Resilient demand for cloud computing and growing excitement about artificial intelligence drove record quarterly revenues for Microsoft in the final three months of 2023.

Revenue at Microsoft’s closely watched cloud division, its biggest sales driver that includes its Azure cloud computing platform, rose 20 per cent to $25.9bn, ahead of analyst expectations for $25.3bn. Azure’s sales growth reaching 30 per cent.

Total revenue climbed 18 per cent to a record $62bn, ahead of forecasts for $61.1bn.

Earnings of $2.93 a share were well ahead of analyst forecasts for $2.77. Microsoft shares were down almost 1 per cent in after-hours trading.

US technology stocks closed lower on Tuesday as investors awaited a flurry of earnings updates from giants including Microsoft and Alphabet.

The tech-heavy Nasdaq Composite lost 0.8 per cent, with Google-owner Alphabet dropping 1.2 per cent before its fourth-quarter results announcement after the market close. Amazon and Apple fell 1.4 per cent and 1.9 per cent respectively ahead of results due in early February.

The broader S&P 500 closed 0.1 per cent lower.

In government bond markets, the policy-sensitive two-year Treasury yield rose 0.03 percentage points to 4.36 per cent, while the benchmark 10-year yield fell 0.05 percentage points to 4.05 per cent. Yields rise as prices fall.

Starbucks showed sales in its China business grew by double-digits in its latest quarter, helping send shares of the coffee chain higher in after-hours trading.

Comparable sales, a key metric for the company, grew 10 per cent in China, with transaction volumes surging 21 per cent, even as the cost of the average order slid nine per cent. The company had 6,975 locations in China, a main growth market, compared to 6,090 a year ago.

Comparable sales growth halved in the US, increasing 5 per cent, down from 10 per cent in the prior year.

The coffee chain recorded $9.4bn in revenue in the first quarter of its fiscal year, missing estimates for $9.6bn. It booked $1.02bn in net income, below forecasts for $1.1bn.

Starbucks shares were up more than 2 per cent after-hours.

The amnesty deal that gave Spain’s prime minister another term in office has fractured as Catalan separatists voted against a bill that was supposed to lock in their support for Pedro Sánchez.

In a day of brinkmanship between hardline separatists and Sánchez’s Socialists, the clash over the amnesty law underlined the volatility ushered in by the prime minister’s bargaining for parliamentary votes.

Sánchez offered the amnesty to absolve separatists of alleged crimes linked to a failed push for independence in 2017, but the most militant pro-independence party on Tuesday rejected the latest bill for not going far enough.

Read more here

US stocks slipped lower as investors braced themselves for earnings reports from tech titans Alphabet and Microsoft.

The S&P 500 gauge was down 0.1 per cent by mid-afternoon on Tuesday in New York, while the technology-heavy Nasdaq Composite lost 0.8 per cent.

Several of the largest US tech stocks were trading lower, with Google parent Alphabet and Microsoft down 0.8 per cent and 0.5 per cent, respectively.

Apple and Amazon lost 1.9 and 1.4 per cent, respectively, two days before their own results.

New York attorney-general Letitia James filed a lawsuit against Citibank on Tuesday for allegedly “failing to protect and refusing to reimburse” victims of online fraud.

Citi had failed to use “sufficiently robust data security measures to protect consumer financial accounts, respond appropriately to red flags, or limit theft by scam”, James said in the complaint.

The suit cites one case in which a Citi account holder lost $40,000 after clicking on a phishing link sent to their phone.

The state is asking the bank to provide information on all cases in the past six years in which Citi denied a request from a customer who asked to be reimbursed for an unauthorised payment.

Citi in a statement denied it had broken any laws related to online fraud and said it was not responsible for reimbursing clients when they gave their account information to criminals.

European stocks closed higher on Tuesday as traders weighed a raft of corporate results and economic data, including an unexpectedly strong employment report from the US. 

The region-wide Stoxx Europe 600 rose 0.2 per cent, as did Germany’s Dax. France’s Cac 40 added 0.5 per cent, while London’s FTSE 100 gained 0.4 per cent.

Government bond yields rose, reflecting falling prices, as traders pared their bets on interest rate cuts from the European Central Bank. Yields on rate-sensitive 2-year German bonds rose 0.04 percentage points to 2.52 per cent. 

Iran’s foreign ministry has summoned the UK ambassador to Tehran, Simon Shercliff, in protest at what it called London’s “illegal sanctions” and “baseless accusations”.

