US Business

US likely to avoid recession, but rates need to climb: Fed official

The US economy will slow this year as intended and is expected to avoid a downturn, but the Federal Reserve will have to raise borrowing rates quickly, a top central bank official said Tuesday.

“Recession is not my base case right now. I think the economy is strong,” New York Fed President John Williams said on CNBC.

But he said policymakers need to hike rates “expeditiously” to tamp down inflationary pressures and get the key policy interest rate to 3.0-3.5 percent by later this year.

With American families struggling in the face of soaring gas and food prices, the Fed has shifted into high gear, implementing the biggest rate hike in nearly 30 years earlier this month to try to cool the economy and rein in inflation.

The Fed since March has raised the benchmark borrowing rate 1.5 percentage points, from zero where it had been since the start of the Covid-19 pandemic, and is expected to announce another three-quarter-point increase at its July policy meeting, with further hikes coming.

That has raised fears the campaign to quell the highest inflation in four decades will tumble the world’s largest economy into recession.

But Williams echoed the cautiously optimistic view of Fed chief Jerome Powell, saying there is a path forward that avoids a contraction.

“I’m expecting growth to slow this year quite a bit relative to what we had last year,” with GDP expanding by 1.0 to 1.5 percent, he said.

“It’s not a recession, it’s a slowdown that we need to see in the economy to reduce the inflationary pressures and bring inflation down.”

The Russian invasion of Ukraine has been a major factor contributing to rising food and oil prices worldwide, and Williams noted that the main risks to the US economy “are coming from abroad.”

He said it was “perfectly reasonable” to expect the Fed to raise the policy rate to 3.5-4.0 percent next year, but that the final path will depend on the economic data.

“We need to raise interest rates quite a bit this year and into next year,” he said. “We’ve got to get interest rates higher and we have to do that expeditiously.”

Stocks bounce as China eases quarantine measures

Stock markets climbed Tuesday and oil prices rallied further as China slashed the quarantine time for visitors, fuelling hopes of recovery for the world’s second largest economy.

The news came as Beijing and Shanghai appeared to have contained a Covid outbreak that had forced officials to impose lockdowns that compounded global supply chain snarls, further pushing up inflation.

Authorities said inbound travellers would have to quarantine for only 10 days instead of three weeks.

The news boosted share prices, already striving to rebound from recent sharp losses triggered by fears of a global recession.

“The Covid crisis appears to be rapidly retreating in China,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“The prospects of rapid recovery for the world’s second largest economy is helping lift miners, as metals prices rise in expectation of a surge in demand in the commodity-hungry economy.”

At the same time, G7 leaders meeting in Germany condemned China’s “non-transparent and market-distorting” international trade practices in an end-of-summit statement that hit out directly at Beijing for the first time.

Traders also digested comments from European Central Bank President Christine Lagarde, who said the ECB would go “as far as necessary” to fight inflation that is set to remain “undesirably high”.

Ben Laidler, a global markets strategist at online trading platform eToro, said current economic weakness had been largely factored in by dealers.

“Much is already discounted by markets, which may be in ‘bad news is good news’ mode, as a slowdown cools inflation and interest rate fears,” he said.

Global equity markets are recovering ground as investors believe central banks could decide to raise interest rates by more modest amounts than previously thought.

The US Federal Reserve and its peers are hiking borrowing costs in an attempt to cool inflation, which has soared around the world to the highest levels in decades.

However, such action has increased the prospect of a global recession, causing economists to think that future rate hikes could be less steep than in recent months.

“Wall Street seems to be close to figuring out how high central banks may take rates over in the short-term and that is supportive for long-term investors to scale into positions,” said market analyst Edward Moya at OANDA trading platform. 

Wall Street stocks opened higher, with the Dow adding 0.6 percent.

Europe’s main indices were higher in afternoon trading, with London and Paris both rising 1.1 percent, while Frankfurt added 0.8 percent.

Asian markets closed higher.

