Live news updates from May 10: Musk says he would reverse Twitter’s ban of Trump, Putin preparing for ‘prolonged conflict’ in Ukraine, US warns

The US Senate confirmed Lisa Cook to serve on the Federal Reserve’s board of governors, making her the first Black woman to hold that position in the central bank’s 109-year history.

All 50 Democrats in the upper chamber of Congress voted in favour of Cook, who is currently a professor of economics at Michigan State University, while 49 Republicans voted against her appointment. One abstained.

Cook, who formerly worked as a staff economist on the White House Council of Economic Advisers during the Obama administration, will serve a two-year term expiring January 2024.

Her confirmation process suffered multiple setbacks, including Democrats having to push back the final vote late last month after Covid absences denied her sufficient support to proceed.

Republicans have opposed her nomination throughout, accusing her of lacking relevant economic experience. Cook, who speaks six languages, has focused her research on the economic costs of discrimination. Her studies have ranged from how racially-motivated violence stymies innovation to output lost because of inequality.

Cook was nominated alongside Philip Jefferson, the dean of faculty at Davidson College, who is expected to be confirmed with bipartisan support soon, and Sarah Bloom Raskin, who was forced to withdraw from consideration as the next vice-chair for supervision after her views on climate-related financial risks lost her key support.

US president Joe Biden has since tapped Michael Barr, a former Treasury official, to fill the position.

The Senate must also confirm Jay Powell for a second term as Fed chair. Lael Brainard was confirmed late last month to serve as vice-chair.

Apple announced it is discontinuing production of its standalone iPod, ending a more-than-20-year run of the device that revolutionised the consumption of digital music in the new millennium.

For many listeners, the need for a standalone iPod has diminished substantially as Apple has increasingly integrated its music and podcast apps into its products, including the iPhones and Apple Watch.

Apple said on Tuesday that the latest generation of its portable media player, the iPod Touch, would be available through its web site, Apple stores and authorised resellers “while supplies last.”

Apple’s all-white first generation iPod went on sale in November 2001. Its matching white earphones became an iconic symbol of mobile music consumption. On April 9, 2007, Apple announced that its 100 millionth iPod had been sold.

US stocks eked out a marginal advance after a volatile trading day on Tuesday, as investors attempted to navigate an increasingly complex outlook for monetary policy and the global economy.

The broad S&P 500 gauge, which closed 3.2 per cent lower on Monday, swung between gains and losses but was 0.2 per cent higher by late afternoon.

The technology-focused Nasdaq Composite, which fell more than 4 per cent the previous session, gained 1 per cent. Europe’s regional Stoxx 600 added 0.7 per cent — tracing back some of the previous day’s 2.9 per cent decline.

Global equities on Monday posted their worst day since June 2020. Tuesday’s swings reflected the tension between investors keen to buy the market dip and rising caution over the outlook.

The Federal Reserve last week raised its interest rate by half a percentage point for the first time since 2000, while the UK, Australia and India also lifted borrowing costs.

In debt markets, the yield on the 10-year US Treasury note fell 0.05 percentage points to 2.99 per cent as fixed-income investors topped up on the low-risk asset to reflect fears of a recession. Bond yields fall as their prices rise.

The yield on the equivalent German bond fell 0.10 percentage points to 1 per cent, while the Italian yield dropped 0.15 percentage points to 3.0 per cent.

In a speech on Tuesday, New York Fed president John Williams said the US central bank’s “challenge” was “to bring inflation down while maintaining a strong economy”.

Read more on the day’s market moves here

It is not exactly an answer to the question David Bowie asked, but Elon Musk said dying on Mars would be “kind of cool”.

Musk said he had been asked previously if he wanted to die on the Red Planet, but clarified as long as “it’s not on impact”.

“I mean, I think if you’re gonna die, obviously we all die sometime. And if you’re gonna die, anywhere, I suppose dying on Mars would be kind of cool.”

Musk said he had a goal of dying on Mars, “If you’re like, where do you want to die? Oh, sure. Mars. I’ll pick that one.”

Tesla is unlikely to take over another carmaker, Elon Musk said, but buying a mining company was not out of the question.

Responding to an audience question about whether Tesla would use its market cap or other funds to buy a rival, Musk said: “I think it’s unlikely. No.”

Buying a mining company, though, might be a different matter, particularly if it helped Tesla secure easier access to important natural resources.

“That’s not out of the question,” Musk said. “It’s not that we wish to buy mining companies, but if that’s the only way to accelerate the transition” to electric vehicles, then the possibility was on the table.

Such an acquisition would only make sense, though, if Tesla were capable of changing that mining company’s trajectory.

Tesla recently struck a deal with Brazilian miner Vale to buy nickel needed for its batteries.

Tesla’s future is “extremely strong”, Elon Musk said.

The company had no debt, a lot of cash, and some of its recent hiccups with production in Shanghai as a result of Covid lockdowns in China should be ironed out in coming weeks.

The company had previously said that its total debt, excluding vehicle and energy product financing, fell to less than $100mn at the end of the first quarter.

