Stellantis NV, owner of the Vauxhall brand, has announced plans to close its van manufacturing plant in Luton, England.

The move comes as the automaker faces mounting pressure from the UK’s stringent zero-emission vehicle (ZEV) sales mandate.

The Luton factory’s production will be relocated to Stellantis’s Ellesmere Port facility, which focuses exclusively on electric vehicles (EVs).

The company cited efficiency improvements and plans to invest an additional £50 million ($63 million) in the Ellesmere Port plant as part of this transition.

The closure is expected to impact around 1,100 employees in Luton, with hundreds of jobs being transferred to the revamped electric-only facility.

Stellantis’ share price was down by 4.70% on Tuesday.

UK’s zero-emission mandate pushes automakers to adapt

The UK government’s ZEV mandate requires automakers to ensure that 10% of new van sales are zero-emission in 2024, a figure set to rise to 70% by 2030.

Non-compliance can lead to fines of up to £15,000 per vehicle, though companies have the option to trade compliance credits or make up deficits in subsequent years.

Stellantis has previously warned about the potential impact of these strict targets, calling for more government incentives to boost EV adoption.

Other automakers in the UK have echoed similar concerns, arguing that current consumer demand for EVs is insufficient to meet the ambitious sales goals.

Investment in Ellesmere Port: A shift towards electric vans

Stellantis has already invested £100 million in transforming the Ellesmere Port facility into an electric-only plant, where it produces small EV vans under its Vauxhall, Citroën, Peugeot, Opel, and Fiat brands.

The additional £50 million planned investment is aimed at increasing efficiencies and capacity to handle the production transferred from Luton.

While the government welcomed Stellantis’s investment in Ellesmere Port, it acknowledged the uncertainties faced by employees affected by the closure in Luton.

Development a “major concern” for UK auto industry: SMMT

The Society of Motor Manufacturers and Traders (SMMT) called Stellantis’s decision a “major concern” for the UK automotive sector.

It highlighted the financial and technological challenges of transitioning to EV production while consumer demand remains subdued.

“This is a sobering reminder of the challenges this industry faces,” the SMMT said.

“The UK has arguably the toughest targets and most accelerated timeline in the world, yet lacks the incentives necessary to drive sufficient demand.”

Industry data showed that EV production, including hybrids, dropped by 7.6% in the first half of 2024.

The automotive sector has repeatedly urged the government to offer stronger incentives, such as subsidies or tax breaks, to make EVs more attractive and affordable to consumers.

Government response and support measures

In response to the concerns raised, the UK government reiterated its commitment to supporting the transition to zero-emission vehicles.

A spokesperson highlighted the £300 million funding allocated to drive EV adoption and emphasized the importance of transitioning the automotive industry while safeguarding jobs.

Despite these assurances, Stellantis’s announcement underscores the broader challenges faced by manufacturers as they navigate the evolving regulatory and market landscape.

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The S&P 500 and Nasdaq Composite rose on Tuesday, while Dow Jones slipped as investors assessed the threat of new tariffs from President-elect Donald Trump. 

The S&P 500 index rose 0.2%, while the Nasdaq Composite climbed more than 0.5%.

The Dow Jones Industrial Average slid 0.6%, dragged down by sharp losses in Amgen’s stock. 

The Dow Jones Industrial Average closed at a record high on Monday, as investors cheered the nomination of Scott Bessent as Treasury Secretary, but has struggled to maintain that level Tuesday. 

The S&P 500 index also hit a new intraday high on Monday, while the small cap-focused Russel 2000 also climbed to fresh high in today’s session. 

That advance came as Treasury yields fell with traders taking a favorable view of Bessent leading the department. 

Many investors view the hedge fund manager as a champion of financial markets and the economy given his background, and as someone who could potentially counteract some of Trump’s aggressive trade aspirations, according to a CNBC report. 

Investors will now wait for the release of the minutes from the US Federal Reserve’s last policy meeting earlier this month. 

The US stock markets will be closed on Thursday on account of Thanksgiving holiday, and is scheduled to close early on Friday.

Volumes are expected to remain low for the remainder of the week. 

Trump threatens more tariffs

Trump said in a social media post on Monday that he intended to impose a 25% tariff on all imported goods from Canada and Mexico. 

He also said an additional 10% tariff will be imposed on Chinese imports, noting that there is a lack of progress on China’s part towards curbing the flow of illegal drugs to the US. 

