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US stocks rally as oil price retreats from recent high

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US stocks rally as oil price retreats from recent high

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Global stocks rose on Thursday, helped by a drop in oil prices ahead of highly-anticipated US and eurozone inflation data.

Brent crude fell 0.8 per cent to trade at $95.78 per barrel, having earlier risen above $97 a barrel to its highest level since November. US marker West Texas Intermediate lost 1.1 per cent to $92.60.

Wall Street’s benchmark S&P 500 gained 0.8 per cent, while the technology-focused Nasdaq Composite rose 1.1 per cent in choppy trading in New York.

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The price of Brent crude had been heading towards $100 a barrel in recent weeks on concerns over global supply, which were stoked on Wednesday after a weekly US government report indicated that stockpiles at a critical delivery hub fell further.

Crude prices have risen 35 per cent since June after some of the world’s biggest producers announced a series of supply cuts to last until the end of this year, adding to investors’ concerns over persistent inflation.

“The biggest question mark for the inflation outlook is the evolution of fuel prices,” said Wouter Thierie, an analyst at ING.

“The danger . . . is that if oil prices stay high for longer, companies will increasingly pass on these higher fuel prices, causing it to trickle down to core inflation again.”

Europe’s region-wide Stoxx Europe 600 index closed up 0.4 per cent, ending a five-day losing streak. France’s Cac 40 advanced 0.6 per cent and Germany’s Dax gained 0.7 per cent.

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Despite the pullback in the oil price late on Thursday, recent gains have hit the bond market.

Yields on 10-year UK gilts were up 0.13 percentage points at 4.48 per cent on Thursday. Bond yields rise when prices fall.

Yields on the 10-year German Bund, a regional benchmark in Europe, rose 0.1 percentage points to 2.94 per cent, having hit their highest level since 2011.

The euro advanced 0.5 per cent to trade at $1.0575, edging up from a nine-month low.

Investors are turning their attention to US inflation figures due out on Friday, which are expected to show that the annual rate of consumer price growth rose to 5.3 per cent in August, up from 3.3 per cent in the previous month.

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German data on Thursday showed the rate slowed to 4.3 per cent year on year in September, down from 6.4 per cent in the previous month and below analysts’ forecasts of 4.5 per cent. Inflation figures from Spain also came in below expectations. Eurozone inflation data is also due to be published on Friday.

The European Central Bank at its last meeting raised interest rates to an all-time high of 4 per cent and signalled that its historic campaign had probably drawn to a close, unless surprises in the price data push policymakers towards further action.

“Today’s and tomorrow’s inflation figures are likely to be scrutinised by a data-dependent ECB and play a central role in the next interest rate announcement in October,” said Pia Fromlet, euro area economist at SEB.

In Asia, Hong Kong’s Hang Seng index gave up 1.4 per cent, hitting its weakest level in 10 months, while China’s benchmark CSI 300 lost 0.3 per cent. Japan’s Topix was down 1.4 per cent.

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US says Russia helping China develop military technologies

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US says Russia helping China develop military technologies

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The US has warned that Russia is helping China develop submarine, aeronautic and missile technologies in exchange for Beijing’s support for Moscow’s war against Ukraine.

Russia’s deepening sharing of military knowhow in areas such as stealth and surveillance would have a “negative and concerning impact” on the security of the US and its allies, Kurt Campbell, US deputy secretary of state, said on Tuesday.

“These new areas of collaboration between Russia and China are in the areas of design and . . . application. They are significant,” Campbell told reporters during a visit to Brussels to meet EU, Nato and Belgian officials.

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The collaboration could have a “very significant impact on Chinese capabilities and deployments in the western Pacific”, he added.

Russia has historically been cautious about co-operating with China on military technology out of concern about giving too much assistance to the development of the large and highly capable forces in its neighbouring country and a desire to protect its intellectual property.

But Campbell said Russian support, provided in exchange for Chinese supplies of items such as parts used to build Russian weapons, was “orchestrated at the highest levels” in Moscow and Beijing.

The co-operation was “not a tactical alliance, this is a fundamental alignment”, he said.

The Chinese embassy to the EU in Brussels did not immediately respond to a request for comment on Campbell’s comments. Beijing has previously denounced accusations it is supporting Russia’s war effort as “biased, slanderous, and provocative”, insisting it has taken a “constructive role” on the war in Ukraine and has not provided lethal weapons to either side.

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Alexander Gabuev, director of the Carnegie Russia Eurasia Center in Berlin, said Moscow had become more willing to collaborate with Beijing on military technology after its annexation of Crimea in 2014 and the process had accelerated since its full-scale invasion of Ukraine in 2022.

“Russia realised that China is pumping tens of billions of dollars into defence research and production, annually,” Gabuev said.

