News updates from July 2: Biden to meet with Democratic governors; Apple to join OpenAI’s board in observer role

Apple is set to take an observer role on the board of OpenAI, giving the iPhone maker similar insight into the artificial intelligence start-up as Microsoft, its biggest backer.

The board role was agreed as part of a deal between Apple and OpenAI, announced last month, to integrate ChatGPT into Apple devices. Tim Cook, the iPhone maker’s chief executive, said the partnership would be part of a suite of AI features for users, such as an enhanced Siri voice assistant, as it took the “next big step” to incorporate the technology into its products.

Phil Schiller, the head of Apple’s App Store and a member of its executive team since 1997, will take on the board observer role later this year, said a person with knowledge of the matter. The news was first reported by Bloomberg. OpenAI and Apple declined to comment.

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US stocks closed at record highs on Tuesday, with gains for Big Tech groups propelling major indices past fresh milestones.

The S&P 500 ended the session up 0.6 per cent, closing above 5,500 points for the first time. The Nasdaq Composite rose 0.8 per cent, the first time it finished higher than 18,000 points. Heavyweight tech companies contributed to those gains, with Apple and Amazon adding 1.6 per cent and 1.4 per cent respectively, while Tesla advanced more than 10 per cent after the electric vehicle giant posted a quarterly sales rebound.

US equity and bond markets are set to close early on Wednesday, and will remain shut on Thursday for the July 4 holiday. Friday will bring the latest US payrolls figures for June.

China’s coast guard has confiscated a Taiwanese fishing vessel near the Taipei-controlled island of Kinmen, according to the Taiwan government, in a sharp escalation of tensions between the two sides.

Taiwan’s coast guard said the captain of the Ta Chin Man 88 called it for help on Tuesday night after the Chinese coast guard stopped and boarded his vessel for inspection while he was fishing north-east of Kinmen, which is located just off China’s coast.

Taiwanese coast guard ships sent to provide emergency assistance to the fishing boat were blocked by Chinese coast guard vessels and told not to interfere.

“In order not to escalate the conflict, the pursuit was aborted,” Taiwan’s coast guard said.

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US stocks rose on Tuesday, while government bond yields edged lower, as investors evaluated the latest flurry of economic and corporate news along with fresh comments from Federal Reserve chair Jay Powell.

Wall Street’s S&P 500 gauge added 0.4 per cent, while the technology-heavy Nasdaq Composite gained 0.7 per cent. Tesla was among the biggest risers. Its shares advanced about 9 per cent after the world’s largest electric-car maker reported a rebound in sales in the second quarter — even as quarterly vehicle deliveries declined again.

The benchmark 10-year Treasury yield slipped 0.04 percentage points to 4.44 per cent, reversing some of the previous day’s move in the opposite direction. Yields fall as prices rise.

Those moves came after Powell referred to a recent decline in the central bank’s preferred measure of inflation as “really good progress” during a conference in Portugal. But he added the Fed still wanted to see more signs of cooling in price pressures and the labour market.

Eli Lilly is gearing up to launch its breakthrough Alzheimer’s drug at a price 20 per cent higher than a medicine produced by rival drugmakers after US regulators on Tuesday approved the treatment for use in early-stage patients. 

Kisunla, which is known scientifically as donanemab, will be sold at list price of $32,000 per year, more than rival treatment Leqembi, which was developed jointly by pharmaceutical groups Biogen and Eisai and costs $26,500 per year.

Kisunla will enter the US market a year after Leqembi, the first fully approved medicine to treat the neurodegenerative disease, was launched. 

European stocks lost ground on Tuesday, dragged lower by banks and healthcare stocks.

Gains for energy stocks and real estate companies were not enough to prevent the region-wide Stoxx Europe 600 falling 0.4 per cent. Germany’s Dax lost 0.8 per cent and London’s FTSE 100 fell 0.6 per cent. The Cac 40 in Paris lost 0.3 per cent.

The euro slipped 0.05 per cent against the dollar to $1.0732. Yields on benchmark German government bonds were broadly steady on the day, having climbed on Monday during a global sell-off.

