World

Bangladesh depot accused over blast that killed at least 49

Bangladesh authorities accused a container depot operator Monday of not telling firefighters about a chemical stockpile before it exploded with devastating consequences, killing at least 49 people — nine of them from the fire service.

The toll from the giant blast, which followed a fire at the B.M Container Depot in Sitakunda and sent fireballs into the sky, was expected to rise further.

Some containers were still smouldering on Monday, more than 36 hours after the explosion, preventing rescuers from checking the area around them for victims.

Around a dozen of the 300 injured were in critical condition, and were flown to the capital Dhaka. 

The nine dead firefighters were the most the department has ever lost in a single incident in the industrial-accident-prone country, where safety standards are lax and corruption often enables them to be ignored.

Two more firefighters are among several people still missing, officials said.

“Never in the history of the fire department, have so many firefighters died,” said Purnachandra Mutsuddi, who led the fire-fighting effort at the 26-acre facility on Saturday night.

“How do you feel when you recover your brothers? No event is as painful as this.”

The depot “didn’t have any fire safety plan”, he told AFP, and it did not inform the firefighters about the chemicals, specifically hydrogen peroxide, stored on site.

“If they did, the casualties would have been much less,” he said.

Mutsuddi, an assistant director of the Chittagong fire station, said that as soon as the firefighters entered the depot on Saturday they unwittingly doused the hydrogen peroxide with water, setting off an explosive reaction that sent “a container flying more than 500 feet”.

“There are some rules to keep hydrogen peroxide. Had we known this, we would never throw water. We would never take our vehicle inside the depot,” he said.

In Chittagong, hundreds of relatives of the missing and the dead queued at a hospital to give DNA samples in an effort to identify the deceased, as most of the fatalities were burned beyond recognition.   

The B.M Container Depot in Sitakunda, an industrial town 40 kilometres (25 miles) from Chittagong Port, is a joint venture between Bangladeshi and Dutch businessmen with around 600 employees, and began operations in 2012.

Its chairman is named on its website as Bert Pronk, a Dutch citizen, but AFP was unable to reach him for comment. Few European businessmen operate in the country.

Local newspapers said another of its owners is a senior official of the ruling Awami League party based in Chittagong, who is also the editor of a local Bengali daily.

Police have yet to lay charges over the fire. “Our investigation is going on. We will look into everything,” said local police chief Abul Kalam Azad.

– ‘Falling like rain’ –

Wisps of smoke rose into the bright morning sky from dozens of twenty-foot containers at the depot on Monday.

“Some 30 to 40 containers are still smouldering,” said fire department inspector Harunur Rashid. “The fire is under control. But the chemicals are the main problems.”

Once the flames are entirely out rescuers will search the area for more victims, he said.

Mujibur Rahman, a director of B.M. Container Depot, said the cause of the initial fire remained unknown.

Witnesses said the entire town shook when the cache of hydrogen peroxide exploded.

“The explosion sent fireballs into the sky,” said Mohammad Ali, 60, who runs a nearby grocery store. “Fireballs were falling like rain. 

“We were so afraid we immediately left our home to find refuge,” he added. “We thought the fire would spread to our locality as it is very densely populated.”

Elias Chowdhury, the chief doctor in Chittagong, said doctors at multiple hospitals had been called back from holidays to help treat the hundreds of injured.

Around 90 percent of Bangladesh’s roughly 100 billion dollars in trade — including clothes for H&M, Walmart and others — passes through the Chittagong port at the top of the Bay of Bengal.

Rakibul Alam Chowdhury, from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said that about 110 million dollars’ worth of garments were destroyed in the fire. 

“It is a huge loss for the industry,” he said.

Markets mixed as US jobs data give Fed room to hike rates

Equity markets were mixed Monday following losses on Wall Street as a forecast-topping US jobs report gave the Federal Reserve room to continue hiking interest rates, while there was some cheer in China as leaders eased Covid curbs.

US traders took flight after the closely watched non-farm payroll figures Friday, which showed a slowdown in hiring but still with more new posts created than expected.

That came as more officials suggested the Federal Reserve could continue lifting borrowing costs sharply as they try to rein in inflation.

However, with prices being driven higher by factors ranging from the Ukraine war to China’s lockdown-induced slowdown, there are fears the bank’s measures could deal a blow to the world’s biggest economy.

