The US military’s top officer spoke with his Chinese counterpart on Thursday, resuming high-level military contacts between Washington and Beijing that have been cut off for more than a year.

The call came after US President Joe Biden and Chinese President Xi Jinping agreed last month to restart military to military communications that China halted in August 2022 after then-House majority leader Nancy Pelosi visited Taiwan.

Chairman of the US joint chiefs of staff General Charles Brown spoke to People’s Liberation Army of China chief of the joint staff department General Liu Zhenli.

A readout of the call from the Pentagon said that General Brown “reiterated the importance of the People’s Liberation Army engaging in substantive dialogue to reduce the likelihood of misunderstandings”.

Oil prices dropped following Angola’s decision to quit the Organisation of Petroleum Exporting Countries.

Brent crude, the international oil benchmark, fell 1.9 per cent to $78.17 a barrel. WTI, the US equivalent, fell 1.9 per cent to $72.76 a barrel.

Prices had climbed over 9 per cent since a recent low on December 12 on growing concerns over the safety of vessels passing through the Red Sea.

Goldman Sachs has said it expects the Bank of England to implement its first interest rate cut in May next year rather than June, following a sharp slow down in UK inflation in November.

November’s inflation figures showed “services, core and headline inflation surprising consensus and BoE expectations meaningfully to the downside,” Goldman analysts wrote in a note.

The US bank now expects a first rate cut in May, and for the BoE to continue cutting until the policy rate hits 3 per cent in May 2025.

Turkey has increased interest rates for the seventh month in a row as policymakers seek to extinguish a long-running inflation crisis. 

The central bank on Thursday increased its one-week repo rate by 2.5 percentage points to 42.5 per cent, as the central bank boosts borrowing costs to cool overheating consumer demand.

Prior to central bank chief Hafize Gaye Erkan’s appointment in June, the bank had set rates at just 8.5 per cent, as Turkish President Recep Tayyip Erdoğan had insisted on keeping borrowing costs at super low levels. 

Erdoğan has allowed for a shift towards more orthodox economic policies since May, but it could take months before this begins to cool inflation, which registered more than 60 per cent in November. 

GDP: The US commerce department will release its final estimate for the country’s gross domestic product in the third quarter, which economists expect will be the same as the second estimate at 5.2 per cent growth. 

Jobless claims: Initial claims for US state unemployment aid, considered a proxy for lay-offs, are forecast to have risen to 215,000 last week, up from 202,000 in the previous seven-day period.

Nike: The athletic apparel maker is projected to post a slight increase in revenue to $13.4bn for the three months to November. However, profits are expected to fall marginally to 84 cents a share from 85 cents.

Barclays has reached a deal to stay in its Canary Wharf headquarters until at least 2039, in a boost to London’s docklands financial centre after other high-profile tenants opted to move elsewhere. 

Canary Wharf Group said the bank has agreed a five-year lease extension on its 32-story tower at One Churchill Place. The deal follows HSBC’s decision in the summer to leave its building when the lease expires. Barclays also agreed to give up a second Canary Wharf building that it had decided to vacate in 2021. 

Alastair Blackwell, chief operating officer at Barclays Execution Services said: “Canary Wharf is a fantastic place to work and our five-year lease extension . . . is testament to that.”

The steps taken by football’s governing bodies to block the formation of the European Super League were unlawful and amounted to an abuse of their dominant position, Europe’s highest court has ruled.

Uefa and Fifa threatened to ban players and clubs who joined the attempted breakaway competition launched by 12 top football clubs in 2021. The project unravelled within days after a fierce backlash from fans, national governments and domestic leagues.

However, the backers of the ESL have argued that the actions taken by Uefa and Fifa were anti-competitive and therefore contrary to European law.

On Thursday, the European Court of Justice said that “rules making any new interclub football project subject to their prior approval . . . are unlawful”.

Co-op Bank has entered exclusive talks to merge with Coventry Building Society, in a deal that would return the private equity-controlled high-street bank to mutual ownership.

Coventry Building Society, the UK’s third largest mutualised lender, earlier this month submitted a bid for Co-op that valued it at more than £700mn, according to a person familiar with the talks. A deal would result in a combined group with about £90bn in assets.

Co-op Bank, which has been backed by US-based investors including Bain Capital Credit and JC Flowers since a £700mn rescue deal in 2017, kicked off an auction process earlier this year.

The World Health Organization has added Oxford university’s malaria vaccine to its list of pre-qualified vaccines, a vital step in paving the way for large-scale procurement by international bodies such as Gavi and Unicef and a global rollout.

Kate O’Brien, the WHO’s chief of vaccines, said the move was “another step toward ensuring a healthier, more resilient future for those who have lived for too long in fear of what malaria could do to their children”.

The UN’s health body had in October recommended widescale use of the shot, known as R21, though its lead developer, Oxford professor Adrian Hill, had criticised the lack of “urgency” of the proposed distribution timelines.

