From the Bank of England stepping in to adult Happy Meals – Here’s your September 30 news briefing

From the Bank of England stepping in to adult Happy Meals – Here’s your September 30 news briefing
FILE PHOTO: Pound and U.S. dollar banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

To start off, we’re looking into:

The Bank of England steps in to avoid a financial crisis

The UK’s economy has been struggling lately. The pound is hitting rock-bottom lows against the US dollar, recently at just US$1.058 (from our experience, it’s usually around US$1.30ish).

Last week, new Prime Minister Liz Truss revealed her tax and spending plans, including controversial tax cuts for the rich and government spending to ease the pressure of rising energy costs. Her plans have worried investors and the Bank of England, which began buying bonds again on Wednesday.

But why bonds? It’s looking to tamp yields down and boost bond prices back up to try and calm the market “dysfunction” down. By temporarily buying into bonds, the central bank hopes to prevent panic selling which would stress the market out even more. Falling bond prices could affect pension funds, hurt the housing market and increase the chances of a recession.

Major IPOs flop in Hong Kong

Hong Kong IPOs
FILE PHOTO: A Stock Exchange of Hong Kong (HKEX) logo in Beijing, China September 4, 2020. REUTERS/Tingshu Wang

Around the world, central banks are raising interest rates to calm inflation, driving up fears of a global recession. As tensions rise between China and the US over Taiwan (among other issues), uncertainty lingers over Chinese listings in the US (there’s a huge US inspection of Chinese audits happening in Hong Kong right now) and the COVID-free policy sticks around, stocks are taking a hit. After Hong Kong’s Hang Seng Index sank to its lowest rate in over a decade last week, stock traders have been playing it a lot safer lately.

Chinese EV-maker Leapmotor and property management unit Onewo are Hong Kong’s two largest completed IPOs for 2022 (worth a combined US$1.5 billion). Yesterday, they had their market debuts, and both totally flopped. Leapmotor ended down 34%, and Onewo dropped 6.8%. Because Hong Kong’s market is getting hit by so many obstacles, traders don’t seem to want to put big money on IPOs at the moment. Now, there probably won’t be any more major market debuts this year as investors stay cautious.

Russia updates

Vehicles are stuck in a traffic jam near banners, set up ahead of an expected ceremony and concert to declare four Ukraine’s self-proclaimed regions part of Russia following recent referendums, on a bridge in central Moscow, Russia September 29, 2022. A slogan on the banners reads: “Donetsk, Luhansk, Zaporizhzhia, Kherson – Russia!" REUTERS/Evgenia Novozhenina

Last week, Russian President Vladimir Putin announced a “partial mobilization” of its citizens into the war in Ukraine. But this partial mobilization meant requiring people to fight – particularly reservists and people with military experience. Except, reports surfaced that Russia was also calling up people that weren’t fit for service – including students, elderly people and some people with health problems.

A lot of Russians weren’t happy to hear the news, with many trying to flee the country. An exodus of people at the Finnish border caused authorities to close the border to most Russians (except those visiting to study, work or see family).

On Thursday, Putin said certain people should have been exempt and that Russia would need to fix “all mistakes” it had made so far in the mobilization. Meanwhile, Putin plans to annex four Ukraine areas after referendums in the regions to join Russia. Ukraine says it’s going to recapture the areas, and the UN is calling these votes a sham, but Russia is planning a big celebration afterwards and could use the annexation as a justification for using nuclear weapons down the road.

To end, we’ll look into:

How Venice is fighting with the ocean

If there’s a city in the West to watch as climate change causes ocean levels to rise, it’s Venice. Venice, Italy, which requires boats for most daily transportation, has been dealing with flooding for decades. But now, with climate change causing sea levels to go up, the consequences are particularly visible in this city made up of over 100 little islands.

To be clear, climate change isn’t the only thing affecting Venice – it’s been dealing with damage from boat wakes for years, and the worst flooding it’s ever seen was back in the 60s, before climate change was such a hot topic. (That’s not to mention the surfer bros hanging loose in the city’s canals and pissing off the mayor, but that’s a different story.)

Still, Venice is famous, small and wealthy, meaning it’s a sort of ground-zero for some interesting tests in the fight against the rising ocean. For example, some have recommended changes to the piles the buildings are built on – which are essentially long wooden poles that stick down into the mud – but experts say that isn’t the most practical solution. Others have said it would be possible to deepen underwater channels so that floods aren’t as bad, but that idea didn’t catch on either.

The one that did, though, is called the MOSE, which is a series of metal gates that can be deployed to keep the incoming tide from flooding the city. In theory, it could help Venice out for the next 100 years. But critics point out that it’ll only keep the city from flooding more than 110 centimeters, when parts of the city begin to flood at only 90 centimeters.

The situation in Venice is a real foil for what we could see in other cities around the world. In the meantime, though, the lesson to take is that cities built on literal shifting sands may not be around for the long run.

In other news …

📉Stocks: MSCI’s global gauge of stocks dropped 1.54% to 2,401.32.

