French Banks Tax Probe
The French government aims to recover €2.5bn in back taxes from major banks implicated in an alleged tax avoidance scheme related to dividend payments. Although the banks involved were not disclosed, Gabriel Attal, the budget minister, disclosed the potential losses caused by cum-cum trades, transactions designed to exploit tax advantages linked to dividends. This marks the first time the French government has publicly quantified the impact of such trades on public funds.
Russia’s Surging Oil Exports
According to the International Energy Agency, Russia’s oil exports in April reached their highest level since the full-scale invasion of Ukraine, with approximately 80% of shipments going to China and India. The country’s oil exports surged to 8.3 million barrels per day, surpassing the average of 7.7 million and 7.5 million barrels per day in 2022 and 2021, respectively.
Real Estate Warning Signals
The real estate industry is being cautioned about a prolonged period of higher interest rates by Mark Allan, CEO of Landsec, one of Britain’s largest landlords. Allan highlighted the drop in Landsec’s portfolio value and emphasized that the era of ultra-low interest rates over the past decade was an anomaly. He urged property investors not to rely on a return to normalcy and anticipate sharp decreases in interest rates.
Declining Hiring Confidence
The percentage of small-business owners expecting workforce expansion dipped below 50% for the second consecutive month in May, reaching the lowest level since June 2020, when the Covid-19 pandemic was in its early stages. A recent survey conducted for The Wall Street Journal revealed this decline in confidence among small-business owners regarding future hiring intentions.
Rebound in US Retail Sales
Retail sales in the United States rebounded in April, growing by a seasonally adjusted 0.4% compared to a revised decline of 0.7% in March, as reported by the Commerce Department. The increase in sales, the first since January, was driven by higher spending at auto dealerships, home-improvement stores, bars and restaurants, as well as online purchases. However, there was a reduction in spending at gasoline stations and stores selling sporting goods, musical instruments, and books.
US Manufacturing Output Rise
Manufacturing output in the United States rose by 1% last month, according to Federal Reserve data, following downward revisions to the preceding two months. When combined with mining and utilities, total industrial production increased by 0.5%. The growth in factory output was driven by a significant 9.3% surge in motor vehicle production, along with increases in primary metals, computers and electronic products, and chemicals. This surge in automaker production represented the largest increase since October 2021.
German Investor Confidence Decline
Investor confidence in Germany continues to decline for the third consecutive month, raising concerns about a potential recession in Europe’s largest economy. The ZEW institute’s expectations gauge dropped to -10.7 in May, down from 4.1 in April, marking the first sub-zero reading of 2023. Economists had predicted a decline to -5. The index of current conditions also worsened, further indicating economic challenges.
AI Regulation Urgency
OpenAI’s CEO, Sam Altman, will emphasize the importance of flexible regulation for artificial intelligence as he testifies before US lawmakers. Altman, creator of AI chatbot ChatGPT, will stress the need for companies to adapt to new technological developments in the face of increased scrutiny from regulators worldwide. He will assert that AI regulation is crucial for the industry during his first congressional testimony.
Gold Prices Drop on Retail Sales
Gold (GC:CMX) prices declined as traders focused on robust retail sales data ahead of a crucial meeting to address the US debt-ceiling impasse. Stronger-than-expected US retail sales figures in April highlighted the resilience of consumer spending, leading to a rise in the dollar and a corresponding 0.8% drop in gold prices.
Qatar’s Market Strengthening Move
In an effort to attract more foreign investors and strengthen its markets, Qatar is exploring plans to increase trading in local stocks. The country’s $450 billion sovereign wealth fund, the Qatar Investment Authority, and the General Retirement and Social Insurance Authority are reviewing a proposal to consolidate their local stock holdings, which are valued at up to $3 billion, into a separate entity. This move aims to enhance interest from international investors and deepen Qatar’s financial markets.
Canada’s Inflation Rebound
Statistics Canada revealed that the consumer price index in Canada rose by 4.4% in April compared to the previous year, marking the first increase in the rate of headline inflation since June 2022. The reported figure surpassed economists’ expectations, as a Bloomberg survey projected a 4.1% gain. This rise in inflation follows the 4.3% increase recorded in March.