News updates from June 17: Netanyahu dissolves Israel’s war cabinet, Russian billionaire Usmanov sues UBS

Dutch Prime Minister Mark Rutte has promised to give Hungary’s Viktor Orbán an opt-out of Nato activities supporting Ukraine if he is made secretary-general of the military alliance, in a pledge aimed at securing Budapest’s support after months of vetoing his proposed appointment.

Rutte, who is backed by 29 of Nato’s 32 member countries to become the next secretary-general — including the US, UK, France and Germany — has had his path blocked by Hungary’s prime minister, the alliance’s most pro-Russia member.

Rutte and Orbán, who have clashed several times in the past, met on the sidelines of an EU leaders’ dinner in Brussels on Monday night, raising expectations Budapest’s block on the Nato appointment — which requires unanimity among alliance members — could soon be lifted.

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Merck has received US regulatory approval for its next-generation vaccine to protect adults from pneumococcal disease, which is set to challenge the dominance of Pfizer’s blockbuster Prevnar shot. 

The US Food and Drug Administration approved Merck’s Capvaxive shot for use in all adults aged 18 and over, but the jab is tailored to protect patients aged 50 and over, Merck said on Monday. Around 150,000 patients, largely older adults, are hospitalised with pneumonia, resulting from pneumococcal disease, each year in the US. 

Merck’s vaccine covers 21 serotypes, which account for 84 per cent of the pneumococcal disease in over-50s, while the 20 serotypes covered by Pfizer’s Prevnar contribute to 52 per cent of the pneumococcal disease in over-50s.

Shares in Merck rose 1 per cent in after-hours trading.

Wall Street stocks started the week on an upbeat note, climbing to a fresh record high as Big Tech names made strong gains.

The benchmark S&P 500 equity gauge closed up 0.8 per cent, while the tech heavy Nasdaq Composite added almost 1 per cent, slightly trimming an earlier advance.

Apple had added just under 2 per cent by the end of the day, while Microsoft rose 1.3 per cent.

In government bond markets, US yields rose sharply as prices came under pressure. The two-year Treasury yield added 0.08 percentage points to 4.77 per cent, while the 10-year yield rose 0.07 percentage points to 4.29 per cent. 

Apple has scrapped its “buy now, pay later” service, Apple Pay Later, which it launched in the US only last year, marking a retreat in the iPhone maker’s ambitions to become a major provider of traditional financial services. 

The tech giant says it is pivoting to a new instalment loans service offered through third-party credit and debit cards.

“With the introduction of this new global instalment loan offering, we will no longer offer Apple Pay Later in the US,” Apple said on Monday. Users with open loans through Apple Pay Later will continue to have access to features, but no new loans are being offered.

Apple announced its BNPL offering in mid-2022 and launched the service last year in what represented a major incursion into traditional banking services, with the company making short loans on its own rather than partnering with a bank. 

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Wall Street stocks marched higher, helped by gains for Big Tech stocks including Apple and Microsoft.

The S&P 500 was up 0.9 per cent by mid-afternoon in New York on Monday, while the tech-heavy Nasdaq Composite added 1.2 per cent. Apple rose 2.8 per cent, Microsoft was up 1.5 per cent and Facebook owner Meta advanced just over 1 per cent.

At the same time, US government bonds came under pressure. The yield on the policy-sensitive two-year Treasury was up 0.08 percentage points at 4.76 per cent, while the yield on the benchmark 10-year yield adding 0.06 percentage points to 4.28 per cent. Yields rise as prices fall.

Those moves came as several companies tapped the corporate bond market on Monday, including Home Depot with a nine-part offering.

US markets have a shortened week ahead, with the Juneteenth public holiday on Wednesday.

Trafigura has agreed to pay a $55mn fine as part of a settlement with US regulators over charges of fraud and manipulation, in the latest blow to the trading house that has been in the crosshairs of authorities over historical malpractice.

The Commodity Futures Trading Commission charged the group with offences alleged to have taken place between 2014 and 2020, including trading gasoline while in possession of nonpublic information, manipulating a fuel oil benchmark and impeding whistleblower communications. 

Trafigura said it neither admitted nor denied the allegations but added that since the period in question it had “voluntarily undertaken significant steps to enhance its compliance programme”.

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Patrick Harker, president of the Philadelphia Fed, on Monday said that if the US economy behaved as he expected, one rate cut would be “appropriate” by the end of the year.