This is on top of an already proposed 60% tariff increase on China. 

Trump’s comments raised concerns about a fragile global economy with a full-blow trade war between the world’s biggest economies. 

Amgen Inc and Kohl’s shares plummet

Amgen Inc’s stock slipped 12% on Tuesday after the company said its experimental weight loss drug helped patients lose up to 20% body weight. 

However, the trial results were at the low end of investors’ expectations.

Meanwhile, shares of Kohl plunged nearly 20% on Tuesday after the retailer’s third-quarter earnings results missed Wall Street’s estimates. 

During the quarter, the company earned 20 cents per share on $3.31 billion in revenue, below the consensus estimates of 28 cents per share on $3.64 billion revenue, according LSEG. 

Meanwhile, comparable shares dropped 9.3% during the quarter compared with expectations of a drop of 5.1%. 

Shares of the retailer have dropped around 36% so far since the beginning of this year.

Dick’s Sporting Goods jump

Shares of Dick’s Sporting Goods jumped more than 5% before the bell on Tuesday after the retailer posted positive earnings and guidance. 

The Pennsylvania-based company earned an adjusted $2.75 per share on $3.06 billion in revenue in the third quarter.

That’s ahead of the forecasts for $2.68 a share and $3.03 billion from analysts polled by LSEG.

The company also lifted its full-year outlook.

Shares have surged more than 46% in 2024, according to CNBC. 

Consumer confidence rises

The US Conference Board’s report showed on Tuesday that consumer confidence rose in November, while expectations for the stock market hit a record high. 

The US consumer confidence index increased to 111.7, or 2.1 points higher this month compared with October, and slightly above the Dow Jones estimate of 111. 

At the same time, 56.4% of respondents said they expect stock market prices to be higher a year from now, a fresh record.

Inflation expectations also improved, with the five-year outlook down to 4.9%, the lowest since March 2020.

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Bitcoin, the largest cryptocurrency, has reversed course after flirting with the $100,000 mark.

The digital asset reached an all-time high of $99,830 on November 22 but has since dropped over 8% to $91,377.32 as of Tuesday.

As of 11:48 am IST on Wednesday, BTC stood at $93,099, according to CoinGecko.

The downturn comes despite a stellar 120% rise in 2024, with gains fuelled by bullish market sentiment following Donald Trump’s presidential election victory.

Trump’s pro-crypto stance, including pledges to make the US a global cryptocurrency leader and amass a national bitcoin stockpile, has played a pivotal role in driving demand.

Investors shift focus to protective strategies

Market activity points to heightened caution among bitcoin investors.

Nick Forster, founder of Derive, an on-chain options platform with $7.1 billion in total trade volume, noted a significant shift in sentiment.

The call-put skew index for December 27 bitcoin options expiry dropped 30% in the last 24 hours, signalling an uptick in protective hedging.

“The decline in skew reflects traders hedging against potential downside risks,” Forster told Reuters.

While calls—options to buy bitcoin—still outnumber puts—options to sell—the trend suggests a cautious market, likely spurred by bitcoin’s sharp pullback from its peak.

Major price movements expected around options expiry

The December 27 expiry of $11.8 billion in bitcoin options could act as a catalyst for substantial price movements.

According to Forster, there is a 68% probability that bitcoin will move 16% lower to $81,493 or 20% higher to $115,579 by this date.

Extreme scenarios include a 29.5% decline to $68,429 or a 41.8% rally to $137,645, though these outcomes have only a 5% probability.

Notably, data from Derive shows a 45% chance of bitcoin hitting $100,000 again, with a 4% chance of exceeding $150,000.

Profit-taking drives selling pressure

Profit-taking by long-term holders is adding to bitcoin’s recent sell-off.

Analysis from _checkonchain.com reveals that $60 billion worth of bitcoin supply has been distributed in the past 30 days.

Since bitcoin’s low of $15,479 during the FTX collapse two years ago, long-term holders have moved 21% of their supply this November, marking the heaviest profit-taking in this cycle.

Anthony Pompliano, founder of Professional Capital Management, cited this data in a letter to clients, underscoring its impact on market dynamics.

Despite recent declines, bitcoin’s volatility metrics remain stable, suggesting the market is bracing for further swings.

The cryptocurrency’s seven-day implied volatility stands at 63%, closely aligned with the 30-day level of 55%.