The jump in inflation has forced finance chiefs around the world to tighten monetary policy, with the European Central Bank indicating it will raise rates in July for the first time in more than a decade.

“The critical issue for markets is whether inflation can be brought under control by central banks without generating a recession,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note. 

“Shares are likely to see continued short-term volatility as central banks continue to tighten to combat high inflation, the war in Ukraine continues and fears of recession remain.”

All three main indexes on Wall Street ended deep in the red, with tech firms taking most of the pain, though Asia fared a little better Monday.

Hong Kong, Tokyo, Shanghai and Taipei all rose, but there were losses in Sydney, Mumbai, Singapore, Manila, Bangkok and Jakarta.

London, Paris and Frankfurt rose at the open.

Diana Mousina, of AMP Capital, said: “Positive news around Chinese economic activity and cheaper equity valuations could offer value from a long-term investment perspective, but volatility will remain high in the short-term.” 

Traders took some heart from a wind down of Covid containment measures that have crippled the world’s number two economy for months.

With infections trending down in major cities including Shanghai and Beijing, authorities have allowed some sense of normality to return, raising hopes for a pick-up in consumer activity.

“The expectations for economic recovery is rising as Beijing and Shanghai try best to resume work and production,” Meng Shen, of investment bank Chanson & Co, said.

Adding to the upbeat mood were comments from US commerce chief Gina Raimondo that she was considering lifting tariffs on some goods from China to help in the battle against inflation.

Oil prices — a key driver of inflation — continued to rise, as a pledge by OPEC and other major producers to boost output fell short of what markets had hoped for. 

The increase came as Saudi Arabia also said it had hiked the official selling price for customers in Asia, while demand expectations rose on the back of the easing of some Covid lockdown measures in China and the start of the US summer driving season.

– Key figures at around 0720 GMT –

Tokyo – Nikkei 225: UP 0.6 percent at 27,915.89 (close)

Hong Kong – Hang Seng Index: UP 1.5 percent at 21,405.99

Shanghai – Composite: UP 1.3 percent at 3,236.37 (close)

London – FTSE 100: UP 0.9 percent at 7,600.01

Brent North Sea crude: UP 0.7 percent at $120.57 per barrel

West Texas Intermediate: UP 0.7 percent at $119.66 per barrel

Euro/dollar: UP at $1.0723 from $1.0719 on Thursday

Pound/dollar: UP at $1.2527 from $1.2488

Euro/pound: DOWN at 85.60 pence from 85.81 pence

Dollar/yen: DOWN at 130.51 yen from 130.81 yen

New York – Dow: DOWN 1.0 percent to 32,899.7 (close)

— Bloomberg News contributed to this story —

At least 10 killed in four weekend shootings across US

At least 10 people were killed and more than two dozen wounded in four shootings across the United States this weekend, as lawmakers struggle to respond to the country’s long-running epidemic of gun violence.

The shootings came after a spate of mass killings that have sparked renewed calls for reform of the nation’s gun laws.

An eruption of violence in Chattanooga, Tennessee on Sunday resulted in 14 people being shot, including two killed, while another person died and two more were injured after they were struck by vehicles fleeing the scene, police chief Celeste Murphy said, adding “several” victims remained in critical condition.

The pre-dawn incident occurred near a nightclub.

In Philadelphia on Saturday, two men and a woman were killed when multiple people opened fire on a crowd at a popular South Street nightlife area.

Philadelphia Police Commissioner Danielle Outlaw said one of the victims got into a fight with another man, which could have been the cause of the shooting.

The two others were “innocent bystanders,” she told reporters.

In Saginaw, Michigan, three people were killed and two others wounded in a shooting on Sunday, MLive.com and WEYI television reported, citing police.

And in Clarendon County, South Carolina, five teens and a 12-year-old were among seven people wounded in a shooting at a graduation party on Saturday that killed one adult, police said in a statement.

– Cries for action –

Gun attacks are common in America, but the shock felt over recent mass shootings at a grocery store in Buffalo, New York and an elementary school in Uvalde, Texas — which killed 10 and 21 people respectively — have spurred cries for action.

Democratic Senator Chris Murphy has been working with a bipartisan group of senators on reform measures — a heavy lift with Republicans routinely rejecting most forms of gun control.

Senator Murphy said Sunday the group hoped to hammer together a legislative package that draws at least 10 Republican votes on top of expected support from nearly every Democrat.

“I think the possibility of success is better than ever before,” he told CNN. 