“Russia realised that . . . in certain limited areas, where Russia still has superiority, it has a window of opportunity right now to grow into the Chinese market, earn money, and in the best-case scenario, create a joint value chain.”

Russia on Tuesday announced the start of naval exercise that it said would be joined by four Chinese warships © Russian Defense Ministry/AP

Several Russian scientists working in areas related to weapons development have been given long prison sentences in the past decade for allegedly passing state secrets to China.

Last week, Alexander Shiplyuk, a physicist from a renowned Siberian institute working on scientific research related to the development of Russian hypersonic missiles, received a 15-year sentence for treason. Reuters reported that his arrest followed a trip to a conference in China.

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However, western sanctions have made Moscow increasingly dependent on China for access to dual-use goods needed to produce weapons for deployment in Ukraine and to refurbish its military-industrial production facilities.

Russian President Vladimir Putin himself confirmed in 2019 that Moscow was helping Beijing develop a missile-defence early-warning system.

China’s new Type 096 nuclear ballistic missile submarine was also developed with support from Russian technology for making its propulsion system more silent, according to US naval researchers.

Until relatively recently, Russia had resisted sharing advanced submarine technology with China. In 2021, the Rubin Central Design Bureau, one of Russia’s key submarine research centres, was hacked in an intrusion that cyber security experts attributed to Chinese actors.

China and Russia have also been deepening military co-operation by holding large joint naval and air exercises.

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On Tuesday, Russia announced the start of a week-long naval exercise involving over 400 vessels and submarines in the Pacific and Arctic oceans and the Mediterranean, Caspian and Baltic seas. Four Chinese warships would join the exercise in the Sea of Japan, it said.

Announcing the start of the drills, Putin accused the US of “trying to maintain its global military and political dominance at any cost”.

“Under the pretext of countering the alleged Russian threat and containing the People’s Republic of China, the US and its satellites are increasing their military presence near Russia’s western borders, in the Arctic and in the Asia-Pacific region,” he said.

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Tropical Storm Francine expected to develop into a hurricane

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Tropical Storm Francine expected to develop into a hurricane

A tropical storm that has developed over the Gulf of Mexico is expected to grow into a hurricane on Tuesday, the National Hurricane Center (NHC) said.

Tropical Storm Francine is expected to make landfall as a hurricane on Wednesday over Louisiana, where Governor Jeff Landry has declared a state of emergency.

It will bring four to eight inches of heavy rainfall, potential tornadoes and damaging winds to much of central and eastern Louisiana, forecasters said.

Residents along both the upper Texas and Louisiana coastlines are being warned of life-threatening storm surge and have been urged to complete their hurricane preparations by Tuesday evening.

A storm surge means there is danger of water rising from the coastline and moving inland. In some places, water may rise up to 10 feet (3 m).

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The hurricane is also expected to bring “considerable” flash and urban flooding in parts of Louisiana, which recently marked the 19th anniversary of Hurricane Katrina, the NHC warned.

Francine’s development follows a quiet August and early September during the Atlantic hurricane season, which typically lasts until November. Experts earlier this summer had predicted a busier season this year.

As of Tuesday morning, Tropical Storm Francine was about 395 miles (540 km) southwest of Cameron, Louisiana, a town overlooking the Gulf of Mexico.

Its maximum winds are currently 65 mph (100 km/h), though that is expected to strengthen.

Some schools and colleges in the state have closed on Tuesday through Wednesday in anticipation of the hurricane.

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US oil and gas producers on the Gulf of Mexico, including Exxon Mobil and Shell, had evacuated staff and in some cases paused drilling in preparation for the storm.

Governor Landry said his state of emergency declaration “will allow parishes statewide to have the resources to help protect the life, safety, and welfare of the citizens of Louisiana.”

Francine is the sixth storm to be named in 2024.

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Top EU court rules Apple must pay €13bn in back taxes

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Top EU court rules Apple must pay €13bn in back taxes

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Apple has suffered a significant defeat after the EU’s top court ruled that the iPhone maker must pay €13bn in back taxes, overturning an earlier decision in the Big Tech group’s favour.

The ruling relates to a 2016 case when the EU’s competition chief Margrethe Vestager said that Ireland had given the company an illegal sweetheart deal, amounting to a tax rate of less than 1 per cent.

The European Court of Justice said on Tuesday its ruling “confirms the European Commission’s 2016 decision: Ireland granted Apple unlawful aid which Ireland is required to recover”.

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A lower court had in 2020 quashed the commission’s order and the ECJ’s decision to overturn that ruling was unexpectedly decisive.

Apple chief executive Tim Cook has previously dismissed the commission’s position as “total political crap”. On Tuesday the company said the EU was “trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the US”.

The case has been watched carefully across the bloc as a watershed moment over Big Tech’s tax affairs in Europe.

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