– Oil jumps as G7 targets Russia –

Oil prices, a major driver of the soaring inflation, rose on fears of further supply tightening, in addition to prospects for higher Chinese demand.

This comes after G7 leaders agreed to work on a price cap for Russian oil, a US official said Tuesday, as part of efforts to cut the Kremlin’s revenues.

International sanctions placed on Russia following its invasion of Ukraine are taking their toll.

Moody’s ratings agency has confirmed that Russia defaulted on its foreign debt for the first time in a century, after bond holders did not receive $100 million in interest payments.

– Key figures at around 1330 GMT –

London – FTSE 100: UP 1.1 percent at 7,336.93 points

Frankfurt – DAX: UP 0.8 percent at 13,292.26

Paris – CAC 40: UP 1.1 percent at 6,115.94

EURO STOXX 50: UP 0.6 percent at 3,519.16

New York – Dow: UP 0.6 percent at 31,636.49

Tokyo – Nikkei 225: UP 0.7 percent at 27,049.47 (close)

Hong Kong – Hang Seng Index: UP 0.9 percent at 22,418.97 (close)

Shanghai – Composite: UP 0.9 percent at 3,409.21 (close)

Brent North Sea crude: UP 1.4 percent at $112.57 per barrel

West Texas Intermediate: UP 1.1 percent at $110.77 per barrel

Euro/dollar: DOWN at $1.0533 from $1.0583 Monday

Pound/dollar: DOWN at $1.2219 from $1.2268

Euro/pound: DOWN at 86.20 pence from 86.24 pence

Dollar/yen: UP at 136.19 yen from 135.48 yen

burs-rl/lth

US Capitol assault panel to hear from key White House aide

A former top White House aide with unique access to Donald Trump and inner workings of the West Wing was expected to testify publicly Tuesday before the committee probing the attack on the US Capitol.

Cassidy Hutchinson, an executive assistant to Trump’s chief of staff Mark Meadows, was a central figure in the White House around the period of the insurrection on January 6 last year.

She has already been the source of several blockbuster revelations, appearing in videotaped depositions at two previous hearings and memorably naming a group of House Republicans who sought pardons from Trump following the violence.

She was also in contact with officials in the battleground state of Georgia, where Trump infamously pressured officials to “find” enough votes to overcome Joe Biden’s victory margin in a phone call that is the subject of a criminal probe.

Hutchinson testified behind closed doors in February, March and May, revealing she saw Meadows incinerate documents in his office after meeting a Republican congressman implicated in the plot to overturn the election.

The lawmaker, Scott Perry, was pivotal in Trump’s failed effort to install his own pliant attorney general as part of a plan to co-opt the Justice Department into his scheme to cling to power.

It was Hutchinson, according to CNN, who told the select committee that Trump voiced approval for the “hang Mike Pence” chants from rioters at the Capitol — an allegation that was among the many eye-popping claims to come out of the opening hearing on June 9.

Hutchinson also testified that she remembered a Secret Service agent informing Meadows of intelligence reports saying there could potentially be violence on January 6.

– ‘Public spirit’ –

“I don’t know what Cassidy Hutchinson will say today,” conservative political commentator Bill Kristol, a founder of the advocacy group Defending Democracy Together, posted on Twitter. 

“But by agreeing to step forward and testify under oath, this young woman is showing far more public spirit, integrity and courage than many of her well-established elders who have chosen a far easier and less honorable path.”

Meadows himself has refused to testify before the panel since handing over thousands of text messages and other documents in the early stages of the investigation.

The House of Representatives held Meadows in contempt in December but the Justice Department decided not to charge him.

The announcement of Tuesday’s hearing with less than 24 hours’ notice raised eyebrows across Washington, since the committee had said it was pushing the rest of its hearings to July and perhaps beyond.

The panel revealed the about-face in a brief release which didn’t mention the purpose of the hearing or reveal who would appear, simply saying it would “present recently obtained evidence and receive witness testimony.”