The emerging package, he said, would probably include “significant mental health investment, school safety money, and some modest but impactful changes in gun laws,” including an expansion of background checks for gun buyers.

“Congress needs to do their jobs and pass commonsense regulation that will help stop this nonsense,” an angry Chattanooga Mayor Tim Kelly told reporters.

He called for “mandatory background checks and prohibiting high-capacity magazines that allow shooters to hurt dozens of people without even having to reload.” 

In addition to the massacres in Texas and New York, recent weeks have seen mass shootings at a hospital in Oklahoma and a church in California.

While Republicans have successfully blocked most efforts at gun control for years, some have recently spoken out for change.

In conservative, gun-loving Texas, more than 250 self-declared firearm enthusiasts, including donors to Republican Governor Greg Abbott, signed an open letter supporting efforts at bipartisan gun reform, the Dallas Morning News reported.

The letter, running as a full-page ad in the newspaper, endorsed an expansion of background checks, raising the age to buy guns to 21, and creating “red flag” laws intended to keep guns from people deemed to be at risk of violence.

US President Joe Biden last week called for new gun-control legislation. On Sunday he renewed his call for restrictions on semi-automatic rifles.

“If we can’t ban assault weapons as we should, we must at least raise the age to buy assault weapons to 21,” he tweeted.

A CBS News/YouGov poll published Sunday shows 62 percent of Americans back a nationwide ban on semi-automatic rifles. Support is even higher for background checks on all gun buyers (81 percent) and “red flag” laws (72 percent).

US gun violence has killed more than 18,000 people so far in 2022, including nearly 10,300 suicides, according to the Gun Violence Archive.

burs-pdh/sw/des/dva/leg

Bangladesh depot accused over blast that killed at least 49

Bangladesh authorities accused a container depot operator Monday of not telling firefighters about a chemical stockpile before it exploded with devastating consequences, killing at least 49 people — nine of them from the fire service.

The toll from the giant blast, which followed a fire at the B.M Container Depot in Sitakunda and sent fireballs into the sky, was expected to rise further.

Some containers were still smouldering on Monday, more than 36 hours after the explosion, preventing rescuers from checking the area around them for victims.

Around a dozen of the 300 injured were in critical condition. 

The nine dead firefighters are the worst toll ever for the fire department in the industrial-accident-prone country, where safety standards are lax and corruption often enables them to be ignored.

“The depot authority did not inform us that there were deadly chemicals there. Nine of our officers were killed. Two fighters are still missing. Several people are also missing,” fire department official Mohammad Kamruzzaman told AFP.

Purnachandra Mutsuddi, who led the fire-fighting effort at the 26-acre facility on Saturday night, said it  “didn’t have any fire safety plan” and lacked firefighting equipment to douse the blaze before it turned into an inferno. 

“The safety plan lays out how the depot will fight and control a fire. But there was nothing,” Mutsuddi, an assistant director of the Chittagong fire station, told AFP.

“They also did not inform us about the chemicals. If they did, the casualties would have been much less,” he said.

The B.M Container Depot in Sitakunda, an industrial town 40 kilometres (25 miles) from Chittagong Port, is a joint venture between Bangladeshi and Dutch businessmen with around 600 employees, and began operations in 2012.

Its chairman is named on its website as Bert Pronk, a Dutch citizen, but AFP was unable to reach him for comment. Few European businessmen operate in the country.

Local newspapers said another of its owners is a senior official of the ruling Awami League party based in Chittagong, who is also the editor of a local Bengali daily.

Police have yet to lay charges over the fire. “Our investigation is going on. We will look into everything,” said local police chief Abul Kalam Azad.

– ‘Falling like rain’ –

Wisps of smoke rose into the bright morning sky from dozens of twenty-foot containers at the depot on Monday.

“Some 30-40 containers are still smouldering,” said fire department inspector Harunur Rashid. “Fire is under control. But chemicals are main problems.”

Once the flames are entirely out rescuers will search the area for more victims, he said.

Mujibur Rahman, a director of B.M. Container Depot, said the cause of the initial fire remained unknown.

The container depot held hydrogen peroxide, according to fire service chief Brigadier General Main Uddin, and witnesses said the entire town shook when the chemicals exploded.

“The explosion sent fireballs into the sky,” said Mohammad Ali, 60, who runs a nearby grocery store. “Fireballs were falling like rain. 