Big share price moves in Europe on Thursday include Belgian biotech Argenx, Germany’s Commerzbank and UK-listed telecoms group Vodafone.

Argenx: Shares in the Belgian biotech continued their slide, retreating 5.2 per cent and leading losses on the Stoxx Europe 600 index, after a late-stage trial failure for an autoimmune disease drug wiped off more than a third of the company’s market cap on Wednesday.

Commerzbank: Shares in the German lender added 2.2 per cent, leading gains on the same index, after the European Central Bank approved its share buyback programme.

Vodafone: Shares ticked 1.7 per cent higher after Bloomberg News reported late on Wednesday that Swisscom was weighing an offer for the Italian division of the telecoms company.

European stocks opened lower on Thursday following a sharp sell-off on Wall Street late in the previous session.

The region-wide Stoxx Europe 600 slipped 0.4 per cent in early trade, with real estate groups and consumer non-cyclicals among the worst performing stocks. France’s Cac 40 and Germany’s Dax both fell 0.3 per cent, while London’s FTSE 100 lost 0.2 per cent. 

The moves came after Wall Street’s benchmark S&P 500 on Wednesday slumped 1.5 per cent, denting a weeks-long rally that has left the index close to an all-time high. The Vix volatility index — known as Wall Street’s “fear gauge” — jumped 9 per cent during the session.

Hipgnosis, the music rights fund, has cut the valuation of the assets it owns by almost a tenth and warned investors to be wary of the latest estimate it has put out.

Announcing first-half results, the company board said investors should look at the fund’s asset value “with a higher degree of caution and less certainty than might otherwise be attached to it as an accurate reflection of the fair value of the company’s assets”.

Earlier this week the company delayed its results due to concerns over the valuation of its assets.

The company owns the rights to over 64,000 songs but is facing serious questions about its future after shareholders in October voted down a further five year mandate for the investment trust.

Tokyo has criticised a ruling by South Korea’s supreme court on Thursday upholding orders on two Japanese companies to compensate Korean workers subjected to historic forced labour practices.

The issue of Japanese forced labour practices has marred relations between the two countries since Japan’s occupation of the Korean peninsula in the first half of the 20th century, despite a 1965 treaty designed to resolve the dispute.

Japan’s chief cabinet secretary Yoshimasa Hayashi said the court’s decision was a “clear violation of the [1965] Japan-South Korea claims agreement”.

In March, South Korea’s President Yoon Suk Yeol and Japan’s Prime Minister Fumio Kishida agreed that victims of the practices would be compensated through a fund financed by South Korean companies. But the agreement did not resolve the outstanding legal claims being pursued in the Korean courts.

UK public sector borrowing fell in November helped by lower spending on energy government support, which was partially offset by higher benefit costs.

Public sector net borrowing hit £14.3bn last month, £0.9bn less than in the same month in 2022, according to data published by the Office for National Statistics on Thursday.

The figure was, however, higher than the £12.9bn forecast by economists polled by Reuters.

“Payments relating to the energy price schemes that began in October 2022 have now stopped; however, these reductions in spending were offset by other inflation-related costs, such as increased benefit payments,” said the ONS.

Asia-Pacific stocks declined on Thursday, with Japan’s Topix marking the biggest fall as Toyota shares were hit by a widening safety scandal.

The Japanese benchmark fell 1 per cent, with Toyota shedding as much as 5.6 per cent in early trading.

The carmaker was down about 4 per cent mid-afternoon as concerns grew over rigged test results at its Daihatsu subsidiary. The allegations follow a US recall of 1.1mn Toyota vehicles over an airbag fault and a customer data breach last week.

South Korea’s Kospi dropped 0.8 per cent and Australia’s S&P/ASX 200 lost 0.5 per cent. Hong Kong’s Hang Seng index dipped less than 0.1 per cent, while China’s CSI 300 edged up 0.5 per cent.

Events: Spain’s Prime Minister Pedro Sánchez and Catalonia’s regional president Pere Aragonès hold a meeting in Barcelona. Spanish economy minister Nadia Calviño appears before a joint parliamentary commission for the EU. A European Court of Justice ruling is expected on whether Uefa was right to block the Super League. European Central Bank chief economist Philip Lane takes part in a policy discussion at the Central Bank of Ireland’s economics winter workshop.

Economic indicators: The UK’s November public finances update is expected. The government borrowed £14.9bn in October, more than analysts predicted and the second-highest figure for the month, according to the Office for National Statistics. Turkey is due for an interest rate decision. Last month Ankara lifted interest rates by 5 percentage points to 40 per cent, much more than economists anticipated. This time a rise to 42.5 per cent is expected.

Corporate updates: The Restaurant Group acquisition by Apollo Global Management is expected to be completed, after shareholders approved the deal at an extraordinary general meeting last month. UK agricultural machinery and services provider Carr’s Group issues full-year results.