The head of the Federal Reserve has welcomed recent signs of easing inflation in the US, but said policymakers still needed more economic data before being confident enough to begin cutting interest rates.

Jay Powell described the recent fall in its preferred measure of US inflation — the price consumption expenditures index — to 2.6 per cent in May as “really good progress”, but said the central bank still wanted to see more evidence that price pressures and the labour market are cooling before it starts to loosen monetary policy.

The Fed’s target for the headline PCE index is 2 per cent a year.

Powell’s comments, delivered at the European Central Bank’s conference in Sintra, Portugal, on Tuesday, came as job openings data showed demand for US workers rose slightly in May.

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The US announced $2.3bn in lethal aid for Ukraine to surge additional air defences to Kyiv ahead of the Nato summit in Washington next week.

“This package under presidential drawdown authority will provide more air defence interceptors, anti-tank weapons, and other critical weapons from us inventories,” US defence secretary Lloyd Austin said.

Air defence remains among Ukraine’s most critical needs as Russia has intensified its long-range air campaign in recent months.

Austin added the US is working to “build a bridge to Nato membership for Ukraine”, ahead of the 75th anniversary in Washington next week.

A US judge has stayed Joe Biden’s permitting freeze for new liquefied natural gas terminals, dealing a blow to a policy that had been cheered by climate activists but attacked by the energy industry.

The pause, announced in January, halted new export licences for LNG developments while the Department of Energy studied the environmental and economic impact of the booming industry.

But in an injunction issued late Monday, Louisiana district court Judge James Cain, a Donald Trump appointee, dismissed the policy as “completely without reason or logic”.

The ruling does not mean new permits will immediately start being issued.

The White House said it was “disappointed” with the decision but did not give any indication of whether it planned to appeal.

Manhattan prosecutors will not object to a delay in sentencing Donald Trump in the “hush money” trial that found him guilty of 34 felony counts, after the ex-president sought to set aside the jury's verdict in the wake of a US Supreme Court decision that granted him broad immunity from criminal prosecution.

The Manhattan district attorney's office said it did not “oppose” Trump's request for a delay to file his motion, even if “we believe defendant's arguments to be without merit,” according to a letter sent to Juan Merchan, the judge presiding over the case, on Tuesday.

Trump was set to be sentenced on July 11 after being convicted of conspiring to buy the silence of a pornography actor ahead of the 2016 election.

Trump's campaign did not immediately respond to a request for comment.

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Music entrepreneur Merck Mercuriadis is to step down as chair of Hipgnosis Song Management, the company he set up six years ago to manage music rights.

The company said on Tuesday that Mercuriadis would step down upon completion of Blackstone’s acquisition of Hipgnosis Songs Fund, which is managed by HSM and owns the rights to works by Blondie and the Red Hot Chili Peppers among others. Blackstone is already the majority owner of HSM.

Mercuriadis said he planned “to undertake a strategic shift of focus, and to spend more time advocating on behalf of songwriters to ensure that they are properly compensated for their work”.

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Demand for US workers rose slightly in May, keeping pressure on the Federal Reserve as it weighs interest rate cuts later this year.

There were 8.1mn job vacancies in May, up from a three year low of 8mn in April, the labour department said Tuesday. Economists, who consider job openings to be a proxy for labour demand, expected 7.9mn.

Layoffs remained at 1.7mn, while voluntary job quits were little changed at 3.5mn. The hires rate rose to 3.6 per cent.

The stronger than expected job openings figure indicates a still hot jobs market ahead of the release of non-farm payrolls data on Friday.

US stocks made small gains early on Tuesday ahead of the release of closely watched jobs data, with utilities and energy groups among the best performers.

Wall Street’s blue-chip S&P 500 rose less than 0.1 per cent and the tech-dominated Nasdaq Composite added 0.1 per cent shortly after the opening bell in New York. Shares in Tesla rose 5.4 per cent after the car company delivered more vehicles than expected in the three months to June. Nvidia slipped 2 per cent.