“We were so afraid we immediately left our home to find refuge,” he added. “We thought the fire would spread to our locality as it is very densely populated.”

Elias Chowdhury, the chief doctor in Chittagong, said doctors at multiple hospitals had been called back from holidays to help treat the hundreds of injured.

Around 90 percent of Bangladesh’s roughly 100 billion dollars in trade — including clothes for H&M, Walmart and others — passes through the Chittagong port at the top of the Bay of Bengal.

Rakibul Alam Chowdhury from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said that about 110 million dollars worth of garments were destroyed in the fire. 

“It is a huge loss for the industry,” he said.

Ukraine says controls 'half' of Severodonetsk

Ukrainian troops have beaten back Russian forces to control half of a flashpoint eastern city, local officials said, as President Volodymyr Zelensky visited the front lines to support his country’s “true heroes”.

As the see-saw battle raged on for the strategically important city of Severodonetsk — the largest in the Lugansk region not under Russian control — more help was promised from abroad.

The United Kingdom said it would follow the United States and send long-range missile systems to Ukraine, defying warnings from Russian President Vladimir Putin against supplying Kyiv with the advanced weapons.

Thousands of civilians have been killed and millions forced to flee their homes since Putin ordered Russian troops into Ukraine on February 24.

Fighting since April has been concentrated in the east of the country, where Russian forces have made slow but steady advances after being beaten back from other parts of Ukraine, including the capital Kyiv.

Ukraine’s gains in Severodonetsk, announced by regional governor Sergiy Gaiday, would represent a significant advance by Kyiv’s troops, who earlier appeared on the verge of being driven out of the city.

“The Armed Forces have cleared half of Severodonetsk and are moving forward,” Gaiday posted on Telegram.

However, he warned in a video in the same post that a major new Russian push on the industrial hub appeared imminent.

– ‘It’s a horror show’ –

Across a river in the neighbouring city of Lysychansk, pensioner Oleksandr Lyakhovets said he had just enough time to save his cat before the flames engulfed his flat after it was hit by a Russian missile.

“They shoot here endlessly… It’s a horror show,” the 67-year-old told AFP.

Lysychansk was among areas visited Sunday by Zelensky, who “got himself acquainted with the operational situation on the front line of defence”, the presidency said.

He also visited Bakhmut, to the southwest in the Donetsk region of the Donbas, and talked with servicemen, his office said.

“I want to thank you for your great work, for your service, for protecting all of us, our state. I am grateful to everyone,” he told them.

“I am proud of everyone whom I met, whom I shook hands with, with whom I communicated, whom I supported,” Zelensky said in his daily evening address after his visit.

“Each family has its own story. Most were without men,” he said.

“Someone’s husband went to war, someone’s is in captivity, someone’s, unfortunately, died. A tragedy. No home, no loved one. But we must live for the children. True heroes –- they are among us.”

Sunday also brought the first Russian missile strikes on Kyiv since April 28.

“High-precision, long-range missiles fired by the Russian Aerospace Forces on the outskirts of Kyiv destroyed T-72 tanks supplied by eastern European countries and other armoured vehicles that were in hangars,” a Russian defence ministry spokesman said.

One person was wounded, and AFP reporters saw several buildings with blown-out windows near one of the sites that were targeted.

– UK pledges missiles –

Ukraine has asked supporting countries for ever more powerful arms to fend off the Russian attack, and its deputy defence minister stressed Sunday this support was needed until Moscow was defeated.

The United States last week said it would supply Ukraine with advanced missile systems, the latest in a long list of weaponry sent or pledged to the pro-Western country.

But Putin said long-range missile supplies to Ukraine meant “we will draw the appropriate conclusions and use our arms… to strike targets we haven’t hit before”.

Unveiling the latest UK contribution, Defence Secretary Ben Wallace insisted Ukraine’s Western allies must maintain their weapons deliveries to enable it to win.

The UK Ministry of Defence said London had coordinated closely with Washington over its gift of the multiple-launch rocket systems, known as MLRS.

The M270 launchers, which can strike targets up to 80 kilometres (50 miles) away with precision-guided rockets, will “offer a significant boost in capability for the Ukrainian forces”, the ministry added.

Western powers have imposed increasingly stringent sanctions on Russia but divisions have emerged on how to act, particularly on whether to engage in dialogue with Russia.

