KEY POINTS



<ul><li>Oil prices jumped after EU leaders reached an agreement late Monday to ban 90% of Russian crude by the end of the year.</li><li>The embargo is part of the European Union’s sixth sanctions package on Russia since it invaded Ukraine.</li></ul>



Oil prices jumped after EU leaders reached an agreement late Monday to ban 90% of Russian crude by the end of the year.



During Asia hours on Tuesday,&nbsp;<a href="https://www.cnbc.com/quotes/@CL.1">U.S. crude futures</a>&nbsp;for July were up 3.53% to $119.12, while&nbsp;<a href="https://www.cnbc.com/quotes/@LCO.2">Brent crude futures</a>&nbsp;rose 1.87% to $123.95. At one point, U.S. crude rose to $119.42 per barrel — a 12-week high, according to Refinitiv data.



Contracts for August also traded higher: WTI crude jumped 3.66% to $116.34, and Brent was up nearly 2% to $119.96 per barrel.



The agreement resolves a deadlock after Hungary initially&nbsp;<a href="https://www.cnbc.com/2022/05/30/eu-to-discuss-watered-down-oil-embargo-on-russia-as-hungary-holds-firm.html">held up talks</a>. Hungary is a major user of Russian oil and its leader, Viktor Orban, has been on friendly terms with&nbsp;<a href="https://www.cnbc.com/vladimir-putin/">Russia’s Vladimir Putin</a>.



Charles Michel, president of the European Council, said the move would immediately hit 75% of Russian oil imports.



The embargo is part of the European Union’s sixth sanctions package on&nbsp;Russia&nbsp;since it invaded Ukraine. Talks to impose an oil embargo have been underway since the start of the month.



“The European Council agrees that the sixth package of sanctions against Russia will cover crude oil, as well as petroleum products, delivered from Russia into Member States, with a temporary exception for crude oil delivered by pipeline,” according to a&nbsp;<a href="https://www.consilium.europa.eu/en/press/press-releases/2022/05/31/european-council-conclusions-on-ukraine-30-may-2022/" target="_blank" rel="noreferrer noopener">May 31 statement from</a>&nbsp;the European Council.



The European Council added that in case of “sudden interruptions” of supply, “emergency measures” will be introduced to ensure security of supply.



That temporary exception covers the remaining Russian oil not yet banned, European Commission President Ursula von der Leyen said in a press conference.



“We have agreed that the Council will revert to the topic as soon as possible in one way or the other. So this is a topic where we will come back to and where we will still have to work on, but this is a big step forward, what we did today,” she said, referring to the temporary exemption.



Von der Leyen explained that the temporary exemption was granted so that Hungary, along with Slovakia and the Czech Republic — all connected to the southern leg of the pipeline — have access which they cannot easily replace.



Roughly 36% of the EU’s oil imports come from Russia, a country that plays an outsized role in global oil markets.



The ban could exacerbate worries over an already-tight energy market. Energy prices have soared over the past year, contributing to a heated inflationary environment in many countries.



“While pipeline imports were not included in this agreement, an embargo on seaborne oil imports is still significant, accounting for around two thirds of the EU’s oil imports from Russia,” Vivek Dhar, director of mining and energy commodities research at the Commonwealth Bank of Australia, wrote in a note following the news.



“A further ban on Russian Crude delivered by shipments will tighten already strained supply amid rising demand due to onset of driving season in [the] United States,” wrote Avtar Sandu, senior manager of commodities at trading platform Philip Nova.



Meanwhile, OPEC+ is expected to stick to its original plan of a modest increase of 432,000 barrels a day for July, Sandu added.

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Oil prices jump after EU leaders agree to ban most Russian crude imports

KEY POINTS



<ul><li>“China and India are expected to become the world’s largest and third largest economies respectively in the next decade while their consumers will increasingly dictate global tastes and trends,” Bird said.</li><li>Abrdn – which has around $586.35 billion in assets under management as of most recent results – has observed that interest in sustainable investment among local investors is also on the rise.</li><li>Bird urged Asian governments to strengthen the credibility of their net zero commitments, offering investors greater surety in allocating capital to the region.</li></ul>



Indian and Chinese stock market capitalization may grow fourfold by 2050 as Asia turns from “laggard to leader” in the climate transition, according to&nbsp;<a href="https://www.cnbc.com/quotes/ABDN-GB" target="_blank" rel="noreferrer noopener">Abrdn</a>&nbsp;CEO Stephen Bird.



In a letter seen by CNBC marking the 30-year anniversary of the British investment company’s first Asian office opening in Singapore, Bird lauded the economic transformation over the last three decades that has seen more than a billion people lifted out of poverty.



He also noted that the region’s share of the global economy has become eight times larger than it was during the Asia Financial Crisis of 1997.



“Capital markets have also evolved and the region has switched from being mostly a destination for foreign investors to one where local investors dominate its markets,” Bird said.



He added that “the next 30 years looks to be every bit as exciting as the last,” and recommended investors remain calm during periods of volatility, keeping their “eye on the long game.”



Chinese stocks have endured a bruising year as&nbsp;<a href="https://www.cnbc.com/2022/05/26/china-holds-an-unprecedented-massive-videoconference-on-the-economy.html">President Xi Jinping’s “zero-Covid” strategy has stifled economic activity</a>&nbsp;and caused supply chain bottlenecks that have rippled through global markets.



<a href="https://www.cnbc.com/quotes/GS" target="_blank" rel="noreferrer noopener">Goldman Sachs</a> analysts recently said they were <a href="https://www.cnbc.com/2022/05/20/goldman-sachs-picks-chinese-stocks-set-to-benefit-from-covid-reopening.html">“seeing light at the end of the tunnel,”</a> and Bird supported the long-term view that Asian equities can transition from “laggards to leaders,” in terms of both performance and their role in tackling the climate crisis.



“China and India are expected to become the world’s largest and third largest economies respectively in the next decade while their consumers will increasingly dictate global tastes and trends. Capitalization of their equity markets could also increase by a factor of four or more by 2050,” Bird predicted.



“Other countries in the region present exciting opportunities too. Bangladesh, Indonesia and Vietnam have some of the highest potential growth rates in the world, while Japan and South Korea’s aging populations have built up significant savings that need to be put to better work. And, as the region’s most open global financial center, Singapore will be at the heart of all of it.”



However, Bird acknowledged that progress is unlikely to be linear, with the globalization that has driven Asia’s economic growth in danger of fizzling out and climate change posing an “acute challenge” for the region.



“A by-product of Asia’s growth is that it has accounted for the lion’s share of the increase in global carbon emissions over the past three decades. This increased human footprint is also evident in rising air pollution and biodiversity loss,” he said.