A diplomat at the ministry accused the UK of supporting organised terror organisations, drug trafficking and criminal groups. London accusing the Islamic republic and its loyal forces was therefore “a bitter historic sarcasm”, the minister said on Tuesday.

The US and UK announced new sanctions against some Iranian officials on Monday, citing Tehran’s alleged plans to kill journalists on UK soil.

US president Joe Biden said he has decided on Washington’s response to the attack that killed three members of the American military along Jordan’s border with Syria at the weekend, but was not looking for a “wider war” in the Middle East. 

Leaving the White House for a trip to Florida for two re-election campaign fundraisers on Tuesday, Biden said “yes” when asked by reporters if he had made a decision on how to respond to the attack at the weekend. 

Biden said he held Tehran “responsible in the sense that they’re supplying the weapons to the people who did it”, but that he did not “think we need a wider war in the Middle East”.

US Treasuries sold off after fresh data showed domestic job openings rose unexpectedly in December, a sign of continued labour market resilience that dented traders’ hopes of imminent interest rate cuts from the Federal Reserve.

Yields on rate-sensitive two-year Treasuries rose 0.04 percentage points to 4.36 per cent. Yields on the benchmark 10-year note, which had been down for the day, wiped out earlier losses and was flat at 4.09 per cent. Yields move inversely to prices.

The Bureau of Labor Statistics’ JOLTS survey found that there were 9mn job openings on the last business day of December, an increase from an upwardly-revised 8.9mn in November. Economists polled by Reuters had forecast a decline.

Demand for US workers outpaced economists’ expectations in December, keeping pressure on the Federal Reserve as it weighs when to start cutting interest rates.

There were 9mn job vacancies in December, the labour department said on Tuesday. It is a slight increase from November but the highest level in three months. The report also upwardly revised November’s openings figure to 8.9mn.

Economists, who consider job openings to be a proxy for labour demand, had been expecting 8.75mn openings, according to a Reuters poll.

The number of lay-offs was unchanged at 1.6mn, while job quits remained at 3.4mn.

UPS is planning to cut 12,000 jobs this year as it faces a slowdown in demand and rising wage costs.

The parcel delivery company said that most of the lay-offs, which will target management positions, will come in the first half of the year. UPS, which employs 495,000 workers worldwide, announced the job cuts in an earnings call on Tuesday.

The workforce reductions come as UPS announced a 9 per cent decline in revenue for 2023 and said it would miss analysts’ expectations for revenue in 2024.

Chief executive Carol Tomé said that 2023 was “a unique and, quite candidly, a difficult and disappointing year”.

Read more here

Private-equity owned UK supermarket chain Wm Morrison has agreed a £2.5bn deal to sell its petrol forecourt business to the Motor Fuel Group.

Both companies are owned by US buyout firm Clayton, Dubilier & Rice. Under the terms of the deal, Morrison’s will take a 20 per cent stake in MFG.

The transaction is expected to create “significant synergies across fuel retail” and other services, the companies said.

It comes as Morrisons seeks to improve its performance, having lagged behind its UK competitors in recent years, and after CD&R previously explored an outright sale of MFG.

Read more here

US stocks slipped in early trading on Tuesday as investors weighed mixed corporate results and looked ahead to key employment data and tech earnings.

Wall Street’s benchmark S&P 500 was down less than 0.1 per cent shortly after the opening bell, while the tech-dominated Nasdaq Composite fell 0.2 per cent.  

Traders will be looking to a fresh employment report for insights into the resilience of the labour market and the odds of imminent rate cuts. Results from Microsoft and Alphabet — the first of the so-called “Magnificent Seven” major technology firms to report earnings — will test the endurance of the rally that recently pushed the S&P 500 to a fresh record high.

US home prices declined in November, as high mortgage rates tempered demand.

On average across 20 cities surveyed, prices fell 0.2 per cent in November from October, according to the S&P Corelogic Case-Shiller index based on figures that were not seasonally adjusted. It was the first monthly decline since January 2023, with Seattle and San Francisco reporting the largest declines of 1.4 and 1.3 per cent, respectively.

On an annual basis prices rose 5.4 per cent, less than the 5.8 per cent gain forecast by economists.

The average 30-year fixed mortgage rate rose to almost 8 per cent in November, a level not seen since 2000, according to Freddie Mac. Rates have since fallen below 7 per cent.

