Chinese Business

Stock markets fell on Tuesday as investors were split between fears that the US Federal Reserve will maintain its aggressive anti-inflation measures and growing optimism over China’s economic reopening.

London, Frankfurt and Paris were down in afternoon trades after Asia mostly fell.

Wall Street extended losses as it opened lower following a sell-off the previous day.

Data showing a forecast-busting jump in activity in the US services sector last month raised the prospect that the Fed will not back down from sharp rate increases when it meets next week.

Monday’s data followed robust jobs figures last week and a jump in wages that give the central bank more room to cool the US economy, fuelling investor concerns that the Fed’s actions could cause a deep recession.

“Worries that the Fed could unwrap an unwelcome present of another super-sized rate hike when policymakers meet next week are sprinkling Christmas fear on indices,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“Speculation is swirling that central banks will have to be more Scrooge-like and make borrowing even more expensive to rein in inflation,” she said.

Markets had been running higher ahead of the jobs figures after a surprise drop in inflation and comments from Fed boss Jerome Powell that the bank was likely to raise rates at a slower pace.

Bets have increased on borrowing costs rising higher than five percent next year — from the current range of 3.75-4.0 percent — before the bank pauses, with no cuts seen until 2024.

“There is a prominent undercurrent of concern that the Fed is going to overtighten and trigger a deeper economic setback,” said Briefing.com analyst Patrick O’Hare.

Analysts said concerns over the Fed have overshadowed China’s easing of zero-Covid policies following nationwide protests over the measures, which have hammered the world’s second biggest economy.

Despite the prospect of higher Chinese demand for oil as the economy reopens, crude prices fell as an EU embargo on Russian oil and a G7-EU price cap on the country’s exports came into force on Monday.

“It seems that the only thing guaranteed in the oil market for now is volatility,” said OANDA trading platform analyst Craig Erlam.

The dollar lost ground against other major currencies after gains on Monday.

– Key figures around 1445 GMT –

New York – Dow: DOWN 0.3 percent at 33,837.66 points

London – FTSE 100: DOWN 0.3 percent at 7,545.95 

Frankfurt – DAX: DOWN 0.5 percent at 14,379.00

Paris – CAC 40: DOWN 0.2 percent at 6,683.24

EURO STOXX 50: DOWN 0.3 percent at 3,944.32

Tokyo – Nikkei 225: UP 0.2 percent at 27,885.87 (close)

Hong Kong – Hang Seng Index: DOWN 0.4 percent at 19,441.18 (close)

Shanghai – Composite: FLAT at 3,212.53 (close)

Euro/dollar: UP at $1.0510 from $1.0495 on Monday

Dollar/yen: DOWN at 136.49 yen from 136.78 yen

Pound/dollar: UP at $1.2193 from $1.2186

Euro/pound: UP at 86.19 pence from 86.06 pence

West Texas Intermediate: DOWN 0.7 percent at $76.40 per barrel

Brent North Sea crude: DOWN 0.7 percent at $82.08 per barrel

Airlines are expected to return to profit next year for the first time since 2019 despite slowing global growth as they recover from a Covid-induced crisis, an industry group said Tuesday.

After cutting losses this year, airlines are forecast to make $4.7 billion in net profits in 2023, according to the International Air Transport Association (IATA).

This is still far off the $26.4 billion profit the industry reported in 2019, before Covid prompted countries to enact travel restrictions that have since been eased in most nations.

“Resilience has been the hallmark for airlines in the Covid-19 crisis,” IATA director general Willie Walsh said in a statement.

“As we look to 2023, the financial recovery will take shape with a first industry profit since 2019. That is a great achievement considering the scale of the financial and economic damage caused by government imposed pandemic restrictions,” he said.

Governments in numerous countries had to bail out airlines as travel was brought to a halt to slow the spread of the virus, and the industry suffered $137.7 billion in losses in 2020 at the height of the restrictions.