The future of Tesla is “incredibly bright”, Musk said. “And we will throw off a tremendous amount of free cash flow.”

Elon Musk cast doubt on flying cars being successful, saying that safety could be a concern, while they could also encourage people to pry on others.

Helicopters already fulfilled much of that role, but Musk said the issues with widespread use of vertical take-off and landing (Vtol) vehicles could be problematic. If a wheel fell off from a Vtol mid-flight, “that would be discomforting to most people”.

Similarly, having Vtols fly over your backyard and having “strangers stare at you all day” would probably also be discomforting. “These are all reasons why Vtols will not succeed.”

Elon Musk ruled out the prospect of forming a conglomerate from some or all of his companies.

“I don’t see a tonne of merit in combining them,” he said.

Musk explained, though, that “at times” very talented people joined companies such as Tesla or SpaceX and were keen and willing to work on projects at both of those companies.

Elon Musk singled out Volkswagen as making some of the best efforts to advance the electric car industry.

Although not a start-up, he said the German company was “doing the most” on electric vehicles, in response to an audience question on which start-up companies impressed him most.

Musk said there were a lot of “interesting” companies in China, and workers there were working hard to advance and complete projects.

“They won’t just be burning the midnight oil; they’ll be burning the 3am oil,” he said of the Chinese industry’s work ethic. “In America, people are trying to not go to work at all.”

Asked if Tesla was considering making vehicles for the lower end of the market, Elon Musk shot down the idea of the company making scooters.

Scooters would not win in an “argument” with a car, he said, to chuckles from the audience.

Musk said it might be possible for Tesla to make something “smaller” than its mass-market Model 3.

Tesla’s self-driving cars are poised, as early as this year, to offer a greater level of safety than people driving, Elon Musk said.

“There are a lot of false dawns,” Musk said of the process of developing safe and effective self-driving technology.

“We are quite close to achieving self-driving at a safety level that is better than human. And my best guess is we could get there this year.”

China is expected to represent about 25 per cent to 30 per cent of Tesla’s market in the long-term, Elon Musk said, but he ruled out more factories in the country for now.

In setting up Tesla’s Shanghai factory, Musk said he had indicated to the Chinese government they would not be doing a locally owned plant.

“Things are proceeding fairly well,” he continued.

Musk also said Tesla was “not expecting to open any additional plants” in China in the “near future”, but would be expanding its Shanghai factory and also focusing production on other plants that had been completed in Austin, Texas, and Berlin, Germany.

Elon Musk has said he would reverse Twitter’s decision to ban former US president Donald Trump from the platform, describing the decision as “morally wrong and flat out stupid”.

“I would reverse the permaban [on Trump],” said Musk, who has agreed to buy the social media platform for roughly $44bn. “Obviously I don’t own Twitter yet, so this is not a thing that will definitely happen.”

Musk added that he had spoken to Twitter co-founder Jack Dorsey who agreed the platform should not have “permabans” on users that violate its content policies.

“It was not correct to ban Donald Trump; I think that was a mistake,” added the Tesla chief executive.

Musk said the decision, made in the wake of the January 6 riots following Trump’s election loss, had “alienated a large part of the country”.

“It didn’t end Trump’s voice. It will amplify it among the right. That’s why it’s morally wrong and flat-out stupid,” he said.

The conversation shifts to Elon Musk’s latest project, his in-the-works buyout of Twitter.

“There’s not a lot I can say,” he said. “Most of the answers are going to be no comment.”

Musk said some of the changes he would make, if he were successful in buying the company, include putting the algorithm on GitHub and allowing anyone to make suggestions and for human interventions to be highlighted.

“You really want transparency to build trust.”

Musk also said it would be important to reduce the left-leaning bias of the San Francisco-based company. “They’re just coming at it from an environment that is very far left. But it fails to build trust in the rest of the US and perhaps other parts of the world.”

The early days of Tesla were tough going, Elon Musk and JB Straubel said.

“We screwed the pooch six ways from Sunday and made so many mistakes it’s embarrassing,” Musk said. “We had no idea how to build a car” — or a commercial lithium ion battery.

Musk asked Straubel how much of AC Propulsion’s technology went into their own vehicle, Straubel said: “I think pretty much nothing by the time it went to the first customer.”

Musk admitted to having Tesla outsource the production of its first lithium battery to a barbecue company in Thailand in the early days.

“It was pretty silly,” he said, before adding that had prompted the decision to bring battery production to California. It was “a burning dumpster fire of stupidity.”

A lunchtime meeting in southern California was the spawning ground for the idea that became the electric vehicle maker Tesla.

Elon Musk says he met JB Straubel and Harold Rosen, who had both worked on electric vehicles, and spent time talking about the future of electric transport and lithium ion batteries.

Straubel suggested Musk visit AC Propulsion in southern California, which had a proof of concept electric sports car. That was in 2003.

Musk said he asked AC if they’d mind if he created an electric sports car of his own.

We have kicked off the latest session of the FT’s Future of the Car summit with a keynote conversation between Tesla’s Elon Musk and JB Straubel of Redwood Materials. The FT’s Peter Campbell is moderating.

