News updates from June 3: Netanyahu coalition slides into infighting; Ruling party’s Claudia Sheinbaum wins Mexico presidency by landslide

Gene sequencing company Illumina plans to spin out cancer test developer Grail as a separate listed company later this month, capping a years-long battle with antitrust regulators over the $8bn acquisition. 

Illumina said on Monday that its board had approved the spin-off of Grail. Grail is expected to be listed on Nasdaq on June 24 as a separate company, in which Illumina will retain a 14.5 per cent stake, the company said. 

Earlier this year, the European Commission approved Illumina’s plans to spin out the company, after European antitrust regulators hit Illumina with a €432mn fine because the deal was pushed through without approval. Illumina also lost an antitrust case against the US Federal Trade Commission last year. 

A late rally for heavyweight tech stocks helped Wall Street’s major equities indices overcome early declines, while Treasuries remained supported as weaker than expected manufacturing sector data stirred interest rate cut hopes.

The S&P 500 ended Monday’s session 0.1 per cent higher despite almost two-thirds of its member stocks closing the session lower. The Nasdaq Composite rose 0.6 per cent as five Magnificent Seven groups advanced, led by Nvidia’s 4.9 per cent gain. The small-cap focused Russell 2000 fell 0.5 per cent.

The price of international oil benchmark Brent crude settled at $78.36, the lowest settlement price since early February, on a 3.9 per cent drop that marked its biggest one-day fall since the start of May.

Two-year and 10-year Treasury yields touched their lowest levels in two weeks as the US manufacturing sector fell deeper into contraction territory, raising hopes for interest rate cuts.

Joe Biden is poised to order a tightening of immigration across the US’s southern border with Mexico in an attempt to neutralise one of his biggest political weaknesses in the US election against Donald Trump.

The US president is set to sign an executive order on Tuesday that would limit migrants’ ability to seek asylum if they have crossed the border illegally, enabling their rapid deportation, people familiar with the plan said.

Biden’s move marks a bet that he can limit the political damage to his campaign from the surge in immigration that has unfolded during his White House tenure, and prevent a spike in border crossings ahead of the election.

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Blue-chip US stocks declined after data showed a slowing manufacturing sector in May, and traders prepared for a closely watched jobs report later this week.

The S&P 500 was down 0.3 per cent in Monday afternoon trading, with energy the worst-performing sector as crude prices dropped more than 3 per cent. The Nasdaq Composite rose 0.1 per cent as four Magnificent Seven groups advanced.

Treasuries rallied after data showed the US manufacturing sector fell deeper into contraction territory in May when economists expected a slight improvement. Traders have recently taken to viewing weak economic data as raising the chances that the Federal Reserve could bring forward any plans to cut interest rates.

The yield on the 10-year bond was down 0.11 percentage points to 4.40 per cent. The yield on the two-year note shed 0.07 percentage points to 4.82 per cent.

Hunter Biden appeared in a Delaware court on Monday on gun charges for the first trial of a sitting US president’s son, less than a week after Donald Trump became the first former president to be convicted of a crime.

First lady Jill Biden also arrived to the courthouse in a show of support for Hunter on the first day of the trial, as jury selection got under way.

Joe Biden on Monday said he would not comment on Hunter’s federal cases as president but expressed his “boundless love” for his son and praised Hunter’s “strength” in recovering from a drug addiction.

“I am the president, but I am also a dad,” Biden said. “Jill and I love our son, and we are so proud of the man he is today.”

Read more here

US equities struggled for direction in late-morning trading on Monday, with the S&P 500 down 0.5 per cent and the tech-dominated Nasdaq Composite down 0.1 per cent as it switched betweens gains and losses.

A technical glitch earlier in the session briefly led to dozens of trading halts for US-listed companies and exchange-traded funds.

European equities ended the session higher. The region-wide Stoxx 600 gained 0.3 per cent, France’s Cac 40 added less than 0.1 per cent and Germany’s Dax rose 0.6 per cent. 

London’s energy-heavy FTSE 100 slipped 0.2 per cent as oil prices fell.

Kamala Harris will represent the US at a Ukraine peace summit next week, after Ukraine’s President Volodymyr Zelenskyy criticised Joe Biden for choosing to skip the event.

The US vice-president will join other world leaders at the event in Lucerne, Switzerland, where more than 100 nations are expected to participate. In May, Zelenskyy said Biden opting to attend a US presidential election fundraiser instead of the summit was “not a strong decision”.