Office blocks and shopping malls lie at the centre of the IMF’s worries over the health of lenders’ real estate portfolios, a senior fund official has said.

While some workers were returning to the office, companies were unlikely to need as much space as before the pandemic, Tobias Adrian, director of the IMF’s monetary and capital markets department, told the Financial Times.

The global health crisis also meant “the push to virtual shopping was accelerated massively . . . Some of that has reverted but perhaps not all of it,” he said.

A combination of slowing economic activity and these structural factors was “leading to some increase in defaults and an expected increase in defaults,” Adrian said.

The IMF predicted global inflation will fall to 5.8 per cent in 2024 and 4.4 per cent in 2025.

China’s CATL expects its net income in 2023 to have jumped as much as 48 per cent from 2022, boosted by new product launches and overseas expansion, the company said on Tuesday.

The world’s largest battery maker reported a preliminary net profit between Rmb 42.5bn ($6bn) and Rmb 45.5bn in 2023, in line with analyst estimates of Rmb 44.2bn, according to a Shenzhen stock exchange filing. 

This preliminary figure from CATL marks a smaller increase than in 2022 when profit almost doubled. CATL, which counts carmakers including Tesla, BMW and Volkswagen as clients, recently reduced its battery prices amid stiff competition and slowing Chinese demand for electric vehicles. 

Pay for UK partners at KPMG have climbed to an average of £746,000 despite a surge in fines for audit failures and a slowdown in growth.

The accounting and consulting firm reported a 9 per cent jump in revenues to £2.96bn during the year to September, compared with growth of 16 per cent in the previous 12 months.

The firm was hit with three regulatory fines during the year worth £2.8mn, as well as a £23mn penalty in October for failures in its auditing of outsourcer Carillion.

Despite the fines and weaker growth, average partner pay at the firm jumped 4 per cent to £746,000.

Read more here

Pfizer reported dwindling Covid-19 revenues and weak sales from other products on Tuesday, as it notched a steep drop in sales in 2023.

Revenues were $58.5bn in 2023, just below analyst estimates, and down 42 per cent compared to 2022, when demand for its Covid-19 vaccine and antiviral drug Paxlovid drove record high revenues of $100.3bn. 

In a bright spot, Pfizer reported adjusted earnings per share of $1.87, surpassing analyst estimates for earnings of $1.55.

Chief executive Albert Bourla said the company was “entering 2024 with a solid foundation”, and called the completion of the $43bn acquisition of cancer drugmaker Seagen in December, “a critical step” towards achieving “world-class oncology leadership”.

Delivery group UPS said 2024 revenues would be below Wall Street expectations, hit by falling demand and a costly pay deal with its Teamsters union. 

The company said it expects revenues in a range between $92bn and $94.5bn in 2024, below analyst expectations of $95.6bn. Its revenue in 2023 was $91bn, a 9.3 per cent drop from 2022.

Fourth-quarter revenues were down 8 per cent year-on-year due to a decrease in average daily volumes. The company’s earnings report comes after it lowered 2023 guidance in October for the second time following a pay deal with the Teamsters union, which represents 340,000 of its 500,000 employees.

General Motors said last year’s six-week strike by its unionised workers cost the company $1.1bn and a dip in its market share, but it still beat analysts’ expectations for fourth-quarter earnings and presented a rosy outlook for 2024.

The Detroit-based carmaker expects to record net income in the range of $9.8bn to $11.2bn in 2024, while cutting $1bn in fixed costs. Analysts polled by LSEG had forecast net income of $9.1bn for the year.

GM notched $43bn in revenue in the three months to December, and posted $2.1bn in net income, beating consensus estimates on both figures.

Shares rose more than 7 per cent in pre-market trading on Tuesday.

Freshfields Bruckhaus Deringer’s former global head of tax has been sentenced to 3.5 years in jail in a landmark ruling by a Frankfurt district court on Tuesday, which found him guilty of aiding and abetting a multiyear dividend tax fraud.

Ulf Johannemann had been standing trial in Frankfurt since September for his allegedly flawed advisory work for Maple Bank, a defunct German subsidiary of Canada’s Maple Financial.

Maple reclaimed more than €388mn in dividend taxes it never paid between 2006-09. Johannemann had issued legal opinions stating that the practice, which exploited a design flaw in the German tax code, was lawful.

The sentence is below the 5.5 years in jail that public prosecutors demanded for Johannemann. Read more here.