Electronic Arts is ending a 30-year partnership with Fifa after months of negotiations between the video games publisher and football’s governing body, ending one of the most popular games partnerships in history.

California-based EA will rename the game EA Sports FC next summer. The content will remain largely unchanged, with the same leagues, tournaments, clubs and athletes.

“This new independent platform will bring fresh opportunity — to innovate, create and evolve,” Cam Weber, executive vice-president of EA Sports said in a statement. “We exist to create the future of football fandom — whether virtual or real, digital or physical, it’s all football.”

More details on the future of EA Sports FC will be shared after the partnership officially ends.

Despite the long and profitable collaboration, EA and Zurich-headquartered Fifa had been locked in a dispute over the value of using the Fifa brand. EA had trademarked the name EA Sports FC last year, seemingly in preparation for discussions to break down.

Fifa makes roughly $150mn a year from the partnership, its largest commercial deal outside of running the quadrennial men’s World Cup.

The video game is EA’s “largest and most popular”, according to the company’s annual report. Gamers pay up to $70 for a new copy of the game each year, available on consoles and computers. Free-to-play versions are also available on mobile.

Fifa president Gianni Infantino said: “The only authentic, real game that has the Fifa name will be the best one available for gamers and football fans. The Fifa name is the only global, original title.”

Ukraine’s transmission network operator has suspended contractual obligations to transport gas through one of its key pipelines with Russia because of enemy troop activity, in a move that could cut flows to Europe.

The gas transmission system operator of Ukraine said that transit would halt at 7am on Wednesday at the Sokhranivka point along the smaller of two pipelines that deliver gas from Russia. It said it was unable to carry out operations at a border compression station in Luhansk — a region of Ukraine that Moscow claims as an independent state — because of the Russian occupation.

“The interference of the occupying forces in technical processes and changes in the modes of operation of gas transmission system facilities, including unauthorised gas offtakes from the gas transit flows, endangered the stability and safety of the entire Ukrainian gas transportation system,” it said in a statement on Tuesday.

The gas transmission system operator of Ukraine said that almost one-third of Russian supplies that go via the country to Europe would be affected, but it would still be possible to fulfil the needs of its European customers by rerouting gas to the Sudzha connection point.

Ukraine’s pipeline operator has previously cautioned that war-related damage to the system could endanger flows, but it is the first time since the invasion that it has declared force majeure, highlighting the risks to the supply of Russian gas to Europe.

Last year, EU states imported 155bn cubic metres of Russian gas, of which roughly 40 bcm transited through Ukraine. Nord Stream 1, the largest pipeline running from Russia to Germany, has the capacity to take 55 bcm.

The announcement of the halt sent future contracts tied to the European wholesale gas price benchmark nearly 6 per cent higher on Tuesday to almost €100 per megawatt hour, overturning earlier losses.

Yuriy Vitrenko, chief executive of Ukraine’s state gas company Naftogaz, pinned the blame on the Russian side. “Gazprom has been duly notified that Ukraine is no longer responsible for gas transit through territories occupied by Russia,” Vitrenko said.

The US believes Russia’s president Vladimir Putin has not changed his aims in Ukraine and sees his focus on the Donbas as a temporary shift “to regain the initiative” after failing to capture Kyiv, the director of National Intelligence said.

The US was “not confident” that the fight in the Donbas would “effectively end the war,” Avril Haines told US lawmakers on Tuesday.

“We assess president Putin is preparing for prolonged conflict in Ukraine during which he still intends to achieve goals beyond the Donbas,” she said during a worldwide threat assessment hearing.

With both sides confident they could make military progress, the chances of a negotiated solution in the short term were remote, she said, and the conflict was developing “into a war of attrition”.

The mismatch between Putin’s ambitions and Russia’s current conventional military capabilities may prompt an escalation of the conflict in coming months, Haines continued.

“The current trend increases the likelihood that president Putin will turn to more drastic means, including imposing martial law, reorienting industrial production or potentially escalatory military actions.” she said.

Russia may increase its attempts to intercept western security assistance, Haines said.

Putin’s immediate aims were to capture the Donetsk and Luhansk with a buffer zone and encircle Ukrainian forces from the north, south and to the west of the Donbas to “crush the most capable and well-equipped Ukrainian forces” holding the line in the east, she said.

Russia wanted to consolidate control of the land bridge it had established from Crimea to the Donbas, occupy Kherson and control the water source for Crimea as well as to extend the land bridge to Transnistria, Haines said.

Germany’s central bank boss has called for eurozone interest rates to rise in July, warning of the growing risk that policymakers act too late and are forced into a Paul Volcker-style “strong and abrupt” increase in borrowing costs.

Joachim Nagel said in a speech on Tuesday there was “disturbing evidence that the increase in inflation is gaining momentum” as more consumers and companies expected prices to keep rising rapidly, which meant “the risk of acting too late is increasing notably”.

The Bundesbank head joins a growing number of European Central Bank governing council members calling for it to cease net asset purchases at the end of June and to raise its deposit rate in July in response to inflation, which is running at almost quadruple its 2 per cent target.