Speaking from the apostolic palace in St Peter’s Square, Pope Francis on Sunday renewed calls for “real negotiations” to end what he called the “increasingly dangerous escalation” of the war.

Russian troops now occupy a fifth of Ukraine’s territory, according to Kyiv, and Moscow has imposed a blockade on its Black Sea ports, sparking fears of a global food crisis.

Ukraine and Russia are among the top wheat exporters in the world.

The United Nations said it was leading intense negotiations with Russia to allow Ukraine’s grain harvest to leave the country.

Climate talks test global resolve on warming

Negotiators from almost 200 countries will meet in Bonn Monday for climate talks tasked with reigniting momentum on tackling global warming, as Russia’s invasion of Ukraine overshadows the threat from rising emissions.

The conference will set the stage for a fresh round of major United Nations talks later this year in Egypt.

It will also be a chance to test the resolve of nations facing a catalogue of crises, including escalating climate impacts, geopolitical tensions, bloodshed in Ukraine and the threat of a devastating global food crisis.

“Climate change is not an agenda we can afford to push back on our global schedule,” said outgoing UN climate change chief Patricia Espinosa ahead of the meeting. 

She said it is imperative that nations arrive at the UN COP27 meeting in Sharm el-Sheikh in November prepared to show they are taking “bold, concrete steps — backed by specific plans — to deliver the urgent and transformational climate ambition we simply must see before it’s too late”.

Governments have already accepted that climate change is a grave threat to humanity and the planet, and have advocated immediate action to cut fossil fuel emissions and prepare for the accelerating impacts of warming.

The summary to this year’s landmark climate report from the Intergovernmental Panel on Climate Change concluded that any further delay in action “will miss a brief and rapidly closing window of opportunity to secure a liveable and sustainable future for all”.

But as things are going, the world is unlikely to be able to meet the Paris climate deal’s commitment to limit warming “well below” 2 degrees Celsius above pre-industrial levels.

“There is this disconnect between the scientific evidence of global crisis in the making, of potentially rushing towards unmanageable climate impact, versus the lack of action,” Johan Rockstrom, director of the Potsdam Institute for Climate Impact Research, told AFP.

“This is a deep worry.”

The world has warmed nearly 1.2C so far — enough to usher in a crescendo of deadly heatwaves, floods and storm surges made worse by rising seas.

– Funding focus –

While the June 6 to 16 conference in Bonn is a largely technical meeting aimed at preparing for Egypt, there are a number of key issues up for debate.

A particular focus will be funding from rich polluters to help vulnerable developing nations least responsible for global heating to cope with its increasingly ferocious consequences.

A promise of $100 billion a year from 2020 to help them adapt to a warming world has still not been met.

Meanwhile, there are growing calls for “loss and damage” funding for countries already struck by devastating climate impacts, with a specific dialogue on the subject slated for this week. 

The Alliance of Small Island States has warned that the Bonn conference must not be “just another talk shop”, calling for a “clear view” on when and how this financing will be put in place.

– ‘Fragile’ world –

UN Secretary General Antonio Guterres last week warned that Russia’s invasion of Ukraine risked slowing action to combat the climate crisis.

“But I think this war has demonstrated one thing: how fragile the world is in its dependence to fossil fuels,” he added.

The invasion has prompted countries, particularly in Europe, to scramble to shore up energy supplies. It has also caused wheat and fertiliser prices to soar.

Fears of a food crisis have intensified in recent weeks, with India moving to ban wheat exports after the hottest March and April on record — blamed largely on climate change — hit harvests.

One opportunity for exhibiting political will comes on Wednesday when the European Parliament votes several hotly debated planks of the bloc’s sprawling “Fit for 55” climate plan.

EU member states have set themselves the target of reducing their greenhouse gas emissions by 55 percent by 2030 compared to 1990, and achieving carbon neutrality for the continent by 2050.

In May, an analysis from non-profit groups found that countries in the G20 group of major economies have yet to strengthen greenhouse gas reduction goals, despite agreeing to revisit their plans.

Last year in Glasgow, countries made new pledges to slash methane emissions, stop deforestation and other measures that — in addition to existing national carbon cutting pledges — could theoretically cap warming under 2C, said Rockstrom. 

But that means the focus at this year’s meetings needs to be on “accountability”, he added. 

“We are now in the delivery phase”.

Climate talks test global resolve on warming

Negotiators from almost 200 countries will meet in Bonn Monday for climate talks tasked with reigniting momentum on tackling global warming, as Russia’s invasion of Ukraine overshadows the threat from rising emissions.

