US Business

Major global equities rose Tuesday, with sentiment soothed after a series of upbeat US earnings and Britain shredded its controversial budget.

Analysts pointed to better-than-expected reports from Goldman Sachs and Johnson & Johnson as a positive driver for stocks, along with shifting investor sentiment.

On Wall Street, the Dow Jones jumped two percent at the open after a day of strong trading in Asia and Europe, before paring back gains later in the morning.

Goldman Sachs reported a third-quarter update that topped analyst expectations on strong trading revenues.

The investment bank followed on from positive earnings news from the Bank of America on Monday, days after JPMorgan Chase and others also logged solid numbers.

“Better-than-expected US earnings reports sparked a rally on Wall Street with positive momentum reverberating across European equities,” Interactive Investor analyst Victoria Scholar told AFP.

“Risk appetite is picking up after a volatile week for markets, as corporate results look to be the main driver of price action today.”

US industrial production also picked up more than anticipated in September, according to official data Tuesday, bouncing back after a dip in August.

Analysts remain hopeful that an upbeat third-quarter results season could give a shot in the arm to markets which have been slammed this year on fears over inflation and Federal Reserve interest rate hikes.

But Craig Erlam, senior market analyst at OANDA, warned the upbeat investor sentiment might not last, saying there was a “strong feeling of a bear market rally about trading over the course of the last week.”

“From the post-US-inflation rebound to what has now been a strong start to the week — in part driven by the UK’s decision to no longer shoot itself in the foot — nothing about this screams sustainable.”

– UK turbulence –

Frankfurt stocks closed up one percent on Tuesday as a key survey showed German investor confidence climbed slightly in October, but it still held at a low level.

London gains were muted after the Bank of England poured cold water on a newspaper report that it could delay the sale of government bonds again to help maintain market stability.

A BoE spokesperson described the Financial Times story as “inaccurate”.

The British pound retreated slightly after jumping Monday above $1.14 as the UK government sensationally ripped up its controversial debt-fuelled budget.

After a volatile few weeks during which the pound hit a record low, new finance minister Jeremy Hunt sought Monday to reassure investors as he scrapped tax cuts and warned of tough spending cuts.

Monday’s move, which dealt a blow to Prime Minister Liz Truss’s authority, sent sterling up as much as two percent at one point and the cost of government borrowing tumbled, while the FTSE 100 jumped.

“Investors continue to monitor the political and economic turbulence surrounding the UK,” noted XTB analyst Walid Koudmani.

Markets in China fluctuated a day after authorities delayed the release of third-quarter economic figures, which analysts said were likely to show the weakest growth since the pandemic owing to Covid-19 lockdowns.

The decision comes as the Communist Party holds a key gathering at which President Xi Jinping is expected to be handed a third term.

Oil prices slumped Tuesday in response on the expectation that the US will draw more barrels than expected from its strategic reserves heading into the winter season.

– Key figures around 1540 GMT –

London – FTSE 100: UP 0.2 percent at 6,936.74 points

Frankfurt – DAX: UP 0.9 percent at 12,765.61

Paris – CAC 40: UP 0.4 percent at 6,067.00

EURO STOXX 50: UP 0.6 percent at 3,463.83 

New York – Dow: UP 0.4 percent at 30,302.02

Tokyo – Nikkei 225: UP 1.4 percent at 27,156.14 (close)

Hong Kong – Hang Seng Index: UP 1.8 percent at 16,914.58 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,080.96 (close)

Pound/dollar: DOWN at $1.1295 from $1.1358 on Monday

Dollar/yen: UP at  149.25 yen from 149.04 yen

Euro/dollar: DOWN at $0.9826 from $0.9841 

Euro/pound: UP at 86.99 pence from 86.64 pence

Brent North Sea crude: DOWN 2.73 percent at $89.12 per barrel

West Texas Intermediate: DOWN 3.45 percent at $81.58 per barrel

burs-rox/jmm

Germany’s cybersecurity chief was sacked on Tuesday after a TV satire show accused him of having ties to Russian intelligence services, with the country on high alert over potential sabotage activities by Moscow.

Arne Schoenbohm, head of the Federal Cyber Security Authority (BSI), had been at the centre of intense speculation since the popular show accused him in early October of contacts with Russia.

He has now been relieved of his duties “with immediate effect”, an interior ministry spokesman told AFP on Tuesday, citing “the allegations revealed and widely discussed in the media” as one of the reasons behind the move.

The allegations “have permanently damaged the necessary public trust” in Schoenbohm as head of the authority, the spokesman said. 

“This is all the more true in the current crisis situation regarding Russian hybrid warfare,” he added.

