Business

HONG KONG — Asian markets mostly rose on Tuesday following fresh records on Wall Street, with healthy corporate earnings overshadowing ongoing concerns about inflation, while progress in Washington on Joe Biden's big-spending economic plans also provided support.

However, a fresh virus outbreak in China, where more than four million have now been put into lockdown, revived concerns about the world's number two economy and authorities' zero-COVID policies.

The S&P 500 and Dow both ended at new peaks, with tech firms lifted by a surge in electric car maker Tesla to the trillion-dollar mark ahead of the release of profit reports this week from business titans including Apple, Amazon, Microsoft and Twitter.

Facebook became the latest firm to unveil bumper earnings, posting a $9 billion profit in the third quarter and reinforcing optimism on trading floors following a string of reports that have seen upbeat commentary on consumer demand.

Tokyo led gains, piling on 1.8 per cent, helped by reports that Japan's ruling Liberal Democratic Party will likely win a majority in the upcoming general election.

Sydney, Singapore, Seoul, Taipei, Manila, Mumbai, Bangkok and Jakarta also rose.

Hong Kong and Shanghai dropped following news that developer Modern Land had missed a bond payment in the latest sign of stress in China's property sector, with focus on an upcoming deadline for China Evergrande.

Reports that Evergrande had met obligations on a note at the end of last week, just before a Saturday cut-off, boosted sentiment but with several more to go before the year's end, there is a feeling the inevitable default is merely being delayed.

OANDA's Jeffrey Halley raised concerns about the possible impact of the latest Delta outbreak in China, with fears over fresh lockdowns as the country follows its zero-COVID strategy.

On Tuesday, officials put the city of Lanzhou, with a population of four million, under lockdown, with residents told not to leave home except in emergencies.

"The arrival of Delta in COVID-zero countries in other parts of the world suggests challenges ahead, even for China," he said in a note. "If it spreads rapidly, some severe lockdowns could follow. That would complicate an already nightmarish scenario for global supply chains under stress."

Biden spending plans 

Developments in Washington are being closely followed after Biden said on Monday he hoped Democrats would strike a deal on two massive spending packages this week.

Both wings of his party have for weeks been haggling over a social spending bill expected to cost a little less than $2 trillion and an infrastructure bill worth $1.2 trillion.

He said talks with one of the main obstacles to agreement, moderate Democratic Senator Joe Manchin, "went well". But there is concern that progressives in the House of Representatives who want more spending could now pose a threat to the plan.

House Budget Chairman John Yarmuth warned the chances of getting a framework together by the end of the week — when Biden heads off for European summits — were slim, saying: "I wouldn't bet my grandson on that."

The European Central Bank holds its latest policy meeting on Thursday, with traders looking for an idea about its plans for monetary policy in light of surging global inflation.

The gathering comes as financial chiefs around the world begin to remove the ultra-loose measures put in place at the start of the pandemic, with the Bank of England tipped to lift interest rates this year, following moves by South Korea and New Zealand among others.

The Federal Reserve (Fed) has said it will begin winding down its bond-buying programme within the next two months, and some observers have forecast that could come as soon as November. Meanwhile, there is a growing expectation the Fed will raise borrowing costs in mid-2022.

There was little reaction to news that China's Vice Premier Liu He held "pragmatic, candid and constructive exchanges" in a virtual call with US Treasury Secretary Janet Yellen to discuss trade issues, with both sides highlighting points of concern in their relationship.

COPENHAGEN — A Danish fuel supplier went on trial on Tuesday, accused of violating EU sanctions against Syria by delivering fuel used by Russian warplanes in the war-torn country.

Dan-Bunkering, through its subsidiary in Russia's Kaliningrad, sold about 172,000 tonnes of fuel to two Russian companies between 2015 and 2017, prosecutors say. 

The fuel was then delivered to Syria.

As the trial opened in Odense in central Denmark, prosecutor Anders Dyrvig Rechendorff said that he was seeking a jail sentence for Dan-Bunkering's chief executive and fines for the company. 

Defence lawyers declined to comment, but Dan-Bunkering has previously said it expects to be acquitted.

"We are convinced we did not sell fuel to companies that were subject to EU sanctions at the time of the trade," it said in a statement ahead of the trial.

Dan-Bunkering insists it acted in good faith and that the Russian companies which supplied fuel to the Russian military were not subject to EU sanctions.

The transactions totalled 647 million Danish kroner ($101 million, 87 million euros), or just under two per cent of the company's revenues for the period from 2015 until 2017.

According to media reports, Dan-Bunkering's business partner was the Russian company Maritime, responsible for supplying fuel to Russian military aircraft in Syria.

EU sanctions against the Syrian regime came into force in late 2011 and have been extended until June 1, 2022. They include an oil embargo and a freeze on assets held by the Syrian central bank in the EU. 

No similar cases of violations of the Syria embargo have been brought before the courts of member countries, according to the European Union Agency for Criminal Justice Cooperation (Eurojust).

LONDON — European and US stock markets mostly rose on Monday with traders assessing company earnings and looking ahead to an ECB rate decision and UK budget later in the week.

Asian markets closed mixed following last week's gains, with investors keeping a worried eye on a fresh COVID outbreak in China that could drag on the already stuttering economy.

Oil prices pressed higher, with Brent at a three-year high above $86 per barrel, while WTI rose above $85 for the first time since October 2014.

The latest gains for crude come after Saudi Arabia said OPEC and other major producers would be cautious in lifting output despite surging demand, warning that the pandemic still posed a threat to the outlook.