“This close alignment indicates traders are expecting significant price movements soon,” Forster added.

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Singapore’s strategic positioning as a global financial hub continues to strengthen, with the city-state outpacing long-time rival Hong Kong.

Bolstered by political stability, favourable tax policies, and a reputation for neutrality, Singapore is attracting a growing share of foreign capital.

As tensions between the US and China escalate, the flow of investments into the region has further tilted in Singapore’s favour.

Its financial institutions, led by Oversea-Chinese Banking Corporation (OCBC), are navigating these changes with a balance of local focus and global reach, positioning the city as a safe haven for investors seeking stability in uncertain times.

OCBC drives Singapore’s financial sector with $18.4 billion revenue in 2023

OCBC, the second-largest bank in Singapore with $448 billion in assets, has become emblematic of the city-state’s robust banking sector.

Generating $18.4 billion in revenue in 2023, the bank accounts for 62% of its earnings within Singapore, while its Southeast Asian and Greater China operations contribute 19% and 13%, respectively.

Its diversified revenue streams and strategic investments in wealth management have helped the bank maintain resilience amid geopolitical headwinds.

The bank also holds a majority stake in Great Eastern, Singapore’s largest life insurer, and operates private banking services through the Bank of Singapore.

These moves position OCBC as a pivotal player in Southeast Asia’s financial landscape.

Wealth management has become a cornerstone of Singapore’s strategy to outpace Hong Kong.

In the first nine months of 2024, this segment contributed $2.9 billion to OCBC’s revenue.

The city-state has introduced tax incentives for single-family offices, attracting 1,650 such entities by mid-2024, up from 400 in 2020.

This influx underscores Singapore’s appeal as a destination for high-net-worth individuals and corporations seeking financial security in a volatile global market.

US-China tensions shift capital to Singapore

The escalating decoupling between the US and China has had profound implications for Hong Kong, whose economy has traditionally relied on its close ties to the mainland.

By contrast, Singapore’s perceived neutrality and stable regulatory environment have drawn capital from both sides.

Assets under management in Singapore reached $4.1 trillion in 2023, surpassing Hong Kong’s $3.9 trillion.

As US funds increasingly view Hong Kong’s financial ecosystem as risky, Singapore has emerged as the preferred alternative for capital allocation.

Trump’s policies could accelerate Singapore’s gains

The election of Donald Trump as US president could further tip the scales in favour of Singapore.

Trump’s prior administration imposed stringent sanctions and financial restrictions on China, and his re-election promises a continuation of these measures.

Such policies may compel US and European firms to withdraw from Hong Kong, redirecting their investments to Singapore.

Singapore must tread carefully to avoid potential fallout from Trump’s proposed tariffs, which could disrupt global trade and impact its export-reliant economy.

Helen Wong’s leadership cements OCBC’s position

Helen Wong, OCBC’s CEO since 2021, has steered the bank through these shifting dynamics.

With roots in Hong Kong and decades of banking experience in Greater China, Wong has leveraged her expertise to expand OCBC’s influence in both China and ASEAN markets.

Under her leadership, OCBC has prioritised wealth management, broadened its customer base in Hong Kong, and enhanced its offerings in Malaysia and Indonesia.

Wong’s leadership has also earned her recognition as one of the most powerful women in global finance, ranked 17th on the Fortune Most Powerful Women list in 2024.

Her dual focus on resilience and growth exemplifies the strategies driving Singapore’s broader financial ambitions.

Hong Kong fights back

Despite these setbacks, Hong Kong is working to reclaim its status as Asia’s financial powerhouse.

It is revitalising its IPO pipeline, aiming to attract 200 new family offices by 2025. UBS predicts Hong Kong could surpass Switzerland as the leading hub for cross-border finance by 2026.

The city’s reliance on a sluggish Chinese economy and its proximity to Beijing’s jurisdiction remain significant challenges.

Singapore, meanwhile, has taken a broader view, seeing the success of Hong Kong as complementary rather than competitive.

The city-state’s ability to tap into diverse regions without geopolitical baggage gives it an edge that Hong Kong cannot easily replicate.

Singapore’s government is already planning for the next wave of challenges.

A task force is addressing its lagging capital markets, and banks like OCBC are eyeing opportunities arising from increased Chinese manufacturing investments in Southeast Asia.