Daihatsu Motor president Soichiro Okudaira addresses the safety data fabrication scandal in Tokyo on Wednesday © Kyodo via AP

Asia-Pacific stocks dipped on Thursday after Wall Street recorded its biggest fall in three months.

Japan’s Topix fell 0.8 per cent, with Toyota Motor shares shedding as much as 5.6 per cent in early trading. The carmaker faces a scandal over rigged safety tests at its Daihatsu subsidiary.

The Hang Seng Index shed 0.8 per cent in early trading, while South Korea’s Kospi dropped 0.6 per cent and Australia’s S&P/ASX 200 lost 0.4 per cent.

China’s CSI 300 edged up 0.1 per cent but Chinese tech stocks fell, led by Meituan’s 2.6 per cent drop.

On Wednesday, the S&P 500 closed 1.5 per cent lower in its biggest fall since September 21, while the Nasdaq Composite fell by the same amount.

Shareholders in Gildan Activewear, one of the world’s largest clothing makers, have demanded the reinstatement of its chief executive and called for the resignation of the American Apparel owner’s chair.

Toronto-based Turtle Creek Asset Management, which has a 3.2 per cent stake in Gildan, said the December 11 dismissal of Glenn Chamandy created “significant risks, including a loss of essential leadership, damaged employee morale, and threatened key customer relationships”.

Its letter followed that of Los Angeles-based Browning West, which owns 4.8 per cent of Gildan, demanding similar action, including the removal of chair Donald Berg.

Chamandy said he was dismissed “without cause” after 20 years with Gildan. Former Fruit of the Loom executive Vincent Tyra was named as his replacement.

Events: The Bank of Japan releases minutes of its monetary policy meeting held on October 30-31, while governor Kazuo Ueda delivers a speech to business lobby Keidanren. Bank Indonesia’s interest rate policy decision is due. Fitch analysts expect the central bank to cut its key benchmark by 25 basis points.

Economic indicators: South Korea releases producer price index data for November and Hong Kong’s consumer price index for that month also comes out.

Corporate updates: Japanese foodservice group Oomitsu provides second-quarter earnings.

US chipmaker Micron signalled it was already realising the benefits of a “multiyear growth phase” brought about by generative artificial intelligence, as higher prices for its products underpinned a solid outlook for its current quarter.

The company had “driven a strong inflection in industry pricing” during its first quarter, chief executive Sanjay Mehrotra said in prepared remarks on Wednesday afternoon, “which will allow us to benefit from higher prices.”

Boise, Idaho-based Micron said it now expected revenue in a range $200mn above and below a target of $5.3bn in its second fiscal quarter. Micron shares jumped more than 4 per cent in after-hours trading.

The S&P 500 registered its biggest one-day drop in three months, and the Nasdaq Composite ended a nine-day winning streak, after an afternoon sell-off that delayed Wall Street’s attempt at a record high.

Big Tech stocks, which have an outsized influence on index direction, led the market turnaround, which ultimately left about 96 per cent of S&P 500 members lower at the closing bell, according to LSEG data.

The S&P 500 closed 1.5 per cent lower for its biggest fall since September 21, while the Nasdaq sank by the same amount.

Matt Maley, chief market strategist at Miller Tabak + Co, said the S&P “had reached a very overbought condition”.

Yields on longer-term US Treasuries hit their lowest levels in about five months, as traders continued to latch on to signals that the Federal Reserve is done with raising interest rates in this cycle.

The yield on the benchmark 10-year Treasury was down 0.04 percentage points at 3.89 per cent in afternoon trading, not too far from a level during the morning session that was its lowest since late July.

Traders were emboldened by remarks from Patrick Harker, the president of the Philadelphia Fed, who said the central bank was done raising interest rates.

The rally in Treasuries was not mirrored in US stocks, which lost steam in afternoon trading.

The US has released a close ally of Venezuelan president Nicolás Maduro in exchange for 10 Americans jailed in the Latin American country, part of a broader diplomatic effort by the White House to secure election reforms in exchange for sanctions relief.

Alex Saab, a Colombian businessman and Maduro’s main dealmaker, was extradited to the US in 2021 after being charged with transferring $350mn from Venezuela as part of a scheme to bribe its government officials.

In return, Venezuela will release 10 Americans, including six who were classified as wrongfully detained. Caracas also agreed to free 20 Venezuelan political prisoners, officials said.

Read more on the prisoner swap here.

The president of the Federal Reserve Philadelphia branch said it remains too soon for them to cut borrowing costs, despite signalling that they now think monetary policy tightening has peaked.

Patrick Harker, a voting member of the Federal Open Market Committee until the end of this year, told radio station WHYY that rate-setters “don’t need to raise rates anymore”.

He said that the inflation outlook was looking better following the worst wave of price pressures for decades. 

While it would “take some time” for the Fed to lower interest rates from their current range of between 5.25 and 5.5 per cent, a loosening was now likely to take place in 2024.