(Reuters) -The National Highway Traffic Safety Administration said on Wednesday that General Motors (NYSE:GM) is recalling about 2,890 Chevrolet Equinox EV vehicles due to concerns about their adaptive cruise control.

The recall affects certain 2025 Chevrolet Equinox EV all-wheel drive electric vehicles.

The adaptive cruise control may fail to engage the brakes as expected, due to incorrect brake module software, increasing the risk of a crash, the U.S. auto safety regulator said.

Dealers will update the software calibration in the brake system control module free of charge, the NHTSA said.

By Brad Haynes

DAVOS (Reuters) – The Bank of Israel could reduce short-term interest rates one or two times in the second half of 2025 as long as inflation moves back below 3%, Governor Amir Yaron said on Wednesday.

Yaron said that while inflation readings have been good in recent months, easing to a 3.2% rate in December – just above the government’s 1-3% annual target – price pressures were likely to accelerate during the first half of the year before coming back down later in 2025.

“We think in the first half we will see inflation still coming up and then moderating towards the second half into our target, which in our baseline case probably implies that in the second half, we could see somewhere between a cut or two cuts of interest,” Yaron said in an interview with Reuters on the sidelines of the World Economic Forum’s annual meeting.

The central bank sharply raised the benchmark rate in 2022 and 2023 to a high of 4.75% from 0.1% due to a spike in inflation.

It cut the rate 25 basis points in January 2024 but the rate has stayed at 4.5% since, as policymakers have been concerned with the effects of Israel’s war in Gaza against Palestinian militant group Hamas that helped to push up inflation, weaken the shekel and raise Israel’s risk premium. 

The shekel has since reversed course and has appreciated 2.5% against the dollar so far this month, while ceasefires with Hamas and Hezbollah have brought Israel’s risk premium down sharply.

“If we see inflation moderating faster and more significantly and the shekel strengthening in a more permanent way, then that may allow us to be a bit more agile and faster in that direction,” Yaron said of the prospects for cutting rates.

GROWTH REBOUND EXPECTED IN 2025

Yaron noted that war-related supply constraints that have helped to push up prices have started to alleviate but “in the short run, we think demand is going to move faster than the supply constraints will get alleviated”.

Israel’s economic growth was near zero in 2024, but the central bank estimates growth of 4% in 2025.

Yaron cautioned that should inflation remain “sticky” or geopolitical issues push Israel’s risk premium higher again, “we will have to maintain a more restrictive stance for a longer period”.

He pointed to a rise in value added taxes and other government mandated increases at the start of 2025 that would add to inflation pressures.

Loose fiscal policies in 2024, mainly $25 billion in extra spending to finance Israel’s military conflicts, have also concerned policymakers, especially a budget deficit last year of 6.9% of GDP.

Yaron, though, largely praised the government for an austerity budget for 2025 – which still needs final parliamentary approval – of spending cuts and tax increases to rein in the deficit.

He expects higher defence spending to boost the debt burden in 2025 but hopes for a decline in 2026.

“Probably some more fiscal adjustment will be needed in the 2026 budget to assure that the trajectory of debt to GDP coming down continues onward,” Yaron said.

After a series of credit rating cuts in 2024, the government, he added, understood the importance of maintaining market confidence although “the composition of the budget could have been pushed more into engines of growth”. 

Tuesday’s release of New Zealand’s consumer price index (CPI) data for the fourth quarter of 2024 showed that underlying inflation continues to soften, aligning with expectations and potentially setting the stage for a rate cut by the Reserve Bank of New Zealand (RBNZ).

The reported 0.5% quarter-on-quarter increase in consumer prices matched the forecasts of Capital Economics and the wider analyst consensus, although it was slightly above the RBNZ’s own prediction of a 0.4% rise. Consequently, headline inflation remained steady at 2.2%, defying the RBNZ’s anticipation of a minor decline.

The modest uptick in inflation, relative to the RBNZ’s projections, was attributed entirely to the volatile tradables component, which saw prices increase by 0.3% quarter-on-quarter in Q4, surpassing the RBNZ’s expectation of a 0.2% decrease, analysts at Capital Economics pointed out.

