Chinese Business

Thousands have braved freezing temperatures in Mongolia’s capital to protest alleged corruption in the country’s coal industry and soaring inflation.

Protesters, many of them young people, rallied in Ulaanbaatar’s Sukhbaatar Square — home to the Government Palace — in minus 21 degrees Celsius (minus six degrees Fahrenheit) on Monday, demanding “justice” against corrupt officials and for the country’s parliament to be dismissed.

“Help us our country is collapsing,” read one protester’s sign.

Two herders told AFP they had travelled to the capital to join the protests.

“Basically doing nothing is not right. I think it is right that young people are angry,” Enkh Amidral, a father of three, told AFP, saying he wanted the government to “punish the thieves”.

“They seem to forget what they promised us — they promised us a better life. They are supposed to make things better,” a female student who gave her name as Bayarmaa said.

“But they aren’t doing anything, taking our money, filling their own bellies,” she added.

Police urged the crowds to disperse by 9 pm local time (1300 GMT) as the mood turned tense and scuffles broke out with demonstrators.

Protesters are frustrated with the country’s ailing economy, with inflation soaring to 15.2 percent in the wake of Russia’s invasion of Ukraine.

But public outrage has also been stoked by whistleblower claims that a so-called “coal faction” of lawmakers with ties to the industry has stolen billions of dollars worth of the sedimentary rock.

In mid-November, Mongolia’s anti-corruption authority announced that over 30 officials — including the CEO of the state-owned coal mining company Erdenes Tavan Tolgoi — were under investigation for embezzlement.

The firm controls the Erdenes Tavan Tolgoi deposits, which contain 7.5 billion tons of coking coal — an essential ingredient in the steel-making process — and represent a key component of Mongolia’s state budget revenue. It is yet to comment on the allegations.

The implicated lawmakers are alleged to have leveraged their ownership of coal mines and transportation companies that move the fossil fuel across the border into China to make illegal profits.

“6.4 million tons coal is not registered by Mongolian customs officials but recorded by Chinese customs, since 2013,” Dorjhand Togmid, an MP, told a press conference at the parliament in November.

Whistleblowers have also alleged that corrupt customs officials did not register coal-loaded trucks as importing goods, but instead as regular passenger vehicles, when they crossed the border to China.

Mongolia sends 86 percent of its exports to China, with coal accounting for more than half the total, and is upgrading its infrastructure in the hopes of selling even more to its southern neighbour.

Mining makes up a quarter of Mongolia’s gross domestic product.

Monday’s rally came a day after several hundred protesters gathered in the capital, the US embassy in Ulaanbaatar said.

Protesters then attempted to march on Ikh Tenger — the official residence of the President and Prime Minister — “where they were stopped by a police barricade,” it added.

The landlocked country, wedged between China and Russia, has struggled with political instability since it became a democracy. Its first constitution was passed in 1992 after decades of communist rule.

Incumbent President Khurelsukh Ukhnaa was forced to resign as Prime Minister last year after protests and public outrage over the treatment of a Covid-19 patient and her newborn baby.

He was then elected head of state with nearly 70 percent of the vote just months later. 

US stocks fell Monday on worries the Federal Reserve will prolong aggressive policies to counter inflation, while Asian bourses rallied on signs China is pivoting from its zero-tolerance Covid policies.

A survey of US services industry companies showed stronger-than-expected activity in November, following Friday’s employment report which also topped estimates.

The latest economic reports show “some pretty considerable resilience,” said Art Hogan, analyst at B. Riley Financial.

While markets continue to bet on a more modest Fed interest rate hike later this month, traders now see the US central bank lifting its rates to a higher “terminal” level when the cycle of increases is complete, Hogan said.

Major US indices ended decisively in the red following a mixed day in Europe.

Earlier, equity markets in Asia bounced as officials in Beijing and throughout China began easing some pandemic restrictions. Commuters in the Chinese capital were no longer required to show a negative virus test taken within 48 hours to use public transport.

The shift comes after Chinese authorities moved to contain rare public protests over prolonged Covid-19 restrictions.

China’s vast security apparatus has acted swiftly to smother the rallies, deploying a heavy police presence while boosting online censorship and surveillance of the population.

Chinese state media, which previously focused on highlighting the dangers of Covid-19, shifted tone as measures were relaxed.

Authoritative business news outlet Yicai on Sunday quoted an unnamed health expert arguing that officials should dial down strict virus rules.