Schoenbohm was accused in the satire show on broadcaster ZDF of contacts with Russian secret services through an association he co-founded in 2012 known as the Cyber Security Council Germany.

One member of that association, Berlin cybersecurity company Protelion, reportedly operated under the name “Infotecs GmbH” until the end of March. 

The report said this was a subsidiary of Russian cybersecurity company OAO Infotecs, founded by a former employee of the Russian KGB intelligence service.

According to other German media reports, Schoenbohm had maintained contact with the Cyber Security Council Germany until recently and the interior ministry had on August 24 approved a request for him to give a speech to the association.

The interior ministry spokesman on Tuesday said all allegations against Schoenbohm would be “thoroughly and emphatically examined and subjected to a detailed evaluation”. 

– ‘Great annoyance’ –

The cybersecurity chief would be “presumed innocent” in the meantime, he said.

The Handelsblatt daily had reported that there was “great annoyance” within the government over the allegations.

A planned joint appearance by Schoenbohm and Interior Minister Nancy Faeser to present a cybersecurity report was cancelled last week. 

Schoenbohm told Spiegel on Tuesday that as he had not heard back over the allegations, he had himself sought disciplinary proceedings to clarify the issue.

He added that he did not know “what the ministry has checked and what are the concrete allegations against me.” 

Germany has in recent years repeatedly accused Russia of online espionage attempts.

The most high-profile incident blamed on Russian hackers to date was a cyberattack in 2015 that paralysed the computer network of the lower house of parliament, the Bundestag, forcing the entire institution offline for days while it was fixed.

Russia denies being behind such actions.

Tensions between Russia and Germany have only intensified since Moscow’s invasion of Ukraine.

The BSI has warned that companies, individuals and critical infrastructure are at risk of being hit by Russian cyberattacks.

Last week, the rail network in the north of the country was temporarily paralysed by what operator Deutsche Bahn called “sabotage”, with some officials pointing the finger at Russia.

Important communications cables were cut at two sites, forcing rail services to be halted for three hours and causing travel chaos for thousands of passengers.

Moscow is also suspected of being behind explosions last month that set off leaks in the Nord Stream 1 and 2 gas pipelines, which connect Russia to Germany.

US labor officials began counting ballots in New York Tuesday in the latest unionization drive at Amazon after workers delivered the retail behemoth a split decision in two earlier votes.

Over the last few days, employees at the ALB1 warehouse near Albany in upstate New York cast ballots in the third vote on a unionization petition by the Amazon Labor Union (ALU).

The National Labor Relations Board (NLRB) said it expects the counting to last several hours, concluding later Tuesday.

The union estimates that 400 hourly workers are eligible to vote. Seasonal employees, information technology employees and truck drivers were among the workers excluded from voting, according to an NLRB email.

Established in 2021 by a small group of current and ex-employees frustrated at Amazon’s workforce policies during the pandemic, ALU scored an upset win in April at the 8,000-employee JFK8 warehouse in Staten Island in New York City.

Led by its president Christian Smalls, a former worker at the Staten Island site, the ALU win gave a jolt to the US organized labor movement after a solid majority voted for representation.

However, just weeks later, the ALU suffered a setback when the LDJ5 warehouse, also in Staten Island, voted against the group.

Amazon has refused to accept the election outcome in the first Staten Island vote, arguing the results should be tossed out in light of alleged improprieties.

Last month, an NLRB official rejected Amazon’s claims as groundless after a 24-day hearing on the e-commerce giant’s claims. 

Thousands of people took to the streets across France on Tuesday and commuters faced delays as unions staged a nationwide strike for higher salaries, as they remain in deadlock with the government over walkouts at oil depots that have sparked fuel shortages.

“It’s a shame it had to come to blockades for something to happen,” said Nadine, a 45-year-old employee in the metalworking industry who was among more than 1,000 demonstrators in Strasbourg, northeast France.

“But today if we don’t block anything, no one listens,” she said.

Among a crowd of some 1,800 marching in the southern city of Montpellier, Magali Mallet, a medical secretary, said she was there because many workers were “living on a knife’s edge”.

A transport walkout did not cause major disruptions nationwide, despite making commuters travelling into the capital from its suburbs late on Tuesday morning.

The broader strike comes after workers at several oil refineries and depots operated by energy giant TotalEnergies voted to extend walkouts.

Their industrial action has seriously disrupted fuel distribution across the country, particularly in northern and central France and the Paris region.

Motorists have scrambled to fill tanks as the fuel strike, which has lasted for nearly three weeks, has had a knock-on effect across all sectors of the economy.