In contrast, non-tradable items exhibited their weakest quarter-on-quarter growth in four years at 0.7%, precisely matching the central bank’s forecast.

More indicative of the easing inflationary pressures, core inflation metrics continued their downward trend. The trimmed mean inflation decreased from 2.7% in Q3 to 2.5% in Q4, and the weighted median inflation similarly dropped from 2.8% to 2.6%. The quarter-on-quarter figures also reflected this softening, with the trimmed mean CPI rising by 0.4% and the weighted median CPI by just 0.3%. This ongoing weakness suggests that underlying inflation could soon fall below the midpoint of the RBNZ’s target range of 1-3%.

The latest inflation figures are in line with other economic data and surveys, which indicate that there is still considerable spare capacity in New Zealand’s economy.

Capital Economics maintains that these conditions justify a substantial rate cut, predicting that the RBNZ will reduce rates by 50 basis points in its upcoming February meeting.

Furthermore, if inflation continues to fall short of the bank’s expectations, Capital Economics believes there is a compelling argument for the RBNZ to implement aggressive policy easing. They stand by their projection that the RBNZ will ultimately lower rates to 2.25%, significantly below the 3.00% terminal rate forecasted by the consensus of analysts.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

By Elisa Martinuzzi

DAVOS, Switzerland (Reuters) – Ships not linked to Israel could begin returning to the Red Sea in as little as two weeks, DP World’s deputy chief executive said, adding that could see freight prices “come crashing down”.

Sea freight prices could drop “at least 20%, 25%” and that could happen over two to three months, Yuvraj Narayan told Reuters on the sidelines of the World Economic Forum meeting taking place in Davos, Switzerland.

It is hard to predict a specific timeline, however, the deputy CEO and CFO of the Dubai-owned ports and logistics firm added.

Yemen’s Houthis said on Sunday they will limit their attacks on commercial vessels to Israel-linked ships and will look into halting all attacks once the Gaza ceasefire is fully implemented.

The Iran-backed Houthis have carried out more than 100 attacks on ships since November 2023. They have sunk two vessels, seized another and killed at least four seafarers.

They have staged attacks across the southern Red Sea and the Gulf of Aden and still hold 25 crew members from the Galaxy Leader car carrier seized in November 2023.

In response many of the world’s biggest shipping companies have diverted vessels away from the Red Sea, travelling around the southern tip of Africa instead.

Narayan said that has tied up at least 30% more capacity than usual. He said freight rates are expected to come down once the shorter route via the Red Sea and Suez Canal picks up again.

Dubai’s DP World, which manages ports in countries from Britain to Peru as well as operating warehousing and logistics parks.

Asked about possible expansion, Narayan said DP World is looking at the east and west coasts of Africa.

“I think there’s massive potential there because there’s nothing available …and the cost of moving cargo in Africa is so high that it just makes sense.”

In Europe, the state-owned conglomerate is working on investment in London Gateway port despite a “challenging” economic environment in the UK due to lack of growth and legacy issues, he said.

The $1.3 billion project was reportedly put on hold after two ministers criticised practices at DP World’s subsidiary P&O Ferries, but British business minister Jonathan Reynolds in October said the investment was going ahead after talks with the firm.

With a general increase in the size of vessels “we have the greatest possible location right now,” Narayan said speaking of the project.

“We’re going to do a complete build-up of London Gateway …that was always our strategy.”

(Reuters) – U.S. stock index futures rose on Wednesday, with those tied to the tech-heavy Nasdaq in the lead as investors cheered streaming giant Netflix (NASDAQ:NFLX)’s strong quarterly performance and President Donald Trump’s multi-billion show of support for the AI technology industry.

At 5:31 a.m. ET, Dow E-minis were up 57 points, or 0.13%, S&P 500 E-minis were up 26 points, or 0.43% and Nasdaq 100 E-minis were up 177.75 points, or 0.82%.

Netflix jumped 14.3% in premarket trading after reporting a record number of subscribers over the holiday quarter, enabling it to increase prices for most service plans.

Other streaming firms such as Roku (NASDAQ:ROKU) and Walt Disney (NYSE:DIS) added 1.3% and 4.2%, respectively.