While Asia alone cannot solve the climate crisis, its major economies must find ways to decouple their economic growth from fossil fuels, Bird suggested. Most major economies in the region have now adopted net-zero targets, while Asia is also playing a role in developing technological solutions to climate change.



“Whether in the form of solar panels, batteries for electric vehicles or green hydrogen, decarbonisation is dependent on Asian innovation,” Bird said.



Abrdn – which has around £464 billion ($586.35 billion) in assets under management as of most recent results – has observed that interest in sustainable investment among local investors is also on the rise, along with active engagement between asset managers and companies, creating potential opportunities for new forms of “sustainability-linked loans and bonds.”



<h3 class="wp-block-heading" id="h-taking-action">Taking action</h3>



Bird – who took the reins of Abrdn in September 2020 after a 21-year career with Citigroup’s Asian and Latin American operations – urged Asian governments to strengthen the credibility of their net zero commitments, offering investors greater surety in allocating capital to the region.



“More countries should follow China’s lead and establish carbon pricing which would bring certainty and encourage investment in low-carbon technologies and infrastructure. The revenue generated could be recycled into ensuring that the zero-carbon transition is a just one,” he said.



“We would also encourage the greater use of dedicated climate-related instruments such as green bonds; this would help align the interests of capital markets participants while the increased issuance would also encourage portfolio diversification.”



The continent’s political, trade and economic forums should be an opportunity to harmonize climate and sustainability standards, Bird said, suggesting a continent-wide common framework could strengthen financial flows into Asia.



“This century is Asia’s century. It must also be the century in which economic objectives are reconciled with sustainability goals,” Bird concluded. “The financial industry can and must play a pivotal role in converging these two priorities, guiding investment to support both outcomes.”

Stock market exchange graph price drop with red numbers investment lose of business financial digital background – Candle stick charts stock crash crisis fall risk decreasing arrow down trend sell

Indian and Chinese stock markets could grow fourfold by 2050, Abrdn CEO says

May 27 (Reuters) The U.S. Securities and Exchange Commission (SEC) is looking into Tesla Chief Executive Officer Elon Musk&#8217;s disclosure of his stake in Twitter Inc (TWTR.N) in early April, according to a letter the agency sent to him in April.



In the letter, now made public by the SEC, the regulator asks Musk why it appears he did not file required paperwork within 10 days of the acquisition, and to provide more information on his public statements on the platform regarding whether Twitter adheres to free speech principles.



Specifically, the SEC asked Musk to explain why he opted to ultimately file a &#8220;13G&#8221; disclosure form, which is meant for investors who plan to hold their shares passively instead of a &#8220;13D&#8221; form, which is for activist investors who intend influence management and policies of the company.



Spokespeople for the SEC and Musk did not immediately respond to requests for comment.



Outside experts had previously said Musk&#8217;s late filing, and that he may have used improper paperwork, could attract the attention of the SEC, which has sparred with Musk in the past.



The SEC&#8217;s letter is dated the same day Musk disclosed a 9.2% stake in Twitter. The billionaire, who has since offered to the Twitter private for $44 billion, has been sued by investors claiming he manipulated the company&#8217;s stock price downward.



The Tesla Inc (TSLA.O) chief executive officer has landed in trouble with the SEC before, when the agency sued him in 2018 after he tweeted he had &#8220;funding secured&#8221; to potentially take the electric car company private at $420 per share. In reality, a buyout was not close.



Reporting by Nivedita Balu and Sweta Singh in Bengaluru, Svea Herbst-Bayliss and Pete Schroeder in Washington Editing by Shinjini Ganguli and Mark Potter

Elon Musk

U.S. SEC looking into Musk’s Twitter stake purchase

LONDON/NEW YORK, May 27 (Reuters)



The International Monetary Fund (IMF) has received $40 billion in pledges for its new Resilience and Sustainability Trust to address challenges such as climate change, IMF head Kristalina Georgieva said on Friday, close to their target set last month.



Building resilience to the effects of climate change will cost trillions of dollars over the next decade, she said in a pre-recorded speech broadcast to the Ibrahim Governance Forum, an Africa-focused conference.



Climate investment globally needs to increase by up to six times from the roughly $640 billion spent in 2020, to keep global temperatures from rising more than 1.5 degrees Celsius above pre-industrial levels, the latest Intergovernmental Panel on Climate Change report said in April.



&#8220;The devastating effects of climate change are robbing Africa of lives and livelihoods,&#8221; Georgieva told the conference, which was scheduled to mark six months until the COP27 climate conference in Cairo.



The IMF launched the new financing facility for low and middle-income countries in April, with the goal of raising at least $45 billion.



Its finance director had said it would need to receive &#8220;a substantial fraction&#8221; of the total before starting operations of the new trust by the time of the meetings of the IMF and World Bank in October.



Georgieva said at the conference that many African countries were dealing with droughts that were increasing food and political insecurity.



&#8220;Now the surge in food, fuel and fertiliser prices have dramatically raised import costs, all in the context of already high sovereign debt and limited fiscal capacity,&#8221; Georgieva said.



&#8220;African countries cannot face these overlapping crises &#8211; climate, food, pandemic &#8211; alone,&#8221; she said, adding that IMF lending to African countries in the last year was 13 times the annual average.



Reporting by Rachel Savage and Rodrigo Campos; Editing by John Stonestreet and Edmund Blair

IMF story

IMF secures $40 billion so far for new sustainability trust

LONDON, May 24 (Reuters)&nbsp;&#8211;&nbsp;Rising borrowing costs and the worldwide fallout from the Russia-Ukraine war could see up to 10% of riskier &#8216;junk&#8217;-rated emerging market countries suffer debt crises this year, analysts at U.S. investment bank JPMorgan have warned.



More acute balance of payment pressures and larger fiscal deficits are now compounding problems for heavily-indebted countries that import most of their energy and food.



Sri Lanka has just suffered its first ever sovereign default, joining a list that already included Lebanon, Suriname, Venezuela and Zambia. Russia and Ukraine are both teetering too and the worry is the numbers globally will soon balloon.



&#8220;Nearly half of the (52) country sample is classified as carrying high repayment risk in our assessment. Of these, eight are at risk of reserve depletion by the end of 2023, signalling high default risks. These are Sri Lanka, Maldives, Bahamas, Belize, Senegal, Rwanda, Grenada, and Ethiopia,&#8221; said the note led by strategist Trang Nguyen on Tuesday.



A jump in world interest rates in response to fast-rising inflation also means many countries are facing the reality of rising borrowing costs, a departure from over a decade of so-called &#8220;easy money&#8221;.



&#8220;Accounting for risks of a potential default in Russia and restructuring in Ukraine&#8230;the EM sovereign HY default rate could reach 10% this year,&#8221; JP Morgan&#8217;s note added, also pointing out how Ethiopia was moving towards a G20-led restructuring of its debts.