The conference will set the stage for a fresh round of major United Nations talks later this year in Egypt.

It will also be a chance to test the resolve of nations facing a catalogue of crises, including escalating climate impacts, geopolitical tensions, bloodshed in Ukraine and the threat of a devastating global food crisis.

“Climate change is not an agenda we can afford to push back on our global schedule,” said outgoing UN climate change chief Patricia Espinosa ahead of the meeting. 

She said it is imperative that nations arrive at the UN COP27 meeting in Sharm el-Sheikh in November prepared to show they are taking “bold, concrete steps — backed by specific plans — to deliver the urgent and transformational climate ambition we simply must see before it’s too late”.

Governments have already accepted that climate change is a grave threat to humanity and the planet, and have advocated immediate action to cut fossil fuel emissions and prepare for the accelerating impacts of warming.

The summary to this year’s landmark climate report from the Intergovernmental Panel on Climate Change concluded that any further delay in action “will miss a brief and rapidly closing window of opportunity to secure a liveable and sustainable future for all”.

But as things are going, the world is unlikely to be able to meet the Paris climate deal’s commitment to limit warming “well below” 2 degrees Celsius above pre-industrial levels.

“There is this disconnect between the scientific evidence of global crisis in the making, of potentially rushing towards unmanageable climate impact, versus the lack of action,” Johan Rockstrom, director of the Potsdam Institute for Climate Impact Research, told AFP.

“This is a deep worry.”

The world has warmed nearly 1.2C so far — enough to usher in a crescendo of deadly heatwaves, floods and storm surges made worse by rising seas.

– Funding focus –

While the June 6 to 16 conference in Bonn is a largely technical meeting aimed at preparing for Egypt, there are a number of key issues up for debate.

A particular focus will be funding from rich polluters to help vulnerable developing nations least responsible for global heating to cope with its increasingly ferocious consequences.

A promise of $100 billion a year from 2020 to help them adapt to a warming world has still not been met.

Meanwhile, there are growing calls for “loss and damage” funding for countries already struck by devastating climate impacts, with a specific dialogue on the subject slated for this week. 

The Alliance of Small Island States has warned that the Bonn conference must not be “just another talk shop”, calling for a “clear view” on when and how this financing will be put in place.

– ‘Fragile’ world –

UN Secretary General Antonio Guterres last week warned that Russia’s invasion of Ukraine risked slowing action to combat the climate crisis.

“But I think this war has demonstrated one thing: how fragile the world is in its dependence to fossil fuels,” he added.

The invasion has prompted countries, particularly in Europe, to scramble to shore up energy supplies. It has also caused wheat and fertiliser prices to soar.

Fears of a food crisis have intensified in recent weeks, with India moving to ban wheat exports after the hottest March and April on record — blamed largely on climate change — hit harvests.

One opportunity for exhibiting political will comes on Wednesday when the European Parliament votes several hotly debated planks of the bloc’s sprawling “Fit for 55” climate plan.

EU member states have set themselves the target of reducing their greenhouse gas emissions by 55 percent by 2030 compared to 1990, and achieving carbon neutrality for the continent by 2050.

In May, an analysis from non-profit groups found that countries in the G20 group of major economies have yet to strengthen greenhouse gas reduction goals, despite agreeing to revisit their plans.

Last year in Glasgow, countries made new pledges to slash methane emissions, stop deforestation and other measures that — in addition to existing national carbon cutting pledges — could theoretically cap warming under 2C, said Rockstrom. 

But that means the focus at this year’s meetings needs to be on “accountability”, he added. 

“We are now in the delivery phase”.

Asian markets mixed as US jobs data give Fed room to hike rates

Asian markets were mixed Monday following a steep drop on Wall Street in response to a forecast-topping US jobs report that gave the Federal Reserve room to continue hiking interest rates as it struggles to contain surging inflation.

US traders took flight after the closely watched non-farm payroll figures Friday, which showed a slowdown in hiring but still with more new posts created than expected.

That came as more officials suggested the Federal Reserve could continue lifting borrowing costs sharply as they try to rein in inflation.

However, with prices being driven higher by factors ranging from the Ukraine war to China’s lockdown-induced slowdown, there are fears the bank’s measures could deal a blow to the world’s biggest economy.