The White House said Harris would be joined by national security adviser Jake Sullivan, and that she would “reaffirm support for the people of Ukraine”.China will not be among the attendees — Zelenskyy has accused the country of helping Russia to press countries not to attend.

JPMorgan Chase’s global head of payments Takis Georgakopoulos is leaving the US bank, the lender’s latest senior exit following a management reshuffle earlier this year.

Georgakopoulos has run the payments business since 2017 and is being replaced by Umar Farooq and Max Neukirchen as co-heads, JPMorgan told staff in a memo that was seen by the Financial Times.

The bank wrote in the memo that Georgakopoulos had “informed us of his decision to pursue an opportunity outside the firm”.

Nigel Farage will return as leader of the right-wing Reform UK party, after he stepped down from frontline politics three years ago, and will contest the seat of Clacton in Essex in this year’s general election.

The party’s leader Richard Tice said he had invited Farage to return at the helm of the party and he had accepted as he introduced the arch-Brexiter in London. 

Tice said the campaign could be spruced up.  “We can do better than this. We can go from sixth gear to eighth gear,” he said.

Until now, Farage has been president of the party.

Speaking at a press conference on Monday, Farage said the country was in economic, social and moral decline.

Follow the FT’s live coverage of today’s UK election developments here

A near $60bn property fund managed by Blackstone vowed on Monday to not change investors’ ability to redeem their holdings after a rival fund overseen by Starwood Capital dramatically restricted investors’ liquidity rights to preserve cash.

In May, Sreit, a fund managed by Starwood, limited investors redemption rights by over 80 per cent to forestall a cash crunch. The manoeuvre came after the FT reported how the fund was running low on cash.

Blackstone said on Monday it had “no plans” to change investors’ liquidity rights and was “operating its business as usual”.

Breit saw an increase in redemptions in May after “another non-listed REIT amended its share repurchase program to significantly reduce liquidity to its shareholders” and temporarily met all repurchases exceeding a 2 per cent monthly cap, it said in a letter to investors.

Oil prices fell more than 3 per cent on Monday, in a wave of selling after the US market opened.

Earlier in the day, prices had been flat following a decision on Sunday by Opec+ to gradually release more oil into the market in the fourth quarter of 2024. 

But Brent crude later fell more than 3 per cent to less than $79 a barrel while WTI fell to below $75 a barrel. Spot prices fell further than oil for delivery in the fourth quarter.

Giovanni Staunovo, a commodities analyst at UBS, said there was no obvious “trigger point” for the sell-off. He speculated that the drop might have accelerated after Brent prices breached the $80 support level.

The US manufacturing sector weakened further in May, as new orders continued to soften amid a slowdown in activity from the start of the year.

The Institute for Supply Management said its index tracking factory activity fell to a reading of 48.7 last month, from 49.2 in April, missing economists’ expectations of 49.5. A figure below 50 indicates that the sector is contracting. 

“Demand remains elusive as companies demonstrate an unwillingness to invest due to current monetary policy and other conditions,” said Timothy Fiore, chair of the ISM manufacturing business survey committee. 

He added that survey panellists noted a slowdown in new orders since the start of the year because of weakened activity in housing, construction and capital expenditure.

The New York Stock Exchange said it was investigating a technical issue that resulted in the halting of several stocks including Berkshire Hathaway. Data providers appeared show that shares in Warren Buffett’s company had fallen more than 99 per cent.

“NYSE Equities continues to investigate a reported technical issue regarding LULD Bands,” the exchange said in an update shortly after 10am local time, referring to limit up, limit down levels.

“Additional information will follow as soon as possible.”

A spokesperson for the exchange told the FT the glitch did not appear to be the result of a cyber attack. 

The incident comes just days after a blip that caused live data for indices including the S&P 500 to disappear from investors’ screens for about an hour.

US stocks rose in early trading on Monday, with tech companies among the best performers. 

Wall Street’s benchmark S&P 500 added 0.4 per cent and the tech-dominated Nasdaq Composite gained 0.7 per cent. Chipmaker Nvidia added 3.3 per cent after it announced the next generation of its artificial intelligence processors on Sunday, while video game and electronics retailer GameStop rallied 72 per cent following after a popular day trader revealed a large position. 

Yields on 10-year Treasuries fell 0.05 percentage points to 4.46 per cent, reflecting rising bond prices. A measure of the dollar’s strength against a basket of six rival currencies slipped 0.1 per cent. 

Claudia Sheinbaum will become Mexico’s first female leader after winning a landslide election victory, but the scale of her win unnerved investors who sold the peso on fears of radical constitutional change.

