Ground-Breaking Global Deal On Corporate Tax Reform

Corporate tax reform

136 nations signed up to a ground-breaking global deal on corporate tax reform, that included a minimum 15% effective corporate tax rate plus new rules to force the world’s multinationals to declare profits and pay more in the countries where they do business. The deal also included a two-year ban on imposing new taxes on tech groups such as Google and Amazon while the Biden administration tries to ratify the deal in the US.

Russian president Vladimir Putin indicated his country was prepared to increase supplies of natural gas to Europe. The country has been accused by some European politicians of deliberately withholding supplies in an effort to win approval for the contentious Nord Stream 2 pipeline, which would send the fuel directly to Germany, avoiding Ukraine.


The FTSE 100 advanced 1.0% over the week.

Brussels offered to scrap many border controls between Northern Ireland and the British mainland in an attempt to de-escalate tensions with the UK after London threatened to suspend the NI protocol. The concessions include allowing the free circulation of many food products across the Irish Sea. However, Lord David Frost continues to demand that the European Court of Justice is removed as the ultimate arbiter of the agreement.

NatWest pleaded guilty to failing to prevent alleged money laundering in a London court on Thursday and could face a £340m fine.


The S&P 500 rose 0.9% over the week, while the tech-heavy Nasdaq gained 0.2%.

The US Senate reached a deal on a stop-gap measure to extend the debt ceiling until December, avoiding an imminent US government default.

The US economy added 194,000 jobs in September, far lower than forecasts for 500,000 new jobs and the lowest number since the start of the year. However, the unemployment rate dropped to 4.8%, the lowest since the pandemic began. Wage growth picked up, with average hourly earnings rising by 4.6% on a year-on-year basis.

The Institute for Supply Management non-manufacturing index rose to 61.9 in September from 61.7 in August. In the previous week, the ISM manufacturing index rose to 61.1 in September, one of the strongest readings on record and up from what was an already very strong July reading of 59.9.

Shares of Facebook were hit as the Instagram, WhatsApp and Facebook services suffered two outages.


The FTSEurofirst 300 rallied 1.1% over the week.

Minutes of the latest ECB meeting revealed that some policymakers argued it is underestimating future inflation. They also warned about the risk of a “regime shift” in prices and pushed for a bigger cut in asset purchases than it ultimately decided at its meeting last month.

Talks have started between Germany’s Greens and liberals with the Social Democrats on forming a coalition government.

Austrian chancellor Sebastian Kurz resigned after he was named as a suspect in an investigation by state prosecutors into a corruption probe.


The Nikkei 225 fell 2.5% over the week.

Investors appeared spooked by comments from the newly appointed Prime Minister Fumio Kishida indicating he might push for a capital gains tax increase.

Pacific Basin ex Japan

The debt problems afflicting China’s real estate market deepened after Fantasia Holdings, a mid-sized Chinese property announced that it had defaulted on its debt. Shares in Evergrande remain suspended.

Hong Kong’s real estate stocks rallied on news the city’s government has pledged to ease its chronic housing shortage with a new metropolis.

New Zealand’s central bank raised interest rates by 25 basis points to 0.5%, its first increase in seven years as concerns over rising property prices and inflation outweigh the importance of the Pacific nation’s battle to control the spread of coronavirus.

Emerging Markets

Poland’s central bank unexpectedly raised interest rates by 40 basis points to 0.5% – its first increase in nine years. Year-on-year inflation in Poland hit 5.8% in September, its highest rate for 20 years.

Tensions between Poland and the EU ramped up after the country’s Constitutional Tribunal ruled that key articles of one of the EU’s primary treaties were incompatible with Polish law, in effect rejecting the principle that EU law has primacy over national legislation in certain judicial areas. French and German foreign ministers rebuked Poland, saying EU membership relied upon “complete and unconditional adherence to common values and rules” and this was “not simply a moral commitment. It is also a legal commitment”.

The Czech opposition (two coalitions: the rightwing Together coalition and the centrist PirStan coalition of the Pirate Party and the Mayors and Independents) won a majority of seats in the recent parliamentary elections, giving them a chance to oust billionaire prime minister Andrej Babis.

Turkish inflation increased to an annual rate of 19.58% in September, up from 19.25% in August and the biggest yearly increase since March 2019.


The yield on the 10-year US Treasury bond closed the week at 1.60%, a rise of 12 basis points over the week.

The yield on the 10-year German Bund ended the week at -0.15%, an increase of 8 basis points over the week. 10-year UK Gilt yields rose 15 basis points during the week to close at 1.06%, taking yields back to pre-pandemic levels.


The Turkish lira hit a new record low amid fears Turkey’s president was about to fire his central bank governor for the fourth time in less than three years.


Oil prices continued to head north. West Texas Intermediate crude oil hit $80 a barrel for the first time since November 2014, after Opec+ resisted calls to accelerate production. Meanwhile Brent crude briefly rose to $83.50 a barrel.

US natural gas futures also hit their highest level since 2008, although the increase remains much lower than that seen in Europe.

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Image by Gerd Altmann from Pixabay