Big Tech: Microsoft and Google parent Alphabet will post their latest quarterly results after trading in New York closes, with investors keen for insight into the tech giants’ AI agendas for the year ahead. Both Microsoft and Alphabet are expected to post jumps in revenue for the three months to December.

Nikki Haley: The US Republican presidential candidate will be in New York City for a major fundraiser hosted by financiers Stanley Druckenmiller, Ken Langone, Cliff Asness and Henry Kravis. Donald Trump, the Republican frontrunner, has warned donors who continue to support Haley that they will be  “barred” from his “MAGA camp”. 

Other earnings: General Motors, Pfizer, and UPS will report their latest earnings before the market opens. Starbucks, Mondelez, AMD and Match Group will post results after the closing bell.

Jobs: Economists project US job openings, a proxy for labour demand, to have ticked down to 8.75mn in December from 8.79mn in November.

Fed: The US Federal Reserve’s interest rate-setting Federal Open Market Committee will begin its two-day meeting, with a decision to come on Wednesday.

Other data: The Conference Board’s consumer confidence index is projected to come in at a reading of 115 in January, up from 110.7 in December.

Corporate insolvencies in England and Wales rose to their highest level since 1993 last year, according to official figures that lay bare the challenges facing companies amid slowing demand and high production costs.

In 2023, there were 25,158 registered company insolvencies, the highest number since 1993, the Insolvency Service said on Tuesday.

Company voluntary arrangements were up 9 per cent from 2022, the highest since the time series began in 1960, as businesses struggled with a stagnating economy and high borrowing and production costs. 

The Insolvency Services explained that because the number of businesses also increased, the 2023 insolvency rate remained much lower than the peak rate of 94.8 insolvencies per 10,000 active companies during the 2008-09 recession.

The eurozone economy stagnated in the final three months of last year, held back by shrinking German output and stalled French growth that offset a stronger than expected rebound in Spain and Italy.

The flat performance of the 20 economies that share the euro was better than the 0.1 per cent contraction forecast by economists in a Reuters poll. It followed a 0.1 per cent decline in the previous quarter and meant the eurozone grew 0.5 per cent last year, the EU’s statistics office said on Tuesday.

That left the bloc trailing the US, which last week confirmed it was the world’s fastest-growing advanced economy in 2023 with annual growth of 3.1 per cent. China’s government recently estimated its economy grew 5.2 per cent last year.

The UK government is expected to announce an extension to the temporary equivalence deal for funds across the European Economic Area, allowing funds domiciled in EEA countries to continue marketing in the UK post Brexit, according to people familiar with the matter. 

The 12-month extension, until 2026, will give funds more time to transition to the UK’s overseas funds regime, a new method for allowing non-UK domiciled funds to be sold to UK investors after Brexit. 

City minister Bim Afolami is expected to say that asset management makes an invaluable contribution to the health of both the UK economy and individuals’ savings, and given the importance of funds domiciled in the EEA to the UK market, this was the first area to be assessed under the new overseas funds regime.

The UK population will reach 70mn by the middle of 2026, sooner than previously thought, due to high levels of net migration, the Office for National Statistics said.

The statistics agency released projections based for the first time on the 2021 census. It also revised its assumption on the long-term level of net migration, which it expects to be steady at 315,000 from the year ending mid-2028, and for natural growth of the population.

It said the UK population was set to increase by 6.6mn people over the 15 years to mid 2036, a rise of 9.9 per cent, from an estimated 67mn to 73.7mn.

This included 541,000 more births than deaths and net international migration of 6.1mn.

UK mortgage approvals rose to a six-month high as the average rate fell for the first time since November 2021, adding to signs of stabilisation in the property market.

Net mortgage approvals for house purchases rose from 49,300 in November to 50,500 in December, new data showed on Tuesday. This was the highest figure since June but was well below the rise to 52,500 forecast by economists polled by Reuters.

Net approvals for remortgaging increased from 25,700 in November to 30,800 in December.

The Bank of England said the ‘effective’ interest rate — the actual interest paid — on newly drawn mortgages fell by 6 basis points to 5.28 per cent in December, marking the first drop since November 2021.

Big share price moves in Europe today include Finnish retailer Kesko, Germany’s Delivery Hero and UK drinks company Diageo.

• Kesko: Shares in the Finnish company shot up 8 per cent, leading gains on the Stoxx Europe 600, after fourth quarter results showed better than expected profitability at the retailer.