The International Monetary Fund too has said that nearly 60% of low income countries are either in, or at high risk of, debt distress.



Analysts at investment firm Tellimer this week highlighted how a record 27 emerging market countries now have eurobond yields above 10%.



Those yields are a proxy for what a government has to pay to borrow in the international capital markets and anything above 10% is generally seen as a sign of trouble.



JP Morgan said that in addition to the eight countries flagged as in immediate default danger, larger economies such as Egypt, Ghana and Pakistan were also highly vulnerable from fiscal and debt standpoints over the slightly longer term.



(Reporting by Marc Jones, editing by Jorgelina do Rosario, Kirsten Donovan)

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JPMorgan warns 10% of junk-rated emerging markets facing debt crises this year

KEY POINTS



<ul><li>Speaking to CNBC’s “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland, on Tuesday, Herbert Diess said alleviating supply chain issues would likely help create some momentum for the German auto giant over the coming months.</li><li>“Markets are always about the future,” Diess said when asked why investors valued Tesla at such a premium to other traditional carmakers.</li><li>“We are still aiming at keeping up and probably overtaking by 2025 when it comes to sales,” Diess said.</li></ul>



The chief executive of&nbsp;<a href="https://www.cnbc.com/quotes/VOW3-DE">Volkswagen</a>&nbsp;believes Europe’s biggest carmaker can overtake&nbsp;<a href="https://www.cnbc.com/quotes/TSLA" target="_blank" rel="noreferrer noopener">Tesla</a>&nbsp;to become the world’s largest seller of electric vehicles by 2025.



Speaking to CNBC’s “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland, on Tuesday, Herbert Diess said alleviating supply chain issues would likely help create some momentum for the German auto giant over the coming months.



“Markets are always about the future,” Diess said when asked why investors valued Tesla at such a premium to other traditional carmakers, such as Volkswagen.



“Tesla currently is in the lead when it comes to EVs, probably also it is the most digital car company already and they have some advantages,” he continued. “We are still aiming at keeping up and probably overtaking by 2025 when it comes to sales.”



Diess said Tesla has been able to demonstrate good results and high returns with a credible business model. However, he reaffirmed his belief that Volkswagen could soon close the gap when it comes to EV sales.



“I think for Tesla, also, ramping up now will probably be a bit more challenging. They are opening up new plants and we are trying to keep up speed. We think in the second half of the year, we are going to create some momentum,” Diess said.



Volkswagen’s Frankfurt-listed shares traded around 0.9% lower on Tuesday morning, roughly in line with losses in the autos sector on the pan-European Stoxx 600.



<h2 class="wp-block-heading" id="h-supply-chain-crisis-to-alleviate"><a></a>Supply chain crisis to alleviate</h2>



More than two years into the coronavirus pandemic, the auto industry continues to grapple with the challenge of obtaining crucial parts and building enough vehicles to meet demand.



Shortages of critical supplies, particularly when it comes to battery production, are expected to be an ongoing constraint for the growth of electric vehicle sales in the years ahead.



Nonetheless, Diess said there are some positive signs on the horizon. He expects to see some relief from the semiconductor supply market from the middle of the year.



“I would say that we would see an alleviation of this situation towards mid-year and second half we should be in better shape — if the situation is not getting any worse, which I don’t think so,” Diess said.



When asked whether this means he expects the semiconductor crisis could end in the second half of the year, Diess replied: “I wouldn’t say end but we see a much-improved situation. I think supply chains are getting in order again.&#8221;

Volkswagen chief says German car giant will overtake Tesla on electric vehicle sales by 2025

WASHINGTON, May 23 (Reuters)&nbsp;&#8211;&nbsp;The United States issued an advisory on Monday warning U.S. companies of growing reputational risks of doing business with state-owned enterprises and military-controlled firms in Sudan.



&#8220;These risks arise from, among other things, recent actions undertaken by Sudan&#8217;s Sovereign Council and security forces under the military&#8217;s command, including and especially serious human rights abuse against protesters,&#8221; State Department spokesperson Ned Price said in a statement.



The African country has been racked by protests since a military coup in October, and lawyers say dozens of political prisoners remain in detention.



&#8220;Businesses and individuals operating in Sudan should undertake increased due diligence related to human rights issues and be aware of the potential reputational risks of conducting business activities and/or transactions with SOEs and military-controlled companies,&#8221; Price said.



The advisory was issued by the U.S. departments of State, Treasury, Commerce and Labor, he said.



(Reporting by Eric Beech; Editing by Tim Ahmann, Bernard Orr)

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U.S. warns companies of ‘reputational risks’ of doing business in Sudan

KEY POINTS



<ul><li>In a blog post ahead of this week’s World Economic Forum, IMF Managing Director Kristalina Georgieva said the global economy faces its “biggest test since the Second World War.”</li><li>In combining the Russia-Ukraine war, the Covid-19 pandemic and the spike in volatility in financial markets and persistent threat from climate change, the IMF said the world faces a “potential confluence of calamities.”</li></ul>



The International Monetary Fund has warned against “geoeconomic fragmentation” as policymakers and business leaders gather at the World Economic Forum in Davos, Switzerland.



In a blog post ahead of this week’s event, IMF Managing Director Kristalina Georgieva said the global economy faces its “biggest test since the Second World War,” with Russia’s invasion of Ukraine compounding the residual economic effects of Covid-19 crisis, dragging down growth and driving inflation to multi-decade highs.



Spiraling food and energy prices are squeezing households around the world, while central banks are tightening monetary policy to rein in inflation, exerting further pressure on indebted nations, companies and families.



When combined with the spike in volatility in financial markets and persistent threat from climate change, the IMF said the world faces a “potential confluence of calamities.”



“Yet our ability to respond is hampered by another consequence of the war in Ukraine—the sharply increased risk of geoeconomic fragmentation,” Georgieva said.



“Tensions over trade, technology standards, and security have been growing for many years, undermining growth—and trust in the current global economic system.”



She added that uncertainty around trade policies alone cut global GDP by almost 1% in 2019, according to IMF research, and the D.C.-based institution’s monitoring also indicates that around 30 countries have restricted trade in food, energy and other key commodities.



Georgieva warned that further disintegration would have enormous global costs, harming people across the socio-economic spectrum, and said technological fragmentation alone could lead to losses of 5% of GDP for many countries.



Carmine Di Sibio, global chairman and CEO of consultancy giant EY, told CNBC on Monday that the economy has “taken center stage” in discussions among big business leaders at Davos.



“The economy is the top conversation – inflation is a big concern and you do see some leading indicators starting to slow,” he said.