The Mexican peso slipped 2.8 per cent to 17.55 against the dollar, its lowest level since November, as investors digested the ruling party’s bigger than expected victory and the increased chance of constitutional changes that could include the elimination of independent regulators.

Read more here

The biggest waste management company in the US, which is backed by the Bill & Melinda Gates Foundation, is expanding with a $7.2bn deal for medical waste disposal group Stericycle.

Houston-based WM, formerly known as Waste Management, said on Monday the acquisition would give it exposure to the “attractive near- and long-term growth dynamics” of the healthcare market.

The Bill & Melinda Gates Foundation is the second-biggest shareholder in WM, with an 8.8 per cent stake, according to Refinitiv.

WM, which has a market capitalisation of almost $85bn, will pay $62 in cash for every Stericycle share. Including $1.4bn of net debt, the deal represents an enterprise value for the target of $7.2bn.

Pershing Square Capital Management, the investment firm founded and run by Bill Ackman, announced a $1.05bn sale to strategic investors of a 10 per cent equity interest in a newly formed limited partnership that owns the hedge fund.

The stake in Pershing Square Holdco LP has been sold to a consortium of strategic investors including Arch Capital Group, Consulta Limited, ICONIQ Investment Management, Menora Mivtachim Holdings. 

The sale follows an internal reorganisation of the hedge fund’s ownership structure and comes ahead of plans for an initial public offering that is expected around the end of next year.

Europe’s gas price jumped more than 9 per cent on Monday, prompted by unplanned maintenance at a gas processing plant in Norway.

The price of the European benchmark TTF surged past €37 per megawatt hour on the Intercontinental Exchange, to its highest since December. While European gas storage facilities are already 70 per cent full and near historical highs for this time of year, markets remain sensitive to supply disruptions due to the tightness in the global market.

Norway supplied 30 per cent of the EU’s gas supplies last year and is now the biggest supplier of natural gas to the bloc after most pipeline deliveries from Russia were cut following its full-scale invasion of Ukraine.

French bond yields were steady on Monday after S&P Global downgraded France’s credit rating from AA to AA-, citing concerns over the country’s bloated budget deficit.

Benchmark 10-year French government bond yields were unchanged on Monday at 3.17 per cent. S&P changed its ratings outlook from “negative” to “stable”, suggesting it did not expect a further downgrade to its rating.

S&P’s downgrade brings it in line with Fitch, with Moody’s still rating France one notch higher.  

Shares in GameStop surged almost 90 per cent in pre-market trading on Monday after a post on Reddit by Keith Gill, also known as Roaring Kitty, purported to show he has a $116mn stake in the struggling video game retailer.

GameStop jumped 87 per cent to more than $43 a share ahead of the New York open. The move came after Gill, who also goes by DeepFuckingValue on Reddit, posted a picture late on Sunday that appeared to show he has 5mn shares in the company, bought at $21.27 apiece.

GameStop was at the centre of 2021’s “meme-stock” mania, when day traders piled into the stock to squeeze out hedge funds which had bet against the company’s shares.

Read more here.

European stocks began the week on the front foot, with the region-wide Stoxx 600 rising 0.5 per cent in morning trading. 

Germany’s Dax was up 0.6 per cent, France’s Cac 40 was up 0.3 per cent and London’s FTSE 100 was up 0.25 per cent, all having pared earlier gains.

Traders are confident that the European Central Bank will lower its benchmark deposit rate by a quarter of a percentage point from its record high of 4 per cent when policymakers meet on Thursday.

“This move has long been telegraphed to markets, and the recent upside surprises in wage growth and services inflation should not materially affect the outlook,” said Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management.

Turkey’s annual rate of inflation rose more than expected to 75.5 per cent in May, as the economy continues to expand despite hefty interest rate increases.

Economists polled by Reuters had expected a rate of 74.8 per cent. May’s rate is the highest since November 2022 and compares with 69.8 per cent in April.

Policymakers expect inflation to have peaked last month and that a cumulative 41.5 percentage points of interest rate rises over the past year, to the current 50 per cent, will damp private consumption.

Yet demand remains strong: data on Friday showed Turkey’s $900bn economy grew 5.7 per cent year on year in the first quarter, with household consumption rising 7.3 per cent.

Shares in GSK dropped by almost 10 per cent after a weekend ruling exposed it to jury trials for more than 70,000 cases concerning its heartburn drug Zantac, which plaintiffs allege caused cancer.