Figures out later on Tuesday are expected to show that the number of US job openings fell to 7.9mn in May from just over 8mn in April.

Elon Musk’s Tesla delivered fewer vehicles for the second consecutive quarter compared with the same period the previous year, as the electric vehicle group deals with slowing demand and stiff competition from Chinese rivals.

The company delivered 443,956 vehicles globally in the three months to June, down 4.7 per cent from a year earlier, but above Wall Street expectations of just over 439,000. 

The numbers are higher than that of China’s BYD, which earlier on Tuesday reported second-quarter deliveries totalling 426,000, a 21 per cent rise from the previous year. 

Tesla’s share price dipped by about 1.8 per cent in pre-market trading.

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Hurricane Beryl has been upgraded to a category five on the five-level Saffir-Simpson wind scale, according to the US National Hurricane Center, which has warned of life-threatening winds and storm surge to Jamaica on Wednesday. 

Beryl, which is currently churning through the Caribbean Sea and is advancing towards Jamaica, is the earliest category-five hurricane on record, according to the World Meteorological Organization.  

Hurricane conditions are also expected in the Cayman Islands, while tropical storms are expected on the south coast of the Dominican Republic and Haiti. Beryl first made landfall on Monday at category four strength on the island of Carriacou, in Grenada.

French stocks slipped on Tuesday, erasing gains from the previous session, as Marine Le Pen said her far-right party would seek to form a new government even if it fails to secure a majority. 

The Cac 40 in Paris was down 0.3 per cent in afternoon trading trade. Banks, which have come under pressure since the snap elections were announced in early June, were again among the worst performers. BNP Paribas was down 1 per cent. Crédit Agricole shed 0.5 per cent and Société Générale shed 0.1 per cent.

France’s benchmark index rose 1.1 per cent on Monday as traders bet that Le Pen’s Rassemblement National party would fall short of securing an outright majority in the second round of elections this weekend, even after it trounced President Emmanuel Macron’s centrist alliance in the first round on Sunday.

Turkey has detained hundreds of people after two nights of violent protests targeting the country’s vast Syrian population. 

Almost 475 people were detained after “provocative actions were carried out against Syrians last night in some cities across our country”, Turkish interior minister Ali Yerlikaya said on Tuesday.

The violence began on Sunday in Kayseri, a province in central Turkey, after a Syrian national was accused of sexually harassing a child. Kayseri’s chief public prosecutor later opened a formal investigation into the man, who the court ordered to be arrested. 

Anti-Syrian violence spread to other cities on Monday evening, with local media showing buildings and cars set ablaze.

Turkey is home to about 3.1mn refugees from Syria, which has been lodged in a more than decade-long civil war. 

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Water companies could face a raft of legal challenges following a landmark judgment from the Supreme Court that ruled that private landowners and individuals can seek redress for sewage released into UK waterways.

The legal challenge was one of a number faced by water companies as anger mounts over the mixture of storm water and raw sewage that is pouring into rivers and coastal waters, threatening human and environmental health.

United Utilities had argued that the owners of the 129-year-old Manchester Ship Canal could not seek redress for the release of “untreated foul water”. They argued that the 1991 water industry act, which privatised the sector, meant only regulators could take action.

However the Supreme Court on Tuesday ruled unanimously that Manchester Ship Canal Company Limited was entitled to claim for damages from sewage pollution.

Eurozone inflation slowed to 2.5 per cent in June, giving some relief to monetary policymakers as strong increases in services prices were offset by weaker growth in energy and fresh food costs.

The figure for the year to June marked a slowdown from 2.6 per cent in the previous month. It was in line with economists’ forecast of 2.5 per cent in a Reuters poll.

Slowing price rises in the 20 countries that share the euro will provide some relief for the European Central Bank, which last month started to cut interest rates in expectation of inflation hitting its 2 per cent target by next year.

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Northvolt, Europe’s big hope in battery manufacturing, is considering cutting back its aggressive expansion plans after a series of problems with its first gigafactory in Sweden pushed it to launch a strategic review.