Although corporate deal volumes have slowed, Di Sibio said EY was still seeing signs of “pretty robust activity” and business leaders were still looking at options to transform their businesses, with pricing in the sector coming down of late amid resolute demand.



“The transformation that companies are going through – the transformation in terms of technology, in terms of supply chain and location of supply chain, and de-risking of supply chains – that is still going on and we do a lot around that as well,” Di Sibio said.



<h3 class="wp-block-heading" id="h-solutions">Solutions</h3>



In order to address the growing fragmentation, the IMF has firstly called for governments to lower trade barriers to alleviate shortages and reduce the prices of food and other commodities, while diversifying exports to improve economic resilience.



“Not only countries but also companies need to diversify imports—to secure supply chains and preserve the tremendous benefits to business of global integration,” Georgieva said.



“While geostrategic considerations will drive some sourcing decisions, this need not lead to disintegration. Business leaders have an important role to play in this regard.”



Secondly, the IMF urged collaborative efforts to deal with debt, as roughly 60% of low-income countries currently have significant debt vulnerabilities and will need restructuring.



“Without decisive cooperation to ease their burdens, both they and their creditors will be worse off, but a return to debt sustainability will draw new investment and spur inclusive growth,” Georgieva said.



“That is why the Group of Twenty’s Common Framework for Debt Treatment must be improved without delay.”



Thirdly, the IMF called for a modernization of cross-border payments, with inefficient payment systems posing a barrier to inclusive economic growth. The institution estimates that the 6.3% average cost of an international remittance payment means around $45 billion annually is diverted toward intermediaries and away from lower-income households.



“Countries could work together to develop a global public digital platform—a new piece of payment infrastructure with clear rules—so that everyone can send money at minimal cost and maximum speed and safety. It could also connect various forms of money, including central bank digital currencies,” Georgieva said.



Finally, the IMF called for an urgent closing of the “gap between ambition and policy” on climate change, arguing for a comprehensive approach to the green transition that combines carbon pricing and renewable energy investment with compensation for those adversely affected by climate change.

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IMF says global economy faces ‘confluence of calamities’ in biggest test since World War II

GENEVA, May 23 (Reuters)&nbsp;&#8211;&nbsp;The head of the World Health Organization said on Monday that it must be &#8220;at the centre&#8221; of a global healthcare system, while also acknowledging the need for internal reforms.



The World Health Assembly from May 22-28 is seen as one of the most important in the UN health agency&#8217;s 75-year history, as it seeks to define its future role in global health policy and get approval for a funding overhaul.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XC0VG&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a><a href="https://www.reutersconnect.com/all?search=all%3AL5N2X96B0&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;We need a stronger and sustainably financed WHO, at the centre of the global health security architecture,&#8221; Director-General Tedros Adhanom Ghebreyesus said in a major speech at the WHO&#8217;s annual assembly.



But he added: &#8220;There have been many calls for WHO to change. And there is no question that more change is needed.&#8221;



The WHO is under scrutiny after an independent panel described it as &#8220;underpowered&#8221; when COVID-19 struck, with limited powers to investigate outbreaks and coordinate containment measures.



However, its 194 member states are seen as split over whether it deserves new powers after its handling of COVID.



&#8220;Some members are saying the WHO did what it could during the pandemic and want to strengthen its authority and others are very disillusioned with the WHO and &#8230; are very divided on whether it should be given more powers,&#8221; said Adam Kamradt-Scott, a professor of Global Health at the School of Transnational Governance.



In the same speech, Tedros said COVID is far from over and that the world was not ready for the next pandemic, echoing the findings of a major report last week.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XA0VC&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



&#8220;It&#8217;s clear that the world was and remains unprepared for a pandemic,&#8221; he said.



(Reporting by Emma Farge and Mrinalika Roy; Editing by Catherine Evans)

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WHO chief says it must take central role in global health

BERLIN, May 22 (Reuters)&nbsp;&#8211;&nbsp;Russia&#8217;s impact on energy and food prices and security will provide the backdrop to Olaf Scholz&#8217;s first trip to Africa as German Chancellor, a three-day tour of Senegal, Niger and South Africa kicking off on Sunday.



The first stop on Scholz&#8217;s trip is Senegal, which has billions of cubic metres of gas reserves and is expected to become a major gas producer in the region.



Germany is seeking to reduce its heavy reliance on Russia for gas following the Kremlin&#8217;s invasion of Ukraine. It could help explore a gas field in Senegal, a government official said on Friday.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AS8N2WV04P&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The source said Scholz also wanted to discuss possible cooperation on the development of renewable energy. In Senegal, he will visit a solar power plant after meeting and holding a joint news conference with the country&#8217;s President Macky Sall.



Germany has invited both Senegal, which currently holds the rotating chairmanship of the African Union, and South Africa to attend the G7 summit it is hosting in June as guest countries.



Both countries abstained from voting on a United Nations resolution against Russia&#8217;s invasion of Ukraine, which Moscow calls a special military operation to demilitarize a neighbor it says threatened its security.



Ukraine and Western allies say the war is an unprovoked act of aggression.



The conflict has triggered supply disruptions that have pushed up food and energy prices in Africa. Russia&#8217;s military has blocked exports from ports in Ukraine, a major grains and food supplier to the region. The Kremlin blames Western sanctions for the rising prices.



SECURITY IN THE SAHEL



Scholz will travel later on Sunday to Niger. The country has taken on a bigger role hosting European special forces to stem a jihadist insurgency across the Sahel since European relations with the military junta ruling neighboring Mali have deteriorated.



The European Union suspended its military training mission in Mali due to a lack of guarantees from Malian authorities that military contractors from Russia&#8217;s Wagner Group would not interfere in the work. The group is under EU sanctions accused of human rights abuses.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2X95FS&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Russia denies any wrongdoing in Mali or in any other country where Wagner operates. Both Mali and Russia have previously said Wagner Group is not made up of mercenaries but trainers helping local troops with equipment bought from Russia.



Scholz will visit German troops in Niger and discuss the lengthy battle against insurgents linked to al Qaeda and Islamic State that have killed thousands and made swathes of territory ungovernable in the Sahel, south of the Sahara.



On Monday evening Scholz is set to travel to Johannesburg for the final leg of his tour.



(Reporting by Andreas Rinke and Sarah Marsh; Editing by Frank Jack Daniel)

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Russia looms large on Scholz’s first Africa tour as chancellor￼

KEY POINTS



<ul><li>Nearly 2,500 global leaders from business, politics and civil society are expected to take part in a rare springtime version of Davos this week.</li><li>Organizers of the event had postponed the meeting from its traditional January slot over safety concerns amid the coronavirus pandemic. However, in a welcome boost to local residents, the forum’s first in-person event has now returned after a two-year hiatus.</li><li>That’s not to say everyone is happy to see the return of the world’s business and political elite to the Swiss Alps.</li></ul>



The World Economic Forum is trying to fix an image problem.