The reason for the change of plan remained a mystery hours ahead of Hutchison’s appearance, although US media reported she had become more cooperative since changing lawyers earlier this month.

Congressional media outlet Punchbowl reported that there had been “sincere concerns” about Hutchinson’s safety because of what she knows and has already revealed.

The committee did not say if there would be more than one witness and Washington insiders speculated that documentary filmmaker Alex Holder’s footage of Trump and his family could also figure.

Meanwhile, Trump lawyer John Eastman, the architect of the former president’s scheme to overturn the election, revealed in a court filing Monday that the FBI had seized his cell phone. 

He said he was confronted by FBI agents as he was leaving a restaurant and called for a judge to have his phone returned.

About 50 migrants dead in 'horrific' truck tragedy in Texas

US police Tuesday were investigating the grim discovery of about 50 bodies in and around a trailer truck abandoned in sweltering heat near the Texas city of San Antonio, with victims identified as from Mexico, Guatemala and Honduras.

The shocking finding was one of the worst disasters involving migrants in the United States in recent years — and came five years after a similar deadly incident in the same Texas city, a few hours from the Mexican border.

The White House — facing intense pressure over its immigration policies — called the tragedy “absolutely horrific and heartbreaking,” and said President Joe Biden, flying to a NATO summit in Madrid, has been briefed on the incident.

San Antonio Fire Chief Charles Hood told reporters that at least 46 victims had died and 16 people had been transported to the hospital alive and conscious — 12 adults and four children.

Early Tuesday, Mexican President Andres Manuel Lopez Obrador said the toll had reached 50, mostly from Latin American nations including Mexico.

“It’s a tremendous misfortune… so far there are 50 dead: 22 from Mexico, seven from Guatemala, two from Honduras and 19 still without information about their nationality,” the Mexican leader said at a morning press conference.

US officials said three people were in custody over the incident.

Hood, the fire chief, said survivors had suffered heat stroke and heat exhaustion, and that there were no signs of water in the truck.

“It was a refrigerated tractor-trailer but there was no visible working A/C unit on that rig,” Hood said.

– ‘Desperation of migrants’ –

San Antonio, which lies about 250 kilometers (150 miles) from the border, is a major transit route for people smugglers.

It has also been gripped by a record-breaking heat wave, and temperatures in the area hit 103 degrees Fahrenheit (39.5 degrees Celsius) on Monday.

The US Customs and Border Protection agency director, Chris Magnus said he was “horrified” at the deaths near San Antonio.

“This speaks to the desperation of migrants who would put their lives in the hands of callous human smugglers who show no regard for human life,” he added on Twitter.

The vehicle was found near Highway I-35, a major US artery that stretches to the Mexican border.

According to San Antonio police chief William McManus, authorities were first alerted by an emergency call at about 5:50 pm local time (2250 GMT).

“A worker who works in one of the buildings up here behind me heard a cry for help,” he told reporters. 

“(He) came out to investigate, found a trailer with the doors partially open, opened them up to take a look, and found a number of deceased individuals inside.”

– Migration politics –

Texas Governor Greg Abbott, a Republican who advocates a tough line on immigration, quickly hit out at Biden over the disaster — blaming the Democrat’s “deadly open border policies.”

“These deaths are on Biden,” Abbott tweeted. “They show the deadly consequences of his refusal to enforce the law.”

San Antonio was the site of a similar migrant tragedy in 2017, when 10 people suffocated to death in a sweltering trailer with broken air conditioning and clogged ventilation holes.

The truck driver later pleaded guilty to charges related to the deaths.

In Geneva, the United Nations’ human rights office said it was “deeply disturbed” by the incident.

“This is not the first such tragedy, and it illustrates again the critical need for regular safe pathways for migration as well as for accountability for those persons whose conduct has directly led to such loss of life,” said spokeswoman Ravina Shamdasani.

