WORLDWIDE: HEADLINES
UK’s Labour pushes for vote on U.S. minimum corporation tax plan
Britain’s main opposition Labour Party said it will push for a vote in parliament on Monday over support for U.S. plans to introduce a global minimum corporation tax rate.
The U.S. Treasury Department earlier this week said it would accept a floor of at least 15% during international negotiations, a rate significantly below its proposed 21% minimum for U.S. multinational firms.
The Biden administration’s proposed Global Intangible Low-Taxed Income tax (GILTI) rate of 21%, aimed at capturing revenue shifted by companies to tax-haven countries, was widely viewed as a starting point for renewed OECD talks on a global minimum tax.
While France and Germany backed 21%, other countries have pushed for a lower rate, as previous OECD discussions on the subject had centered around 12.5%, the same rate charged by Ireland.
Britain will raise its main corporation tax rate to 25% from 19% in 2023, finance minister Rishi Sunak announced earlier this year.
Labour is tabling an amendment to the Finance Bill.
“This global pact will bring in extra tax benefitting Britain, while stopping huge multinationals and online giants from undercutting our businesses,” said Labour finance spokeswoman Rachel Reeves.
Britain’s finance ministry has said reaching an international agreement on how large digital companies are taxed “is a priority” and that “we welcome the U.S.’ renewed commitment to tackling the issue and agree that minimum taxes might help to ensure businesses pay tax”.
“However, it also matters where the tax is paid and any agreement must ensure digital businesses pay tax in the UK that reflects their economic activities.”
Full coverage: REUTERS
SoftBank CEO slams Olympics as Japan races to catch up on vaccinations
Japanese tycoon Masayoshi Son warned of significant dangers around holding the Olympics in Tokyo, where the government on Monday kicked off a mass vaccination drive to catch up with other countries and ensure a “safe and secure” Games.
In a series of tweets, the SoftBank Group (9984.T) CEO expressed bewilderment and concern about the Tokyo Olympics, calling Japan a “vaccine laggard” and saying the slow inoculation drive less than two months before the start of the Games could put people’s lives at risk.
“Currently more than 80% of people want the Olympics to be postponed or cancelled. Who and on what authority is it being forced through?” the billionaire executive wrote in a Twitter post in Japanese over the weekend.
In a follow-up tweet late on Sunday, Son wrote: “Does the IOC (International Olympic Committee) have the power to decide that the Games would go ahead?
“There’s talk about a huge penalty (if the Games are cancelled). But if 100,000 people from 200 countries descend on vaccine-laggard Japan and the mutant variant spreads, lives could be lost, subsidies could result if a state of emergency is called, and gross domestic product could fall. If we consider what the public has to endure, I think we could have a lot more to lose.”
Son’s tweets followed comments on Friday from IOC Vice President John Coates that the games would “absolutely” go ahead even if Tokyo was under COVID-19 restrictions.
Earlier this month, Son said in a TV interview he was “afraid” of having the Olympics, partly due to the severity of the pandemic in some countries.
Full coverage: REUTERS
WORLDWIDE: FINANCE / MARKETS
Asia shares wary of U.S. inflation
Asian shares got off to a cautious start on Monday as investors awaited key U.S. inflation readings for guidance on monetary policy.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) dipped 0.4% in slow trade. Japan’s Nikkei (.N225) added 0.2% and Chinese blue chips (.CSI300) lost 0.5%.
Nasdaq futures were flat and S&P 500 futures firmed 0.2%. EUROSTOXX 50 futures and FTSE futures added 0.1%.
After surveys of the global service sectors out on Friday showed spectacular growth, all eyes will be on U.S. personal consumption and inflation figures this week.
A high reading for the core inflation figures would ring alarms and could revive talk of an early tapering by the U.S. Federal Reserve.
The diary has a crowd of Fed speakers this week, including the influential Fed Board Governor Lael Brainard, and markets will be keen to hear if they stick to the script on being patient with policy.
BofA’s monthly Fund Manager survey found a record high 69% of respondents expected above trend economic growth and inflation globally.
“With such bullish views on growth and inflation, the risk for investors is that growth slows and inflation proves temporary,” BofA analysts said in a note.
“Also, Tech, viewed as crowded fairly recently, is now back to an underweight and would likely benefit if inflation fears ebbed.”
Full coverage: REUTERS
Oil prices rise as storm forms in Gulf, doubts emerge on Iran deal
Oil prices rose on Monday as a storm formed in the Gulf of Mexico and Iran said a three-month nuclear monitoring deal had expired, raising doubts about the future of indirect talks that could end U.S. sanctions on Iranian crude exports.
Brent crude oil futures for July rose 32 cents, or 0.5%, to $66.76 a barrel by 0143 GMT, while U.S. West Texas Intermediate for July was at $63.93 a barrel, up 35 cents, or 0.6%.
Oil prices fell last week after Iran’s president, Hassan Rouhani, said the United States was ready to lift sanctions on his country’s oil, banking and shipping sectors.
“Iran’s oil production has been rising in recent months, likely in anticipation of a lifting of the sanctions,” ANZ analysts said in a note on Monday.
However, the speaker of Iran’s parliament said on Sunday a three-month monitoring deal between Tehran and the U.N. nuclear watchdog had expired and that its access to images from inside some Iranian nuclear sites would cease.
European diplomats said last week that failure to agree an extension of the monitoring deal would plunge wider, indirect talks between Washington and Tehran on reviving the 2015 Iran nuclear deal into crisis. Those talks are due to resume in Vienna this week.
Former President Donald Trump withdrew the United States from the deal in 2018 and re-imposed sanctions.
Meanwhile, a low-pressure system located over the western Gulf of Mexico with winds of 30-35 miles per hour (48 to 56 km per hour) near and east of the center, has a 60% chance of becoming a cyclone in the next 48 hours, the U.S. National Hurricane Center (NHC) said on Friday.
Concerns of rising coronavirus cases in Asia capped price gains.
Full coverage: REUTERS
Dollar near 3-month low, weighed by prospects of dovish Fed
The dollar stood near its lowest level in three months against a resurgent euro, struggling for traction as investors pared earlier bets the U.S. Federal Reserve may soon be ready to taper its stimulus.
The dollar index, measuring the greenback against a basket of six currencies, was hovering at 90.027, a tad above a three-month low of 89.646 set on Friday.
Minutes from the Fed’s April policy meeting released last week showed a sizable minority of policymakers wanted to discuss tapering bond purchase.
Still, Fed Chairman Jerome Powell’s repeated warnings that it is not yet time to discuss a reduction in quantitative monetary easing has led many investors to believe it will be months before the central bank actually tweaks policy.
“Inflation figures have been pretty strong but retail sales may be starting to slow down. And the economic outlook hinges on fiscal policy, which is still uncertain,” said Shinichiro Kadota, senior currency strategist at Barclays.
The White House said on Friday it had pared down its infrastructure bill to $1.7 trillion from $2.25 trillion, with cuts to investments in broadband and roads and bridges, but Republicans dismissed the changes as insufficient for a deal.
Data from U.S. Commodity Futures Trading Commission released late on Friday showed speculators slightly increased their net short dollar positions in the latest week while raising long positions on the euro for four weeks in a row.
The euro traded at $1.2179, off a three-month high of $1.2245 touched on Wednesday.
The British pound stood at $1.4144, off Friday’s three-month peak of $1.4233.
The yen was little moved at 108.92 per dollar.
Full coverage: REUTERS