Harker’s stance is in line with the median voter on the Federal Open Market Committee, which last Wednesday revealed using their so-called “dot plot” projections that they expect to cut interest rates just once this year.

Still, Harker echoed Fed chair Jay Powell’s messaging that US rate-setters would still assess the data before determining rate cuts.

“I see two cuts, or none, for this year as quite possible if the data break one way or another,” Harker said.

Investor Bill Gross has smashed several records for rare stamp collections, including the most expensive US stamp ever sold and the single highest-grossing philatelic auction.

His 1868 one cent Z Grill, one of two known to be in existence, shattered the record for a single US stamp by selling for $4,366,000, more than double the $2mn paid last year for a single inverted Jenny stamp. The winning bid was $3.7mn plus an 18 per cent “buyer’s premium”.

Gross, dubbed the Bond King when he led asset manager Pimco, had amassed the most complete array of US stamps in history. It brought in $19.2mn at a two-day sale over the weekend at Siegel Auction Galleries, including more than $18mn for the first day, when the 100 most valuable stamps were auctioned off.

Italy’s banking sector trade unions have called the first ever strike at Borsa Italiana, the national stock exchange, accusing owner Euronext of massive divestments from the country.

Trade unions Fabi, First Cisl and Fisac Cgil said workers would strike for two hours on June 27 and other forms of protest would follow. The action was prompted by Euronext’s “constant, systematic and overall divestments from Italy and the emptying of [its] structures from within”, the unions said.

Euronext rejected the unions’ complaints and called for “constructive dialogue”.

European stocks closed higher, with French equities among the best performers having on Friday notched up their worst weekly performance in more than two years.

The region-wide Stoxx 600 rose 0.1 per cent on Monday, Germany’s Dax gained 0.4 per cent, while London’s FTSE 100 fell less than 0.1 per cent. 

France’s Cac 40, which tumbled last week on election jitters, gained 0.9 per cent. Financials — which sold off last week as they hold a large amount of debt and may be exposed to windfall taxes under a populist government — and healthcare stocks were among the best performers on Monday.

Brussels is set to clear Lufthansa’s purchase of a €325mn minority stake of Italy’s ITA Airways after obtaining concessions that appeased competition worries, said two people with knowledge of the situation.

The concessions will give rivals more slots at Milan’s Linate airport and should also improve competition in the long-haul market.

The European Commission had been under political pressure from the Italy’s government as it lacks sufficient funds to keep financing ITA, the successor to Alitalia.

An official announcement is expected in early July although the timing could still shift. The EU and Lufthansa declined to comment.

Wall Street stocks and government debt slipped in early dealings, starting a shortened week of trading in the US on the back foot.

The benchmark S&P 500 was down 0.1 per cent shortly after the opening bell in New York on Monday, while the tech-dominated Nasdaq Composite was steady. US stocks made modest gains last week even as European equities lost ground. US markets are closed on Wednesday.

The interest rate-sensitive two-year Treasury yield was up 0.06 percentage points to 4.75 per cent, reflecting a decline in price.

A survey on Monday showed manufacturing activity in New York state contracted less than forecast in June. But the main US economic data release this week is retail sales, which are expected on Tuesday to show a 0.2 per cent increase in May from a month earlier, according to a poll conducted by Reuters. A robust figure could suggest that US consumer spending remain resilient even as higher rates have crimped household budgets.

Manufacturing activity in New York state contracted by less than expected in June, offering a bright spot among recent surveys that have showed the sector in sluggish shape.

The headline index of the Federal Reserve Bank of New York’s Empire State manufacturing survey improved to a reading of minus 6, from minus 15.6 in May. That was the highest level since February, and beat economists’ forecasts of minus 9.

Readings below zero indicate the sector is contracting, and the index has only been in expansion territory in one month — February — since November.

The yield on the two-year Treasury was up 0.05 percentage points at 4.74 per cent, with the slightly stronger data being perceived as potentially reducing the chances of near-term interest rate cuts.

Uzbek-Russian billionaire Alisher Usmanov has filed a lawsuit in Frankfurt against UBS, according to a statement by his representatives, accusing the bank of triggering a “politically motivated investigation” against him by flagging multiple transactions to the German authorities as “suspicious”.

Usmanov, who was hit with EU sanctions shortly after the start of Russia’s invasion of Ukraine, last year won a legal victory in Frankfurt when a court ruled searches of his property in Germany in 2022, conducted as part of a money-laundering investigation, were unlawful.