Anticipation of a recovery in Chinese economic activity initially boosted oil prices on Monday, but crude later pulled back as markets appeared to bet that more restrictive US monetary policy could limit petroleum demand.

The entry into force of a price cap on Russian crude agreed by the EU, G7 and Australia came into force and the weekend decision by OPEC and its Russia-led allies to maintain oil output levels also supported prices.

“From the OPEC+ perspective, it can’t be easy to make reliable forecasts against that (Russia) backdrop and the constantly evolving Covid situation in China, which currently looks far more promising from a demand perspective,” said Craig Erlam, senior market analyst at OANDA trading group.

– Key figures around 2130 GMT –

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

New York – S&P 500: DOWN 1.8 percent at 3,998.84 (close)

New York – Nasdaq: DOWN 1.9 percent at 11,239.94 (close)

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

Frankfurt – DAX: DOWN 0.6 percent at 14,447.61 (close)

Paris – CAC 40: DOWN 0.7 percent at 6,696.96 (close)

EURO STOXX 50: DOWN 0.5 percent at 3,956.53 (close)

Tokyo – Nikkei 225: UP 0.2 percent at 27,820.40 (close)

Hong Kong – Hang Seng Index: UP 4.5 percent at 19,518.29 (close)

Shanghai – Composite: UP 1.8 percent at 3,211.81 (close)

Euro/dollar: DOWN at $1.0495 from $1.0535 on Friday

Dollar/yen: UP at 136.78 yen from 134.31 yen

Pound/dollar: DOWN at $1.2186 from $1.2280

Euro/pound: UP at 86.06 pence from 85.79 pence

Brent North Sea crude: DOWN 3.4 percent at $82.68 per barrel

West Texas Intermediate: DOWN 3.8 percent at $76.93 per barrel

burs-jmb/bys

Ukraine was targeted on Monday by a new wave of fatal Russian missiles, the latest attack to cause massive power disruptions across the country and pile pressure on its embattled critical infrastructure as temperatures plunge.

Moscow in turn blamed Ukraine for drone attacks which caused explosions at two of its airfields, killing three soldiers.

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

While the drone attacks on Russia’s Saratov and Ryazan regions were intercepted, the defence ministry said falling debris had caused the explosions.

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

Fresh power cuts were announced in all regions of Ukraine due to the heavy strikes.

“Due to the consequences of shelling… a regime of emergency shutdowns will be introduced in all regions of Ukraine,” national electricity provider Ukrenergo said on Telegram.  

The head of the central Zaporizhzhia region, Oleksandr Starukh, said Russian missiles on Monday had left two people dead.

Ukrainian President Volodymyr Zelensky said his country’s military had shot down a majority of Russian missiles fired earlier in the day, and engineers had already begun working to restore electricity.

“Our people never give up,” Zelensky said in a video-statement on social media.

Nearly half of Ukraine’s energy system has already been damaged after months of systemic strikes on power infrastructure. 

Ukrainians have frequently been left in the cold and dark for hours at a time when the outdoor temperature has dropped below zero. 

Officials told residents to charge power banks and prepare reserves of water. 

The UN rights chief Volker Turk, who arrived Sunday in Ukraine on a four-day visit, had to move his meetings with activists into an underground shelter in the capital Kyiv as missiles rained down.

– Moscow vows to keep fighting –

As Russia shrugged off the oil price cap, state-run media released footage of President Vladimir Putin driving a Mercedes car across the Crimea bridge that connects the annexed peninsula to the Russian mainland, and was damaged in a blast last month.

The $60-per-barrel price 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 the 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 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.

The measure 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.

The oil price cap aims to ensure that when Russia sells its crude to non-EU countries it is not sold for more than $60 a barrel.

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

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

– ‘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 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 old 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. 

US stocks fell on Monday as resilient economic data fuelled concerns that the Federal Reserve may not be able to relent on interest rate hikes.

Meanwhile, world oil prices rallied more than three percent at one point on more easing of strict Covid containment measures in China which should boost demand, before turning lower as the US dollar pushed higher.

Optimism about the world’s second largest economy reopening for business didn’t carry over to European and US equity markets, where investors remain concerned that the US economy is continuing to overheat.

Friday’s jobs figures showing that the labour market is continuing to create new jobs at a strong pace was joined Monday by data showing that growth in the dominant services sector picked up last month.

That means the Fed still had plenty of work to do to get inflation down to its two-percent target, and upended investors hopes that it might be able to soon stop raising interest rates.