The jump in inflation has forced finance chiefs around the world to tighten monetary policy, with the European Central Bank indicating it will raise rates in July for the first time in more than a decade.

“The critical issue for markets is whether inflation can be brought under control by central banks without generating a recession,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a note. 

“Shares are likely to see continued short-term volatility as central banks continue to tighten to combat high inflation, the war in Ukraine continues and fears of recession remain.”

All three main indexes on Wall Street ended deep in the red, with tech firms taking most of the pain, though Asia fared a little better in early trade.

Hong Kong, Tokyo, Shanghai and Taipei all rose, but there were losses in Sydney, Singapore, Manila and Jakarta.

Oil prices — a key driver of inflation — continued to rise, as a pledge by OPEC and other major producers to boost output fell short of what markets had hoped for. 

The increase came as Saudi Arabia also said it had hiked the official selling price for customers in Asia, while demand expectations rose on the back of the easing of some Covid lockdown measures in China and the start of the US summer driving season.

– Key figures at around 0230 GMT –

Tokyo – Nikkei 225: UP 0.3 percent at 27,844.26 (break)

Hong Kong – Hang Seng Index: UP 0.8 percent at 21,250.08

Shanghai – Composite: UP 0.4 percent at 3,208.52

Brent North Sea crude: UP 0.7 percent at $120.51 per barrel

West Texas Intermediate: UP 0.7 percent at $119.76 per barrel

Euro/dollar: UP at $1.0721 from $1.0719 on Thursday

Pound/dollar: UP at $1.2492 from $1.2488

Euro/pound: UP at 85.83 pence from 85.81 pence

Dollar/yen: DOWN at 130.61 yen from 130.81 yen

New York – Dow: DOWN 1.0 percent to 32,899.7 (close)

London – FTSE 100: Closed for a holiday

ECB to end stimulus in prelude to rate hikes

The European Central Bank is set to draw a line under its massive bond-buying stimulus programme at a meeting in Amsterdam on Thursday, as inflation in the eurozone soars to all-time highs.

The decision, already extensively flagged in advance by senior policymakers, is then expected to pave the way for the ECB to raise its interest rates for the first time in over a decade in the weeks that follow. 

Eurozone consumer prices rose by 8.1 percent year-on-year in May, a record since the single currency was launched and well above the ECB’s own target of two percent.

The surge, driven by the war in Ukraine and the consequent rise in energy prices, has boosted calls for the ECB to move more quickly to end its expansionary monetary policy. 

The ECB is lagging behind the central banks in Britain and the United States, which have moved aggressively to try to stamp out inflation.

But the ECB first plans to discontinue asset purchases under its crisis-era stimulus programme before proceeding to actual rate hikes. 

The so-called asset purchase programme, or APP, is the last in a series of debt-purchasing measures worth a total of around five trillion euros ($5.4 trillion) deployed by the ECB since 2014.

ECB chief Christine Lagarde suggested recently that the APP would “end very early in the third quarter”.

– ‘Lift off’ –

For ING’s head of macro, Carsten Brzeski, the comments by Lagarde, a former French finance minister, were “remarkable” in that she has taken the unusual step of mapping out a timetable for ECB policy into the second half of the year.

Lagarde said that rates were set to “lift off” at the ECB’s meeting in July — the first upward move in borrowing costs in over a decade — and the euro’s guardian would then close the era of negative interest rates by the end of September.

Of the ECB’s three main interest rates, the so-called deposit rate — which is normally the interest commercial banks would receive for parking their cash with the ECB overnight — has been negative since 2014.

A negative rate effectively means that commercial banks have to pay the ECB to park their cash, a move introduced by the then president Mario Draghi to keep cash circulating in the eurozone financial system at a time of looming deflation.

For Brzeski, the ECB “has clearly passed the stage of discussing whether and even when policy rates should be increased” and the “only discussion” for the coming weeks was how big the first step would be. 

A number of governing council members have openly discussed the possibility of a 50-basis-point, or half-point, hike to lift ECB interest rates out of negative territory in one go.

Before the most recent eurozone inflation data was released, the head of the Dutch central bank, Klaas Knot, said that such a move was “clearly not off the table”.

On the other side of the Atlantic, the US Federal Reserve already raised rates by half-a-percentage point last month, and some of its policymakers are arguing for more big increases.

But observers have urged the ECB to proceed more cautiously.