Erdogan to meet Biden for crunch NATO expansion talks

Turkish President Recep Tayyip Erdogan said on Tuesday he would meet US President Joe Biden on the sidelines of the NATO summit in Madrid for talks on Russia’s invasion of Ukraine and the bloc’s expansion into two Nordic states.

Analysts believe the meeting could play a crucial role in breaking down Turkey’s resistance to bids by Sweden and Finland to join the Western defence alliance in response to the war.

The two leaders have had a chilly relationship since Biden’s election because of US concerns about human rights under Erdogan.

Biden and Erdogan last met briefly in October on the sidelines of a G20 summit in Rome.

“We spoke with Mr Biden this morning and he expressed his desire to get together tonight or tomorrow. We said it was possible,” Erdogan said.

He was speaking to reporters before flying to Madrid for talks that will start with his meeting with the leaders of the two Nordic countries and the NATO secretary general.

Erdogan said he wanted to see the results of preparatory talks held on Monday in Brussels before deciding whether Sweden and Finland had done enough to lift his objections to their membership of the military alliance.

Turkey is a NATO member and could veto both countries’ applications at the summit.

“We are a 70-year-old member of NATO. Turkey is not a country that randomly joined NATO,” Erdogan said.

“We will see what point they (Finland and Sweden) have reached,” he added. “We do not want empty words. We want results.”

– ‘Open mind’ –

Ankara has accused Finland and more particularly Sweden of offering a safe haven to Kurdish militants who have been been waging decades-long insurgency against the Turkish state.

The Turkish leader has also called on the two countries to lift arms embargoes imposed on Turkey in 2019 over Ankara’s military offensive in Syria.

The two countries went into the NATO meeting open to the possibility that Turkey might only lift its objections after the summit concludes on Thursday.

“We have made progress. That is definitely the case,” said Swedish Foreign Minister Ann Linde.

“We are prepared for something positive to happen today, but also for it to take more time,” she added. “We must be patient and continue discussions even after the summit.”

Finnish President Sauli Niinisto said that he was neither “optimistic nor pessimistic at this stage”.

“We will go into this afternoon’s discussion with Erdogan with an open mind,” he told Finnish media.

– Fighter jet talks –

Erdogan’s ability to maintain a close working relationship with Russian President Vladimir Putin while supporting Ukraine’s war effort has made him an important player in the conflict.

But those ties have also complicated his relations with Biden and the NATO bloc.

Washington has sanctioned Ankara for taking delivery of an advanced Russian missile defence system in 2019.

The purchase saw the United States drop Turkey from the F-35 joint strike fighter programme and impose trade restrictions on its military procurement agency.

But Washington has signalled that it may be willing to move past the dispute.

Biden’s administration has dangled the possibility of supplying Ankara with older-generation F-16 jets that could replenish Turkey’s ageing air force fleet.

“The most important issue is the F-16 issue. It is still on the table,” Erdogan said of his upcoming talks with Biden.

Stocks bounce as China eases quarantine measures

Stock markets jumped Tuesday and oil prices rallied further as China slashed the quarantine time for visitors, fuelling hopes of recovery for the world’s second largest economy.

The news came as Beijing and Shanghai appeared to have contained a Covid outbreak that had forced officials to impose lockdowns that compounded global supply chain snarls, further pushing up inflation.

Authorities said inbound travellers would have to quarantine for only 10 days instead of three weeks.

The news boosted share prices, already striving to rebound from recent sharp losses triggered by fears of a global recession.

“The Covid crisis appears to be rapidly retreating in China,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“The prospects of rapid recovery for the world’s second largest economy is helping lift miners, as metals prices rise in expectation of a surge in demand in the commodity-hungry economy.”

At the same time, G7 leaders will condemn China’s “distorting” international trade practices in an end-of-summit statement Tuesday, a senior US official said.

“You’ll see leaders release a collective statement, which is unprecedented in the context of the G7, acknowledging the harms caused by China’s non-transparent, market distorting, industrial directives,” the official told reporters.