Eurozone inflation hit 7.5 per cent in April, a record since the launch of the single currency in 1999. In Germany, prices are rising even faster, up 7.8 per cent — the most since 1981.

Nagel said Russia’s “horrific” invasion of Ukraine had “added to the pre-existing price pressures, both directly and indirectly” by driving up the price of energy and other commodities and worsening disruption to global supply chains.

Adding his voice to those warning that inflation could stay high because of structural changes in the economy, such as a retreat from globalised markets and a shift away from fossil fuels, Nagel said the war “may clearly accelerate pre-existing tendencies in both the short and the long run, as exemplified in energy markets and international trade”.

Wall Street stocks swung higher on Tuesday after heavy selling in the previous session, as traders attempted to navigate an increasingly complex outlook for monetary policy and the global economy.

The broad S&P 500 gauge added 1.9 per cent, having closed 3.2 per cent lower on Monday. The technology-focused Nasdaq Composite climbed 2.7 per cent, after dropping more than 4 per cent.

In Europe, the regional Stoxx 600 added 1.7 per cent — tracing back some of the prior day’s 2.9 per cent decline.

Tuesday’s gains came after global equities on Monday posted their worst day since June 2020. But despite the bounceback, investors remained cautious about the growth outlook and the risk of the US central bank going so far as to curb scorching inflation that it chokes off expansion in the world’s largest economy.

The Federal Reserve last week raised its interest rate by half a percentage point for the first time since 2011, while the UK, Australia and India also lifted borrowing costs.

“The broad context for markets is not great,” said Salman Baig, portfolio manager at Unigestion, in reference to the Fed tightening monetary policy, persistently high global inflation, Russia’s invasion of Ukraine and an economic slowdown in China driven by stringent coronavirus policies.

Baig added that in equity markets, he would expect “the troughs to continue to be deeper and the peaks to be lower, and that we are basically trending down”. 

Read more on today’s markets here.

The number of Ukrainians internally displaced by Russia’s war has surpassed 8mn, according to figures from the International Organization for Migration, representing a 24 per cent increase since March.

“The needs of those internally displaced and all affected by the war in Ukraine are growing by the hour,” said IOM director-general António Vitorino. “Access to populations in need of aid remains a challenge amid active hostilities, but our teams are committed to continue delivering urgent assistance inside Ukraine and in neighbouring countries,” he added.

Two-thirds of those surveyed identified cash assistance as a main need, compared with 49 per cent of respondents at the beginning of the war, the IOM said.

Shelter was another crucial need, with one in 10 people surveyed requiring materials to fix damaged properties.

The IOM said it had appealed for “support from states and partners” to continue its work in Ukraine.

More than 5.9mn people have fled Ukraine following the outbreak of war, according to the latest figures from the UN’s High Commissioner for Refugees.

Peloton shares fell heavily after the company reported a wider than expected quarterly loss and acknowledged that it was “thinly capitalised” for a business of its scale.

The New York-based maker of connected fitness bikes and treadmills downgraded its fourth-quarter guidance and now expects revenue to be between $675mn and $700mn, below analyst expectations for $821.7mn.

Shares in Peloton dropped 26 per cent in pre-market trading.

The group also reported a net loss of $757.1mn in its fiscal third quarter, wider than analyst expectations of a net loss of $266.5mn.

“We finished the quarter with $879mn in unrestricted cash and cash equivalents, which leaves us thinly capitalised for a business of our scale,” said Barry McCarthy, chief executive.

McCarthy said the company was rethinking its capital structure after being left with a large inventory of unsold equipment, leading it to consume a lot of cash. He also said the company had signed a binding commitment letter with Morgan Stanley and Goldman Sachs to borrow $750mn in order to strengthen its balance sheet.

As more people return to in-person activities at gyms and boutique fitness studios, Peloton has struggled to maintain strong equipment sales, which account for 61.6 per cent of its total revenue.

Former Spotify and Netflix executive McCarthy succeeded John Foley as Peloton’s boss in February. Despite some investors pushing for a sale of the company, McCarthy has previously said that is not part of his plans.

It is “almost certain” that Russia was responsible for a cyber attack on a Ukrainian communications company prior to launch of Moscow’s invasion of Ukraine on February 24, a joint statement by international intelligence agencies said.

The announcement by the UK’s Foreign, Commonwealth and Development Office (FCDO) on Tuesday said the attack on ViaSat was primarily aimed at Ukraine’s military but that other customers including “personal and commercial internet users” had been affected.

The assessment of the February 24 ViaSat incursion, and a previous attack that defaced Ukrainian government websites on January 13, was made by the UK’s National Cyber Security Centre (NCSC).

“The NCSC assesses that the Russian military intelligence was almost certainly involved in the 13 January defacements of Ukrainian government websites and the deployment of Whispergate destructive malware,” the FCDO said. “The NCSC also assesses that it is almost certain Russia was responsible for the subsequent cyber attack impacting ViaSat on 24 February.”

The statement said the February 24 cyber attack began about an hour before Russia launched its renewed invasion of Ukraine.