A Delaware judge ruled that scientific evidence presented by plaintiffs was admissible, meaning scientists will be able to testify before a jury that there is a link between the plaintiffs’ cancers and their exposure to NDMA, a probable human carcinogen, through Zantac. GSK and other companies that sold the drug dispute such claims.

GSK said it would appeal, which if accepted could take 10 months, according to Citi analysts who estimate the company’s potential settlement costs at $3bn.

Shares were down 9.5 per cent in early trading.

Digital bank Monzo has broken even for the first time as the London-based fintech benefited from higher interest rates and growth in transaction fees and subscriptions.

The company, founded in 2015, posted a £15.4mn pre-tax profit in the year to the end of March, up from a £116.3mn loss the year before. Revenue more than doubled in the period to £880mn as the fintech’s net interest income rose 167 per cent to £438mn thanks to higher interest rates.

Monzo’s revenue was also boosted by transaction fees, with net transaction income more than doubling to £167mn despite customers spending less abroad.

WH Ireland, one of the City of London’s leading brokers to small cap companies, is to sell its capital markets business as consolidation accelerates in the struggling sector.

The company said on Monday that it had agreed to sell the business to Zeus Capital for up to £5mn. “Market conditions have continued to be challenging, especially for brokers specialising in Aim companies,” WH Ireland said. The company will in future focus on its wealth management operation.

In January, Panmure Gordon and Liberum announced a merger. Last year, Cenkos and FinnCap merged, while Deutsche Bank bought Numis.

Claudia Sheinbaum is set to become Mexico’s first female president after preliminary results showed she is on course for an overwhelming victory in the Latin American nation’s election.

After a polarising campaign scarred by violence, former Mexico City mayor Sheinbaum of the ruling leftwing Morena party was on track to win with between 58.3 and 60.7 per cent of the vote.

That puts her at least 30 points clear of her centre-right opposition rival Xóchitl Gálvez on 26.6-28.6 per cent, according to a quick count of a representative sample of polling stations by electoral authority INE.

Read more here

Equities in India, Hong Kong and South Korea surged on Monday after a string of promising policy developments in the region.

India’s benchmark Nifty 50 led gains as it added 2.9 per cent following the release of polls over the weekend showing that Prime Minister Narendra Modi’s Bharatiya Janata party was likely to have expanded its parliamentary majority. Infrastructure-related names outperformed.

Hong Kong’s Hang Seng index climbed 2.2 per cent, boosted by gains in Chinese electric vehicle manufacturers after Beijing announced $890mn in subsidies for vehicle trade-ins.

South Korea’s Kospi jumped 1.7 per cent, with energy names leading gains after the country said it was exploring potentially enormous oil and gas reserves off its east coast.

Toyota and four other leading Japanese vehicle manufacturers have admitted to falsifying testing data, prompting a halt in domestic shipments and warnings of raids by transport authorities.

The announcements came after Japan’s transport ministry released the outcome of an investigation into 85 carmakers, initiated in response to a string of testing scandals that hit Toyota subsidiaries, including Toyota Industries and Daihatsu Motor.

Toyota apologised “for any concern or inconvenience” the incident may have caused. “Internal investigations have confirmed that there are no problems with vehicle performance and safety,” the carmaker added.

Shares in Toyota, Honda, Mazda and Yamaha Motor briefly fell more than 2 per cent. Suzuki rose 2 per cent.

Heavily indebted French IT services company Atos has said that it aims to decide by Wednesday between two rival offers received from Czech billionaire Daniel Křetínský and lead investor David Layani.

Atos’ board has given management the go-ahead to work with the company’s creditors to “ensure the maximum support is likely to be secured for one of those proposals by June 5”, it said on Monday. The goal remains to secure a final restructuring agreement by July.

Atos, which is burning through cash to keep its operations running, said it had secured €450mn interim financing with its creditors, while another €350mn of additional short-term financing was being negotiated.

The Maldives will ban Israeli citizens from visiting the Muslim-majority South Asian archipelago nation, in a response to the ongoing war in Gaza.

President Mohamed Muizzu made the announcement on Sunday at a news conference in Male. He also announced a “special envoy to assess Palestinian needs” and the launch of a fundraising campaign with UNRWA, the Palestinian relief agency.

Visits by Israelis to the Maldives, whose economy depends heavily on tourism, have fallen since the start of the Israel-Hamas war. According to the Maldives Ministry of Tourism, 528 Israelis visited the country in the first quarter of this year, down 89 per cent from 4,644 in the first quarter of 2023. 