The euro dropped with data showing Germany's business climate worsened in October for the fourth month in a row, as supply chain woes weighed on the country's export-driven economy.

Long-running worries about inflation, meanwhile, continued to cast a shadow over trading, though a healthy batch of earnings has tempered those concerns in the past couple of weeks and Wall Street has scaled new summits.

"Records were set last week by the S&P 500 and Dow Jones Industrial Average. More could be coming this week, but there is a big earnings hill to climb if that is going to happen," said market analyst Patrick J. O'Hare at Briefing.com.

US tech titans including Amazon, Apple, Facebook and Microsoft provide their own earnings updates this week, which will be closely followed for an idea about what impact supply chain snarls and rising prices are having on their bottom lines.

Their forward guidance will also be of interest as businesses contemplate tighter central bank monetary policies.

News that Chinese Company Evergrande had paid interest due on a bond before Saturday's deadline provided a much-needed boost to market confidence, though it remains to be seen whether the property developer can meet obligations on other notes due before the end of the year.

Chinese markets also got some extra cheer from Evergrande saying it had resumed work on more than 10 projects. 

But there were concerns about the property sector after reports that China plans to expand pilot property tax reforms.

The latest Delta variant outbreak in mainland China, meanwhile, comes just over three months before the country hosts the Winter Olympics.

The latest spike has forced authorities to reimpose strict containment measures, but there are fears of a wider lockdown that would weigh on economic growth. 

STOCKHOLM — Swedish car brand Volvo said on Monday it has set a fixed share price of 53 kronor ($6.20) for its listing on the Stockholm Stock Exchange later this week.

The price is at the bottom end of the range that Volvo announced last week — which was between 53 and 68 kronor per share — ahead of its initial public offering (IPO).

In a statement on Monday, the carmaker also lowered the amount it plans to raise by going public from 25 billion kronor ($2.9 billion) to 20 billion kronor ($2.3 billion).

It said its first day of trading will be on October 29, one day later than previously announced. 

Volvo first said its plans to go public in early October, while noting that China's Geely would remain the largest shareholder.

The Swedish automaker had been struggling until Geely acquired it from US giant Ford for $1.8 billion in 2010.

Volvo's image and sales have dramatically improved since then, riding the wave of popularity of SUVs. The company plans to go all-electric by 2030.

Volvo Cars CEO Hakan Samuelsson said in the statement that "the proceeds raised from the IPO together with our strong balance sheet will secure the funding of our fastest transformer strategy and the delivery of our mid-decade ambitions".

WASHINGTON — The stunning recent runup in global oil prices could threaten economic growth, and is unlikely to retreat until 2023, the World Bank said on Thursday.

Average crude prices are expected to end the year at $70 a barrel, 70 per cent higher than in 2020, according to the latest Commodity Markets Outlook.

That in turn is pushing up other energy prices like natural gas, the report said.

"The surge in energy prices poses significant near-term risks to global inflation and, if sustained, could also weigh on growth in energy-importing countries," said World bank chief economist Ayhan Kose. 

The increases have been "more pronounced than previously projected" and "may complicate policy choices as countries recover from last year's global recession".

Oil prices in recent weeks have surged above $80 a barrel, the highest point in years, as economies reopen following the pandemic shutdowns and amid shipping bottlenecks.

The World Bank uses an average of Brent, West Texas Intermediate and Dubai which it said will "remain at high levels in 2022 but will start to decline in the second half of the year as supply constraints ease".

The 2022 average is projected to rise to $74 before falling to $65 in 2023, the World Bank said.

But the report warns that "additional price spikes may occur in the near-term amid very low inventories and persistent supply bottlenecks".

LONDON — Britain's upcoming budget will invest almost £7 billion ($9.6 billion, 8.3 billion euros) on transport outside London, the Treasury said on Saturday, as part of plans to cut economic inequality.

Finance Minister Rishi Sunak will unveil the transport initiative during his autumn budget and spending review due on Wednesday.

Prime Minister Boris Johnson's so-called "levelling up" programme is seen as vital to keeping voters in former strongholds of the main opposition Labour Party who backed him in the 2019 general election.

His Conservative party won a swathe of seats in northern England on a promise to deliver Britain's Brexit divorce from the European Union, as well as boost jobs and growth.

Recipients of the transport project cash include regions in the former Labour "red wall" that turned Tory blue two years ago and will be seen as payback for their support.

According to the finance ministry, the government will invest £5.7 billion in city regions to boost productivity via train and station upgrades, and tram network expansion.

It will also inject £1.2 billion into overhauling bus services.

The government wants to quicken journey times, simplify fares and increase services outside London, after repeated complaints that regions outside the British capital were ill-served by transport links, affecting business.

"Great cities need great transport and that is why we're investing billions to improve connections in our city regions as we level up opportunities across the country," said Sunak in the statement.

"This transport revolution will help redress that imbalance as we modernise our local transport networks so they are fit for our great cities and those people who live and work in them."

Transport policy is set separately in Scotland, Wales and Northern Ireland by the nations' devolved administrations in Edinburgh, Cardiff and Belfast. 

The government said the extra investment for England would mean additional cash for the three other UK nations under weighted public expenditure adjustments.

Chancellor of the Exchequer Sunak will also announce the latest growth forecasts for the economy, which is battling high inflation due largely to surging energy prices and a supply chain crisis that was sparked by Brexit and COVID.