UK foreign secretary Liz Truss said there was “clear and shocking evidence” of a “deliberate and malicious attack by Russia against Ukraine”, which had significant consequences on people and businesses in the country and across Europe.

The announcement was made as cyber security leaders from the Five Eyes intelligence-sharing arrangement, the EU and international allies met at the NCSC’s Cyber UK conference in Wales to discuss the cyber threats facing the world.

US pharmaceuticals company Pfizer has agreed to buy biotechnology group BioHaven for more than $11.8bn in cash, in what is its biggest deal in over five years, according to people with direct knowledge of the matter.

Pfizer will pay $152 per share for the Connecticut-based company. That amounts to a hefty 83 per cent premium to its closing price of $83 per share on Monday. A deal is expected to be announced within hours, the people said.

BioHaven specialises in developing drugs that target neurological diseases and rare disorders. Pfizer has previously invested in the company and the deal would be the largest for the US drugmaker since its 2016 purchase of Medivation.

Neither company immediately responded to a request for comment.

A historic moment was under way on Tuesday in the House of Lords, the UK parliament’s upper house, as Prince Charles for the first time stood in for his mother, Queen Elizabeth, at this year’s Queen’s Speech.

The heir to the throne was reading out a list of bills that Boris Johnson’s governing administration hoped to push through Parliament over the next 12 months.

He stepped in after Buckingham Palace said that the monarch was suffering from “episodic mobility problems”. It is the first time since 1963 that the 96-year-old has not read out the Queen’s Speech.

The 38 bills set out included an energy security bill to ease the transition to a low-carbon electricity system, a financial services bill, a data protection bill and legislation to put the new Infrastructure Bank on a statutory footing.

Other bills will ban “conversion therapy” seeking to change people’s sexual orientation, and establish a new regulator for the railway industry.

German investors became slightly less gloomy about the economic outlook this month, according to the latest ZEW survey, but analysts said the results still pointed to a contraction in Germany’s economy later this year.

Economists have been cutting their estimates for growth in Germany and the wider eurozone this year, while raising inflation forecasts and warning that the war in Ukraine and Covid-19 lockdowns in China are likely to hit output in Europe.

The ZEW research institute on Tuesday said its economic sentiment index, a gauge of investor expectations for the German economy over the next six months, was -34.3 points, a slight improvement from a two-year low of -41 last month.

“The experts assume that the situation will continue to deteriorate, but with less intensity,” said Achim Wambach, ZEW president, adding that “a large majority” of investors expected the European Central Bank to raise interest rates in the next six months.

However, investors’ assessment of current economic conditions fell from -30.8 to -36.5. The Sentix survey of investor sentiment in the eurozone economy was published on Monday and was more gloomy, falling to a 14-month low.

Economists said the latest ZEW survey results pointed to a likely contraction in the German economy later this year. “The small sign of a rebound . . . in May is encouraging but we need to see a much stronger rise in the next few months to confidently call a bottom,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.

Sony has posted record revenues on the back of blockbuster hits but a supply squeeze for components pushed the Japanese group behind PlayStations to cut the sales forecast for its latest game console.

The Tokyo-based multinational said on Tuesday it expected to sell 18mn PlayStation 5 consoles this financial year, rather than the initial target of 22.6mn, as a shortage of parts hampered production.

Hiroki Totoki, Sony’s chief financial officer, told reporters in Tokyo the forecast reflected the number of consoles the company was confident it could make.

“What I can say now is that we can procure enough components for 18mn units,” he said, adding that demand was probably “slightly higher” than the forecast number.

However, that prediction could be lowered should the spread of Covid-19 worsen in China, which has imposed more lockdowns. Sony sold 11.5mn units in the previous financial year.

Sony’s Spider-Man: No Way Home became the third-highest-grossing film ever in the US, helping the group generate record sales of Y9.9tn for the year ended in March, up 10 per cent from 12 months earlier. But net profit fell 14 per cent to Y882bn.

The group plans to buy back Y200bn ($1.5bn) shares and forecast operating income of Y1.16tn for this fiscal year, slightly below analyst estimates of Y1.2tn.

Peloton: Barry McCarthy will deliver his first set of quarterly earnings as chief executive of the connected fitness company. Following several difficult quarters and pressure from activist investors, shareholders will be keen for an update on the strategic direction of the company, particularly given reports of takeover interest or a stake sale. Analysts polled by Refinitiv expect Peloton to report third-quarter revenue of $973mn, down from $1.26bn a year ago, and a loss per share of 83 cents, down from 3 cents.

Other earnings: Companies reporting before the bell include Norwegian Cruise Line and Warner Music. Those reporting after the bell include Coinbase, Occidental Petroleum, Allbirds, Electronic Arts and Wynn Resorts.

Fedspeak: Raphael Bostic and Loretta Mester, presidents of the Atlanta and Cleveland branches of the Federal Reserve, respectively, will each discuss monetary policy at the Atlanta Fed’s Financial Markets Conference in Florida. Minneapolis Fed president Neel Kashkari will take part in a discussion with Fed governor Christopher Waller in Minnesota. New York Fed president John Williams will speak at an economic symposium in Germany.