“If incoming data continues to remain favourable, then inflation is likely to persist longer and that may encourage the Fed to be even more reluctant to pause its hiking early in the first half of 2023,” said market analyst Fawad Razaqzada at City Index and FOREX.com.

Investors expect the Fed to hike interest rates 0.5 percentage points next week and had been hoping it might wait a bit to evaluate the impact.

The Dow was down 0.8 percent in late morning trading. 

In Europe, both Frankfurt and Paris ended the day lower, while London squeaked out a marginal gain as metals and mining firms were boosted by the China news.

– Oil jumps, then slides  –

Oil prices jumped as higher demand is expected from China after businesses reopened and testing requirements were relaxed in Beijing and other cities as the country tentatively eases out of a strict zero-Covid policy that sparked nationwide protests.

The entry into force of a price cap on Russian crude agreed by the EU, G7 and Australia came into force and the weekend decision by OPEC and its Russia-led allies to maintain oil output levels also supported prices.

“Uncertainty is coming in waves in energy markets as the choppy tides of supply and demand push up the oil price but keep a lid on big gains,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

The $60-per-barrel price cap aims to restrict Russia’s revenue while making sure Moscow keeps supplying the global market.

“There are expectations that there will be less crude available to buy as the $60 cap on Russia oil takes effect,” Streeter added.

The Kremlin on Monday insisted the cap would not affect Moscow’s military campaign in Ukraine.

“From the OPEC+ perspective, it can’t be easy to make reliable forecasts against that (Russia) backdrop and the constantly evolving Covid situation in China, which currently looks far more promising from a demand perspective,” said Craig Erlam, senior market analyst at OANDA trading group. 

The uncertainty was highlighted as crude gave up its gains as the day wore on and then turned lower. 

But those gains faded as the dollar rose against its main rivals, making purchases of dollar-denominated oil more expensive for consumers.

– Key figures around 1630 GMT –

New York – Dow: DOWN 0.8 percent at 34,161.25 points

EURO STOXX 50: DOWN 0.5 percent at 3,956.53

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

Frankfurt – DAX: DOWN 0.6 percent at 14,447.61 (close)

Paris – CAC 40: DOWN 0.7 percent at 6,696.96 (close)

Tokyo – Nikkei 225: UP 0.2 percent at 27,820.40 (close)

Hong Kong – Hang Seng Index: UP 4.5 percent at 19,518.29 (close)

Shanghai – Composite: UP 1.8 percent at 3,211.81 (close)

Euro/dollar: DOWN at $1.0514 from $1.0531 on Friday

Dollar/yen: UP at 136.43 yen from 134.27 yen

Pound/dollar: DOWN at $1.2188 from $1.2296

Euro/pound: UP at 86.24 pence from 85.73 pence

Brent North Sea crude: DOWN 0.7 percent at $85.01 per barrel

West Texas Intermediate: DOWN 0.9 percent at $79.26 per barrel

burs-rl/kjm

Ukraine was targeted on Monday by a new wave of fatal Russian missiles, the latest attack to disrupt power across the country and pile pressure on its embattled critical infrastructure as temperatures plunge.

The attacks came just after Moscow shrugged off a Western-imposed price cap on its oil exports, warning that the move would not disrupt its military campaign in Ukraine.

Russian state-run media at the same time released footage of President Vladimir Putin driving a Mercedes car across the Crimea bridge that connects the annexed peninsula to the Russian mainland and was damaged in blast last month.

The head of the central Zaporizhzhia region, Oleksandr Starukh, said that Russian missiles had left two people dead. Officials in regions in the east and south announced disruptions to water, electrical and heating services.

“There are already strikes on energy infrastructure facilities and subsequently emergency power outages,” the national electricity provider Ukrenergo said in a statement.

Officials in the eastern region of Sumy and the southern regions of Odessa and Mykolaiv said residents were being subjected to disruptions in water, power or heating supplies as a result of the strikes.

Nearly half the country’s energy system has been damaged after months of systemic strikes on power infrastructure. Ukrainians have frequently been left in the cold and dark for hours at a time when the outdoor temperature has dropped below zero. 

“Charge power banks. Prepare reserves of water. And heads of enterprises of all forms of ownership: let people go home,” said the head of Kryvyi Rig military administration, Oleksandr Vilkul.

– Moscow vows to keep fighting –

The $60-per-barrel price 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 the 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” and would “change” oil prices, he added.

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.

The measure 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.

