the Group of Seven countries and the European Union are in talks to replace a price cap on Russian oil exports with a full maritime services ban, in a bid to reduce Russia's oil revenue.

Also on the radar is the Federal Reserve's policy decision due on Wednesday, with markets pricing in an 87% probability of a quarter-point rate reduction.

Lower interest rates typically are a positive driver for oil demand given the decrease in borrowing costs, though some analysts were cautious about how much impact this could have on oil prices for now.

"Although markets are largely invested in upcoming FED policy decision on Wednesday for a possible 25bp cut, something that could lend short-term support at the lower end of the US$60–US$65 band, the broader price structure remains anchored by expectations of an oversupplied 2026 (oil market)," said Phillip Nova's Sachdeva.

Source: Theedgemarkets

Thai and Cambodian troops exchanged artillery fire overnight, with Bangkok accusing its neighbor of firing rockets into civilian areas as the long-simmering border dispute flared into its most serious violence in months.

Clashes raged for a third day along the roughly 800-kilometer (500-mile) border, with the Cambodian Defense Ministry claiming that Thai shells killed two civilians overnight, raising the death toll to six. The Thai army said rockets fired by Cambodian troops struck two houses near the border, after previously stating that a soldier was killed and nearly 30 others were injured in the latest fighting.

Overnight clashes followed Thailand's use of airstrikes on Monday — its first since July — raising fears that the conflict is expanding just as the two sides struggle to uphold a US-led peace framework. The escalation also poses a challenge for Thai Prime Minister Anutin Charnvirakul, whose political calculus, trade negotiations and domestic standing are at stake.

Thai army spokesman Winthai Suvaree condemned Cambodia for firing rockets across the border, calling it a "violation of sovereignty and a serious threat to public safety." He said Thailand's military actions comply with international law.

Thailand said its air force and navy will continue to support the army in countering Cambodian attacks. Anutin has vowed to press on with the offensive to protect Thailand's sovereignty and has ruled out talks until Cambodia fully halts its attacks.

The latest bout of violence followed five days of military clashes in July, the deadliest in recent history that left nearly four dozen people dead and displacing more than 300,000. A ceasefire agreement was reached days later during talks in Malaysia and a peace accord was signed in October in a ceremony presided over by US President Donald Trump.

The agreement included deploying observers from the Association of Southeast Asian Nations to help maintain peace.

Source: Bloomberg Europe