Airlines are expected to post $779 billion in revenues in 2023, meaning the $4.7 billion profit constitutes a razor-thin net profit margin of just 0.6 percent. 

Walsh said many airlines are “sufficiently profitable” to attract capital as the industry seeks to decarbonise its operations.

But many others are struggling due to “onerous regulation, high costs, inconsistent government policies, inefficient infrastructure and a value chain where the rewards of connecting the world are not equitably distributed,” he said.

Passenger traffic was slightly lower than forecast in 2022 due to slowing economies and China’s zero-Covid restrictions. 

– ‘Optimistic about 2023’ –

But the IATA expects passenger traffic to return to 85.5 percent of its pre-crisis level in 2023.

And that expected improvement comes as global GDP growth slows, according to IATA’s forecast, to 1.3 percent from 2.9 percent in 2022. 

“Despite the economic uncertainties, there are plenty of reasons to be optimistic about 2023,” said Walsh.

Airlines should not be as affected by rising jet fuel prices as they were in 2022, while continuing to benefit from pent-up travel demand.

A recent IATA poll found that more than two-thirds of travellers surveyed in 11 global markets are travelling as much or more than before the pandemic. 

And while 85 percent said they are concerned about the economic situation, 57 percent said have no intention to curb their travel habits.

But Walsh also warned that with such thin margins, “even an insignificant shift in any one of these variables has the potential to shift the balance into negative territory.”

IATA sees airlines squeaking out a profit thanks to revenues growing faster than costs next year. 

While rising interest rates may crimp demand for travel, IATA sees that as likely leading to lower oil prices, thus reducing costs for airlines.

– Help for green transition –

On a regional level, airlines in North America are expected to post $9.9 billion in profits this year, thanks to carriers benefitting from fewer and shorter-lasting travel restrictions in the region. For 2023, profits are seen as climbing to $11.4 billion.

European carriers are forecast to post $3.1 billion in losses as some airlines had to curtail operations due to Russia’s war in Ukraine while others faced limitations imposed by airports. IATA sees European airlines posting $621 million in profit in 2023.

Asia-Pacific airlines are expected to suffer $10 billion in losses this year, primarily due to China’s zero Covid policy. In 2023, they are expected to narrow that to $6.6 billion. 

But IATA noted it expects “strong pent-up demand to fuel a quick rebound in the wake of any” relaxation in Covid travel restrictions by China.

Walsh said that the airline industry remains committed to reaching net zero carbon emissions by 2050, but given its thin profit margins, pleaded for government help. 

“We’ll need all the resources we can muster, including government incentives, to finance this enormous energy transition,” said Walsh.

“More taxes and higher charges would be counter-productive,” he added.

Stock markets mostly fell on Tuesday as fears that the US Federal Reserve will maintain its aggressive anti-inflation measures trumped growing optimism over China’s economic reopening.

London, Paris and Frankfurt were all in the red at around midday.

Asian markets were mostly down after all three main indexes on Wall Street lost more than one percent the day before.

Data showing a forecast-busting jump in activity in the US services sector last month raised the prospect that the Fed will not back down from sharp rate increases when it meets next week.

Monday’s data followed robust jobs figures last week that could give the central bank more room to manoeuvre, fuelling investor concerns that the Fed’s actions could tip the economy into recession.

“Worries that the Fed could unwrap an unwelcome present of another super-sized rate hike when policymakers meet next week are sprinkling Christmas fear on indices,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“Speculation is swirling that central banks will have to be more Scrooge-like and make borrowing even more expensive to rein in inflation,” she said.

Markets had been running higher ahead of the jobs figures after a surprise drop in inflation and comments from Fed boss Jerome Powell that the bank was likely to raise rates at a slower pace.

“Outstanding news from the vast services-based US economy is devastating for market participants keen to see evidence of the US economic disintegration,” said SPI Asset Management’s Stephen Innes.

Bets have increased on borrowing costs rising higher than five percent next year — from the current range of 3.75-4.0 percent — before the bank pauses, with no cuts seen until 2024.