• Delivery Hero: Shares retreated 7 per cent, reaching record lows, after the German company said it had divested from its 4.5 per cent stake in rival food delivery company Deliveroo.

  

• Diageo: Shares lost 3.6 per cent after the company missed first-half sales estimates, dragged by weak turnover in Latin America

Italy’s economy expanded 0.2 per cent in the fourth quarter, providing a badly needed boost to the eurozone after German gross domestic product shrank 0.3 per cent in the same period.

The quarterly expansion of Italian GDP is an acceleration from 0.1 per cent growth in the previous quarter and was stronger than the stagnation forecasted by economists in a Reuters poll. The country’s statistics office said the economy grew 0.7 per cent last year.

Higher output in industry and services as well as a positive contribution from foreign trade boosted Italy’s growth in the fourth quarter, offsetting weaker domestic demand and a downturn in farming, forestry and fishing.

European stocks opened slightly higher on Tuesday as traders await economic data that could shape the outlook for regional interest rates.

The Stoxx Europe 600 index was up 0.1 per cent shortly after the opening bell. France’s Cac 40 gained 0.1 per cent, Germany’s Dax added 0.2 per cent, and London’s FTSE 100 rose 0.3 per cent.

The moves come after data showed the French economy stagnated in the fourth quarter. Traders are awaiting eurozone GDP estimates due later on Tuesday, as well as consumer confidence survey data.

Contracts tracking Wall Street’s benchmark S&P 500 and the tech-heavy Nasdaq Composite fell 0.1 per cent and 0.2 per cent, respectively, ahead of the New York trading session.

Norway’s $1.6tn oil fund recorded its third best year for returns in 2023, as the world’s largest sovereign wealth fund rebounded thanks to strong equity markets.

The oil fund returned 16.1 per cent in 2023, it said on Tuesday, behind only 2009 and 2019 in percentage terms. In kroner terms, it gained NKr2.2tn, the most ever.

“Despite high inflation and geopolitical turmoil, the equity market in 2023 was very strong, compared to a weak year in 2022. Technology stocks in particular performed very well,” said chief executive Nicolai Tangen.

Twenty twenty-two was the fund’s worst year in kroner terms, and behind only 2008 and the global financial crisis in percentage terms as it lost 14.1 per cent.

The Spanish economy expanded 0.6 per cent in the three months to December, accelerating from earlier in the year thanks to rising domestic demand.

The growth in Spanish gross domestic product in the three months to December from the previous quarter was above the 0.2 per cent forecast by economists polled by Reuters.

It increased from growth of 0.4 per cent in the prior quarter and meant the Spanish economy expanded 2.5 per cent last year. That is a slowdown from the previous two years but still outstripped the eurozone, which was expected to grow only 0.6 per cent last year.

UK grocery inflation fell marginally in January, according to research company Kantar.

The annual pace of supermarket price increases eased to 6.8 per cent in January, down from 6.9 per cent the previous month. The figure was below the recent high of 17.5 per cent registered in March 2023 but marked a slower decline than the 2.2 percentage points decrease between November and December, new data showed.

Earlier on Tuesday, the British Retail Consortium reported that shop price inflation dropped sharply to 2.9 per cent in January, the lowest since May 2022, with the decline driven by non-food products.

Saudi Arabia has dropped a plan to boost its oil output capacity, in a major reversal from previous policy.

Saudi Aramco, the world’s biggest oil producer, responsible for 10 per cent of global supply, said it had been asked by the energy ministry to abandon a plan to increase the Kingdom’s maximum sustainable production capacity from 12mn barrels per day to 13mn b/d by 2027.

The multi billion dollar investment programme had set the Saudi Arabian producer apart from much of the industry, where spending on oil production is generally falling due to concerns about climate targets and future demand.

UK petcare and veterinary service provider Pets at Home reported a 4.3 per cent increase in revenue in the third quarter but lowered profit guidance due to slower than expected retail demand.

While performance in the vet group remained strong, it said, retail revenues grew 3.5 per cent, below company expectations. It now expects pre-tax profits in 2024 to be £132mn, down from about £136mn in its interim report in November.

Pets at Home has benefited from a surge in pet ownership during the Covid-19 pandemic and the move to remote work.

The Bank of England has fined HSBC £57.4mn for failing to correctly identify customer deposits eligible for protection under the UK’s Financial Services Compensation Scheme between 2015 and 2022.

