FirstFT: Optimism spreads at Davos

Business leaders and top government officials have expressed optimism about the global economy as China reopens, the US embarks on a green investment boom and western Europe adjusts to the impact of Russia’s war in Ukraine.

At the World Economic Forum in Davos, Gita Gopinath, deputy managing director of the IMF, signalled that the fund would upgrade its economic forecasts. Instead of predicting a “tougher” 2023, she now expected an “improvement” in the second half of the year and into 2024.

Positive data from Europe and the US in recent weeks have boosted hopes that the world’s economy will avoid a recession this year.

Germany’s chancellor, Olaf Scholz, told Bloomberg that the eurozone’s largest economy would avoid a recession, while the Mannheim-based think-tank ZEW said its monthly gauge of investor sentiment had turned positive for the first time since Russia’s invasion of Ukraine.

Daniel Pinto, head of JPMorgan’s investment bank, highlighted the global economy’s resilience. “We have come through a period with a war, a pandemic and the biggest normalisation of monetary policy in history,” he said. “Considering all the things that have happened, the world is a lot better than you would have expected.”

• ‘Unprecedented’ green investment: Brussels will ease rules and pump cash into climate-friendly businesses to rival US subsidies, European Commission president Ursula von der Leyen said at Davos.

What do you think of the upbeat mood at Davos? Let me know at [email protected] — Tee

Five more stories in the news

1. BoJ keeps yield control measures The Bank of Japan has defied market pressure and left its yield curve control measures unchanged, sending the yen sharply lower and stocks higher as it stuck to a core pillar of its ultra-loose monetary policy. The decision follows weeks of turmoil in the Japanese government bond market during which yields surged.

2. UK strikes hit 30-year high Tens of thousands of nurses will stage walkouts in England today and tomorrow, marking an escalation of industrial action not seen in 30 years. Official figures released yesterday show that more than 1.6mn days were lost to labour disputes from June to November last year, the most in any one year since 1990.

3. Morgan Stanley retains edge over Goldman Plunging profits at the two premier Wall Street investment banks have sparked contrasting reactions from investors, who punished Goldman Sachs for a sharp fall in investment banking fees while rewarding Morgan Stanley’s push into more stable businesses. The earnings have underscored the benefits of Morgan Stanley’s expansion into wealth management under boss James Gorman.

4. Chinese tech stocks rally China’s tech stocks have staged a $700bn rally as the country reopens and a clampdown on the sector loosens. Hong Kong’s Hang Seng Tech index has soared almost 60 per cent from its October lows, with heavyweights such as Tencent and Alibaba gaining $350bn combined in market value.

5. Ratcliffe enters race to buy Man Utd British chemicals billionaire Sir Jim Ratcliffe has formally entered the process to buy Manchester United. The stock has risen almost 80 per cent since November, when the Glazer family first made public that they were considering selling the club which they have owned since 2005 after facing losses both financially and on the pitch.

The day ahead

Economic data The EU releases final core consumer inflation data for December, while the UK has consumer and producer price inflation figures for the same month, as well as house price inflation for November. The US publishes its December retail sales and producer price index, and the Federal Reserve issues its Beige Book on economic conditions.

IEA The International Energy Agency publishes its monthly oil market report.

Nato The alliance’s military chiefs of defence, including counterparts invited from membership applicants Finland and Sweden, gather in Brussels for a two-day meeting.

Yellen meets China’s economic tsar US Treasury secretary Janet Yellen meets Chinese vice-premier Liu He in Zurich, in a move that signals Washington and Beijing’s commitment to improving ties.

Corporate results Earnings season marches on with Barry Callebaut, Burberry, Charles Schwab, Currys, Galliford Try, JB Hunt Transport Services, Just Eat Takeaway, Liontrust Asset Management, Pearson, Qinetiq, PNC Financial Services Group, Prologis, Rathbones, Richemont, United Airlines, Vistry Group and WHSmith.

The World Economic Forum continues today. Tune in to the Davos Daily Show, hosted by the FT’s Andrew Hill, from 12pm GMT January 17-19. Register here for free.

What else we’re reading

Can Apple decouple from China? In November, workers at Apple supplier Foxconn protested against Beijing’s strict Covid policies. Police responded with riot gear. When confronted by a reporter on the incident, Tim Cook declined to comment, in a scene later widely replayed and criticised by US media. As the tech giant increasingly finds itself beholden to America’s biggest geopolitical rival, the question is whether diversification is even possible.

Disney activist investor focuses on Fox deal Nelson Peltz, the activist investor who is trying to force his way on to Disney’s board, has fixated on a $71bn deal that saw the entertainment company buy Fox’s movies and television business. Peltz blames the deal for what he calls Disney’s “balance sheet from hell”, saddling it with extra debt and preventing the company from returning cash to investors.

Covid will ‘taunt us’ for years, says UK health security chief The future path of the pandemic is less predictable than when Covid-19 first hit because of the number of new variants, said Jenny Harries. As the NHS copes with a terrible flu season and new Covid outbreaks, the head of the UK Health Security Agency said cases for both diseases might have peaked for now, but the country could confront further waves this year.

Opinion: Tackle global debt before it’s too late The system we currently have for resolving the debts of poor countries is not “fit for purpose”, writes Martin Wolf. The same is true of that for helping poor countries through adverse shocks and towards sustainable development — and change is needed urgently.

Musk faces looming Twitter interest payment After borrowing $13bn from a syndicate of banks, Elon Musk faces his first repayment on the debt he used to purchase Twitter. In order to cover the payments the billionaire has a range of unpalatable options, from bankruptcy proceedings to another costly sale of Tesla shares.

Take a break from the news

Who was the writer of the 1969 sci-fi novel The Andromeda Strain? Try your hand at 1-across in this FT crossword puzzle.