Investors have also been tracking China’s zero-Covid policies, which have hammered the world’s second biggest economy.

Hong Kong dropped after soaring around 15 percent over the past week on China’s easing of strict Covid containment measures.

The dollar lost ground against other major currencies after gains on Monday.

Crude prices fell more than one percent over concerns that higher interest rates could slow the global economy, which would affect oil demand.

– Key figures around 1150 GMT –

London – FTSE 100: DOWN 0.4 percent at 7,539.62 points

Frankfurt – DAX: DOWN 0.3 percent at 14,405.66

Paris – CAC 40: DOWN 0.3 percent at 6,675.04

EURO STOXX 50: DOWN 0.3 percent at 3,946.83

Tokyo – Nikkei 225: UP 0.2 percent at 27,885.87 (close)

Hong Kong – Hang Seng Index: DOWN 0.4 percent at 19,441.18 (close)

Shanghai – Composite: FLAT at 3,212.53 (close)

New York – Dow: DOWN 1.4 percent at 33,947.10 (close)

Euro/dollar: UP at $1.0513 from $1.0495 on Monday

Dollar/yen: DOWN at 136.34 yen from 136.78 yen

Pound/dollar: UP at $1.2216 from $1.2186

Euro/pound: UP at 86.08 pence from 86.06 pence

West Texas Intermediate: DOWN 1.3 percent at $75.97 per barrel

Brent North Sea crude: DOWN 1.2 percent at $81.70 per barrel

The European Union reached an agreement Tuesday to ban the import of products including coffee, cocoa and soy in cases where they are deemed to contribute to deforestation.

The draft law, which aims to ensure “deforestation-free supply chains” for the 27-nation EU, was hailed by environmental groups as “groundbreaking”.

It requires companies importing into the EU to guarantee products are not produced on land that suffered deforestation after December 31, 2020, and that they comply with all laws of the source country.

The scope encompasses palm oil, cattle, soy, coffee, cocoa, timber and rubber as well as derived products such as beef, furniture and chocolate.

Illegal production has spurred massive deforestation in countries such as Brazil, Indonesia,  Malaysia, Nigeria, the Democratic Republic of Congo, Ethiopia, Mexico and Guatemala.

The United Nations’ Food and Agriculture Organization estimates that an aggregate area of land bigger than the European Union, or some 420 million hectares (more than one billion acres), has been deforested around the world over the past three decades.

The European Union is the second-biggest market for consumption of the targeted products after China. 

Pascal Canfin, chairman of the European Parliament’s environment committee, hailed the agreement, and how its impact would feed through to everyday items Europeans consume.

“It’s the coffee we have for breakfast, the chocolate we eat, the coal in our barbecues, the paper in our books. This is radical,” he said.

– ‘Historic’ –

The environmental lobby group Greenpeace called the draft law, agreed between the European Parliament and EU member states, “a major breakthrough”.  

Another, WWF, called it “groundbreaking” and “historic”.

“This regulation is the first in the world to tackle global deforestation and will significantly reduce the EU’s footprint on nature,” the WWF said in a statement.

Both groups called on the EU to go further, by expanding the scope of the law to include savannahs, such as Brazil’s Cerrado, which are also under threat by encroaching ranchers and farmers.

Greenpeace noted that financial institutions extending services to importing companies would not initially come under the new law, but that they would come under review two years later.

Both the European Council — representing the EU countries — and the European Parliament now have to officially adopt the agreed law. Big companies would have 18 months to comply, while smaller ones would get a longer grace period.

“The new law will ensure that a set of key goods placed on the (European Union) market will no longer contribute to deforestation and forest degradation in the EU and elsewhere in the world,” the European Commission said in a statement. 

“The battle for climate and biodiversity is accelerating,” French President Emmanuel Macron tweeted.

– Big fines –

The parliament said in a statement that the law opened the way for technology such as satellite monitoring and DNA analysis to verify the provenance of targeted imports.