With the global trading system facing potential disruptions, Singapore’s adaptability and foresight will likely determine its financial trajectory in the years ahead.

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The European Central Bank (ECB) is pushing hard for the digital euro.

It argues that Europe risks falling behind in the global race for central bank digital currencies (CBDCs). 

ECB officials warn that delays in the project could erode Europe’s financial sovereignty, as other countries are advancing quickly with their digital currencies.

What is the ECB’s plan?

The ECB has been exploring the concept of a digital euro since 2021.

ECB President Christine Lagarde has hinted at launching the digital currency by 2027, but progress has been slow. 

A key obstacle is the lack of a unified legal framework nearly 17 months after the European Commission’s initial proposal.

The ECB envisions a digital euro that mirrors cash in its privacy and usability.

Offline payments would not share personal data beyond the payer and payee, while online payments would rely on advanced encryption to enhance privacy compared to existing digital payment solutions.

Users could pre-fund their wallets or link them to bank accounts for easy transactions.

However, individual holdings would be capped to prevent destabilization of the banking system.

Why is the digital euro needed?

The ECB argues that the digital euro is crucial for Europe’s financial autonomy.

Thirteen of the eurozone’s 20 countries rely on global payment giants like Visa and Mastercard.

This dependence, the ECB says, makes the eurozone vulnerable to external disruptions.

A digital euro would provide a Europe-wide payment solution, reducing reliance on non-European systems.

Globally, the CBDC race is accelerating.

According to the Bank for International Settlements, 134 countries, representing 98% of the global economy, are exploring CBDCs.

Sixty-six countries are in advanced stages, with nations like China, the Bahamas, and Nigeria already launching CBDCs. 

China’s digital yuan has processed $986 billion in transactions by mid-2024, demonstrating its potential to reshape sectors like healthcare and tourism.

The adoption problem

The ECB’s ambition has a big obstacle, that is consumer adoption.

Survey data from the SPACE study shows that many European consumers prefer traditional payment methods like cash and cards.

Introducing a digital euro requires overcoming significant adoption barriers, including consumer habits and perceived complexity.

ECB officials believe the solution lies in design and education.

The digital euro must combine the convenience of cards with the privacy and budgeting benefits of cash. 

The ECB considers public awareness campaigns to be essential as well.

Studies show that exposure to new payment methods, such as during the Covid-19 pandemic, can influence long-term behaviour.

Does Europe risk losing the race?

ECB officials worry that Europe is falling behind.

China’s digital yuan is a clear example of the transformative power of CBDCs.

Other countries, including the UK, Singapore, and Australia, are running advanced pilots. 

Europe’s fragmented payment systems and slow legislative processes risk sidelining the eurozone in this technological shift.

The truth is that Europe’s lead in CBDC development is at risk without decisive action.

ECB officials believe that the digital euro must be ready when it is needed, reflecting frustration over legislative delays.

Is a digital euro worth the risk?

Despite its promise, the digital euro is faced with skepticism. 

First, there is the issue of central bank overreach.

The ECB proposes creating a payment system that competes with commercial banks.

While this could reduce Europe’s reliance on non-European firms, it risks undermining the banking system.

Caps on individual holdings are meant to address this, but they also contradict the ECB’s claim of “freedom and convenience.”

Second, the digital euro might not solve the problems it aims to address.

Europe’s payment landscape is already competitive, with numerous digital options that work well.

Creating a new system from scratch could add complexity rather than simplify payments.

Third, the project highlights deep flaws in the eurozone’s financial architecture. Europe lacks a banking union and centralized deposit insurance.

A digital euro could make matters worse, particularly if national central banks and the ECB clash over its design.

The bigger picture

The ECB’s push for the digital euro is not just about payments.

It highlights a broader struggle for relevance in a digital world. 

Central banks, traditionally focused on monetary stability, are now venturing into new territory.

But with this ambition comes the risk of mission creep.

By taking on roles traditionally handled by commercial banks and private firms, the ECB could undermine trust in the financial system it is supposed to safeguard.

The global CBDC race is real, but Europe must decide if winning it is worth the cost.

A poorly executed digital euro could destabilize the banking system and deepen divisions within the EU. 

Ultimately, a digital euro is more than a payment tool—it is a gamble on Europe’s financial future.

Whether this gamble pays off depends on how well the ECB addresses the challenges of design, adoption, and integration into Europe’s financial ecosystem.

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