Now, Usmanov is accusing UBS of sending “more than a dozen absurd and unsubstantiated, if not knowingly false, reports” to German authorities about his transactions, the statement said.

UBS declined to comment.

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Russian President Vladimir Putin will travel to North Korea on Tuesday for a two-day trip, the Kremlin has said, further deepening ties between the two countries which have been growing closer since the start of Moscow’s full-scale invasion of Ukraine.

The visit will mark Putin’s first to Pyongyang in more than two decades. It follows the delivery of millions of North Korean artillery shells to Russia for its armed forces in Ukraine, and Moscow’s provision of oil and petroleum products to Pyongyang. The two sides have also begun developing closer trade, tourism and transport ties in recent months.

London was the main drag on UK productivity growth between 2019 and 2022, resulting in the lowest productivity gap between the capital and the rest of the country on record.

Output per hour worked fell 2.7 per cent in London between 2019 and 2022, the Office for National Statistics said on Monday. There was expansion in every other region except Wales, including 7.9 per cent growth in the North West.

London was still 26.2 per cent more productive than the country-wide average, but this was the lowest lead since records began in 1998 and well below the peak of nearly 40 per cent in 2007.

EU ministers have given the green light to a controversial law to preserve nature despite heated political campaigning and threats from Vienna that it would seek to annul the outcome of the vote.

The Nature Restoration Law, which was passed on Monday, sets a legally binding target for EU countries to preserve a fifth of the bloc’s land and seas but has been heavily contested by conservative, right wing and farming groups.

Austria’s chancellor Karl Nehammer said that the Austrian climate minister Leonore Gewessler, who voted in favour of the legislation, had not been permitted to do so by Vienna and that therefore holding the vote was “unlawful”.

European stocks rose in early trading after tumbling last week on concerns over the far right’s showing in upcoming French elections. 

The region-wide Stoxx 600 added 0.4 per cent, with tech groups and financials among the best performing stocks. Germany’s Dax rose 0.5 per cent and London’s FTSE 100 gained 0.4 per cent. 

France’s Cac 40 rose 0.6 per cent, having last week suffered its worst five-session run in more than two years as President Emmanuel Macron’s decision to call snap elections unnerved investors.

Ukraine has urged international bondholders to accept deep cuts on more than $20bn of debt to help finance the nation’s war effort, after initial talks failed to produce a deal two months before a payment standstill runs out.

Bondholders turned down a proposal by Ukraine to reduce the value of foreign currency bonds by up to 60 per cent in negotiations this month, Ukraine’s finance ministry said.

An investor committee that represents holders of around 20 per cent of the bonds instead proposed cuts of just over 22 per cent, but the IMF said that this would fail key debt targets, according to the ministry.

“Strong armies must be underpinned by strong economies to win wars”, said the country’s finance minister Sergii Marchenko.

The billionaire owner of L’Occitane has made a new proposal to minority shareholders as he works towards taking the Hong Kong-listed skincare company private.

Reinold Geiger, who already holds a more than 72 per cent stake in the company, is now offering a share alternative of 10 rollover shares in the private company for every share held. The terms come on top of an existing cash option of HK$34 per share.

Geiger made his first offer to delist the company from the Hong Kong stock exchange, where it floated in 2010, in April. Shares have since climbed more than 10 per cent to about HK$33.

UBS has offered to pay former Credit Suisse clients 90 per cent of the funds they invested with collapsed specialist finance firm Greensill Capital.

The Swiss lender is hoping to draw a line under one of the biggest and most damaging scandals that rocked Credit Suisse, its former rival that itself imploded last year.

UBS said on Monday morning that the offer would be open until the end of July and that it would provision $900mn in the second quarter of the year linked to the offer, but that it would have no material impact on its financial results or capital requirements.

Asian stock markets were mixed on Monday, with Indian and Hong Kong indices rising while Japanese stocks fell.

India’s Nifty 50 edged up 0.3 per cent during early trading, with vehicle manufacturers Eicher Motors and Mahindra & Mahindra leading gains.

Hong Kong’s benchmark Hang Seng index added 0.2 per cent, buoyed by a rally in BYD Electronic, a subsidiary of the electric vehicle powerhouse that manufactures consumer electronics components.

Japan’s Topix slid 1.7 per cent, the worst of any major regional index for the day, led lower by big consumer groups.

In currency markets, Indonesia’s rupiah weakened 0.8 per cent against the US dollar to Rp16,395.

Australians will be entitled to visa-free travel to China, premier Li Qiang said in a joint press conference with Prime Minister Anthony Albanese in Canberra on Monday.