High-risk exporting countries would have nine percent of products sent to the EU checked, while lower-risk ones would have lower proportions scrutinised.

Companies found violating the law could be fined up to four percent of annual turnover in the EU.

The legislation would be reviewed one year after coming into force, to see whether it should be extended to other wooded land.

Another review at the two-year mark would have the commission considering whether to expand it to cover other ecosystems and commodities, as well as financial institutions.

Philippine lawmakers have proposed a $4.9 billion sovereign wealth fund to be chaired by President Ferdinand Marcos Jr to boost growth, but critics warn it will be prone to graft and risk Filipino pensions.

Congressmen Sandro Marcos and Martin Romualdez — the president’s son and cousin respectively — are among the six authors of the bill filed to the House of Representatives and will be examined by several committees before being debated in the house.

The “Maharlika Investments Fund” (MIF) would be seeded with 275 billion pesos from government financial institutions, including two pension funds and two banks, according to the latest version of the bill.

It would help the Marcos administration achieve its goals of getting the Philippine economy to “soar to greater heights in spite of external shocks”, the authors wrote.

The word “maharlika” is widely associated with Marcos Jr’s late dictator father and namesake, who presided over widespread human rights abuses and corruption during his two decades in power. He was ousted in 1986.

Marcos Sr claimed to have led an anti-Japanese guerrilla unit called Ang Mga Maharlika during World War II, but he has been accused of lying about his war record.

The MIF has been met with concern from business groups, economists, activists and opposition figures, who have questioned the need for a sovereign wealth fund in the debt-laden country.

They argue pension funds were already being invested and that diverting them to the MIF would expose them to additional risk.

Even the president’s own sister, Senator Imee Marcos, said it was “risky to gamble” retirement funds.

“We all know about our neighbour Malaysia where their 1MDB was a real disaster where the money was looted,” she said, referring to the graft scandal that involved billions of dollars of state funds.

A lack of safeguards also meant “the potential for corruption is almost limitless”, Vincent Lazatin, former executive director of the Transparency and Accountability Network, told AFP Tuesday.

– ‘A lot of questions’ – 

The bill’s proponents highlighted Indonesia as an example of a sovereign wealth fund successfully being used to attract direct investments into infrastructure and emerging industries.

But Natixis senior economist Trinh Nguyen said Indonesia’s fund has a “very clear” investment objective, while the Philippine proposal “lacks a direction”.

“There are a lot of questions… How is it going to benefit the longer-term development objective of the Philippines because it’s not very clear to me that it would,” she said.

Under the proposed bill, MIF funds would be “exempt from any regulatory restrictions”.

Investment options would include financial derivatives, equities, infrastructure projects and “other investments as may be approved by the Board”.

Congressman Joey Salceda, who leads the technical working group examining the bill, told AFP the fund’s governing board would be chaired by the president.

Former president Gloria Arroyo, who has backed the bill, said it was a “powerful statement that the highest official of the land will hold himself as ultimately accountable to the Filipino people for the performance of the Fund”.

But Lazatin noted that the country had a dismal record of punishing elected officials for corruption. 

“Our laws are good on paper, but in practice… we have not been able to hold public officials accountable,” he said.

An estimated $10 billion was stolen from state coffers over the course of Marcos Sr’s rule, while the family has been accused of owing more than $3.6 billion in estate taxes.

No one in the clan has been jailed.

Most Asian and European markets fell Tuesday and the dollar rose as fresh fears that the US Federal Reserve will push interest rates higher than hoped overshadowed growing optimism over China’s economic reopening.

After a strong start to the week in Asia, traders tracked a big drop on Wall Street that came on the back of data showing a forecast-busting jump in activity in the US services sector last month.

The news — combined with Friday’s bigger-than-expected print on November jobs and wage increases — dented optimism that the Fed’s monetary tightening campaign was finally paying off, which would give it room to take a less hawkish approach into the new year.

Markets had been running higher ahead of the jobs figures after a surprise drop in inflation and comments from Fed boss Jerome Powell that the bank would likely raise rates at a slower pace.