Elon Musk: The Tesla chief executive will virtually attend the Financial Times’ Future of the Car Summit at 6pm London time. He will be interviewed by the FT’s Peter Campbell and take audience questions.

Google I/O: Google’s two-day developer conference kicks off today and will include keynote presentations on the company’s products.

Nintendo on Tuesday addressed longtime investor calls to improve corporate governance and transparency by announcing a stock split, at the same time as warning of a 29 per cent year-on-year decline in net profit for the current fiscal year.

The 10-1 stock split will broaden the company’s shareholder base by allowing average retail investors to invest in the shares of the creator of Mario and Donkey Kong, which had long been out of their reach.

With the stock trading at ¥56,360 ($433) on Tuesday, investors currently need about $43,250 to buy the shares because of a minimum trading limit of 100 shares. The stock split from October 1 will bring that figure down to $4,325.

The company attributed the projected net profit decline to global shortages of computer chips, which have suppressed sales of Nintendo’s popular Switch gaming console.

Tesco’s chair has supported a one-off tax on energy companies that would help mitigate the cost of living for consumers, as the UK government prepares to lay out its legislative agenda.

“There’s an overwhelming case for a windfall tax on profits from energy producers fed back to those most in need of help with energy prices,” John Allan told BBC Radio 4’s Today programme on Tuesday.

Allan, speaking in a personal capacity, said energy companies were “expecting it”.

“I doubt they would actually be much phased by it, and [the windfall tax] should be short term only,” he added.

His call for a windfall tax on oil and gas profits echoes statements from many UK politicians after energy groups, such as Centrica, Shell and BP, generated bumper earnings and prospects on the back of soaring prices.

Those in favour of such a tax have argued that the proceeds should be used to help people who are struggling with higher energy bills.

Tesco, the UK’s largest supermarket group, said its earnings would suffer this year as it made price competitiveness a priority amid soaring costs and a squeeze on household incomes.

The chair of Tesco was speaking ahead of the Queen’s Speech on Tuesday. The statement is usually delivered by the monarch and lays out the UK government’s legislative agenda.

Allan also called for business rates to be “pulled down” to help small and medium-sized enterprises.

“A lot of people are feeling something of a pinch and lots of people are actually feeling extremely stretched,” he said. “I hope the Queen’s Speech will do something to address that.”

European stocks recovered some of their losses on Tuesday after economic growth fears drove the steepest drop for global equities since June 2020.

The regional Stoxx 600 gauge rose 0.8 per cent in early trades, having dropped 2.9 per cent on Monday. London’s FTSE 100 added 0.6 per cent.

In Hong Kong, the Hang Seng index was down 1.9 per cent in mid-afternoon trading, having opened sharply lower after a holiday. Chinese technology groups listed in the territory recorded some of the biggest declines, with Alibaba falling as much as 8 per cent and the Hang Seng Tech index declining 3.3 per cent.

Tuesday’s moves came after a steep decline for shares the day before, with the FTSE All-World index down 3 per cent — hitting its lowest level in more than a year. The US’s broad S&P 500 gauge closed 3.2 per cent lower and the tech-focused Nasdaq Composite lost 4.3 per cent.

Futures contracts tracking the S&P and the Nasdaq 100 gauges also showed early signs of recovery on Tuesday, up more than 1 per cent during the European morning.

Read more on today’s markets here.

Russia’s “demonstrable operational failings” in its war against Ukraine prevented President Vladimir Putin from claiming significant military success at an annual parade in Moscow, UK defence ministry has said.

The Russians had also underestimated the strength of Ukraine’s resistance, the Ministry of Defence said on Tuesday in its latest intelligence assessment.

The report follows Monday’s annual commemoration of the Soviet Union’s victory over Nazi Germany in the second world war, which had been widely seen as a target date for Russia to claim a large-scale success following its invasion of Ukraine on February 24. In the event, Putin’s speech contained little of substance.

“Russia’s underestimation of Ukrainian resistance and its ‘best-case scenario’ planning have led to demonstrable operational failings, preventing President Putin from announcing significant military success in Ukraine at the 09 May Victory Day parade,” the ministry wrote on Twitter.

Russia’s plan for the invasion of its western neighbour was “highly likely” to have been based on the “mistaken assumption” that it would encounter “limited resistance” and be able to encircle and bypass population centres rapidly, the department added.

“This assumption led Russian forces to attempt to carry out the opening phase of the operation with a light, precise approach intended to achieve a rapid victory with minimal cost,” it wrote. The miscalculation had led to “unsustainable losses” and a “subsequent reduction in Russia’s operational focus”, it added.

Russia has insisted it was provoked into the invasion by Ukraine’s aggression and that it is fighting to protect the fundamental interests of Ukraine’s Russians and Russian speakers.

British Gas owner Centrica expects full-year earnings to be at the top end of analysts’ expectations, adding to a bullish mood in the energy industry that has prompted calls for higher taxes to offset surging costs for consumers.

Analysts expect the company to make earnings of between 6.7p and 10.8p per share this year, Centrica said on Tuesday, up from 4.1p last year.