Traders digested comments also from European Central Bank boss Christine Lagarde, who said the ECB would go “as far as necessary” to fight inflation that is set to remain “undesirably high”.

Ben Laidler, a global markets strategist at online trading platform eToro, said current economic weakness had been largely factored in by dealers.

“Much is already discounted by markets, which may be in ‘bad news is good news’ mode, as a slowdown cools inflation and interest rate fears,” he said.

Global equity markets are recovering ground as investors believe central banks could decide to raise interest rates by more modest amounts than previously thought.

The US Federal Reserve and its peers are hiking borrowing costs in an attempt to cool inflation, which has soared around the world to the highest levels in decades.

However, such action has increased the prospect of a global recession, causing economists to think that future rate hikes could be less steep than in recent months.

– Oil jumps as G7 targets Russia –

Oil prices, a major driver of the soaring inflation, jumped around two percent Tuesday on fears of further supply tightening, in addition to prospects for higher Chinese demand.

This comes after G7 leaders agreed to work on a price cap for Russian oil, a US official said Tuesday, as part of efforts to cut the Kremlin’s revenues.

International sanctions placed on Russia following its invasion of Ukraine are taking their toll.

Moody’s ratings agency has confirmed that Russia defaulted on its foreign debt for the first time in a century, after bond holders did not receive $100 million in interest payments.

– Key figures at around 1030 GMT –

London – FTSE 100: UP 1.2 percent at 7,246.58 points

Frankfurt – DAX: UP 0.8 percent at 13,286.57

Paris – CAC 40: UP 1.2 percent at 6,121.49

EURO STOXX 50: UP 0.9 percent at 3,569.57

Tokyo – Nikkei 225: UP 0.7 percent at 27,049.47 (close)

Hong Kong – Hang Seng Index: UP 0.9 percent at 22,418.97 (close)

Shanghai – Composite: UP 0.9 percent at 3,409.21 (close)

New York – Dow: DOWN 0.2 percent at 31,438.26 (close)

Brent North Sea crude: UP 2.3 percent at $117.74 per barrel

West Texas Intermediate: UP 1.8 percent at $111.55 per barrel

Euro/dollar: UP at $1.0590 from $1.0583 Monday

Pound/dollar: FLAT at $1.2268

Euro/pound: UP at 86.33 pence from 86.24 pence

Dollar/yen: UP at 136.01 yen from 135.48 yen

46 migrants found dead in trailer truck in Texas

At least 46 migrants were found dead Monday in and around a large trailer truck that was abandoned on the roadside on the outskirts of the Texas city of San Antonio.

The grim discovery was one of the worst disasters involving migrants in the United States in recent years — and came five years after a similar deadly incident in the same central Texas city, a few hours from the Mexican border.

“At this time we have processed approximately 46 bodies that have been triaged and tagged and declared deceased,” San Antonio Fire Chief Charles Hood told reporters.

He said that 16 people had been transported to the hospital alive and conscious — 12 adults and four children.

There were no initial details on the age or nationalities of the deceased.

“The patients that we saw were hot to the touch, they were suffering from heat stroke, heat exhaustion, no signs of water in the vehicle, it was a refrigerated tractor-trailer but there was no visible working A/C unit on that rig,” Hood said.

Officials said three people were in custody over the incident.

“Tonight we are dealing with a horrific human tragedy,” San Antonio Mayor Ron Nirenberg told a press conference.

“So I would urge you all to think compassionately and pray for the deceased, the ailing, the families,” he said.

“And we hope that those responsible for putting these people in such inhumane conditions are prosecuted to the fullest extent of the law.” 

– ‘Alleged human smuggling’ –

San Antonio, which lies about 250 kilometers (150 miles) from the border, is a major transit route for people smugglers.

It has also been gripped by a record-breaking recent heat wave, and temperatures in the area hit 103 degrees Fahrenheit (39.5 degrees Celsius) on Monday. 

