Good morning. Today is Thursday, January 5th.
UK PM Rishi Sunak gave his new year speech with five big promises, focusing on improving the health system and the economy, and fighting illegal immigration. Oh, also — being the "finance bro" he is, Sunak added that he wants all students to learn math until they turn 18. While all of this was going on, it is probably important to note that only 10% of the UK's normal rail services are due to run today, with 12,500 train drives staging walkouts. No big deal.
Here’s a smooth playlist to accompany you in the background as you read today’s news.
—Tanem and Can
• The downturn in eurozone business activity eased for the second consecutive month in December, a survey by S&P Global showed on Wednesday, as price pressures slightly subsided and the labor market remained resilient. The final Composite PMI for the single-currency bloc registered at 49.3, up from 47.8 in November and the slowest rate of decline since July 2022, but still below the 50-line that separates growth from contraction.
• Inflation in France was pushed down by lower energy prices, raising expectations that consumer prices have peaked across the region. The Harmonised Index of Consumer Prices (HCIP) fell to 6.7% year-on-year, according to preliminary figures released by INSEE on Wednesday, following November’s 7.1%.
- Looking ahead… Eurozone inflation is expected to drop into single digits for the first time in three months when December price data for the bloc is published on Friday. Analysts predict a decline to 9.5% — the lowest level since August. A sharper-than-expected fall in inflation in the first half of 2023 could allow the ECB to stop raising rates before the summer.
• Fresh food prices at British supermarkets rose by 15.0% from a year ago in early December, figures from the British Retail Consortium (BRC) showed on Wednesday, which marked the biggest annual increase since at least 2005 when records started. The BRC said the overall annual rate of shop price inflation reported by its members was 7.3%.
- Cooling expectations: Public expectations for future inflation fell in December, according to a separate survey from Citi and YouGov, signaling a reduced risk that high inflation would become entrenched. The US lender said the average expectation for inflation in 5-10 years dropped to 3.6% in December from 3.9% in November, after peaking at 4.8% in August.
- More figures: The UK housing market slowed dramatically in November and people ramped up borrowing on credit cards, according to Bank of England data on Wednesday that underscored the effects of rising interest rates and the cost-of-living crisis.
• All officials at the Federal Reserve's Dec. 13-14 policy meeting agreed the US central bank should slow the pace of its aggressive interest rate hikes, allowing them to continue increasing the cost of credit to control inflation but in a gradual way meant to limit the risks to economic growth, according to the minutes of the meeting released on Wednesday.
- However: Fed officials also acknowledged they had made "significant progress" over the past year to bring inflation down. As a result, the central bank now needed to balance its fight against rising prices with the risks of slowing the economy too much and "potentially placing the largest burdens on the most vulnerable groups" through higher-than-necessary unemployment.
• The BMW Group sold around 100,000 fewer cars in 2022 at 2.4 million vehicles, but more than doubled the proportion of fully-electric cars sold to reach almost 10% of total sales, a spokesperson said on Wednesday, adding that the German automaker plans to raise the share of battery electric vehicles in total sales to 15% in 2023.
- Zoom in: The core BMW brand sold 2.1 million vehicles last year, down from a record 2.2 million in 2021, as Covid-19 lockdowns in China hindered supply and record-high inflation in Europe held back demand. Still, BMW has so far offset the dip in sales volumes with higher prices, with Q3 profits rising in 2022.
• General Motors on Wednesday posted a 2.5% yearly rise in US new vehicle sales in 2022, outselling its biggest competitor Toyota, thanks mainly to an easing of inventory shortages and strong demand for its cars and trucks. GM, which lost the spot as the top US automaker at the end of 2021 for the first time since 1931, said its annual sales rose to 2,274,088 vehicles last year.
- Furthermore: Toyota has been among those hit acutely by surging material costs and persistent chip shortage, forcing the automaker to cut its full-year production target in November. Sales of its SUVs, a key segment, fell 8.6% in 2022, data on Wednesday showed.
• French energy suppliers have agreed to allow bakeries to negotiate new payment plans for 2023 to avoid going out of business, as the country’s iconic boulangeries face an existential threat due to the double hit of higher wheat and energy prices. In addition, the government announced plans on Tuesday to support the industry by allowing bakers to spread tax payments.
• Russia’s Defense Ministry said that the "mass use" of cell phones by soldiers —normally banned— was the "main cause" of the deadly Makiivka strike on New Year’s Eve, as it led Ukraine to detect the location of the Russian army barracks.
- Details: Russia’s Defense Ministry also said four rockets from US-made HIMARS launchers were used in the strike in which the death toll reported by the ministry went up to 89, while Ukraine claimed it to be around 400.
- What’s more: Ukraine's President Volodymyr Zelenskiy said Russia was planning to call up more troops for a major offensive, and will "throw everything they have left" to turn the tide of war — just as they face one of their biggest internal criticism of war over the strike.
• UK PM Rishi Sunak promised to cut National Health Service waiting times, turn the economy around, and stop migrant boats crossing the English Channel — before the planned general election in 2024. Sunak set out five promises that he asked the country to hold him accountable for, including halving inflation in the next year and promising more health service choices for patients.
• NATO's KFOR force removed roadblocks in Kosovo that ethnic Serbs have put on, in the weeks-long standoff between Serbia and Kosovo. After removing two burnt-out trucks from a key road in Kosovo, an EU spokesperson said they welcome the de-escalation of tensions as the bloc expects Serbs living in Kosovo to end their protest against government institutions.
• Japan’s bid to reboot its nuclear industry risks being set back by a shortage of engineers and production capacity, which has seen the exit of more than 20 manufacturers since the Fukushima accident in 2011. PM Fumio Kishida’s new policy calls for the construction of new nuclear power plants, but the industry’s nuclear supply chain is under strain, warned industry executives and experts.
- A step back: Japan sourced about a third of its electricity from 54 nuclear reactors before the Fukushima disaster. Now, only nine are operational. "Not only did construction cease, but jobs such as replacing and repairing equipment that would have been needed if plants had been in operation were also drastically reduced," said Tomoko Murakami, senior economist at the Institute of Energy Economics.
• Twitter announced on Wednesday it will expand the types of political advertisements allowed on the platform, as the company prioritizes growing revenue under Elon Musk's leadership. Twitter added that it would also be more flexible with its ad policy for "cause-based ads" in the US, and aims to eventually align its ad policy "with that of TV and other media outlets."
- A step back: Twitter banned political ads in 2019 after the platform —along with others like Facebook— faced widespread criticism for allowing election misinformation to spread across its services. Twitter had also restricted ads related to social causes.
• Microsoft is planning to integrate the OpeanAI software powering ChatGPT into its Bing search engine, in a bid to compete with Google, according to The Information. The Elon Musk-founded OpenAI's ChatGPT, into which Microsoft had invested $1 billion in 2019, could help Bring give results to users in a friendlier and more intuitive manner.
• Salesforce is planning to cut its workforce by 10% and close some offices, in a bid to cut costs after pandemic hiring left it with "too many people" in the midst of an economic slowdown. The cloud-based software company added that it expects the job cuts to bring $1.4 billion to $2.1 billion in charges, of which about $800 million to $1 billion will be recorded in the fourth quarter.
• An Indian tribunal rejected Google's attempt to prevent the country's competition watchdog from penalizing the company for "abusing its dominant position" in Android devices, the Financial Times reported. The tribunal, NCLAT, rejected Google from trying to block a $162 million antitrust fine and ordered Google to deposit 10% of the watchdog's total fine — while agreeing to consider the tech giant's appeal against the order.