China’s Ministry of Finance announced on Monday that it will allocate Rmb6.4bn ($890mn) in subsidies for consumers trading in old cars, as Beijing tries to boost domestic consumption and high-end manufacturing in the world’s largest auto market.

Under the trade-in scheme first unveiled in April, drivers can receive a one-time subsidy of up to Rmb10,000 after exchanging old gasoline or electric vehicles.

According to the China Passenger Car Association, the subsidies and the recent abolition of government-set minimum down payments for car purchases could potentially add 2mn units to the country’s full-year auto sales.

China’ manufacturing activity expanded in May, according to a privately run survey published on Monday, in contrast to official data released last week.

The Caixin manufacturing purchasing managers’ index came in at 51.7, slightly beating the consensus forecast by a poll of Bloomberg analysts of 51.6 and the fastest rate of expansion since June 2022.

A reading above 50 indicates growth from the previous month.

The Caixin gauge diverged from the official manufacturing PMI, which unexpectedly showed a contraction in May, offering mixed signals for industrial growth.

China’s official PMIs focus on larger business and state-owned companies, while the Caixin PMI covers more small and medium-sized enterprises.

Indian markets hit all-time highs after exit polls predicted a landslide election triumph for Prime Minister Narendra Modi, whose third-term promises investors a continuation of market-friendly reforms and infrastructure investment.

A batch of polls released over the weekend indicate Modi’s Bharatiya Janata party is set to increase its majority in India’s lower house of parliament. They also signposted a potential two-thirds majority with allied parties that may enable changes to the country’s constitution.

India’s benchmark Nifty 50 index hit a record high when markets opened on Monday, jumping 3.6 per cent. The rupee was up 0.6 per cent against the dollar and the yield on India’s 10-year bonds slid to a one-year low.

South Korea’s benchmark stock index jumped on Monday after the government said there were potentially vast oil and gas reserves off the country’s east coast.

The Kospi rose 2 per cent in early trading, with domestic energy companies leading gains. The won strengthened 0.4 per cent against the dollar, making it the strongest-performing currency in the region for the day.

President Yoon Suk Yeol on Monday said he had approved exploration of potential reserves off Yeongil Bay in Pohang, adding that there was a “very high possibility” that 14bn barrels of oil and gas were in the reserve.

China’s Ministry of State Security said MI6, Britain’s spy agency, recruited “employees of a central national agency” in a statement on Monday morning.

The MSS said that a man surnamed Wang and his wife with the last name Zhou were recruited by MI6 to “collect information for the British”. They allege Wang was targeted by MI6 shortly after arriving in the UK in 2015 as part of a “China-UK exchange programme”.

“MI6 provided Wang with professional spy training, directing him to return home and collect important intelligence related to China,” the ministry said, adding that it was “legally investigating the couple”.

Read more here.

Events: Bank of America’s India Conference begins in Mumbai.

Economic data: Caixin releases its China manufacturing purchasing managers’ index for May. India and Pakistan announce May inflation figures, and Singapore publishes its May PMI.

Corporate updates: Japanese tea beverage giant Ito En reports quarterly results and Hong Kong property developer Henderson Land hosts its annual meeting.

Sir Keir Starmer is set to unveil 14 former military personnel as Labour candidates for the UK general election as he tries to persuade voters that Britain’s main opposition party can be trusted with the country’s defence.

The Labour leader on Monday will also pledge to continue a trio of current Conservative government policies on the UK’s Trident nuclear defence system, a promise he will dub the “nuclear deterrent triple lock”.

The announcements are part of Starmer’s effort to show voters that Labour has changed since the leadership of his hard-left predecessor Jeremy Corbyn, who opposed Trident and was a critic of Nato.

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The online fashion giant Shein is planning to confidentially file for a London listing as soon as the coming days, laying the groundwork for a blockbuster initial public offering in the UK.

Shein is set to file privately with UK regulators its intention to float, according to people familiar with the matter, who cautioned that timing on the filing could yet shift.

Shein had been leaning towards a London listing after tensions between Beijing and Washington stalled its plans for an IPO in New York.

Read more here

Hello and welcome to the working week.

Will it be the treble? The world’s biggest and longest running election — in this bumper year for plebiscites — will reach a conclusion this week as India names its new prime minister. The incumbent Narendra Modi is not only on course to claim a hat-trick, becoming the first leader since Jawaharlal Nehru to serve three consecutive terms, but if poll predictions are confirmed on Tuesday, when the official results are reported, he will have achieved a decisive win.

Read more here