– ‘Serious consequences’ –

Prime Minister Elisabeth Borne said that less than a quarter of petrol stations nationwide were experiencing shortages, down from 30 percent previously.

President Emmanuel Macron’s government used requisitioning powers to force some strikers back to open fuel depots, a move that infuriated unions but has so far been upheld in the courts.

But his government is also pushing bosses to acknowledge salary demands, with Interior Minister Gerald Darmanin saying Tuesday that there was “a salary problem” in France, and urging employers “to increase pay when possible”.

Workers have also been striking in the nuclear power sector, potentially hampering efforts to restart reactors down for maintenance or safety work.

At the northern Gravelines nuclear plant, 32-year-old technician Henia Abidi said she was not usually one to protest.

“But now since it’s about inflation and our salaries, I really feel concerned. I won’t give up,” she said, adding that everything from food to fuel had become expensive.

Power grid operator RTE warned Tuesday that “any extension of the social movement” at the nuclear power stations would have “serious consequences” on electricity provision this winter.

Macron said last week only 30 out of 56 nuclear reactors were online, while the country hoped to have 45 working by January.

But French state energy provider EDF said Saturday it was postponing plans to bring five of the halted reactors back on stream.

The leftist CGT and FO unions called the nationwide strike Tuesday for higher salaries, and against government requisitions of oil installations.

The action is the unions’ biggest challenge to Macron since he won a new presidential term in May.

The Liberation newspaper published a front-page caricature of Macron swept off his feet and clinging on to the edge of a giant megaphone blasting the message of angry protesters.

– Tense autumn? –

Unions in other industries and in the public sector had also announced action to protest against the twin impact of soaring energy prices and overall inflation on the cost of living.

Beyond transport workers, unions had hoped to bring out staff in sectors such as the food industry and healthcare.

The education ministry said less than six percent of its workers had walked out, though that rate reached 23 percent for vocational schools.

Their action will kick off what could be a tense autumn and winter as Macron also seeks to implement his flagship domestic policy of raising the French retirement age.

The economic squeeze partly caused by Russia’s invasion of Ukraine, along with the failure of Macron’s party to secure an overall majority in June legislative polls, only adds to the magnitude of the task.

A poll by the Elabe group found that one in three French people would be prepared to take part in a strike or protest in the coming weeks to demand pay increases as inflation soars. 

sl-burs/ah/js/rox

Britain’s Liz Truss on Tuesday battled to salvage her position as prime minister, after market turmoil at her tax-slashing plans forced a series of humiliating U-turns that have put her job in jeopardy.

The beleaguered leader — only six weeks into her tenure — met senior ministers for their weekly cabinet, the day after new chancellor of the exchequer Jeremy Hunt announced almost all her debt-fuelled tax cuts would be reversed.

Truss reiterated her government “had gone too far and too fast” in its mini-budget unveiled last month, her office said, as she bids to stabilise weeks of economic and political tumult sparked by the package.

Hunt, who replaced her sacked ally Kwasi Kwarteng last Friday, urged ministers “to look at finding ways to save taxpayers’ money,” ahead of detailing the government’s revised medium-term fiscal plans on Halloween.

“The cabinet are fully supportive of the prime minister and it was an effective and in-depth discussion,” Truss’s spokesman told reporters, denying there were any calls for the embattled premier to resign.

But even Conservative MPs are publicly joining opposition lawmakers in declaring her position untenable, with the 47-year-old’s credibility seemingly in tatters.

Less than two months after electing her Tory leader, a new YouGov poll of the party’s membership found a stunning reversal in her fortunes, with a majority now saying she should go.

The pollster also found she was the most unpopular leader it has ever tracked, scoring a net favourability of -70.

“Unprecedented unpopularity,” tweeted YouGov’s Patrick English.

– Spending cuts –

The government’s September 23 mini-budget sent bond yields spiking and the pound collapsing to a record dollar-low on fears of rocketing UK debt.

Truss had already staged two embarrassing U-turns, scrapping tax cuts for the richest earners and on company profits, before then firing close friend Kwarteng.

On Monday, his replacement Hunt announced that not only would the remaining tax curbs be reversed, but a previously two-year cap on consumer energy bills would now be limited to six months.

He estimated all the changes would raise about £32 billion ($36 billion) per year, after economists estimated the government faced a £60-billion black hole. Hunt also warned of tough spending cuts.

His interventions sent the British pound soaring against the dollar and euro, while bond yields dipped.

Truss sought to draw a line under the largely self-inflicted crisis by apologising for the first time in a BBC interview Monday. But she insisted she would remain in office.

