US orders immediate stop to some AI chip exports to China; Lloyds profits up but lending margins fall – business live

The UK’s Financial Conduct Authority (FCA) has warned that cryptocurrency firms are not properly telling customers about the risks of their products, two weeks after new legislation gave it oversight over the sector.

In news that will not surprise anyone familiar with the wild west of crypto promotions, the City regulator said it had seen:

• Promotions making claims about the ‘safety’, ‘security’ or ease of using cryptoasset services without highlighting the risk involved

• Risk warnings not being visible enough due to small fonts, hard-to-read colouring or non-prominent positioning

• Firms failing to provide customers with adequate information on the risks associated to specific products being promoted

It is another shot across the bows from the regulator, which has already restricted promotions by one crypto company, rebuildingsociety.com Ltd. It has also issued 221 alerts about illegal promotions from unauthorised firms on its “Warning List”.

An EY-linked auditor to the Adani Group is under scrutiny from India’s accounting regulator, Bloomberg News has reported.

The National Financial Reporting Authority, or NFRA, has started an inquiry into, S.R. Batliboi, a member firm of EY in India, Bloomberg said, citing unnamed sources.

S.R. Batliboi is the auditor for five Adani companies which account for about half Adani’s revenues.

Bloomberg reported that representatives for NFRA and the Adani Group didn’t respond to an emailed request for comments. A representative for EY and S.R. Batliboi declined to comment to Bloomberg.

China’s economic slowdown is causing worries at home, as well as in Germany and other big trade partners.

A series of Chinese government actions have signalled their concern about slowing growth, which could cause problems for an authoritarian regime.

Xi Jinping, China’s president, visited the People’s Bank of China for the first time, according to reports yesterday. “The purpose of the visit was not immediately known,” said Reuters, ominously.

State media also reported that China had sharply lifted its 2023 budget deficit to about 3.8% of GDP because of an extra $137bn in government borrowing. That was up from 3%. The Global Times, a state-controlled newspaper, said the move would “benefit home consumption and the country’s economic growth”, citing an unnamed official.

Germany’s economic fortunes were better than expected in October, according to a closely watched indicator – but whether it’s overall good news or bad depends on who you ask.

The ifo business climate index rose from 85.8 to 86.9 points, higher than the 85.9 expected by economists polled beforehand by Reuters.

Germany has been struggling as growth slows in China, a key export market, as well as the costs of switching from Russian gas to fuel its economy. You can read more context here:

Franziska Palmas, senior Europe economist at Capital Economics, a consultancy, is firmly in team glass half empty. She said:

The small rise in the Ifo business climate index (BCI) in October still left the index in contractionary territory, echoing the downbeat message from the composite PMI released yesterday. This chimes with our view that the German economy is again recession.

Despite the improvement in October, the bigger picture remains that the German economy is struggling. The Ifo current conditions index, which has a better relationship with GDP than the BCI, is still consistent with GDP contracting by around 1% quarter-on-quarter. This is an even worse picture than that painted by the composite PMI, which fell in October but points to output dropping by “only” 0.5% quarter-on-quarter.

But journalist Holger Zschaepitz said it looks like things are improving:

House prices to fall 11% from last year’s peak says Lloyds Banking Group

Kalyeena Makortoff

The Israel-Hamas conflict adds another cloud on the horizon for the global economy, according to the head of the International Monetary Fund (IMF).

Kristalina Georgieva was at “Davos in the desert”, a big conference hosted by Saudi Arabia.

The Future Investment Initiative conference was the subject of boycotts five years ago when Saudi crown prince Mohammed bin Salman allegedly ordered the murder of exiled critic Jamal Khasoggi. The distaste of global leaders has apparently faded since, however.

Speaking on the Israel-Hamas conflict, Georgieva said (via Reuters):

What we see is more jitters in what has already been an anxious world. And on a horizon that had plenty of clouds, one more – and it can get deeper.

The war has been devastating for Israel and Gaza. Hamas killed more than 1,400 people and took more than 220 people as hostages in an assault on Israel. The health ministry in Gaza, which is run by Hamas, said last night that Gaza’s total death toll after 18 days of retaliatory bombing was 5,791 people, including 2,360 children.

The broader economic impacts have been relatively limited, but Georgieva said that some neighbouring countries were feeling them:

Egypt, Lebanon, Jordan. There, the channels of impact are already visible. Uncertainty is a killer for tourists inflows. Investors are going to be shy to go to that place.

Dettol maker Reckitt misses sales expectations but announces £1bn buyback

Speaking of Deutsche Bank, it posted its own earnings this morning: third-quarter profits dropped by 8%, but that was better than expected by analysts.

Shares in Deutsche, which has struggled in the long shadow of the financial crisis, are up 4.2% in early trading.

Reuters reported:

The bank was slightly more optimistic on its revenue outlook for the full year, forecasting it would reach €29bn ($30.73bn), the top end of its previous guidance range, as it upgraded the outlook for revenue at the retail division.

Net profit attributable to shareholders at Germany’s largest bank was €1.031bn, better than analyst expectations for profit of around €937m.

Though earnings dropped, it marked the 13th consecutive profitable quarter, a considerable streak in the black after years of hefty losses.

Here are the opening snaps from across Europe’s stock market indices, via Reuters:

• EUROPE’S STOXX 600 DOWN 0.1%

• FRANCE’S CAC 40 DOWN 0.4%

• SPAIN’S IBEX DOWN 0.3%

• EURO STOXX INDEX DOWN 0.2%

• EURO ZONE BLUE CHIPS DOWN 0.3%

European indices appeared to be taking their lead from the US, where Google owner Alphabet’s share price dropped in after-hours trading last night. That dragged down futures for US tech companies, even though another tech titan, Microsoft, pleased investors.

Analysts led by Jim Reid at Deutsche Bank said:

Microsoft saw its shares rise +3.95% in after-market trading as revenues of $56.52bn (+13% y/y) beat estimates of $54.54bn and EPS came in at $2.99 (v $2.65 expected). The beat comes on the back of recovering cloud-computing growth with corporate customers spending more than expected. The other megacap, Alphabet, missed on their cloud revenue estimates at $8.4bn (v $8.6bn) with the share price falling -5.93% after hours as operating income and margins both surprised slightly to the downside.

You can read more about Google’s performance here:

We’re off to the races on the London Stock Exchange this morning: and the FTSE 100 has dipped at the open.

Shares on London’s blue-chip index are down by 0.15% in the early trades. Lloyds Banking Group shares initially moved higher, but now they are down 2.1% after they flagged increasing competition hitting net interest margins.

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