Peter Carlsson, Northvolt’s chief executive, told the Financial Times that the Swedish industrial start-up’s board would meet in September and hinted that new factories in Germany, Canada and Sweden could be delayed.

Northvolt recently lost a $2bn contract with BMW, which instead gave it to an Asian supplier, Samsung SDI, as the Swedish group has struggled to produce at scale at its first factory in Skellefteå, just below the Arctic Circle.

“We need to prove that we can match [Asian suppliers] in execution. That’s why we are also doing a strategic overview of our business plan and our growth plan so that the core engine of Skellefteå is getting up and running before we take the next steps of moving along,” Carlsson said.

Big share price moves in Europe today include German energy technology group Siemens Energy, French service provider Sodexo and UK supermarket chain J Sainsbury:

• Siemens Energy: Shares in the Munich-headquartered energy technology group advanced 3.5 per cent, leading gains on the region-wide Stoxx 600 on Tuesday, after it announced plans to invest €1.2bn by 2030 and create 10,000 jobs for an electricity grid unit. 
  

  

• Sodexo: Shares in the Paris-listed service provider slipped 5 per cent after its third-quarter sales disappointed investors.

• J Sainsbury: Shares in the UK grocery retailer fell 5 per cent after quarterly results showed growth slowed compared with the same period last year. 

Big-name hedge funds Citadel and Millennium have made solid gains in the first half of the year, extending a strong run for so-called multi-manager firms that increasingly dominate the industry.

The flagship Wellington fund of Ken Griffin’s Citadel was up 8.1 per cent to the end of June, while Izzy Englander’s hedge fund Millennium was up 6.9 per cent, according to people who have seen the numbers.

While those figures lagged behind a 15 per cent gain for the S&P 500 stock index over the same period, they eclipsed the gains made by the average hedge fund of 5.2 per cent to the end of May, according to data provider Hedge Fund Research. 

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European stocks fell early on Tuesday, with declines for real estate and consumer non-cyclicals offsetting small gains for energy groups and utilities.

The region-wide Stoxx Europe 600 lost 0.7 per cent, while Germany’s Dax and London’s FTSE 100 both fell 0.5 per cent.

France’s Cac 40 fell 0.7 per cent, having risen sharply on Monday after the far-right Rassemblement National party scored historic gains in the first round of France’s parliamentary elections.

The euro slipped 0.2 per cent against the dollar to $1.0715. Contracts tracking Wall Street stocks fell ahead of the New York open.

Far-right leader Marine Le Pen has said her Rassemblement National party will seek allies in parliament to secure an outright majority and form a government if the election results leave it short of the required number of seats.

It marks a change from RN’s previous position that it would only take the premiership and reins of government if voters gave it an outright majority of 289 out of 577 votes. 

“We want to govern, to be extremely clear. And if we are a few deputies short of the majority . . . we will go see others and say: are you ready to participate with us?” Le Pen told France Inter Radio, adding that allies could be found on the left and right, notably in the conservative Les Republicains party.

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The owner of London Stansted and Manchester airports has swung back to profit after the boom in leisure travel helped passenger numbers rise above pre-pandemic levels. 

Manchester Airport Group on Tuesday posted pre-tax profits of £218.4mn for the 12 months to the end of March, up from a £59.4mn loss the year before. 

Passenger numbers rose 14 per cent to 61.3mn, and the company, which also owns East Midlands airport, said it planned to spend £2bn over the next five years expanding capacity at its three airports to keep up with strong demand for travel. 

Swiss luxury goods group Richemont has said the chief executive of its jewellery brand Cartier will step aside after eight years and be replaced by former Cartier China head Louis Ferla. 

Cyrille Vigneron will retire from the role and become the brand’s culture and philanthropy chair from September. Ferla will move to Cartier from his current position as chief executive of one of Richemont’s luxury watch brands, Vacheron Constantin, a role he has held since 2017. 

The change at Cartier, Richemont’s biggest brand, follows a leadership overhaul at the group in May, in which Nicolas Bos become chief executive.

Richemont’s high-end jewellery brands, which include Van Cleef & Arpels and Buccellati, accounted for €14bn of the group’s €20bn sales in its most recent annual results. 