Nearly 2,500 global leaders from business, politics and civil society are expected to take part in a rare springtime version of Davos this week.



The annual meeting will see movers and shakers convene in Switzerland’s luxury Alpine ski resort of Davos for five days of conversation on issues including Covid-19, Russia’s war in Ukraine and the climate crisis.



Organizers of the event had&nbsp;<a href="https://www.cnbc.com/2021/12/20/davos-world-economic-forum-postpones-meeting-due-to-covid.html">postponed the meeting</a>&nbsp;from its traditional January slot over safety concerns amid the coronavirus pandemic. However, in a welcome boost to local residents, the forum’s first in-person event has now returned after a two-year hiatus.



The&nbsp;<a href="https://www.weforum.org/agenda/2022/05/davos-2022-whos-coming-and-everything-else-you-need-to-know/" target="_blank" rel="noreferrer noopener">theme</a>&nbsp;of this year’s event is “History at a Turning Point: Government Policies and Business Strategies.”



“It means a lot to us. It means a lot to the whole of Switzerland,” Samuel Rosenast, a spokesperson for the local tourism board, said in an interview with CNBC’s&nbsp;<a href="https://www.cnbc.com/tom-chitty/">Tom Chitty</a>.



Rosenast said the event was “unbelievably important” to those residing in Europe’s highest town, estimating that the resort could see a windfall of approximately 70 million Swiss francs ($72 million) in just this week alone.



“Every business is in contact with the World Economic Forum. The people know how important it is,” Rosenast said. “Most people here are looking forward to the World Economic Forum. They are happy that it takes place here again this year.”



<h2 class="wp-block-heading" id="h-a-symbol-of-a-failed-era"><a></a>‘A symbol of a failed era’</h2>



That’s not to say everyone is pleased to see the return of the world’s business and political elite to the Swiss Alps. The event has been sharply criticized in recent years for being&nbsp;<a href="https://fortune.com/2015/01/22/davos-out-of-touch/" target="_blank" rel="noreferrer noopener">out of touch</a>,&nbsp;<a href="https://www.cnbc.com/2018/01/18/is-davos-nothing-more-than-an-overpriced-ineffective-talking-shop.html">ineffective</a>&nbsp;and&nbsp;<a href="https://www.fnlondon.com/articles/davos-is-broadly-irrelevant-there-is-no-case-for-guzzling-jets-and-gallons-of-dom-perignon-20220516" target="_blank" rel="noreferrer noopener">irrelevant</a>.



Three years ago, Dutch historian Rutger Bregman went viral at a Davos panel&nbsp;<a href="https://www.cnbc.com/2019/03/19/rutger-bregman-historian-who-confronted-davos-elite-on-higher-taxes.html">when he called out billionaires for tax avoidance</a>. In a clip that has now been viewed nearly 11 million times, Bregman said that a global failure to effectively tackle tax avoidance was the primary cause of inequality.



“It feels like I’m at a firefighters conference and no one’s allowed to speak about water,” Bregman said at the time. “This is not rocket science … we have got to be talking about taxes. That’s it. Taxes, taxes, taxes.”



More recently, protestors, activists and people on the frontlines of inequality have sought to challenge the WEF over its “<a href="https://inequality.org/research/global-inequality-protest-davos/" target="_blank" rel="noreferrer noopener">empty rhetoric</a>,” accusing Davos of representing “a symbol of a failed era” that should be left behind.



A report published Monday by global charity Oxfam found that 573 people became new billionaires during the coronavirus pandemic — at a rate of one every 30 hours. The brief, entitled “Profiting from Pain,” expects that 263 million additional people will fall into extreme poverty this year at a rate of 1 million people every 33 hours.



“Billionaires are arriving in Davos to celebrate an incredible surge in their fortunes. The pandemic and now the steep increases in food and energy prices have, simply put, been a bonanza for them,” said Gabriela Bucher, executive director of Oxfam International.



“Meanwhile, decades of progress on extreme poverty are now in reverse and millions of people are facing impossible rises in the cost of simply staying alive.”



In his youth, Philipp Wilhelm was one of those protesting the annual gathering of billionaires and political leaders in the town where he was born. Now, however, Wilhelm is the mayor of Davos, and his goal is to deliver a successful meeting.



“I protested during the annual meeting because, for me, it was important to express that it’s really crucial that we solve this climate crisis. And we need to make the world a more just place,” Wilhelm said.



Wilhelm said that he had taken part in protests because he felt it was essential to ensure that everyone arriving in Davos “gets the message that it’s really important to solve these issues.”



Wilhelm said he — and WEF — had changed their positions since his protesting days, adding that he believes he can influence policy more effectively in his current role.



When asked whether it was a concern that criticism of WEF had become too closely associated with Davos given that the town itself has become largely interchangeable with the forum, Wilhelm replied: “No it doesn’t bother me at all.”



“I think it is interesting that people know Davos as a place where people meet and discuss — and I mean it should be controversial. There should be a discussion about what is the right way to improve the state of the world,” Wilhelm said.



<h2 class="wp-block-heading"><a></a>Davos 2022 is ‘one marker in time’</h2>



“The forum’s work is ongoing. The meeting is one marker in time,” said Saadia Zahidi, managing director at the World Economic Forum.



“What we’ve been doing over the last two and a half years — while it hasn’t been visible through a particular meeting — is a set of work that is trying to make a dent on inequality and at the same time also make changes towards addressing one of the biggest existential risks we all face which is climate change.”



When asked whether rising income inequality had become a particular problem for the forum, Zahidi replied: “Inequality is a problem for the world. I think we know that societies that do not combat inequality will have slower growth.”



“And so there has to be an effort that addresses inequality. Now, what does that? Better education, better skills, better jobs, addressing issues like taxation and changing the nature of our economies so that they actually work for people and not just for the few,” Zahidi said. “That is going to be front and center on next week’s agenda.”

Stefan Wermuth | Bloomberg | Getty Images

How Davos became the anti-establishment’s punching bag

KEY POINTS



<ul><li>A document outlining the European Commission’s aims for the REPowerEU plan was published on Wednesday.</li><li>It highlighted the importance of energy savings, the diversification of energy imports and speeding up what it called “Europe’s clean energy transition.”</li><li>The EU’s desire to wean itself off Russian hydrocarbons means it will need to find oil and gas from other parts of the world to plug supply gaps.</li></ul>



The European Commission has fleshed out details of a plan to ramp up the EU’s renewable energy capacity and reduce its reliance on Russian fossil fuels, at the same time acknowledging that existing coal facilities may have to be used for “longer than initially expected.”