“Stellar subscriber figures such as these would be hard to beat. Netflix is seen as a litmus test for the entire tech sector … the tech sector could be well placed to report strong earnings figures in the coming months,” said Kathleen Brooks, research director at XTB.

Also among top movers, Oracle (NYSE:ORCL) gained 7.8%, a day after Trump said the company would make a $500 billion investment in AI infrastructure with OpenAI and SoftBank (TYO:9984) – a joint venture called Stargate. Although, there was no clarity on funding.

Server makers including Dell (NYSE:DELL) and Super Micro added 3.5% and 3% respectively, while AI bellwethers Microsoft (NASDAQ:MSFT) added 1.5% and Nvidia (NASDAQ:NVDA) rose 2.8%.

“The news also boosted growth and productivity expectations more than they fueled the ballooning debt worries,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Data pointing to a strong economy as underlying inflation cools, and Trump’s moderate approach to tariffs have aided risk taking on Wall Street since last week, with the benchmark S&P 500 less than 1% away from all-time highs. Easing Treasury yields have also encouraged risk taking in stocks.

However, Trump has warned that tariffs on imports from China, Mexico, Canada and the European Union could be issued on Feb. 1, a reminder for markets that risks of a potential trade war and fresh inflation pressures still prevailed.

Traders expect the Federal Reserve to leave interest rates unchanged when it meets next week and expect the central bank to deliver its first rate cut this year in July, according to data compiled by LSEG.

Among other movers, United Airlines advanced 3.6% after forecasting a stronger-than-expected profit in the current quarter, betting on robust travel demand and improved pricing power.

Johnson & Johnson (NYSE:JNJ), Procter & Gamble (NYSE:PG), Abbott Halliburton (NYSE:HAL) are among those that are expected to report quarterly earnings before markets open.

Investing.com — Barclays (LON:BARC) strategists, including Matthew Joyce, have highlighted that the UK capital markets are underperforming, largely due to an over-reliance on non-domestic equity investors. This dependency on foreign investors is viewed as a significant vulnerability.

The strategists suggest that boosting domestic demand could potentially mitigate this ongoing issue. They note that initial public offering (IPO) activity in the UK has been less robust compared to other regions, such as continental Europe and the United States.

The UK’s attractiveness as a listing destination appears to be diminishing, while the US is increasingly becoming the primary global capital market. The strategists express that this pattern is unlikely to change without some form of intervention.

The strategists also observed a structural decline in UK valuations. This is primarily due to the dwindling ownership by pension funds and insurance companies. The absence of these traditionally stable investors has contributed to the current state of the UK capital markets.

BEIJING (Reuters) – China will grant foreign financial institutions the same treatment as domestic ones in offering new types of financial services not yet available in the country in some free trade zones, the central bank said on Wednesday.

The country will also facilitate the transfer of inbound and outbound funds related to foreign investments in these areas in regions such as Beijing and Shanghai, according to guidelines jointly published by five government agencies. (This story has been refiled to fix the spelling of ‘institutions’ in the headline)

By Liam Mo and Brenda Goh

BEIJING (Reuters) – TikTok owner ByteDance on Wednesday released an update to its flagship AI model aimed at challenging Microsoft-backed OpenAI’s latest reasoning model products, as a global race intensified to create AI models capable of tackling complex problems.

The company released Doubao-1.5-pro, an upgrade to its flagship AI model, which it claims outperforms OpenAI’s o1 in AIME, a benchmark test that measures how well AI models understand and respond to complex instructions.

ByteDance’s release comes after Chinese AI startup DeepSeek rolled out an open-source reasoning model called DeepSeek-R1 on Monday that it said rivalled OpenAI’s o1 on several performance benchmarks.

DeepSeek drew widespread attention in global AI circles last month after tests showed its V3 large language model outperformed those of OpenAI and Meta (NASDAQ:META), despite a smaller development budget and plans to charge users a lot less.

The developments in AI reasoning by ByteDance, DeepSeek and others is likely to challenge the market share of OpenAI and other large language models in terms of both performance metrics and fees charged to users.

Other Chinese firms that have unveiled their own reasoning models in the past weeks include Moonshot AI, Minimax and iFlyTek.