📰Some specifics:

  • S&P 500 slipped 2.11% to 3,640.47.
  • Nasdaq Composite is at 10,737.51, falling 2.84%.
  • Dow Jones is down 1.54% to 29,225.61.
  • Hang Seng Index slipped a slightly by 0.49% to 17,165.87.

🧠Some quick factors to bear in mind:

  • Yesterday, Cleveland Fed President Loretta Mester said she doesn’t see distress in US markets altering the Fed’s campaign to hike interest rates, saying there’s more to be done. A stronger-than-expected jobless claims report didn’t boost investor sentiments, either. Plus, in the US, GDP fell at a 0.6% annualized rate last quarter.
  • The US dollar is crushing currencies worldwide, which presents complications when it comes to stock trading. European stocks are falling, German inflation topped 10% and the UK’s Bank of England is buying bonds to try and help stabilize the market.
  • Meanwhile, in China, currency intervention talk is gaining momentum. China’s central bank has asked major state-owned banks to be prepared to sell dollars and buy yuan to prop up the currency. The government has also allowed some cities to lower mortgage rates for first-time home buyers to help out the housing market situation. Asian investors will be keeping an eye out for Friday’s release of China’s Manufacturing Purchasing Managers Index (PMI).

👄Some comments and chatter:

  • “Despite substantial appreciation year-to-date, we see little pressure for policymakers to respond to dollar strength for now. Trade-weighted dollar strength is not excessive, in sync with broadly tighter financial conditions and in line with Fed objectives, though inflation benefits are small," Morgan Stanley strategists wrote in a note released Thursday.
  • “I’m not going to recommend buying any stock at the moment. There might be a very short-term technical rebound, but in the mid-term, I’m still very bearish,” Wen of KGI Asia said, regarding Hong Kong’s market.

🛢Oil: There are expectations of weaker demand and a stronger US dollar, but global supply issues show that prices could rise again. US crude fell 1.1%, settling at US$81.23 per barrel, and Brent ended at US$88.49, down 0.9%.

👛Bitcoin: At the time of writing, Bitcoin was up 0.14%, settling at US$19,439.80.

👩‍⚖️Myanmar court issues sentence for former leader: In Myanmar, a military court has sentenced ousted leader Aung San Suu Kyi and her former adviser, Australian economist Sean Turnell, to three years in prison. They’re accused of violating the country’s Official State Secrets Act, and Suu Kyi now faces 23 years in prison after the military coup of 2021. Already, the Australian government has demanded the release and return of Turnell.

🌏VP Harris in DMZ: On Thursday, US Vice President Kamala Harris visited the Demilitarized Zone between North and South Korea. The day before, North Korea fired two missiles into the ocean off its east coast. In a meeting with South Korean President Yoon Suk Yeol, Harris stressed the US-South Korea alliance as crucial for global security.

🍫Nestlé palm oil controversy: Swiss food company Nestlé is dropping its palm oil supplier, Astra Agro Lestari Tbk. There have been land-rights abuses and environmental harm accusations against this supplier, and Nestlé has decided to cut ties.

🌀Hurricane Ian pounces on Florida: As Hurricane Ian hit land, it proved to be devastating to Florida and the Southeastern US, making landfall as a Category 4 storm with winds at 150 mph. It’s now been downgraded to a tropical storm, and President Biden has declared a disaster in Florida.

Iranian solidarity: At a friendly football match between Senegal and Iran on Tuesday in Austria, Iranian players protested in solidarity with the mass demonstrations in Iran over the death of Mahsa Amini. Players covered up their national symbols with jackets during the national anthem. One player posted on Insta: “At worst I’ll be dismissed from the national team. No problem. I’d sacrifice that for one hair on the heads of Iranian women. This story will not be deleted. They can do whatever they want. Shame on you for killing so easily; long live Iranian women.”

🎎Japan and China festival: At a festival to mark 50 years since Japan and China normalized relations in 1972, vibes were tense between the two countries. Japan has been vocal about Taiwan’s authority over its security, and Japan’s only military ally, the US, has had rising tension with China recently, too. Neither country’s leader showed up for the festivities.

😎Google is casing the joint: Google just announced a bunch of new features, and one of them is set to hit Google Maps. “Neighborhood Vibe” is an update that will give users a vibe check of the area they’re going to by revealing other user reviews while looking at the area on the app.

🚦Colombia-Venezuela border reopens: This week, the Simon Bolivar International Bridge reopened between Colombia and Venezuela, prompting residents on both sides to gather and celebrate. This reopening marks the end of a seven-year border closure, and air travel between Colombia and Venezuela is also open. This shows escalating tensions between the two countries may be easing up.

🍔Adult Happy Meals?: For a limited time, McDonald’s in the US is teaming up with Cactus Plant Flea market (a streetwear brand) to create a Happy Meal for adults. While Happy Meals are usually meant for children, this grownup-friendly version will even come with a classic toy – either Grimace, the Hamburglar, Birdie or Cactus Buddy (a new guy).

Written and put together by Jake Shropshire, Vanessa Wolosz, Christine Dulion and Krystal Lai