“Outstanding news from the vast services-based US economy is devastating for market participants keen to see evidence of the US economic disintegration,” said SPI Asset Management’s Stephen Innes.

“Coming as it did on the heels of Friday’s jobs report, which indicated that the rumours of the US economic demise were greatly exaggerated, the market immediately moved into ‘good news is bad’ mode, which saw investors ride roughshod over the dovish pivot camp.”

Bets have increased on borrowing costs going higher than five percent next year — from the current 3.75 to 4.0 percent — before the bank pauses, with no cuts seen until 2024.

All three main indexes on Wall Street lost more than one percent and Asia struggled to maintain its recent momentum.

Hong Kong dropped after soaring around 15 percent over the past week on China’s easing of strict Covid containment measures.

Sydney, Seoul, Singapore, Wellington, Mumbai, Bangkok, Taipei and Jakarta were also in the red.

Shanghai was barely moved while Tokyo rose. Manila was up more than three percent as banks were boosted by a forecast-beating jump in inflation that ramped up expectations for a hike in interest rates.

London, Paris and Frankfurt all slipped at the open.

The dollar extended most of the gains made Monday after the services data release. The Australian dollar was among the biggest losers after the country’s central bank lifted interest rates to a decade high but by less than expected.

The mood in Asia remains largely positive owing to the prospect of China rolling back some of the harsh measures that have been in place for almost three years and have hammered the giant economy.

But analysts said the country would not likely see a complete end to the zero-Covid policy for several months.

Oil prices climbed Tuesday, having dropped heavily the two previous days, on expectations that a reopening will boost demand in the world’s biggest importer of the commodity.

– Key figures around 0820 GMT –

Tokyo – Nikkei 225: UP 0.2 percent at 27,885.87 (close)

Hong Kong – Hang Seng Index: DOWN 0.4 percent at 19,441.18 (close)

Shanghai – Composite: FLAT at 3,212.53 (close)

London – FTSE 100: DOWN 0.1 percent at 7,562.19

Euro/dollar: DOWN at $1.0490 from $1.0495 on Monday

Dollar/yen: UP at 136.90 yen from 136.78 yen

Pound/dollar: UP at $1.2200 from $1.2186

Euro/pound: DOWN at 85.99 pence from 86.06 pence

West Texas Intermediate: UP 0.8 percent at $77.53 per barrel

Brent North Sea crude: UP 0.9 percent at $83.44 per barrel

New York – Dow: DOWN 1.4 percent at 33,947.10 (close)

Philippine lawmakers have proposed a $4.9 billion sovereign wealth fund to be chaired by President Ferdinand Marcos Jr to boost growth, but critics warn it will be prone to graft and risk Filipino pensions.

Congressmen Sandro Marcos and Martin Romualdez — the president’s son and cousin respectively — are among the six authors of the bill filed to the House of Representatives and will be examined by two committees before being debated in the house.

The “Maharlika Investments Fund” (MIF) would be seeded with 275 billion pesos from government financial institutions, including two pension funds and two banks, according to the latest version of the bill.

It would help the Marcos administration achieve its goals of getting the Philippine economy to “soar to greater heights in spite of external shocks”, the authors wrote.

The word “maharlika” is widely associated with Marcos Jr’s late dictator father, who presided over widespread human rights abuses and corruption during his two decades in power. He was ousted in 1986.

Marcos Sr claimed to have led an anti-Japanese guerrilla unit called Ang Mga Maharlika during World War II, but he has been accused of lying about his war record.

The MIF has been met with concern from business groups, economists, activists and opposition figures, who argue pension funds were already being invested and that diverting them to a sovereign wealth fund would expose them to additional risk.

Even the president’s own sister, Senator Imee Marcos, said it was “risky to gamble” retirement funds.

“We all know about our neighbour Malaysia where their 1MDB was a real disaster where the money was looted,” she said, referring to the graft scandal that involved billions of dollars of state funds.