The oil price cap aims to ensure that when Russia sells its crude to non-EU countries, who are not bound by the embargo, it is not sold at a price higher than $60 a barrel.

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

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

– ‘Impossible to prepare’ –

Ukraine’s President Volodymyr Zelensky this weekend described the move as “weak”.

He added that Russia had already caused “huge losses” by “deliberately destabilising” the global energy market.

The G7 nations — Britain, Canada, France, Germany, Italy, Japan and the United States — along with Australia have already said they are prepared to adjust the price ceiling 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 the capital, Kyiv, where snow has already coated the ground, locals recently gathered around old 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. 

World oil prices rallied Monday after more easing of strict Covid containment measures in China and as a price cap on Russian crude agreed by the EU, G7 and Australia came into force.

Main contracts Brent North Sea crude and WTI advanced more than two percent, also after OPEC and its Russia-led allies decided at a weekend meeting to maintain oil output levels.

European and US stock markets traded mostly lower after Friday’s forecast-busting US jobs report that dented hopes that the Federal Reserve would take a softer approach to hiking interest rates in its battle against sky-high inflation.

In currency trading, the dollar was mixed against its main rivals while China’s yuan was among the best performers, breaking below the seven per dollar level for the first time in almost three months.

Higher oil demand is expected from China after businesses reopened and testing requirements were relaxed in Beijing and other cities as the country tentatively eases out of a strict zero-Covid policy that sparked nationwide protests.

It has also seen major cities including Shanghai locked down for months, a decision blamed for a sharp slowdown in economic growth this year that sent shudders through financial markets.

“Uncertainty is coming in waves in energy markets as the choppy tides of supply and demand push up the oil price but keep a lid on big gains,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“There are expectations that there will be less crude available to buy as the $60 cap on Russia oil takes effect.”

– Russia shrugs it off –

The Kremlin on Monday insisted the cap would not affect Moscow’s military campaign in Ukraine.

The $60-per-barrel price cap aims to restrict Russia’s revenue while making sure Moscow keeps supplying the global market.

“From the OPEC+ perspective, it can’t be easy to make reliable forecasts against that (Russia) backdrop and the constantly evolving Covid situation in China, which currently looks far more promising from a demand perspective,” said Craig Erlam, senior market analyst at OANDA trading group. 

Major oil-producing countries led by Saudi Arabia and Russia on Sunday agreed to maintain their current output levels in a climate of uncertainty.

The prospect of China, the world’s number-two economy, kicking back into gear helped traders overcome data on Friday showing far more jobs than expected were created in the United States in November.

A big jump in wages added to concerns that the economy remained hot, meaning the Fed still had plenty of work to do to get inflation down to its two percent target.

– Key figures around 1430 GMT –

Brent North Sea crude: UP 2.6 percent at $87.81 per barrel

West Texas Intermediate: UP 2.8 percent at $82.25 per barrel

London – FTSE 100: UP 0.4 percent at 7,586.67 points

Frankfurt – DAX: DOWN 0.7 percent at 14,432.17

Paris – CAC 40: DOWN 0.7 percent at 6,694.95

EURO STOXX 50: DOWN 0.5 percent at 3,957.89

New York – Dow: DOWN 0.6 percent at 34,208.87

Tokyo – Nikkei 225: UP 0.2 percent at 27,820.40 (close)

Hong Kong – Hang Seng Index: UP 4.5 percent at 19,518.29 (close)

Shanghai – Composite: UP 1.8 percent at 3,211.81 (close)

Euro/dollar: UP at $1.0562 from $1.0531 on Friday

Dollar/yen: UP at 135.82 yen from 134.27 yen

Pound/dollar: DOWN at $1.2248 from $1.2296

Euro/pound: UP at 86.19 pence from 85.73 pence

burs-rl/lth

Russia shrugged off a Western-imposed price cap on its oil exports on Monday, warning that it would not disrupt its military campaign in Ukraine.

The $60-per-barrel price 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 the Ukraine offensive.

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

Russia, he added, “will not recognise” the measures, adding that they amounted “a step towards destabilising the global energy markets” and that they would “change” oil prices.

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.

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

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

– Not enough –

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

Kyiv, after initially welcoming the price ceiling, later warned it would not do enough damage to Russia’s economy. 

Ukraine’s President Volodymyr Zelensky this weekend described the move as “weak”.

He added that Russia had already caused “huge losses” by “deliberately destabilising” the global energy market.

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

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

Ukraine too is suffering an energy crisis following weeks of systematic Russian strikes on its energy grid, which have led to emergency power cuts.