The vehicle was found on a road near Highway I-35, a major US artery that stretches all the way to the border with Mexico.

A large-scale emergency operation was underway at the scene involving police, firefighters and ambulances.

According to San Antonio police chief William McManus, authorities were first alerted by an emergency call at about 5:50 pm local time (2250 GMT).

“A worker who works in one of the buildings up here behind me heard a cry for help,” he told reporters. 

“(He) came out to investigate, found a trailer with the doors partially open, opened them up to take a look, and found a number of deceased individuals inside.”

He said the probe had been turned over to the federal Department of Homeland Security (DHS).

In a statement, the DHS said it had initiated an investigation after receiving the call from San Antonio police “regarding an alleged human smuggling event”.

Dozens of emergency responders who had worked at the scene underwent a stress debriefing following the operation.

“We’re not supposed to open up a truck and see stacks of bodies in there, none of us come to work imagining that,” Hood said.

– ‘A better life’ –

Texas Governor Greg Abbott, a Republican who advocates a tough line on immigration, hit out at President Joe Biden over the disaster — blaming the Democrat’s “deadly open border policies.”

“These deaths are on Biden,” Abbott tweeted. “They show the deadly consequences of his refusal to enforce the law.”

Beto O’Rourke, the Democratic party’s candidate to run against Abbott in November, called for “urgent action” following the incident.

“Dismantle human smuggling rings and replace them with expanded avenues for legal migration that reflect our values and meet our country’s needs,” he said.

Mexico’s foreign minister, Marcelo Ebrard, called the incident a “tragedy” and said the Mexican consul was headed to the site. 

Ebrard said the nationalities of the victims were not yet known, but that two Guatemalans were among the survivors.

San Antonio was the site of a similar migrant tragedy in 2017, when 10 people suffocated to death in a sweltering trailer with broken air conditioning and clogged ventilation holes as they traveled into the United States.

Dozens more had been hospitalized with heat stroke and dehydration — with the truck believed to have been holding as many as 200 people, most of whom fled when it stopped in a parking lot. The truck driver later pleaded guilty to charges related to the deaths.

After news broke of Monday’s discovery, the archbishop of San Antonio, Gustavo Garcia-Siller tweeted “Lord have mercy on them. They hoped for a better life.”

“Once again, the lack of courage to deal with immigration reform is killing and destroying lives.”

In Geneva, the United Nations’ human rights office said it was “deeply disturbed” by the incident.

“This is not the first such tragedy, and it illustrates again the critical need for regular safe pathways for migration as well as for accountability for those persons whose conduct has directly led to such loss of life,” said spokeswoman Ravina Shamdasani.

Moody's says Russia defaulted on debt

Moody’s ratings agency has confirmed that Russia defaulted on its foreign debt for the first time in a century, after bond holders did not receive $100 million in interest payments.

The historic default follows a series of unprecedented Western sanctions that have increasingly isolated Russia from the global financial system following its invasion of Ukraine.

Russia lost the last avenue to service its foreign-currency loans after the United States removed an exemption last month that allowed US investors to receive Moscow’s payments.

“On 27 June, holders of Russia’s sovereign debt had not received coupon payments on two eurobonds worth $100 million by the time the 30-calendar-day grace period expired, which we consider an event of default under our definition,” Moody’s said.

Moscow said on Monday there were “no grounds to call this situation a default”, as the payments had not reached creditors due to the “the actions of third parties”.

The Russian authorities insist they have the funds to honour the country’s debt, calling the predicament a “farce” and accusing the West of pushing an “artificial” default.

Moody’s warned that more defaults “are likely”.

Moody’s released an “issuer comment” instead of a formal default declaration, as sanctions bar credit ratings agencies from covering Russia’s sovereign debt.

– ‘Limited’ impact –

The sanctions have included freezing the Russian government’s stockpile of $300 billion in foreign currency reserves held abroad, making it more complicated for Moscow to settle its foreign debts.

