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🏦 Half-point hikes

ECB and BoE both lift interest rates by half-point, EU to train 15,000 additional Ukrainian soldiers, Deutsche Bank delays buyback as annual profits hit 15-year high
Euronews

Euronews

Good morning! It’s Friday, February 3rd.

Finland has passed a new law that allows people aged 18 and older to legally change their gender by self-declaration and eliminates the need to go through a difficult medical and psychiatric approval process first. The legislation also abolishes a rule aimed at preventing transgender people from having kids, which was condemned by human rights groups for years.

  • To celebrate the step forward, let’s play this playlist full of Finnish songs that, apparently, everyone should know. And why not enjoy some kalsarikännit this weekend?

—Özlem, with Tanem and Can

INTERNATIONAL MARKETS

The European Central Bank raised interest rates by a half-point on Thursday and signaled at least one more hike of the same magnitude next month, reaffirming it would stay the course despite conceding that the inflation outlook is improving. The move brings the deposit rate to 2.5%, the highest since 2008, in line with what the central bank for the single-currency bloc said in December and with market expectations.

rate hikes

via FT

The Bank of England lifted interest rates by half a percentage point to a 15-year high of 4% on Thursday, but suggested that rates may have peaked. The Monetary Policy Committee voted seven to two in favor of the 10th consecutive rate increase, which came a day after a quarter-point rise by the US Federal Reserve and just before the ECB carried out its own half-point increase.

  • Brighter ahead: The BoE said it now expects a "much shallower" recession than it feared — with output falling by 1% compared with a 3% drop it said in November. The Bank expects the headline rate of inflation to fall rapidly this year from December’s 10.5% to 3.5% by the end of the year, and then 1% in 2024.

German exports fell by 6.3% month-on-month in December, figures from the Federal Statistics Office showed on Thursday, exceeding expectations for a 3.3% drop and suggesting a slowing down in Europe's largest economy despite fading supply chain problems. Imports dropped 6.1%, against forecasts for a drop of just 0.8%.

  • Furthermore: In 2022 as a whole, exports were up by 14.3% from the previous year after calendar and seasonal adjustments. Imports rose much more strongly, by 24.3%, driven by increased energy prices due to the war in Ukraine.

US unemployment claims fell for the fourth time in five weeks, highlighting the broad resilience of the labor market that threatens to keep inflation elevated. Applications for unemployment benefits ticked down by 3,000 to 183,000 in the week ended Jan. 28, the lowest since April, Labor Department data showed Thursday.

BUSINESS

Deutsche Bank delayed a decision on new share buybacks this year and missed analyst expectations in Q4 despite reporting bumper results for 2022. The German lender’s annual net profit more than doubled to €5.7 billion, exceeding analyst expectations by more than €1 billion and setting a 15-year record, thanks mainly to a tax benefit in the US.

DB

via FT

  • Furthermore: The bank lifted its dividend and said it sees sustainable growth in the years ahead. It also reaffirmed its financial targets and capital objectives for 2025.
  • However: Deutsche missed analyst expectations for revenue and pre-tax profit in Q4, mainly due to underperformance in its fixed-income trading division. Shares in the lender were down nearly 6.5% at market close.

Volvo is preparing to convert all its mainstay models, three SUVs, and two sedans, into electric vehicles and to introduce a luxury electric van. The Swedish carmaker, 82%-owned by China’s Zhejiang Geely Holding Group, is expected to launch at least six new battery electric vehicles through 2026. Volvo is following customer trends in Asia and looking to boost sales there, according to Reuters’ sources.

Oil and gas supermajor Shell reported record annual profits on the back of surging energy prices following Russia's invasion of Ukraine. Europe’s largest oil company by revenue reported adjusted full-year earnings of $39.9 billion on Thursday — more than double last year's total and the highest in its 115-year history.

  • A step back: The earnings are the latest in a series of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of soaring oil and gas prices. ExxonMobil this week posted record full-year earnings of $59.1 billion. Last month, Chevron reported a record full-year profit of $36.5 billion.

Meta reported fourth-quarter revenues of $32 billion (€29.5bn) with a 4% decline from the last year but above analysts' expectations. The company also cut its 2023 expenses outlook by $5 billion and announced an additional $40 billion for share buybacks. The company’s shares went up 25% on Thursday, largely reversing the investor anxiety over its metaverse costs. 