Sainsbury’s said sales had continued to grow strongly despite the bad weather this spring, and reiterated its profit guidance of up to £1.06bn for the year.

Retail sales grew 4.2 per cent in the first 16 weeks of the year, with grocery up 4.8 per cent and non-food down 4.3 per cent.

The company said it had made more market share gains than any other retailer as a result of switching by online consumers.

Sainsbury’s expects to return at least £250mn to shareholders after completing the sale of its banking business to NatWest.

Shares of mainland Chinese property developers listed in Hong Kong rose on Tuesday after an industry report showed stronger than expected sales figures.

The Hang Seng Mainland Properties index rose 3.1 per cent, helping boost the broader Hang Seng index. Stronger than expected home sales data from real estate information provider CRIC released on Monday spurred hopes that efforts to revive China’s property market were working.

South Korea’s won continued to slide against the US dollar, weakening 0.5 per cent to Won1,388.85 after cooling inflation raised the prospect of rate cuts.

Japanese equities held on to gains from early in trading to lead rises among Asian stock markets.

Revolut reported record profits as the financial services company was boosted by higher interest rates and customer growth.

The London-based fintech said in its annual report published on Tuesday that it swung to a £438mn pre-tax profit, up from a £25mn loss the previous year.

Revenue rose 95 per cent year on year to £1.8bn. Interest income jumped more than fivefold to £500mn over the period as its total customer balances base grew to £18.2bn.

Revolut also attracted 12mn new customers during the period. The SoftBank-backed app had 38mn customers at the end of 2023 and has since grown its user base to 45mn.

The amount of equity raised in Hong Kong during the first half of the year was the lowest in more than two decades, data from the London Stock Exchange Group showed.

Just $6.3bn was raised in the first half of 2024, the lowest since the Sars epidemic disrupted business in 2003. The amount includes follow-on offerings and convertible bonds.

Hong Kong raised just $1.5bn from initial public offerings, ranking 13th globally. The top-ranked New York Stock Exchange raised $10.9bn.

Hong Kong’s largest IPO of the year so far is for the company behind milk tea brand ChaPanda, which raised about $330mn in March, though shares tanked as much as 38 per cent on the first day of trading.

EU labour market: The bloc publishes unemployment data for May. In April, the euro area’s seasonally adjusted unemployment rate fell to 6.4 per cent, its lowest level since 1999, with just under 11mn people unemployed.

UK household budgets: Resolution Foundation publishes its annual wealth audit charting the size and distribution of household finances across the country.

Ukraine: Industrial production data for May.

Corporate earnings: Swedish electric-car maker Polestar publishes quarterly results, as does UK grocery retail chain J Sainsbury, while Hungarian budget airline Wizz Air releases June traffic statistics.

ANZ, one of Australia’s largest banks, has been hit with sanctions by the country’s banking watchdog for charging fees to the accounts of deceased customers.

The Banking Code Compliance Committee said the decision to name ANZ reflected “serious and systemic breaches” of the banking code. 

ANZ, which has since hired staff and introduced new tools to speed up the service it provides when a customer dies, will refund A$3.3mn (US$2.2mn) to more than 18,000 estates and write 10,604 apology letters to atone for the issue. 

A 2018 inquiry into financial services in Australia revealed that a number of well-known companies, notably AMP, continued charging fees to customers after they died. 

LG Energy Solution will supply lithium iron phosphate (LFP) batteries to Renault’s electric vehicle unit Ampere, the South Korean company announced on Tuesday morning.

It is the group’s first large-scale supply deal for LFP batteries, which are cheaper and safer than batteries made from alternative materials but have shorter driving ranges.

Production of LFP batteries has been dominated by Chinese players but LGES is keen to increase its market share in the sector.

Under the five-year contract, LGES will provide Ampere with LFP batteries for about 590,000 EVs starting in late 2025. The batteries will be produced at its plant in Poland.

Renault will also get LFP batteries from China’s CATL, the world’s largest battery maker. 