A document outlining the Commission’s aims for the REPowerEU plan was published on Wednesday, highlighting the importance of energy savings, the diversification of energy imports and speeding up what it called “Europe’s clean energy transition.”



In total, it envisages extra investment of 210 billion euros ($220.87 billion) between 2022 and 2027. When it comes to renewables’ share in the EU’s energy mix, the Commission has proposed that the current target of 40% by 2030 should be increased to 45%.



The Commission’s proposals came on the same day the governments of Denmark, Germany, the Netherlands and Belgium said they would aim for a combined target of at least 65 gigawatts of offshore wind capacity by 2030. By the middle of the century, they are aiming for 150 GW of capacity.



On the fossil fuel front, the situation is a challenging one. Russia was the biggest supplier of both petroleum oils and natural gas to the EU last year,&nbsp;<a href="https://ec.europa.eu/eurostat/statistics-explained/index.php?title=EU_imports_of_energy_products_-_recent_developments#:~:text=Russia%20was%20the%20largest%20supplier,and%2C%20at%20some%20distance%20Algeria" target="_blank" rel="noreferrer noopener">according to Eurostat</a>.



The EU’s desire to wean itself off Russian hydrocarbons&nbsp;following the latter’s invasion of Ukraine&nbsp;means it will need to find oil and gas from other parts of the world to plug supply gaps.



The Commission said as much as 1.5 to 2 billion euros of investment would be needed to secure oil supply. To import enough liquefied natural gas and pipeline gas from other sources, an estimated 10 billion euros will be needed by 2030.



All the above comes at a time when the EU has said it wants to be carbon neutral by 2050. In the medium term, it wants net greenhouse gas emissions to be cut by at least 55% by 2030, which the EU calls its “Fit for 55” plan.



The Commission said REPowerEU could not work without what it called “a fast implementation of all Fit for 55 proposals and higher targets for renewables and energy efficiency.”



In this new reality, gas consumption in the EU would “reduce at a faster pace, limiting the role of gas as a transitional fuel,” the Commission said.



“However, shifting away from Russian fossil fuels will also require targeted investments for security of supply in gas infrastructure and very limited changes to oil infrastructure alongside large-scale investments in the electricity grid and an EU-wide hydrogen backbone,” it added.



“In parallel, some of the existing coal capacities might also be used longer than initially expected, with a role for nuclear power and domestic gas resources too,” the Commission said.



During a press conference on Wednesday the EU’s climate chief, Frans Timmermans, admitted that using less natural gas in a transitional phase would mean “you might use coal a bit longer — that has a negative impact on your emissions.”



“But if at the same time, as we propose, you rapidly speed up the introduction of renewables — solar, wind, biomethane — you then have the opposite movement,” he said.



Timmermans, who is the European Commission’s executive vice president for the European Green Deal, went on to stress the importance of finding a middle ground.



“If we can actually do what I say — reduce our energy consumption in combination with a speedier introduction of renewables — we will bring down our emissions even quicker than before,” he said.



“And then, of course we will have slightly higher emissions if people stick a bit longer to coal, but we need to strike the balance so that, on balance, we do not increase our emissions — we hopefully even decrease them more.”



Coal has a substantial effect on the environment, with Greenpeace describing it as “the dirtiest, most polluting way of producing energy.”



Elsewhere, the U.S. Energy Information Administration lists a range of emissions from coal combustion, including carbon dioxide, sulfur dioxide, particulates and nitrogen oxides.



The European Commission announcement drew criticism from a number of environmental organizations.



“These plans are supposed to fast-track the clean energy transition — but the European Commission’s latest strategy gives with one hand and takes with the other,” Eilidh Robb, an anti-fossil fuels campaigner at Friends of the Earth Europe, said.



“So-called REPowerEU contains useful and necessary strides towards renewable solutions but it simultaneously enables almost 50 fossil fuel infrastructure projects and expansions,” Robb said.

6P3A4A5Y3FPCBIXZTKFUXZLSHM

Europe admits it’ll have to burn more coal as it tries to wean itself off Russian energy

By Mohi Narayan and Scott DiSavino



May 20 (Reuters)&nbsp;&#8211;&nbsp;Oil&nbsp;prices fell on Friday as investors worried that weakening global economic growth and tighter central bank monetary policy could curb a recovery in&nbsp;fuel&nbsp;demand.



Brent&nbsp;LCOc1&nbsp;futures for July fell 59 cents, or 0.53%, to $111.45 a barrel by 0648 GMT, while U.S. West Texas Intermediate (WTI) crude for June&nbsp;CLc1&nbsp;fell 56 cents, or 0.5%, to $111.65 on its last day as the front-month.



The more actively traded WTI contract for July&nbsp;CLN2&nbsp;was down 0.8% at $109.01 a barrel.



The International Monetary Fund (IMF) urged Asian economies to be mindful of spillover&nbsp;risks from monetary tightening.



Asian economies faced a choice between supporting growth with more stimulus and withdrawing it to stabilise debt and inflation, IMF Deputy Managing Director Kenji Okamura said.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL3N2XB2VQ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



While Bank of Japan policy runs counter to a global shift towards monetary tightening, central banks in the United States, Britain and Australia raised interest rates recently.



Crude gains have been limited this week, with Brent and WTI mostly trading in a range due to the uncertain path of&nbsp;demand. Investors, worried about rising inflation and more aggressive action from central banks, have been reducing exposure to riskier assets.



Open interest in WTI futures fell to 1.722 million contracts on May 18, the lowest since July 2016.



&#8220;If U.S. growth data continues to sour,&nbsp;oil&nbsp;prices could get caught up in the negative stock market feedback loop,&#8221; SPI Asset Management Managing Director Stephen Innes said in a client note.



In the United States, Americans were getting back behind the wheel, despite higher&nbsp;fuel&nbsp;prices, according to a report from the Federal Highway Administration on vehicle miles.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XB2RM&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



On the gasoline supply side, South Korea&#8217;s third-largest refiner S-Oil&nbsp;halted production at its No. 2 alkylation unit and related processes at its Onsan refinery due to a blast.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XB31C&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The shutdown following Thursday night&#8217;s blast that killed one person is expected to affect already tight gasoline supplies in Asia.



Citi analysts expect S-Oil&#8217;s gasoline output to be &#8220;severely impacted&#8221; in the near term, although it could buy alkylate to maintain production.



Iran, meanwhile, is having a tougher time selling its crude now that more Russian barrels are available.