It followed a day branded farcical by critics, in which she failed to turn up to an urgent question tabled by the leader of the main Labour opposition in parliament, instead sending cabinet colleague Penny Mordaunt.

After she doggedly defended the prime minister for an hour, Truss then appeared sheepishly to take her place next to Hunt as he announced the dismemberment of her economic agenda. 

She is set to return to the House of Commons on Wednesday for a session of Prime Minister’s Questions seen as a crucial, possibly last, opportunity to reassert her authority.

– ‘Ghost PM’ –

Following Monday’s performance, The Sun tabloid branded Truss “the Ghost PM”, while left-wing tabloid The Mirror called the situation a “catastrophic humiliation”.

Even The Daily Telegraph, typically loyal to Conservatives, questioned her future. 

“It’s hard to conceive of a more serious political and economic crisis in recent times than that which Britain now faces,” its editorial said.

The paper added she faced “the ignominy” of becoming the country’s second shortest-serving prime minister in history, unless her own MPs gave her “breathing space”.

But that appears increasingly unlikely, as reports continue of Tory lawmakers plotting to oust her.

Under current party rules, she cannot be challenged internally through a no-confidence vote in the first year, but speculation is rife they could be changed to allow for a ballot.

Conservative MP Roger Gale said Monday Hunt had become “de facto prime minister”, as several MPs publicly urged her to resign.

“I think her position is untenable,” Conservative MP Charles Walker told Sky News.

“If she doesn’t go right now, it will not be her decision.”

Armed forces minister James Heappey said Tuesday that Truss had “owned” her mistake but cautioned that she could not repeat such errors.

“Given how skittish our politics are… I don’t think that there’s the opportunity to make any more mistakes,” he told Sky News.

Germany’s cybersecurity chief was sacked on Tuesday after a TV satire show accused him of having ties to Russian intelligence services, with the country on high alert over potential sabotage activities by Moscow.

Arne Schoenbohm, head of the Federal Cyber Security Authority (BSI), had been at the centre of intense speculation since the popular show accused him in early October of contacts with Russia.

He has now been relieved of his duties “with immediate effect”, an interior ministry spokesman told AFP on Tuesday, citing “the allegations revealed and widely discussed in the media” as one of the reasons behind the move.

The allegations “have permanently damaged the necessary public trust” in Schoenbohm as head of the authority, the spokesman said. 

“This is all the more true in the current crisis situation regarding Russian hybrid warfare,” he added.

Schoenbohm was accused in the satire show on broadcaster ZDF of contacts with Russian secret services through an association he co-founded in 2012 known as the Cyber Security Council Germany.

One member of that association, Berlin cybersecurity company Protelion, reportedly operated under the name “Infotecs GmbH” until the end of March. 

The report said this was a subsidiary of Russian cybersecurity company OAO Infotecs, founded by a former employee of the Russian KGB intelligence service.

According to other German media reports, Schoenbohm had maintained contact with the Cyber Security Council Germany until recently and the interior ministry had on August 24 approved a request for him to give a speech to the association.

The interior ministry spokesman on Tuesday said all allegations against Schoenbohm would be “thoroughly and emphatically examined and subjected to a detailed evaluation”. 

– ‘Great annoyance’ –

The cybersecurity chief would be “presumed innocent” in the meantime, he said.

The Handelsblatt daily had reported that there was “great annoyance” within the government over the allegations.

A planned joint appearance by Schoenbohm and Interior Minister Nancy Faeser to present a report on German cybersecurity in 2022 was cancelled last week. 

Commenting on the scandal then, Faeser said Germany was “vulnerable” to cyberattacks, “especially due to the threat posed by Russia’s war”.

Europe’s biggest economy has in recent years repeatedly accused Russia of online espionage attempts.

The most high-profile incident blamed on Russian hackers to date was a cyberattack in 2015 that paralysed the computer network of the lower house of parliament, the Bundestag, forcing the entire institution offline for days while it was fixed.

Russia denies being behind such actions.

Tensions between Russia and Germany have only intensified since Moscow’s invasion of Ukraine.

The BSI has warned that companies, individuals and critical infrastructure are at risk of being hit by Russian cyberattacks.

Last week, the rail network in the north of the country was temporarily paralysed by what operator Deutsche Bahn called “sabotage”, with some officials pointing the finger at Russia.

Important communications cables were cut at two sites, forcing rail services to be halted for three hours and causing travel chaos for thousands of passengers.

Moscow is also suspected of being behind explosions last month that set off leaks in the Nord Stream 1 and 2 gas pipelines, which connect Russia to Germany.