Nearly half of the country’s energy system has been damaged and Ukrainians are frequently left in the cold and dark for hours at a time with temperatures outside dropping below freezing. 

In the town of Borodianka outside the capital Kyiv, where snow has already coated the ground, locals gather around old 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. 

World oil prices rallied Monday after more easing of strict Covid containment measures in China and as a price cap on Russian crude agreed by the EU, G7 and Australia came into force.

Main contracts Brent North Sea crude and WTI advanced more than 2.5 percent, also after OPEC and its Russia-led allies decided at a weekend meeting to maintain oil output levels.

Stock markets traded mixed after Friday’s forecast-busting US jobs report that dented hopes that the Federal Reserve would take a softer approach to hiking interest rates in its battle against sky-high inflation.

In currency trading, the dollar was mixed against its main rivals while China’s yuan was among the best performers, breaking below the seven per dollar level for the first time in almost three months.

Higher oil demand is expected from China after businesses reopened and testing requirements were relaxed in Beijing and other cities as the country tentatively eases out of a strict zero-Covid policy that sparked nationwide protests.

It has also seen major cities including Shanghai locked down for months, a decision blamed for a sharp slowdown in economic growth this year that sent shudders through financial markets.

“Uncertainty is coming in waves in energy markets as the choppy tides of supply and demand push up the oil price but keep a lid on big gains,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“There are expectations that there will be less crude available to buy as the $60 cap on Russia oil takes effect.”

The Kremlin on Monday insisted the cap would not affect Moscow’s military campaign in Ukraine.

The $60-per-barrel price cap aims to restrict Russia’s revenue while making sure Moscow keeps supplying the global market.

“From the OPEC+ perspective, it can’t be easy to make reliable forecasts against that (Russia) backdrop and the constantly evolving Covid situation in China, which currently looks far more promising from a demand perspective,” said Craig Erlam, senior market analyst at Oanda trading group. 

Major oil-producing countries led by Saudi Arabia and Russia on Sunday agreed to maintain their current output levels in a climate of uncertainty.

The prospect of China, the world’s number-two economy, kicking back into gear helped traders overcome data on Friday showing far more jobs than expected were created in the United States in November.

A big jump in wages added to concerns that the economy remained hot, meaning the Fed still had plenty of work to do to get inflation down to its two percent target.

– Key figures around 1200 GMT –

Brent North Sea crude: UP 2.6 percent at $87.83 per barrel

West Texas Intermediate: UP 2.8 percent at $82.22 per barrel

London – FTSE 100: UP 0.3 percent at 7,576.49 points

Frankfurt – DAX: DOWN 0.5 percent at 14,462.21

Paris – CAC 40: DOWN 0.3 percent at 6,719.84

EURO STOXX 50: DOWN 0.2 percent at 3,969.40

Tokyo – Nikkei 225: UP 0.2 percent at 27,820.40 (close)

Hong Kong – Hang Seng Index: UP 4.5 percent at 19,518.29 (close)

Shanghai – Composite: UP 1.8 percent at 3,211.81 (close)

New York – Dow: UP 0.1 percent at 34,429.88 (close)

Euro/dollar: UP at $1.0570 from $1.0531 on Friday

Dollar/yen: UP at 135.20 yen from 134.27 yen

Pound/dollar: DOWN at $1.2284 from $1.2296

Euro/pound: UP at 86.00 pence from 85.73 pence

burs-bcp/rl

Taiwanese tech giant and key Apple supplier Foxconn said Monday it was hiring new workers and moving towards “restoring production capacity to normal” following violent clashes at its central China plant last month.

Foxconn, also known by its official name Hon Hai Precision Industry, is the world’s biggest contract electronics manufacturer and assembles gadgets for many international brands.

Most of its factories are in China including the eastern city of Zhengzhou, where lockdowns were imposed last month as part of Beijing’s zero-Covid policy after a spike in infections.

Violent protests by workers subsequently erupted over salaries and conditions at the plant, which Foxconn later blamed on a “technical error” in its payment systems.

Hundreds of workers marched in Zhengzhou — dubbed “iPhone City” as the home of the world’s biggest factory for the smartphone — with some clashing with riot police and health personnel in hazmat suits.

Foxconn said in a statement Monday that it was working with the local government to ensure safe production and “making every effort to protect” the rights and interests of employees.

“At present, the overall epidemic situation has been brought under control, with November the most affected period,” it said.