Smaller steps of 25 basis points, or a quarter of a percentage point, were the “benchmark pace” for the move out of negative interest rates, the ECB’s chief economist Philip Lane said at the end of May.

– ‘Neutral’ rates –

The idea is to “normalise” eurozone borrowing costs and bring them to a more “neutral” level — which neither stimulates nor stifles the economy — even if opinions differ as to what that level might be. 

Ultimately, the appropriate level of borrowing costs will depend on the eurozone’s economic outlook.

A worrying further acceleration in inflation could prompt the ECB to step on the brakes harder.

The ECB is also scheduled to publish its new economic forecasts on Thursday.

Its previous estimates — published in the immediate aftermath of Russia’s invasion of Ukraine — cut projected growth in 2022 to 3.7 percent and saw inflation rising to 5.1 percent.

But for the chief executive of US bank Citi, Jane Fraser, Europe faced a “very high likelihood” of going to recession on the back of the war, she told journalists in Frankfurt last week.

Iran to face censure amid stalled nuclear talks

Major European countries and the United States are expected to seek to censure Iran when the UN atomic watchdog meets this week amid stalled talks to revive the 2015 nuclear deal.

The resolution drafted by the United States, Britain, France and Germany is a sign of their growing impatience as diplomats warn the window to save the landmark deal is closing.

The International Atomic Energy Agency’s Board of Governors meets Monday through Friday in Vienna.

If the resolution urging Iran to “cooperate fully” with the IAEA is adopted, it will be the first motion censuring Iran since June 2020.

Talks to revive the accord started in April 2021 with the aim to bring the United States back into the deal and lift sanctions again and get Iran to scale back its stepped-up nuclear programme.

The 2015 landmark deal — promising Tehran sanctions relief in exchange for curbs in its nuclear programme — started to fall apart in 2018 when then president Donald Trump withdrew from it.

Talks to revive the agreement have stalled in recent months.

The coordinator of the talks, the EU’s top diplomat Josep Borrell, warned in a tweet this weekend that the possibility of returning to the accord was “shrinking”.

“But we still can do it with an extra effort,” he said.

– ‘Send a message’ –

In a report late last month, the IAEA said it still had questions that were “not clarified” regarding traces of enriched uranium previously found at three sites which had not been declared by Iran as having hosted nuclear activities.

Iran has warned “any political action” by the United States and the so-called E3 group of France, Germany and the UK would “provoke without any doubt a proportional, effective and immediate response”.

“There is no excuse for Iran’s continued failure to provide meaningful cooperation with the agency’s investigation,” Kelsey Davenport, an expert with the Arms Control Association, told AFP.

“A resolution censuring Iran is necessary to send a message that there are consequences for stonewalling the agency and failing to meet safeguards obligations,” she said. 

China and Russia, which are also parties to the Iran nuclear deal — together with Britain, France and Germany — have warned that any resolution could disrupt the negotiation process.

Russia’s ambassador to the UN in Vienna, Mikhail Ulyanov, in a tweet called on the EU to “undertake extra diplomatic efforts”.

– In shadow of Ukraine –

But even if the climate is tense, negotiations are unlikely to fall apart, according to Clement Therme, associate researcher at the Rasanah International Institute for Iranian Studies.

“Given the war in Ukraine, the Europeans are not ready to trigger a new crisis with Iran when they are already dealing with a crisis with Russia” which invaded its neighbour in February, he said.

The expert suggested that the resolution would be worded “in a way that does not close the door to further negotiations”.

A key sticking point is Tehran’s demand for Washington to remove the Islamic Revolutionary Guard Corps, the ideological arm of Iran’s military, from the official US list of terror groups.

US President Joe Biden’s administration has refused to do so ahead of tough November midterm elections.

“The political cost Biden will pay for lifting sanctions on the IRGC is high, but it pales in comparison to the threat of a nuclear-armed Iran,” Davenport said.

She said Biden’s administration “should double down on other creative proposals to get negotiations back on track”. 

According to the latest IAEA report, the Islamic republic now has 43.1 kilograms (95 pounds) of 60-percent-enriched uranium.

If enriched to 90 percent, this could be used to make a bomb in under 10 days, Davenport warned in a report last week.

“Weaponising would still take one to two years, but that process would be more difficult to detect and disrupt once Iran moved the weapons-grade uranium from its declared enrichment facilities,” Davenport said.

Iran has always denied wanting to develop a nuclear weapon.

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