The BoE’s Prudential Regulation Authority said the fine was the second highest it had ever imposed. It said the bank’s failings had “materially undermined the firm’s readiness for resolution” and that HSBC had “failed to be duly open and co-operative with the PRA in not alerting the PRA over an approximately 15-month period about problems identified”.

Sam Woods, chief executive of the PRA said: “The serious failings in this case go to the heart of the PRA’s safety and soundness objective.”

HSBC did not immediately respond to a request for comment.

Global drinks giant Diageo reported a drop in spirits sales on the back of a slump in Latin America that led it to issue a shock profit warning late last year.

Net sales fell 1.4 per cent in the six months to December, the company said, while operating profit fell 11.1 per cent to $3.3bn. Excluding the impact of Latin America, net sales grew 0.7 per cent.

In November the maker of Guinness and Johnnie Walker warned that Latin American sales would plummet 20 per cent following a destocking issue, a warning that sent Diageo’s share price sliding 15 per cent.

The French economy stagnated in the final three months of last year as weaker business and household investment offset a rebound in foreign trade and government spending.

GDP in the eurozone’s second-largest economy was flat in the three months to December, in line with economists’ forecasts in an earlier Reuters poll and following a 0.1 per cent decline in the third quarter.

Despite the weak performance in the second half of the year, the French economy still grew 0.9 per cent last year, according to official figures released by Insee, the French statistics agency, on Tuesday.

Hong Kong and Chinese equities continued to sell off on Tuesday as promises of more government support for financial markets failed to materialise.

Hong Kong’s Hang Seng index dropped 1.9 per cent and China’s CSI 300 fell 1.2 per cent. Japan’s Topix closed the day down 0.1 per cent and South Korea’s Kospi was flat. India’s Nifty 50 was flat in early trading.

Yields on China’s 10-year bond, which fall as prices rise, dropped 0.026 percentage points to 2.466 per cent. The last time Chinese 10-year bonds traded at these levels was in April 2020, early in the Covid-19 pandemic.

France: French President Emmanuel Macron begins a two-day state visit to Sweden ahead of a European Council meeting on Thursday over whether to approve a €50bn aid package for Ukraine. France’s new and youngest Prime Minister Gabriel Attal will deliver his general policy statement at the National Assembly in Paris, where he will outline his goals.

Economic indicators: The EU will release early estimates for fourth-quarter gross domestic product growth. France will release monthly consumer spending figures. UK fourth-quarter insolvency figures are also expected. 

Corporate updates: Diageo, Pets at Home, Saga and SSP Group will report earnings. 

Boeing has withdrawn a request that would have expedited official approval for its upcoming 737 Max 7 jet amid a deepening crisis at the company following the blowout of a section of fuselage on one of its aircraft.

Boeing said on Monday that it had withdrawn a request to the US Federal Aviation Administration for an exemption from certain safety rules that would allow the Max 7 to be certified to fly.

Investors had expected the model to be cleared by authorities in the first half of this year.

Last week Illinois senator Tammy Duckworth urged the FAA not to certify the Max 7, based on concerns that the exemption request, if granted, would endanger passengers.

Yields on China’s 10-year bond dropped on Tuesday amid expectations of monetary easing and a sell-off of riskier assets due to weak investor sentiment.

The yield on the 10-year Chinese government bond, which falls as prices increase, declined 0.024 percentage points to 2.47 per cent.

The last time the 10-year bond traded at such a level was in April 2020, at the beginning of the Covid-19 pandemic, when a sluggish economy prompted Beijing to cut interest rates.

Xinhua, the country’s official news agency, reported on Monday that China’s bond issuance in 2023 was Rmb71tn ($10tn), an increase of 14.8 per cent from the previous year.

Hong Kong has revealed details of a proposed new security law which would target espionage, treason and foreign political activities in the Chinese territory.

John Lee, Hong Kong’s leader, said a four-week public consultation for the new law would begin on Tuesday. The legislation would be in addition to an existing Beijing-imposed security law.

The new local legislation was shelved after an initial attempt in 2003 faced a public backlash and triggered one of the territory’s largest protests.

Beijing’s crackdown on Hong Kong after the 2019 pro-democracy protests has silenced dissent with many activists in jail or living outside the city.

Hong Kong and mainland Chinese equities fell early on Tuesday in the first full day of trading following a court order for Evergrande to be wound up.

Hong Kong’s Hang Seng index shed 1.6 per cent and China’s benchmark CSI 300 dropped 0.9 per cent.