Japanese equities led stock markets in Asia on Tuesday morning as the country’s benchmark Topix rose 1 per cent, bringing gains for the year to date above 20 per cent.

High-end manufacturing companies in precision tooling and optical equipment contributed the most to the rise.

Hong Kong’s Hang Seng index edged up 0.5 per cent as a subindex of mainland Chinese property developers listed in the city climbed more than 3 per cent.

In currency markets, South Korea’s won weakened 0.3 per cent against the US dollar to Won1,386.73 after official statistics released on Tuesday showed June inflation came in lower than expected, raising the prospect of central bank rate cuts.

Events: China’s President Xi Jinping begins a state visit to Kazakhstan ahead of a meeting of the Shanghai Cooperation Organisation in the capital of Astana. Vietnam’s Prime Minister Pham Minh Chinh meets his South Korean counterpart in Seoul to discuss deepening co-operation between the two countries.

Economic data: South Korea announces inflation data for June, Hong Kong publishes May retail sales data and Singapore releases its manufacturing purchasing managers’ index for June.

Corporate updates: Japan’s Fast Retailing, ABC-Mart and Nitori Holdings release monthly sales and revenue data for June.

Millennium Management, one of the world’s largest and best-known hedge funds, was up 6.9 per cent to the end of June, according to a source familiar with the matter. 

The New York-headquartered hedge fund, which manages more than $67.7bn in investor assets, was up 10 per cent the previous year. 

Millennium is a multi-manager hedge fund that puts hundreds of trading teams to work across asset classes and strategies, all controlled by a centralised risk system to ensure the fund does not take big losses. 

The multi-manager hedge fund space, which includes competitors Ken Griffin’s Citadel and Steve Cohen’s Point72, has been the fastest-growing corner of the hedge fund market.

Panama’s new president has pledged to halt illegal immigration through the notorious Darién Gap and work with the US government as it seeks to limit arrivals at its southern border ahead of its presidential election.

José Raúl Mulino, the rightwing leader who won the May vote, said in his inauguration speech on Monday that the country could no longer pay the economic and social costs associated with migration.

“Panama will no longer be a transit country for illegals,” he said, adding that migrants were being organised by “international groups related to drug trafficking and people smuggling”.

Last year more than half a million people crossed the Darién Gap, which stretches into Colombia, with economic and political crises in Latin America pushing people out of their home countries such as Venezuela. After leaving the jungle most migrants cross Panama’s isthmus on buses on their journey towards the US.

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Boeing must either plead guilty to felony fraud or go to trial against the US government as the next step in a criminal case stemming from its door panel blowout, according to the latest terms offered to the company by the Department of Justice. 

Under the potential plea agreement, the airline would plead guilty to one charge of conspiring to defraud the US and pay a fine of $243.6mn, the second criminal penalty of this size in the case, according to someone familiar with the matter.

The move comes after the DoJ notified Boeing it had breached the deferred prosecution agreement it signed in 2021 in the wake of the fatal Lion Air and Ethiopian Airlines 737 Max crashes.

The notification followed the mid-air blowout that terrified passengers of an Alaska Airlines flight earlier this year.

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US stocks closed higher in the first session of the second half of the year, even as Treasury yields hit multi-week highs.

Strong gains in the technology sector helped the benchmark S&P 500 add 0.3 per cent despite almost three-quarters of the index’s constituents declining on the day. The Nasdaq Composite rose 0.8 per cent, with every so-called Magnificent Seven tech group finishing higher.

Treasuries sold off as traders weighed higher odds of Donald Trump being elected as US president later this year. The yield on the 10-year bond jumped 0.14 percentage points to 4.48 per cent, its highest level in a month.

“There are several investment implications of Trump back in the White House,” said Jack Ablin, chief investment officer at Cresset Capital. “[Most notable would be] a higher-for-longer Fed, as monetary policymakers increase the likelihood that the corporate tax cuts will be extended next year.”

Meanwhile, oil prices rose for the fourth session in a row, with international benchmark Brent crude settling 1.9 per cent higher to $86.60 a barrel.