After the United States closed the last payment loophole last month, Russia said it would pay debt in rubles that could be converted into foreign currency, using a Russian financial institution as a paying agent.

But Moody’s said it “would likely treat payments in rubles as a default for bonds that do not allow for such redenomination in the contractual terms”.

Noting that Moody’s no longer covers Russia, Kremlin spokesman Dmitry Peskov said: “Does this mean that Moody’s restarted the ratings process? The agency must surely explain itself.”

The country last defaulted on its foreign debt in 1918, when Bolshevik revolution leader Vladimir Ilich Lenin refused to recognise the massive debts of the deposed tsar’s regime.

Russia defaulted on domestic debt in 1998 when, due to a drop in commodity prices, it faced a financial squeeze that prevented it from propping up the ruble and paying off debts that accumulated during the first war in Chechnya.

The International Monetary Fund’s number two official, Gita Gopinath, said in March that a Russian default would have “limited” impact on the global financial system.

'Unimaginable': Austria prepares to reopen coal power station

At the Mellach coal power plant in southern Austria, spider webs have taken over the conveyor belts, and plants and flowers have sprung up around the vast lot that once stored coal.

The plant, Austria’s last coal-fuelled power station, was closed in the spring of 2020, but now the government — nervous that Russia may cut its crucial gas deliveries further — has decided to get the site ready again in case it’s needed.

“I never would have imagined that we would restart the factory,” Peter Probst, a 55-year-old welder, told AFP during a visit of the plant.

“It’s really sad to be so dependent on gas,” he added.

Europe had been trying to move away from coal in the fight against climate change.

But as Russia has cut gas deliveries in the wake of sanctions the West has imposed on it for the war in Ukraine, European countries are turning back to coal.

Today, the Mellach plant’s white and red chimney stands out amid fields of corn and pumpkins, the city of Graz in the distance.

Inside, the walls are black, and coal dust clings to the doors and railings.

Some 450,000 tonnes of coal were stored at the plant before its closure as Austria’s conservative-Greens coalition aimed to have all electricity come from renewable resources by 2030.

Site manager Christof Kurzmann-Friedl says the plant operated by supplier Verbund can be ready again in “about four months” — just in time to help tackle any gas shortages in winter.

– ‘Emergency measure’ –

Chancellor Karl Nehammer insisted on Monday that the plant would only go online if necessary, while Austria holds on to its goals to reduce emissions.

“It’s really an emergency measure,” the conservative told foreign correspondents at a briefing.

“It’s really something that shows how extraordinary our times are… We must prepare for any eventuality.”

The 230 megawatt power plant would take over from the nearby gas-fired plant, also operated by Verbund, which currently supplies heating to Graz’s 300,000 inhabitants, according to Kurzmann-Friedl.

He warned, however, that the site must still be readied, hooking up all the equipment again, in addition to hiring qualified personnel and above all finding enough coal. 

Before, the coal mainly came from mines in Poland’s Silesia region, which the Polish government is aiming to shut.

Because coal prices have risen by as much as three times since 2020, the power produced by the plant will also be more expensive, Kurzmann-Friedl said.

Criticism has already flared with the opposition Social Democrats slamming the decision to reactivate the coal plant as “an act of desperation by the Greens”.

“Will the next step be the reactivation of Zwentendorf?” the opposition asked, referring to the country’s only nuclear power plant.

The Alpine nation of nine million people has been fiercely anti-nuclear with an unprecedented vote in 1978 against nuclear energy that prevented the plant from ever opening.

Asian markets bounce as China eases quarantine measures

Most Asian markets reversed early losses Tuesday and oil continued its recent rally after China slashed the quarantine time for visitors, fuelling hope for a boost to the embattled economy.

The news came as Beijing and Shanghai appeared to have contained a Covid outbreak that had forced officials to impose lockdowns which compounded global supply chain snarls.