Iran&#8217;s crude exports to China have fallen sharply since the start of the Ukraine war as Beijing favoured heavily discounted Russian barrels, leaving almost 40 million barrels of Iranian&nbsp;oil&nbsp;stored on tankers at sea in Asia and seeking buyers.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2XB1O9&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Reporting by Scott DiSavino; Editing by Kim Coghill and Frank Jack Daniel)

Oil falls on uncertainty over fuel demand recovery

LONDON, May 19 (Reuters)&nbsp;&#8211;&nbsp;A new study by the&nbsp;central&nbsp;bank&nbsp;to the world&#8217;s&nbsp;central&nbsp;banks, the&nbsp;Bank&nbsp;of International Settlements (BIS), has called for&nbsp;urgent&nbsp;action to tackle&nbsp;rising&nbsp;wealth&nbsp;inequality, warning the problem was feeding a dangerous loop of recessions and poverty.



While government policies have largely been blamed for the rise in&nbsp;inequality&nbsp;since the 1980s,&nbsp;central&nbsp;bankers have also come under fire in recent years for fuelling huge stock market gains with ultra-low interest rates and asset buying schemes.



The&nbsp;BIS, looking at 182 recessions across 70 countries, found that even six years after a downturn, the income share of the bottom 50% of earners in an impacted economy remained 0.3% below the pre-recession level on average, whereas for those in the top 10% bracket it was still 0.7% higher.



Economies that are more unequal go through deeper recessions which in turn further increases&nbsp;inequality, its analysis showed. Less progressive taxes and social support programme in many countries have made the problems worse as well.



&#8220;It is increasingly apparent that&nbsp;inequality&nbsp;has evolved from being an academic issue to an&nbsp;urgent&nbsp;policy&nbsp;matter,&#8221; the&nbsp;<a href="https://www.bis.org/" target="_blank" rel="noreferrer noopener">BIS&nbsp;paper</a>&nbsp;said, adding that one of key risks for&nbsp;central&nbsp;banks was that their policy tools become less effective.



The&nbsp;BIS&nbsp;study showed that low-paid workers in some countries were over three time more likely to have lost their jobs during the COVID-19 pandemic, while surging inflation was&nbsp;now&nbsp;hitting poorer households disproportionately hard.



&#8220;Once&nbsp;inequality&nbsp;is left to grow unchecked, deeper and deeper recessions demand additional policy support,&#8221; it said.



&#8220;But at the same time monetary stimulus loses traction, so that the&nbsp;central&nbsp;bank&nbsp;needs to deploy bolder and bolder instruments, which can in turn produce undesirable side effects in terms of wealth&nbsp;inequality&#8221;.



Instead it recommended keeping inflation in check and that governments use &#8220;stabilisation policies&#8221; such as subsidies or support payments that help poorer people.



(Reporting by Marc Jones; Editing by Jan Harvey)

people-black-poverty-guinea-african-bissau-940174-pxhere.com_

Rising inequality now an urgent matter, BIS central bank group warns

May 19 (Reuters) &#8211; Russia will send any oil rejected by European countries to Asia and other regions, Deputy Prime Minister Alexander Novak said on Thursday, adding that Europe would have to find substitute supplies that would be more expensive.



The European Commission on Wednesday unveiled a 210 billion euro ($220 billion) plan for Europe to end its reliance on Russian fossil fuels by 2027 and to use the pivot away from Moscow to quicken its transition to green energy. <a href="https://www.reuters.com/business/sustainable-business/eu-unveils-escape-route-russian-fossil-fuels-by-2027-2022-05-18/">read more</a>



Europe receives about 4 million barrels per day (bpd) of Russian oil, Novak said, adding that Russia was ready to reroute those supplies leaving Europe with more expensive crude from other origins.



Western sanctions imposed on Russia after its troops marched into Ukraine in February forced a number of oil buyers to delay or refuse cargoes, which in turn knocked Russian oil production.



Novak said Russian oil production was about 1 million bpd lower in April but had increased by 200,000-300,000 bpd in May with more volumes expected to be restored next month.



He said Russia&#8217;s oil exports were gradually recovering and the country would be able to find export markets because its energy resources were competitive.



($1 = 0.9537 euros)



RegisterReporting by Reuters; Editing by Edmund Blair



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Russia to send oil rejected by Europe to Asia, other regions, says Novak

<ul><li>Stocks slide as inflation scare drives uncertainty</li><li>UK inflation hits 9%, in Canada rises to 6.8%</li><li>German 2-year yield hits 2011 high on ECB rate hike bets</li></ul>



NEW YORK, May 18 (Reuters) &#8211; Global stocks plunged and the dollar strengthened for the first time in four sessions on Wednesday as concerns about rising inflation on economic growth soured sentiment.



The mood was underscored by a 9% surge in British consumer prices and a faster-than-expected acceleration in inflation in Canada.



British inflation surged to its highest annual rate since 1982 as energy bills soared, while Canadian inflation rose to 6.8% last month, largely driven by rising food and shelter prices, Statistics Canada data showed. <a href="https://www.reuters.com/markets/uk-inflation-hits-9-highest-since-modern-records-started-2022-05-18/">read more</a>



British inflation is now the highest among major economies in Europe, but prices are rapidly rising worldwide, forcing central banks around the globe to hike interest rates and tamp down growth as suggested by a modest decline in U.S. homebuilding in April.&nbsp;<a href="https://www.reuters.com/business/us-building-permits-dive-april-housing-starts-fall-2022-05-18/">read more</a>



Soaring prices and material shortages have already hit homebuilding, the sector of the economy most sensitive to rates. But the U.S. Commerce Department report also showed a record backlog of houses to be built, indicating a decline in homebuilding potentially might be marginal.



Adding to the gloom caused by inflation were earnings results from Target Corp&nbsp;<a href="https://www.reuters.com/companies/TGT.N" target="_blank" rel="noreferrer noopener">(TGT.N)</a>, whose quarterly profit halved as it warned of a bigger margin hit this year due to rising fuel and freight costs.&nbsp;<a href="https://www.reuters.com/business/retail-consumer/target-profit-halves-rising-costs-warns-bigger-margin-hit-2022-05-18/">read more</a>



Target shares plummeted 24.88%, its biggest one-day percentage drop since the &#8220;Black Monday&#8221; stock market crash on Oct. 19, 1987, a day after Walmart Inc <a href="https://www.reuters.com/companies/WMT.N" target="_blank" rel="noreferrer noopener">(WMT.N)</a> warned of similar margin squeezes and saw its stock drop 11.4% for its biggest one-day percentage fall since Oct. 16, 1987.



&#8220;It was Walmart yesterday and everybody thought it was a one-off,&#8221; said Dennis Dick, head of markets structure and a proprietary trader at Bright Trading LLC in Las Vegas. &#8220;Now that Target misses earning a lot more than Walmart even did, they&#8217;re scared that consumer is not as strong as everybody think it is.&#8221;



MSCI&#8217;s gauge of stocks across the globe&nbsp;<a href="https://www.reuters.com/quote/.MIWD00000PUS" target="_blank" rel="noreferrer noopener">(.MIWD00000PUS)</a>&nbsp;shed 2.74%, while in Europe, the pan-regional STOXX 600 index&nbsp;<a href="https://www.reuters.com/quote/.STOXX" target="_blank" rel="noreferrer noopener">(.STOXX)</a>&nbsp;closed down 1.14%.