On Monday, a Hong Kong High Court judge ordered China Evergrande, the highly indebted property developer, to be wound up.

Japan’s Topix edged up 0.1 per cent and South Korea’s Kospi rose 0.5 per cent. On Monday the S&P 500 gained 0.8 per cent to reach a new all-time high.

Events: Japanese Prime Minister Fumio Kishida delivers a policy speech to parliament. Philippine President Ferdinand Marcos Jr concludes his first state visit to Vietnam.

Economic indicators: Japan publishes its December unemployment rate and jobs-to-applications ratio.

Corporate updates: Japan’s Oriental Land and India’s Larsen & Toubro announce their latest earnings figures, while Japan’s eight major carmakers release 2023 global production data.

UK shop price inflation eased sharply in January to its lowest rate in almost two years as retailers heavily discounted goods during a weak sales period, according to industry data.

The British Retail Consortium said on Tuesday that annual shop price inflation slowed to 2.9 per cent in January, down from 4.3 per cent in December. It is the seventh consecutive monthly decline and the lowest rate since May 2022.

The BRC shop price index, which provides an early indication of pricing pressures ahead of the publication of official data on February 14, will raise hopes that underlying inflationary pressures are continuing to ease despite the uptick in the headline measure to 4 per cent in December.

Read more on this story here.

The US is reinstating sanctions on Venezuela’s state-owned miner Minerven following a ban on the candidacy of opposition leader María Corina Machado in upcoming elections.

The US Treasury department on Monday ordered a wind-down of transactions with the company by February 13.

In October, Washington relaxed its sanctions for six months on oil, mining, and secondary financial markets, on the condition that President Nicolás Maduro allow a “free and fair” vote in elections due this year.

But the government-aligned Supreme Court in Caracas on Friday upheld an earlier ban on Machado — who overwhelmingly won an opposition primary last October — from holding office, based on corruption charges she describes as politically motivated. 

Neuralink cofounder Elon Musk said on Monday the company has conducted its first brain-computer interface implant on a person.

“The first human received an implant from @Neuralink yesterday and is recovering well,” the billionaire wrote on his X social media platform.

“Initial results show promising neuron spike detection,” Musk added, referring to brain activity.

Neuralink announced the start of clinical trials in September to evaluate the safety of its implants.

The US Food and Drug Administration gave approval for the trials in May.

BlackRock has turned bullish on US stocks, upgrading them to overweight from neutral on expectations that the world’s largest economy is set for a “soft landing”.

With inflation declining and the Federal Reserve expected to begin cutting rates later this year, BlackRock Investment Institute — the in-house research arm of the world’s largest asset manager — on Monday said it had upgraded US stocks to overweight.

BlackRock’s prior view on US equities was neutral, with a preference for stocks that stand to benefit from artificial intelligence. BlackRock now expects the AI-driven rally to broaden out beyond technology stocks, if inflation and rates fall over the coming months. 

The US military failed to stop the enemy drone that killed three of its service members after mistaking it for an American drone that approached a base near Jordan’s border with Syria at the same time, a US official said.

The preliminary assessment was disclosed as the US considers its response to the attack that took place over the weekend, the first to kill US troops since the Israel-Hamas war that began on October 7 triggered a wave of assaults by Iranian-aligned groups against American forces in the region.

The US military was still trying to better understand the incident and how the one-way attack drone was able to cause so many casualties, officials said.

Read more here.

US stocks were on course to advance at the start of a week that will include the Federal Reserve’s first interest rate decision of the year, the latest domestic jobs report and quarterly results from the biggest tech companies.

The blue-chip S&P 500 was up 0.3 per cent in afternoon trading on Monday, with consumer discretionary the benchmark’s best-performing sector. The tech-heavy Nasdaq Composite added 0.6 per cent.

Investors bought US government bonds, with the yield on the 10-year Treasury note falling 0.06 percentage points to 4.1 per cent. Bond yields fall as their prices rise.

The White House has said President Joe Biden is “weighing the options before him” as Washington looks to retaliate against the attack that killed three US troops near Jordan’s border with Syria at the weekend.

White House National Security Council spokesperson John Kirby told reporters that Biden had met with his top advisers on Sunday and Monday to discuss Washington’s response to the attack.

Kirby would not be drawn on the timing or nature of the US response, but said the action by the administration was “fully cognisant of the fact that these groups backed by Tehran have just taken the lives of American troops”.