Authorities said inbound travellers would now only have to quarantine for 10 days, instead of the three weeks that had been in place during the pandemic.

The news provided a much-needed boost to shares, which had mostly been down on renewed concerns about central bank interest rate hikes and soaring inflation.

On Monday the central People’s Bank of China pledged to provide support to the world’s number two economy.

The gains extended a rally enjoyed last week on bets that a possible recession next year could allow finance chiefs to ease up on their monetary tightening campaign.

“This relaxation sends the signal that the economy comes first,” Li Changmin, at Snowball Wealth, said. “It is a sign of the importance of the economy at this point.”

After spending the morning in the red, Hong Kong, Shanghai, Tokyo, Seoul and Wellington turned higher, while there were also gains in Sydney, Manila and Bangkok. Mumbai, Taipei and Jakarta slipped while Singapore was flat.

London, Paris and Frankfurt were all up as traders digest comments from European Central Bank boss Christine Lagarde, who said it would go “as far as necessary” to bring inflation back down to its two percent goal.

However, Huang Yanzhong of the New York-based Council on Foreign Relations warned: “It’s not surprising that China has managed to return to so-called zero, after all the huge effort it’s made.

“But that doesn’t mean it can claim a thorough and durable victory because it didn’t eradicate the virus,” he said. “Unless they thoroughly fence off Beijing and Shanghai, the virus could sneak in anytime.”

– Inflation fears –

Still, while the inflation and rate situation remains a worry, compounded by the war in Ukraine, some commentators remain relatively upbeat as the second half of the year approaches.

Market strategist Louis Navellier said in a note: “While it’s sobering that the first half of the year is the worst since 1970, history also says that when the first half of the year is down at least 15 percent the second half of the year is up every single time with an average return of 24 percent.”

And Ben Laidler, a global markets strategist at eToro, added that a lot of the expected economic weakness had been largely factored in by dealers.

“Much is already discounted by markets, which may be in ‘bad news is good news’ mode, as a slowdown cools inflation and interest rate fears,” he said.

“A ‘less bad’ gradual easing of inflation risks is possible, as is a slowdown — not recession — driving a ‘U-shaped’ rebound. The focus for investors is on cheap and defensive assets while managing rising risks.”

Oil prices surged more than one percent to build on a rally that has seen Brent and WTI pile on more than eight percent since Wednesday. Both main contracts had fallen heavily earlier in the month on recession worries.

The gains have come on the back of a pick-up in demand from China, while supply fears have been raised by political crises in producers Libya and Ecuador.

“The rhetoric around declaring victory in Shanghai over Omicron seems to be prompting Asian traders to continue buying,” said OANDA’s Jeffrey Halley.

Meanwhile, Moody’s ratings agency confirmed Russia had defaulted on foreign debt for the first time in a century after bondholders did not receive $100 million in interest payments.

The missed payments follow a series of Western sanctions that have increasingly isolated Moscow following its invasion of Ukraine.

Russia lost the last avenue to service its foreign-currency loans after the United States removed an exemption last month that allowed US investors to receive Moscow’s payments.

– Key figures at around 0810 GMT –

Tokyo – Nikkei 225: UP 0.7 percent at 27,049.47 (close)

Hong Kong – Hang Seng Index: UP 0.9 percent at 22,418.97 (close)

Shanghai – Composite: UP 0.9 percent at 3,409.21 (close)

London – FTSE 100: UP 0.8 percent at 7,316.77

West Texas Intermediate: UP 1.2 percent at $110.90 per barrel

Brent North Sea crude: UP 1.2 percent at $116.43 per barrel

Dollar/yen: UP at 135.77 yen from 135.48 yen on Monday

Euro/dollar: DOWN at $1.0577 from $1.0583

Pound/dollar: DOWN at $1.2266 from $1.2268

Euro/pound: DOWN at 86.23 pence from 86.24 pence

New York – Dow: DOWN 0.2 percent at 31,438.26 (close)

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