Sony nudged up its annual profit forecast with support from the strong performance of its videogame division. The company said it now expects operating profit for the year to March 31 to total 1.18 trillion yen (€8.5bn), up 1.7% from its previous forecast of 1.16 trillion yen.

PS5

via Engadget

  • Going like hotcakes: Sony also raised its PlayStation 5 game console sales target by one million units to 19 million for the year to March. The company sold 7.1 million PS5s from October to December, an 82% increase compared to 3.9 million in the same quarter last year.

Indian billionaire Gautam Adani defended his conglomerate Adani Enterprises after he canceled a share sale valued at $2.4 billion, causing investors to panic. He said the sale had been called off to prevent investors from facing steep losses because of the plunge in the company’s value since they signed up for the deal. Despite Adani’s speech, the group’s stocks lost $100 billion in value on Thursday.

POLITICS | WORLD

European Commission leaders were in Ukraine to hold a joint meeting in Kyiv on Friday, the first summit between them since the beginning of Russia's invasion and since Ukraine was granted candidacy status for the bloc. Leaders are expected to discuss Ukraine's progress toward becoming a full member state, and further support for Ukraine as well as global food security.

von der Leyen and Zelenskiy

via Euronews

  • In accordance: The EU is to train an additional 15,000 Ukrainian soldiers as part of its Military Assistance Mission, EU Foreign Policy Chief Josep Borrell said.

A barrage of Russian missiles hit Ukraine's easter city of Kramatorsk on Thursday, a day after a strike killed at least three people in the city.  At least five people were wounded in Thursday’s attack, a Ukrainian military official said.

Kramatorsk

via CNN

  • Meanwhile: President Vladimir Putin compared Russia's invasion of Ukraine to the fight against Nazi Germany, in a speech marking the 80th anniversary of the conclusion of the Battle of Stalingrad. Citing Germany's decision to send Leopard tanks to Ukraine, he said, "We are again being threatened by German Leopard tanks."

The European Parliament removed two lawmakers' protective immunity for their connection to the bloc's biggest corruption scandal, even though they continue to deny any links to the bribing scandals involving Qatari and Moroccan officials. Parliamentary immunities of Belgian lawmaker Marc Tarabella and Italian Andrea Cozzolino were lifted through an overwhelming vote.

Finland passed a new law —with a large majority— that makes it easier for trans people to change their legal gender, with the country's PM Sanna Marin saying it was a priority for her government. Under the new law, trans people who are 18 and older can legally change their gender through self-declaration, rather than having to go through complex medical and psychiatric processes.

The Philippines allowed the US to set up four additional military bases in the country, boosting Washington's efforts to counter China by having a strategic advantage to monitor activities in the South China Sea and Taiwan. US and Philippines' military expansion plan is part of the full implementation of the 2014 Enhanced Defense Cooperation Agreement (EDCA).

TECHNOLOGY

TikTok should be removed from app stores by Apple and Google because it poses a risk to national security, US senator Michael Bennet, a Democrat on the intelligence committee, said in a letter on Thursday. The short video app, owned by China’s ByteDance, causes concern that China's government could use it to harvest data on Americans. Congress has already banned TikTok from federal government devices.

ChatGPT is estimated to have reached 100 million monthly users in January, only two months after launch, according to a study by analytics firm UBS. The OpenAI-developed chatbox is growing much faster than any other app or service. In comparison, the vastly popular TikTok reached the same number of users in nine months, and Instagram in 2,5 years.

OpenAI

via Engadget

  • What next: On Thursday, OpenAI announced a $20 monthly subscription, initially for users in the US only. It would provide a more stable and faster service as well as the opportunity to try new features first, the company said.

Pinterest is laying off 150 employees, joining other tech companies such as Amazon, Meta, Microsoft, and Google to cut jobs after expanding rapidly over the past few years. The digital-search company that lets users create online pinboards had 4,000 employees at the end of the third quarter, and the layoffs came from teams across the company.

Researchers discovered two rare stars 11,000 light-years away from Earth in an "ultra-stripped" supernova, a star system explosion with little throw-out. It’s the first confirmed detection of a star system that will one day create a kilonova — when neutron stars collide and explode, releasing gold and other heavy elements into space. The rare stellar pair is believed to be one of only about 10 like it in our galaxy.

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