The UK group said it had delivered a “strong” operational performance in the first four months of this year even as it suffered supply chain disruption and higher inflation that hit customer demand.

Centrica’s prediction comes soon after groups such as Shell and BP posted bumper first-quarter earnings as prices soared for hydrocarbons. Its shares have risen by more than a quarter over the past 12 months.

UK politicians have called for a windfall tax on oil and gas profits, arguing that the proceeds should be used to help people who are struggling with large energy bills.

Centrica has set up a support fund that provides grants of up to £750 to help customers pay their energy bills.

UK: The government’s new legislative agenda will be set out in the Queen’s Speech, delivered during the state opening of parliament.

Economic news: Hungary publishes its latest consumer price index, while ZEW releases its latest survey of business sentiment in Germany. Michael Saunders, Bank of England monetary policy committee member, will speak at an event run by the Resolution Foundation think-tank. Luis de Guindos, European Central Bank vice-president, talks at a banking industry event organised by IESE Business School.

Bayer: The German drug and agrochemical conglomerate releases its first-quarter results. In March, Bayer threatened to suspend crop supply sales to Russia next year unless the country stops its war in Ukraine.

Corporate earnings: Coinbase and Pirelli will also publish results.

Markets: European stocks are set for a mixed open with futures for the Euro Stoxx 50 up 0.3 per cent and for the FTSE 100 down 0.1 per cent. The moves would follow declines on Monday, with the FTSE All-World barometer of global equities dropping 3 per cent as investors worried about signs that the world’s largest economies were slowing down.

Renault will sell a third of its South Korean unit to China’s Geely Automobile Holdings for about $200m as it looks to focus on its core markets and electric vehicle business.

The French carmaker has accelerated turnround plans to boost profit margins and split its EV business to catch up with rivals such as Tesla and Volkswagen in the transition to greener cars.

Renault will sell a 34.02 per cent stake in Renault Korea for Won264bn ($207m) by issuing 45.4m shares at Won5,815 per share to Centurion Industries, a Geely unit, the companies said on Tuesday.

The deal would allow Geely to gain a foothold in the South Korean automotive market dominated by Hyundai Motor and its affiliate Kia. With a stake in Renault Korea, the Chinese carmaker would have better access to South Korean EV batteries produced by LG Energy Solution, SK On and Samsung SDI, analysts said.

The deal also comes amid speculation that Renault, the largest shareholder in Nissan Motor, may reduce its stake in the Japanese company. Through a partnership, Renault and Geely are developing hybrid vehicles for the South Korean market to be produced at Renault’s factory in Busan.

Renault owned 80 per cent of the South Korean unit at the end of 2021, with the rest held by Samsung’s credit card unit Samsung Card, which is seeking to sell its stake in the company.

Asia-Pacific markets followed Wall Street lower after a global equity sell-off as investors worried about the threat of the world’s largest economies slowing down.

Hong Kong’s Hang Seng index slid more than 4 per cent in early Tuesday trading following a one-day holiday. Chinese technology giants registered some of the sharpest declines, with Alibaba falling as much as 7 per cent. China’s CSI 300 dipped 1.5 per cent before recovering.

South Korea’s tech-heavy Kospi index fell more than 2 per cent to its lowest level since November 2020, while Australia’s S&P/ASX 200 and Japan’s benchmark Topix shed 1.3 per cent and 1.1 per cent, respectively.

The Asia market falls come after the steepest one-day decline among global equities on Monday, with the FTSE All-World index down 3 per cent and hitting its lowest level in more than a year.

US government bonds rallied as investors sought safe assets in response to uncertainty over how much the Federal Reserve would raise interest rates. The yield on 10-year Treasuries fell three basis points to 3 per cent.

A silkscreen image by Andy Warhol of actress Marilyn Monroe set a record for 20th century art on Monday when it was sold in New York for $195mn.

Dealer Larry Gagosian bought “Shot Sage Blue Marilyn” (1964) in an auction by Christie’s of works from the Thomas and Doris Ammann Foundation in Zurich. Doris Ammann died last year and her brother passed away in 1993.

Gagosian had sold the silkscreen image to Ammann in 1986.

The Ammanns were a notable collectors of contemporary art. The auction included other works by Warhol as well as those of Cy Twombly, Jean-Michel Basquiat, Francesco Clemente and Robert Ryman.

A 2003 painting by New York-based artist Ann Craven sold for $680,000, far higher than the estimate of $20,000-$30,000.

The previous record price for a 20th century artwork sold at auction was $110.5mn for a Basquiat skull painting at Sotheby’s in 2017. It was sold again in 2021 for $93mn.

Christie’s chief executive Guillaume Cerutti said he was “thrilled”.

Household spending in Japan shrank 2.3 per cent in real terms in March from the previous year as accelerating inflation and higher prices weighed heavily on consumers.

Average monthly spending by households of two or more people was ¥307,261 ($2,362), according to data released by the Ministry of Internal Affairs and Communications on Monday, marking the first fall since December.

The decline contrasted with a 1.1 per cent rise the previous month but was less severe than a 2.8 per cent median forecast in a Reuters poll. The average monthly household income stood at ¥503,128.