OpenAI triggered the race in AI development after it launched ChatGPT in November 2022 and its “Strawberry” series of AI reasoning models in September last year. The latter are capable of reasoning through complex tasks and solving more challenging problems than previous models in science, coding and math.

Last week, OpenAI CEO Sam Altman said they had finalized a version of its new reasoning AI model o3 mini, and would be launching it in a couple of weeks.

DeepSeek proposed a cut-price fee offering for accessing and using DeepSeek-R1, at 16 yuan ($2.20) per million tokens, considerably less than OpenAI’s o1 438 yuan for the same usage.

ByteDance’s pricing is even more aggressive. Doubao-1.5-pro-32k costs 2 yuan per million tokens for output, while its more powerful Doubao-1.5-pro-256k version is priced at 9 yuan, according to ByteDance’s cloud platform Volcano Engine.

($1 = 7.2798 Chinese yuan renminbi)

Wells Fargo (NYSE:WFC) economists noted that the Texas economy, while cooling from its post-pandemic surge, continues to outpace the national average in employment and GDP growth. The state’s nonfarm payroll growth has slowed, aligning more closely with pre-pandemic levels, yet remains robust compared to the rest of the United States. Texas’ real GDP expanded at a 4.2% annualized rate in the third quarter of 2024, surpassing the national average of 3.1%.

Despite a slower job addition rate in November 2024, with only 9,100 new jobs created, the overall employment growth in Texas is still in line with historical trends. The moderation in hiring across several industries, including transportation, utilities, and manufacturing, is partly attributed to higher interest rates affecting consumer demand and financing costs.

The state’s unemployment rate has seen a slight uptick to 4.2% from 3.9% at the start of the year, which coincides with a significant increase in the labor force, indicating a slackening but still healthy job market.

Texas has also witnessed substantial population growth, adding nearly 563,000 residents in 2024 and ranking as the third fastest growing state. This growth has more than doubled the state’s population since 1980, bringing the current total to approximately 31 million people. The state’s robust population increase continues to be a key driver of its economic resilience.

The real estate market in Texas has experienced a deceleration, with home sales in November 2024 falling almost 24% from the same month in 2021. The cooling housing market is a consequence of high mortgage rates and inflated home prices, which have challenged affordability and tempered buyer activity.

The multifamily housing sector has also corrected, with new starts declining to pre-pandemic levels amid a surge in completed units and tighter financing conditions.

Looking ahead, the Texas economy is poised for continued solid growth into 2025. With the Federal Reserve expected to ease monetary policy, sectors previously hindered by high financing costs may see improvement. Texas’ strong demographic trends and economic fundamentals are likely to sustain its growth trajectory, despite the recent slowdown from its rapid expansion in recent years.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Investing.com — Fifteen provinces in China have revised their GDP growth targets for 2025, with most setting their aim between 5% and 6%. Qinghai province is the only one with a growth target below 5%.

Among the economically strong provinces, Sichuan has reduced its target, while Zhejiang, Jiangsu, and Shandong have maintained theirs.

Tibet has set the highest growth target of all provinces, aiming for above 7%, specifically 8%. Hainan, despite muted growth in 2024, continues to set its 2025 target at above 6%. Provinces such as Chongqing, Inner Mongolia, Hubei, and Xinjiang have set their targets around 6%.

Nine provinces, including Anhui, Sichuan, Zhejiang, and Henan, have set their targets at 5.5% or above. Fujian has lowered its target from approximately 5.5% to a range of 5-5.5%. Fourteen provinces, including Shandong, Jiangsu, Beijing, and Shanghai, have set their targets at 5% or above. Among these, only Tianjin has raised its 2025 target from the previous year, up from 4.5% to 5%.

In other news, housing rents in China have hit new lows in recent years. The China Index Academy reported that the average rent in tier-1 to tier-3 cities was RMB 75.37, RMB 28.31, and RMB 24.58 per square meter, respectively, in December 2024.

These figures represent the lowest levels since September 2021. Compared to September 2021 levels, rents have declined 7.15%, 9.79%, and 8.9% in tier-1 to tier-3 cities, respectively.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.