The lack of safeguards also meant “the potential for corruption is almost limitless”, Vincent Lazatin, former executive director of the Transparency and Accountability Network, told AFP Tuesday.

Under the proposed bill, MIF funds would be “exempt from any regulatory restrictions”.

Investment options would include financial derivatives, equities and “other investments as may be approved by the Board”.

Congressman Joey Salceda, who leads the technical working group examining the bill, told AFP the fund’s governing board would be chaired by the president.

Former president Gloria Arroyo, who has backed the bill, said that was a “powerful statement that the highest official of the land will hold himself as ultimately accountable to the Filipino people for the performance of the Fund”. 

Ukraine worked to restore power on Tuesday after Russia’s latest wave of missile strikes caused power disruptions across the country, right as winter frost builds and temperatures plunge.

Out of the 70 missiles launched by Moscow, “most” were shot down, President Volodymyr Zelensky said, but the barrage still hit Ukraine’s already battered infrastructure. 

Fresh power cuts were announced in all regions “due to the consequences of shelling,” national electricity provider Ukrenergo said on Telegram.

The head of Ukrenergo said he had “no doubt that Russian military consulted with Russian power engineers during this attack”, judging by where the missiles landed. 

“The time that Russians chose for this attack was connected with their desire to inflict as much damage as possible,” Volodymyr Kudrytskyi told a Ukrainian news programme, explaining the attacks were launched as the country enters a “peak frost” period.

“Our repairmen will be working on the energy system restoration.”

Nearly half of Ukraine’s energy system has already been damaged after months of strikes on power infrastructure, leaving people in the cold and dark for hours at a time as outdoor temperatures drop below zero degrees Celsius (32 degrees Fahrenheit).

As missiles rained down on Kyiv, UN rights chief Volker Turk — who arrived over the weekend on a four-day visit — had to move his meetings with activists into an underground shelter. 

Zelensky announced in his nightly address that four were killed in Russia’s strikes.

But “our people never give up,” the president said in a video statement. 

Across the border in Russia’s Kursk region on Tuesday, an airfield saw a “drone attack”, said local governor Roman Starovoyt, without specifying where the drone originated. 

“As a result of a drone attack in the area of the Kursk airfield, an oil storage tank caught fire,” he said on social media, adding that there were no casualties. 

Tuesday’s incident comes a day after Moscow accused its neighbour of carrying out deadly drone strikes on two other airfields.

Russia also confirmed a “massive attack on Ukrainian military command systems and related defence, communications, energy and military facilities”.

– Moscow vows to keep fighting –

The latest violence comes just after Russia shrugged off a Western-imposed price cap on its oil exports, warning the move would not impact its military campaign in Ukraine.

The $60-per-barrel cap agreed by the European Union, G7 and Australia aims to restrict Russia’s revenue while making sure Moscow keeps supplying the global market.

“Russia’s economy has all the necessary potential to fully meet the needs and requirements of the special military operation,” Kremlin spokesman Dmitry Peskov told reporters, using Moscow’s term for its Ukraine offensive.

“These measures will not affect this,” he said.

Russia “will not recognise” the measures, which amounted to “a step towards destabilising the global energy markets”, he added.

The market price of a barrel of Russian Urals crude is currently around $65 dollars, just slightly higher than the $60 cap — suggesting the measure may have only a limited impact in the short term.

The cap is the latest in a number of measures spearheaded by Western countries and introduced against Russia — the world’s second-largest crude oil exporter — after Moscow sent troops into Ukraine over nine months ago.

It comes on top of an EU embargo on seaborne deliveries of Russian crude oil that came into force on Monday.

The embargo will prevent maritime shipments of Russian crude to the European Union, which account for two-thirds of the bloc’s oil imports from Russia, potentially depriving Moscow of billions of euros.

Kyiv had initially welcomed the price ceiling, but later said it would not do enough damage to Russia’s economy. 

