21st Century Business Herald reporter Hu Tianjiao comprehensive report
U.S. stocks fell after data showed wholesale prices rose at a record pace last month, further increasing pressure on the Federal Reserve to speed up its bond-buying program. The Wall Street benchmark S&P 500 fell 0.7 percent in early New York trading and the technology-based Nasdaq Composite fell 1.1 percent. In November, the U.S. Producer Price Index (PPI) rose 9.6 percent year-on-year, its biggest gain since 2010 and up sharply from 8.8 percent last month. Economists surveyed had previously expected price gains of 9.2 percent in November. After the opening of the US stock market, the market on the other side of the Atlantic also fell, with the European Stoxx 600 falling 0.5% and the Frankfurt Dax falling 0.6%. The FTSE 100 in London has barely changed.
The International Monetary Fund has asked the Bank of England not to delay rate hikes. The group warned that demand in the UK economy was too strong and that UK inflation would rise to around 5.5 per cent this spring. During an annual health check on the UK economy, IMF President Kristalina Georgieva said: "Monetary policy needs to withdraw the special support provided during 2020." "Given the costs associated with containing the second round of (inflation) impacts, it will be important to avoid inaction," the IMF said. As the annual "Clause IV" mission to study the UK economy draws to a close, IMF staff acknowledged that the Bank of England's task in timing the tightening of monetary policy is difficult, but they applauded the recovery but said the inflation trend would not disappear anytime soon. The agency predicts that UK inflation will not return to the BoE's 2% target level until early 2024 after "peaking around 5.5% in the spring of 2022".
The International Monetary Fund (IMF) believes that unless Poland's central bank continues to raise interest rates, the country's economy may overheat next year. Following an annual fact-finding survey of Warsaw, the IMF issued a statement urging the government to avoid imposing expansionary fiscal policies when economic output exceeds its potential. The agency forecasts that Poland's average inflation rate will be 5.6% next year, compared with an average of 5% in 2021. The IMF said that while the recent rise in inflation has been largely driven by factors outside of monetary policy's control, the persistence of these factors and the current relatively high level of core inflation suggest that further rate hikes will be necessary to minimize the second round of impact and avoid the risk of overheating.
Under a proposal that the UK's energy regulator will unveil on Wednesday, UK energy suppliers will undergo "robust stress tests" in the future. Previously, the agency's regulation of the energy market has been fiercely criticized, and in just over 4 months, 26 companies have gone bankrupt. Onathan Brearley, chief executive of the UK's Energy Regulatory Authority (Ofgem), wrote acknowledging that the UK retail energy market "lacks enough resilience" to withstand the spike in wholesale gas and electricity prices since this summer. Since last summer, soaring wholesale prices for natural gas and electricity have led to the collapse of suppliers with nearly 4 million customers. Brearley said regulation "is not yet ready to withstand a global shock of this magnitude," the clearest acknowledgment to date that the rules governing the industry are not fit to achieve the goal. He said of the reforms planned by Ofgem would include stricter stress testing of suppliers so they could not pass on "inappropriate risks" to consumers, in addition to "more checks" on people "in key positions" at energy companies.
Toyota said it would spend $35 billion to switch to electric vehicles. The world's largest automaker is preparing to compete directly with Tesla and join other groups to push for carbon neutrality. The company plans to sell 3.5 million electric vehicles per year by 2030, when it will launch 30 electric vehicles, including sports cars and commercial vehicles. This marks a significant increase in the company's power targets. Toyota has said in the past that the long-term solution to global warming should be hybrids, electric vehicles and hydrogen-powered vehicles, rather than betting solely on battery-powered cars. But that focus has worried investors that the group is stalling its power plans, especially as the technology drives Tesla's market capitalization up sharply.
An independent investigation found that Uk's financial regulators have not done enough to hold banks accountable for the £2.2 billion interest rate hedging scandal that began 20 years ago and used flawed criteria to exclude some customers from compensation schemes. The report, published by John Swift QC, said it had harshly accused the UK's Financial Services Authority (FSA) of not being transparent enough to customers affected by the scandal and for giving an unrealistic timeline of the time it would take to correct the plan. The FSA was the predecessor of the Financial Conduct Authority (FAC). One person familiar with the matter attributed the long gap between the scandal and regulatory review to the complexity of the report and the amount of data involved, the last of which was submitted before December 2020. The FSA oversees nine banks that mistakenly sold interest rate hedging products to tens of thousands of small businesses when interest rates plummeted, bringing them huge bills. The UK Financial Services Authority was abolished in 2013 and the FCA took over its responsibilities for the UK's financial services industry.
The International Energy Agency (IEA) said the global oil market had returned to a surplus as the Omicron variant inhibited international travel, and oil prices fell with it. Brent crude futures fell 1.2 percent to near $73 a barrel. The IEA said a supply rebound in many oil-producing countries is creating a new glut that could widen further early next year. The deteriorating outlook is reflected in the oil futures curve. On Tuesday, the spread between Brent's two contracts narrowed to 2 cents a barrel, compared with more than $1 a month ago, suggesting ample supply. Global oil inventories will increase early next year as OPEC and its allies ramp up production, some major consumers plan to sell oil from strategic reserves, and the United States, Canada and Brazil set record production next year.
Bank of America Corp. This year is expected to be another important year for U.S. environmental, social and governance-related bonds. Bank of America is the largest issuer of corporate bonds in the United States. This year, sustainable bonds issued by global businesses and governments exceeded $1 trillion for the first time, more than double the total issued in 2020. Andrew Karp, head of advisory and financing solutions at Bank of America's global corporate and investment bank, and Karen Fang, head of global sustainable finance at the bank, said the market will also grow at a significant pace next year. Karen Fang believes that given the global net zero transition and the dynamics behind investor demand, growth next year will be very, very strong. ”
The Bank of Thailand said that as more and more people are attracted to cryptocurrencies, Thailand plans to publish detailed rules for digital assets to minimize risk to the financial system and provide greater investor protection. Bank of Thailand Governor Sethaput Suthiwartnarueput said in an interview that the Bank of Thailand will release a consultation paper on the "financial landscape" in January, which will seek a consensus on red lines for business people in digital currencies, green finance and related fields. He said the rules would seek to promote technological innovation, financial inclusion and managing systemic risk.
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