It reported revenue in that month fell 11.4 percent on-year and 29 percent from October.

“In addition to re-allocating production capacity to different factories, we have also started to recruit new employees, and are gradually moving towards the direction of restoring production capacity to normal.”

The company said the outlook for the final three months of the year was expected to be “roughly in line with market consensus” but did not give figures.

Foxconn earlier said it was revising down its outlook for the last quarter. Some analysts have predicted sales could drop as much as 20 percent.

Testing requirements were relaxed in Beijing and other Chinese cities including Zhengzhou on Monday as the country tentatively eases out of its zero-Covid policy, which has sparked protests across the nation.

The price cap on Russian oil agreed by the EU, G7 and Australia came into force on Monday. It aims to restrict Russia’s revenue as punishment for its invasion of Ukraine, while making sure Moscow keeps supplying the global market.

Kremlin spokesman Dmitry Peskov said on Monday the measure would contribute to a destabilisation of world energy markets and would not affect Russia’s military campaign in Ukraine.

– Embargo and cap – 

The cap took effect alongside an EU embargo on maritime deliveries of Russian crude oil, which comes several months after an embargo imposed by the United States and Canada.

Russia is the world’s second-largest crude exporter and without the cap it would be easy to find new buyers at market prices.

The measure means only oil sold at a price equal to or less than $60 per barrel can continue to be delivered.

Companies based in the EU, G7 countries and Australia will be banned from providing services enabling maritime transport, such as insurance, with oil above that price.

The G7 nations — Canada, France, Germany, Italy, Japan, Britain and the United States — provide insurance services for 90 percent of the world’s cargo and the EU is a major player in sea freight.

This means they should be able to pass on the cap to the majority of Russia’s customers around the world, making for a credible price cap.

There is a transition period, and the cap will not apply to cargoes loaded before December 5, and a further cap on oil products will come into effect on February 5.

– Market impact –

The West has adopted the cap of $60, well above the current cost of producing oil in Russia, so Moscow will have an incentive to continue pumping crude. Russia will continue to earn revenue, even if it is reduced.

“Russia must retain an interest in selling its oil” or risk reducing global supply and causing prices to soar, said one European official, who did not believe the Kremlin’s threats to stop deliveries to countries complying with the cap.

The official said Russia would remain concerned about maintaining the state of its infrastructure, which would be damaged if production is halted, and keeping the confidence of its customers, including China and India.

Experts are worried about a leap into the unknown and keeping a close eye on the reaction of the 23-nation OPEC+ group of oil-producing countries led by Saudi Arabia and Russia.

“We will sell oil and oil products to countries that will work with us on market terms, even if we have to reduce production somewhat,” Russia’s Deputy Prime Minister Alexander Novak said after an OPEC+ videoconference on Sunday.

“We are currently working on mechanisms to prohibit the use of the price cap tool at any level,” Novak added, warning that the cap can only cause “further market destabilisation”.

But Brussels insists the cap will help stabilise the markets and “directly benefit emerging economies and developing countries”, which will be able to get hold of Russian crude at a lower cost.

The market price of a barrel of Russian Urals crude is currently hovering around $65 dollars a barrel, suggesting the measure may have only a limited impact in the short term.

Ukraine said the cap should have been set even lower, arguing that $60 is not enough to penalise the Kremlin.

– A revisable cap – 

The cap will be reviewed from mid-January and then every two months, with the option to modify it according to price changes. 

The principle is for the cap to be at least five percent below the average market price.

Any revision would need the agreement of the G7, Australia and the EU.

– Effectiveness –

All countries are invited to formally join the measures. States that do not adopt them can continue to buy Russian oil above the price cap, but without using Western services to acquire, insure or transport it.

“We have clear signals that a number of emerging economies, particularly in Asia, will observe the principles of the cap,” said a European official, adding that Russia is already “under pressure” from its customers to offer discounts.

It would be very complicated to find alternatives for services provided by European companies, which dominate tanker transport and insurance, the official said. Improvised substitutes, including insurance for oil spills, would be “extremely risky”, he said.

– Risks – 

Each EU and G7 state will have to monitor companies based in its territory.

If a ship flying the flag of a third country is identified carrying Russian oil at a price above the cap, Western operators will be banned from insuring and financing it for 90 days.

While Russia could be tempted to create its own fleet of tankers, operating and insuring them itself, Brussels believes “building a maritime ecosystem overnight will be very complicated” — and such make-do measures could have trouble convincing customers.