Meanwhile, Russian state media released footage of President Vladimir Putin driving a Mercedes car across the Crimea bridge — the closest the 70-year-old leader has come to the frontline in Ukraine.

The bridge connects the annexed peninsula to the Russian mainland, and was damaged in a blast in October.

– ‘Impossible to prepare’ –

The G7 nations — Britain, Canada, France, Germany, Italy, Japan and the United States — along with Australia have said they are prepared to adjust the price ceiling of oil if necessary.

In recent months, gas prices have skyrocketed since Moscow halted deliveries to the EU in suspected retaliation for Western sanctions and the bloc struggled to find alternative energy suppliers.

In the Ukrainian town of Borodianka, outside Kyiv, where snow has already coated the ground, locals recently gathered around wood-fired stoves inside tents to keep warm and cook food during the blackouts. 

“We are totally dependent on electricity… One day we had no electricity for 16 hours,” Irina, who had come to the tent with her child, told AFP. 

Volunteer Oleg said it was hard to say how Ukraine would manage in the coming winter months. 

“It is impossible to prepare for this winter because no one has lived in these conditions before,” he said. 

Asian markets were mixed Tuesday as fresh fears that the US Federal Reserve will push interest rates higher than hoped played off against growing optimism over China’s economic reopening.

After a strong start to the week in the region, traders tracked a big drop on Wall Street that came on the back of data showing a forecast-busting jump in activity in the US services sector last month.

The news — combined with Friday’s bigger-than-expected print on November jobs — dented optimism that the Fed’s monetary tightening campaign was finally paying off, which would give it room to take a less hawkish approach into the new year.

Markets had been running higher ahead of the jobs figures after a surprise drop in inflation and comments from Fed boss Jerome Powell that the bank would likely raise rates at a slower pace.

“Outstanding news from the vast services-based US economy is devastating for market participants keen to see evidence of the US economic disintegration,” said SPI Asset Management’s Stephen Innes.

“Coming as it did on the heels of Friday’s jobs report, which indicated that the rumours of the US economic demise were greatly exaggerated, the market immediately moved into ‘good news is bad’ mode, which saw investors ride roughshod over the dovish pivot camp.”

Bets have increased on borrowing costs going higher than five percent next year — from the current 3.75 to 4.0 percent — before the bank takes a break, with no cuts seen until 2024.

All three main indexes on Wall Street lost more than one percent and Asia fluctuated in early trade.

Hong Kong swung between gains and losses, having soared around 15 percent over the past week on China’s easing of strict Covid containment measures.

Shanghai inched up along with Tokyo and Manila. But Sydney, Seoul, Singapore, Wellington, Taipei and Jakarta were in the red.

The dollar dipped slightly but held most of the gains made Monday after the services data release.

The mood in Asia remains largely positive owing to the prospect of China rolling back some of the harsh measures that have been in place for almost three years and have hammered the giant economy.

But analysts said the country would not likely see a complete end to the zero-Covid policy for several months.

Oil prices climbed around one percent Tuesday, having dropped heavily the two previous days, on expectations that a reopening will boost demand in the world’s biggest importer of the commodity.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.3 percent at 27,902.11 (break)

Hong Kong – Hang Seng Index: DOWN 0.1 percent at 19,495.73

Shanghai – Composite: UP 0.3 percent at 3,220.21

Euro/dollar: UP at $1.0511 from $1.0495 on Monday

Dollar/yen: DOWN at 136.58 yen from 136.78 yen

Pound/dollar: UP at $1.2211 from $1.2186

Euro/pound: UP at 86.08 pence from 86.06 pence

West Texas Intermediate: UP 1.0 percent at $77.72 per barrel

Brent North Sea crude: UP 1.0 percent at $83.50 per barrel

New York – Dow: DOWN 1.4  percent at 33,947.10 (close)

London – FTSE 100: UP 0.2 percent at 7,567.54 (close)

Ukraine worked to restore power on Tuesday after Russia’s latest wave of missile strikes caused power disruptions across the country, right as winter frost builds and temperatures plunge.