“We agreed to provide each other with reciprocal access to five-year multiple entry visas . . . China will also include Australia in its visa waiver programme,” Li said, according to a summary.

Albanese emphasised the importance of dialogue in managing relations with Beijing, Australia’s largest trading partner.

Li also announce visa-free travel from New Zealand over the weekend. Both Australia and New Zealand are members of Five Eyes, a security alliance with the US.

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Japanese equities slid on Monday morning, leading losses in Asia while Hong Kong’s stock market edged higher.

Japan’s benchmark Topix dropped 1.5 per cent, while the Nikkei 225 fell 2.1 per cent. The yen weakened slightly against the dollar to ¥157.47.

Hong Kong’s Hang Seng index was the only Asian stock market to rise in early trading, climbing 0.4 per cent. BYD Electronic, a subsidiary of the electric vehicle powerhouse that manufactures consumer electronics components, led gains with a 7 per cent increase.

New home prices in China’s largest or “first tier” cities fell 3.2 per cent year on year in May compared with 2.5 per cent in April.

The decline underlines the challenges Beijing faces in stabilising the country’s real estate sector. Last month policymakers announced plans to buy up unused housing stock and relax mortgage restrictions in a bid to boost the market.

Other data for May showed property investment declined 10.1 per cent year on year and residential property sales fell 30.5 per cent from the same period last year.

Beijing has placed most of its bets for growth this year on industrial production, particularly exports, and investment in infrastructure and manufacturing.

China’s industrial output grew less than expected in May as policymakers struggle to overcome a deep property slump and reignite investor confidence in the world’s second-largest economy.

Industrial production rose 5.6 per cent year on year in May, data from the National Bureau of Statistics showed, down from 6.7 per cent in April. The median estimate from a Reuters poll of analysts forecast a 6 per cent increase.

Fixed asset investment rose 4 per cent, compared with a Reuters forecast of 4.2 per cent, while retail sales grew 3.7 per cent, beating estimates of a 3 per cent increase and up from 2.3 per cent in April.

Events: China’s Premier Li Qiang arrives in Canberra as part of a regional tour. New Zealand’s Prime Minister Christopher Luxon travels to Japan to meet Prime Minister Fumio Kishida.

Central banks: The People’s Bank of China announces its decision on the one-year medium-term lending facility rate, which manages banking sector liquidity.

Economic data: China releases data on May industrial production, retail sales, fixed-asset investment, housing prices and urban unemployment. South Korea announces revised trade figures for the same month.

Corporate updates: Longi Green Energy Technology, the world’s largest solar panel manufacturer, holds its annual meeting.

A Chinese vessel collided with a Philippine supply ship in the South China Sea on Monday morning, according to a statement from China’s coastguard.

The collision took place at 5.59am in waters around the Second Thomas Shoal, said the coastguard, which blamed the Philippines for the incident.

The supply ship “approached a normally navigating Chinese ship in a deliberately dangerous and unprofessional manner, resulting in a collision”, the coastguard said.

China claims a large portion of the South China Sea, including the Second Thomas Shoal, as part of its territory. A Chinese coastguard rule allowing it to detain foreign nationals in the disputed areas of the South China Sea came into effect on Saturday.

Dan Gertler, a billionaire under sanctions, is set to receive hundreds of millions of dollars as part of a controversial US plan to lift restrictions on the Israeli tycoon if he sells his remaining mining interests in the Democratic Republic of Congo.

Gertler was sanctioned by the US Treasury in 2017 for alleged corrupt dealing in Congo, but retains lucrative royalty streams from three mining projects there.

Under the US proposal, the Treasury would provide Gertler with “special” licences to sell the three royalty streams back to the Congolese government and would eventually grant him a “general” licence to regain access to the US financial system.

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Australia’s trade with China has jumped in the past year to record levels, as relations between the two countries recovered from a damaging dispute sparked by the Covid-19 pandemic despite wider security tensions in the region.

Total trade with China reached A$219bn (US$145bn) in 2023, the highest-ever level and up from A$168bn in 2019, the last year before the outbreak of the pandemic and imposition of Chinese tariffs and sanctions, according to official data from the Australian government.

The importance of the trade ties was on clear display this weekend, as Chinese premier Li Qiang made a four-day visit that included Australia’s mining and winemaking regions, underscoring the importance of the country’s commodities to the Chinese economy even as Canberra has embraced closer security ties with Washington.

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