The findings came after the country’s core consumer price index, which excludes fresh food, rose 0.8 per cent in March from a year earlier — its quickest pace since January — as a surge in global commodity prices pushed energy bills and prices higher. Inflation-adjusted real wages dipped by 0.2 per cent in the same month.

South Korea inauguration: Yoon Suk-yeol, a 61-year-old former prosecutor, will be installed as the country’s president, with China’s vice-president Wang Qishan expected to attend the ceremony. Here is the FT guide to the new leader of the world’s 10th-largest economy.

Japanese earnings: Companies that are due to report full-year results include Mitsubishi Motors, Nintendo, Nippon Steel, Sony and Sumitomo Corporation, in which analysts expect the impact of global shortages and higher raw material costs to become apparent.

Markets: Asia-Pacific bourses look set to continue another day of declines with futures for Japan’s Topix and Hong Kong’s Hang Seng index down 1.4 per cent and 0.9 per cent, respectively. The moves would come a day after global stocks suffered their worst one-day decline since the start of the coronavirus pandemic over fears of slowdowns in the world’s large economies, including China.

El Salvador’s government has spent millions of dollars of public money buying a further 500 bitcoin, the country’s president Nayib Bukele announced.

The Central American country was the first nation in the world to adopt the cryptocurrency as legal tender last September, though it had a rocky start when the government wallet had technical problems. Take-up of bitcoin for everyday use has been limited, while most Salvadorans have little trust in it.

Bitcoin has shed more than half its value in the last seven months, with globally rising interest rates pushing investors out of riskier assets like cryptocurrencies.

“El Salvador just bought the dip!” Bukele, the self-styled ‘CEO of El Salvador’ who regularly makes major government announcements on the social media platform, said in a tweet on Monday.

The authoritarian leader said the average purchase price was $30,744, meaning the government spent more than $15.3mn on the new coins. The government has bought more than 2,000 bitcoin in total.

Salvadoran non-profit organisations and analysts have signalled a lack of transparency around the country’s bitcoin adoption, including how it buys its cryptocurrency.

A plan to issue “bitcoin volcano bonds” has been put on hold with no launch date in sight as the country faces increasingly difficult financing issues. The rating of El Salvador’s sovereign bonds has fallen to junk status in the past year.

Global stocks on Monday suffered their worst one-day decline since the early months of the coronavirus pandemic in 2020, as investors fret about signs of slowdowns in the world’s large economies at a time when central banks are reining in crisis-era stimulus measures.

The FTSE All-World barometer of global equities dropped 3 per cent, its sharpest fall since June 2020, and hit its lowest level since December 2020.

Worries over rising rates have been compounded by indications that growth in big global economies could be slowing. Chinese export growth fell to its lowest level in two years last month, according to data released on Monday, which followed reports last week pointing to slowdowns in the German and French manufacturing sectors.

Wall Street’s blue-chip S&P 500 index slid 3.2 per cent and the tech-focused Nasdaq Composite dropped 4.3 per cent. Europe’s regional Stoxx 600 index fell 2.9 per cent, while China’s CSI 300 fell 0.8 per cent and Tokyo’s Topix fell 2 per cent.

Brent crude, the international oil benchmark, dropped almost 6 per cent to $105.94 a barrel, reflecting concerns about weaker demand.

Natural gas futures fell even more steeply than crude oil, with the Henry Hub front-month contract down more than 12 per cent in the US afternoon, to just over $7 per million British thermal units.

US government bonds initially came under selling pressure on Monday, pushing the yield on the 10-year US Treasury note above 3.2 per cent. Yields rise when prices fall. However, the debt rallied later in the day, bringing the yield down to around 3.03 per cent, down 0.1 percentage points for the day.

Read more on the day’s market moves here.

Russia’s armed forces continue to make limited progress in the northern and southern areas of Ukraine’s eastern Donbas region, a senior US defence official has said.

In the north near Izyum, Russian forces had made “single-digit-kilometre kind-of progress because the Ukrainians keep pushing them back”, a senior US defence official said.

The same level of progress was true in the south, the official continued. There, the majority of the Russian battalion tactical groups dedicated to the port city of Mariupol have moved north and remain stalled outside of a town to the north-west called Velyka Novosilka.

“There’s been virtually no progress in the south,” the official said. There were about 2,000 Russian troops still dedicated to Mariupol and Russia was still conducting air strikes there, the official said. Ukrainian forces continue to resist Russia’s siege of the Azovstal steel plant in the city.

Throughout the Donbas region, Ukrainian artillery forces were successfully fending off Russian advances, the official said. The springtime weather in Ukraine and muddy roads had kept Russian forces on paved roads and they also continued to struggle with logistics and sustainment issues, the official said. The US has received anecdotal reports of poor troop morale and officers disobeying orders.

Contrary to predictions by some officials and analysts, President Vladimir Putin did not say on Monday, as Russia held its annual Victory Day commemoration, whether he was seeking to mobilise Russian forces or declare a wider war. The senior US defence official said the US had seen no indications of a new major Russian mobilisation of forces in Ukraine.