On Wall Street, the Dow Jones Industrial Average&nbsp;<a href="https://www.reuters.com/quote/.DJI" target="_blank" rel="noreferrer noopener">(.DJI)</a>&nbsp;fell 3.56%, the S&amp;P 500&nbsp;<a href="https://www.reuters.com/quote/.SPX" target="_blank" rel="noreferrer noopener">(.SPX)</a>&nbsp;lost 4.03% and the Nasdaq Composite&nbsp;<a href="https://www.reuters.com/quote/.IXIC" target="_blank" rel="noreferrer noopener">(.IXIC)</a>&nbsp;dropped 4.73%.



The declines for the S&amp;P 500 and Dow marked their biggest one-day percentage declines since June 11, 2020.



Few analysts are willing to predict the end to selling after a bruising first five months of the year for risk assets given the magnitude of macroeconomic uncertainty, with many anticipating market volatility will be the norm for some time.



The U.S. dollar gained ground as the sell-off in risk assets boosted the safe-haven appeal of the greenback, which was on pace to snap a three-session losing streak, a day after Fed Chair Jerome Powell pledged the U.S. central bank would ratchet up rates as high as needed to combat rising inflation.



The dollar index rose 0.581%, with the euro down 0.8% to $1.0463. The Japanese yen strengthened 0.92% to 128.23 per dollar.



Treasury yields fell, although a steep path for rates remained the prevailing market consensus as the benchmark 10-year note yield hit a one-week high of 3.015% after Powell&#8217;s hawkish comments.



The yield fell 8.1 basis points to 2.890% on Wednesday after a soft U.S. housing starts number.



The German two-year government bond yield shot to 0.444%, its highest since November 2011 after more hawkish central banker comments, and last was up 1.6 basis points at 0.386%. The European Central Bank&#8217;s Klaas Knot said on Tuesday that a 50-basis-point rate hike in July was possible if inflation broadens.



Gold prices were little changed despite the risk-off environment as looming U.S. interest rate hikes and a resurgent dollar dimmed the metal&#8217;s shine.



Spot gold was up 0.1% at $1,816.06 an ounce.



Oil prices dipped in volatile trade, reversing early gains as traders grew less worried about a supply crunch after government data showed U.S. refiners ramped up output.&nbsp;<a href="https://www.reuters.com/markets/europe/oil-prices-climb-hopes-china-demand-recovery-2022-05-18/">read more</a>



U.S. crude settled down 2.5% at $109.59 per barrel and Brent settled at $109.11, down 2.52% on the day.



Reporting by Herbert Lash and Chuck Mikolajczak; additional reporting by Devik Jain in Bengaluru; editing by Jonathan Oatis



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Stocks pummeled by growth worries, U.S. dollar climbs

KEY POINTS



<ul><li>Goldman Sachs analysts have cut their China GDP forecast to 4% from 4.5% after weak data in April.</li><li>The bank does not expect China will start fully easing Covid controls before the second quarter of 2023.</li><li>On Monday, Citi — which had one of the highest China GDP forecasts — cut its outlook for growth to 4.2% from 5.1%.</li></ul>



BEIJING — Goldman Sachs analysts on Wednesday cut their forecast for China’s GDP to 4% after&nbsp;<a href="https://www.cnbc.com/2022/05/16/china-economy-covid-lockdowns-weigh-on-retail-industrial-production-data.html">data for April showed a slump</a>&nbsp;in growth as Covid-19 controls restricted business activity.



The new forecast is even further below the&nbsp;<a href="https://www.cnbc.com/2022/03/05/china-on-deck-to-reveal-its-2022-gdp-target.html">“around 5.5%”</a>&nbsp;growth target the Chinese government announced for the year in March.



“Given the Q2 Covid-related damage to the economy, we now expect China’s growth to be 4% this year (vs. 4.5% previously),” Hui Shan and a team at Goldman wrote in a report Wednesday. That prediction assumes there will be significant government support, on top of measures to stabilize the property market and control Covid outbreaks.



Since March, mainland China has struggled to contain its worst Covid outbreak in two years. Notably, the metropolis of Shanghai only started this week to begin discussing the resumption of normal activity — with a goal of mid-June.



Among April’s weak data, the Goldman analysts pointed to a plunge in housing starts and sales, half the credit growth that markets expected and&nbsp;<a href="https://www.cnbc.com/2022/05/11/chinas-consumer-prices-climb-as-covid-prompts-food-stockpiling.html">a drop below 1% for the increase in consumer prices, excluding food and energy.</a>



Other data for April released Monday showed an <a href="https://www.cnbc.com/2022/05/16/china-economy-covid-lockdowns-weigh-on-retail-industrial-production-data.html">unexpected drop in industrial production</a> and a worse-than-expected 11.1% decline in retail sales from a year ago. Exports, a major driver of growth, rose <a href="https://www.cnbc.com/2022/05/09/china-economy-april-exports-slow-imports-unchanged-amid-virus-curbs.html">by 3.9% in April</a> from a year earlier, the slowest pace since a 0.18% increase in June 2020, according to official data accessed through Wind Information.



“The weak data highlight the tension between China’s growth target and zero-Covid policy which is at the core of China’s growth outlook,” the Goldman analysts said.



They noted how Chinese leaders have&nbsp;<a href="https://www.cnbc.com/2022/05/12/chinese-official-on-chinas-economy-amid-covid-pandemic.html">emphasized their “dynamic zero-Covid” policy,</a>&nbsp;and how news that China will not host the Asian Cup next summer due to Covid reflects Beijing’s conservative mindset.



“We now expect reopening does not start before 2023Q2 and the process to be more gradual and controlled than previously assumed,” the Goldman analysts said.



“This is why our 2023 GDP growth forecast only increases by a quarter point to 5.3% (vs. 5.0% previously) despite the half a point downward revision to 2022 full-year growth forecast.”



<h2 class="wp-block-heading" id="h-other-banks-cut-forecasts"><a></a>Other banks cut forecasts</h2>



On Monday, Citi — which&nbsp;<a href="https://www.cnbc.com/2022/04/26/investment-banks-slash-china-growth-outlook-one-puts-gdp-below-4percent.html">had one of the highest China GDP forecasts</a>&nbsp;— cut its outlook for growth to 4.2% from 5.1%.



A few days earlier, JPMorgan had reduced its estimate to 4.3% from 4.6%. Morgan Stanley cut its target in late April to 4.2% from 4.6%.

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