Out of the 70 missiles launched by Moscow, “most” were shot down, President Volodymyr Zelensky said, but the barrage still hit Ukraine’s already battered infrastructure. 

Fresh power cuts were announced in all regions “due to the consequences of shelling,” national electricity provider Ukrenergo said on Telegram.

The head of Ukrenergo said he had “no doubt that Russian military consulted with Russian power engineers during this attack”, judging by where the missiles landed. 

“The time that Russians chose for this attack was connected with their desire to inflict as much damage as possible,” Volodymyr Kudrytskyi told a Ukrainian news programme, explaining the attacks were launched as the country enters a “peak frost” period.

“Our repairmen will be working on the energy system restoration.”

Nearly half of Ukraine’s energy system has already been damaged after months of strikes on power infrastructure, leaving people in the cold and dark for hours at a time as outdoor temperatures drop below zero degrees Celsius (32 degrees Fahrenheit).

As missiles rained down on Kyiv, UN rights chief Volker Turk — who arrived over the weekend on a four-day visit — had to move his meetings with activists into an underground shelter. 

Zelensky announced in his nightly address that four were killed in Russia’s strikes.

But “our people never give up,” the president said in a video statement. 

Moscow in turn blamed Ukraine for drone attacks in Russia’s Saratov and Ryazan regions which caused explosions at two of its airfields and killed three soldiers.

At the same time, it confirmed a “massive attack on Ukrainian military command systems and related defence, communications, energy and military facilities”.

– Moscow vows to keep fighting –

The attacks come just after Russia shrugged off a Western-imposed price cap on its oil exports, warning the move would not impact its military campaign in Ukraine.

The $60-per-barrel cap agreed by the European Union, G7 and Australia aims to restrict Russia’s revenue while making sure Moscow keeps supplying the global market.

“Russia’s economy has all the necessary potential to fully meet the needs and requirements of the special military operation,” Kremlin spokesman Dmitry Peskov told reporters, using Moscow’s term for its Ukraine offensive.

“These measures will not affect this,” he said.

Russia “will not recognise” the measures, which amounted to “a step towards destabilising the global energy markets”, he added.

The market price of a barrel of Russian Urals crude is currently around $65 dollars, just slightly higher than the $60 cap — suggesting the measure may have only a limited impact in the short term.

The cap is the latest in a number of measures spearheaded by Western countries and introduced against Russia — the world’s second-largest crude oil exporter — after Moscow sent troops into Ukraine over nine months ago.

It comes on top of an EU embargo on seaborne deliveries of Russian crude oil that came into force on Monday.

The embargo will prevent maritime shipments of Russian crude to the European Union, which account for two-thirds of the bloc’s oil imports from Russia, potentially depriving Moscow of billions of euros.

Kyiv had initially welcomed the price ceiling, but later said it would not do enough damage to Russia’s economy. 

Meanwhile, Russian state media released footage of President Vladimir Putin driving a Mercedes car across the Crimea bridge — the closest the 70-year-old leader has come to the frontline in Ukraine.

The bridge connects the annexed peninsula to the Russian mainland, and was damaged in a blast in October.

– ‘Impossible to prepare’ –

The G7 nations — Britain, Canada, France, Germany, Italy, Japan and the United States — along with Australia have said they are prepared to adjust the price ceiling of oil if necessary.

In recent months, gas prices have skyrocketed since Moscow halted deliveries to the EU in suspected retaliation for Western sanctions and the bloc struggled to find alternative energy suppliers.

In the Ukrainian town of Borodianka, outside Kyiv, where snow has already coated the ground, locals recently gathered around wood-fired stoves inside tents to keep warm and cook food during the blackouts. 

“We are totally dependent on electricity… One day we had no electricity for 16 hours,” Irina, who had come to the tent with her child, told AFP. 

Volunteer Oleg said it was hard to say how Ukraine would manage in the coming winter months. 

“It is impossible to prepare for this winter because no one has lived in these conditions before,” he said.