Oil prices drop as aid arrives in Gaza; major Apple supplier faces China tax inquiry – business live - The Guardian

Chinese stocks fall to pre-pandemic level; oil prices drop as aid arrives in Gaza - business live | Business | The Guardian
US President Donald Trump, centre, along with Wisconsin governor Scott Walker, left, and Foxconn chairman Terry Gou, participate in a groundbreaking event for the new Foxconn facility in 2018. Photograph: Evan Vucci/AP

China has targeted Apple supplier Foxconn with a tax investigation. Foxconn’s share price dropped by 2.9% on Monday.

Foxconn is deeply involved in trade between the US and China, but also with the Taiwan, which China claims to own. So the timing of the intervention seems notable, writes the Guardian’s Kalyeena Makortoff:

It comes months after Foxconn’s founder, Terry Gou, announced he would run as an independent leadership candidate in Taiwan’s 2024 presidential election. Gou – a well-known and outspoken businessman – resigned from Foxconn’s board in September, days after announcing his election bid.

Gou’s presidential candidacy comes amid ongoing tension over Taiwan’s independence, with China having vowed to subsume Taiwan into the Chinese state, under what it calls “reunification” plans. That is despite widespread resistance by Taiwan’s population and its main political parties.

Gou used the launch of his presidential bid in August to declare that he would “bring 50 years of peace to the Taiwan Strait and build the deepest foundation for the mutual trust across the strait”.

China’s stock market index has dropped to its lowest level since before the coronavirus pandemic in 2019, a sign of the struggles of the world’s second biggest economy.

The CSI 300 index in Shanghai fell by more than 1% to a low of 3,450 points on Monday, the lowest since February 2019.

That was far below the peak of 5,930 points in February 2021, when China’s economy was outperforming others because of strict coronavirus controls. However, those controls eventually dragged the country back.
China's stock market surged during the pandemic, but has since fallen back to pre-pandemic levels. Photograph: Refinitiv

Investors have also been rattled by China’s geopolitical manoeuvring against the US, its great rival. The Financial Times, which first reported the stock market drop, cited an Asia-based senior capital markets banker at one Wall Street investment bank, who said investors need clarity before they shift money back to China en masse:
Global investors need two floors before they get back into China — they need a floor for the geopolitics and a floor for the Chinese economy. Only then they can start pricing things up.

Shares in London-listed drug company Indivior have risen by 7% on Monday after it said it will pay a $385m settlement of lawsuits claiming it had illegally supressed competition for its addiction treatment Suboxone.

Indivior, a member of the FTSE 250 index of mid-sized companies, said it had agreed the payment with drug wholesalers allegedly affected by its actions. Indivior was alleged to have switched from a tablet to an oral film for the product to extend its monopoly over the valuable product used to treat opioid addiction.

Indivior chief executive Mark Crossley said:

We are pleased to achieve this settlement to conclude this legacy multi-district antitrust matter.

The resolution of this litigation, which was filed over a decade ago, provides greater certainty for all Indivior stakeholders and allows us to continue focusing on our important work for patients suffering from opioid use disorder and mental health illnesses around the world.

Oil prices drop amid Gaza diplomacy; Apple supplier Foxconn faces tax probe

Good morning, and welcome to our live coverage of business, economics and financial markets around the world.

Oil prices dropped back on Monday after diplomatic efforts over the weekend to try to prevent the conflict between Israel and Hamas from spreading, including aid convoys being allowed into Gaza.

The price of a barrel of Brent crude oil, the North Sea benchmark, for December delivery fell as low as $91.08 on Monday morning, down by more than a dollar, or about 1%, following the weekend closure of markets. West Texas Intermediate, the North American grade also used as a global benchmark, fell by 1.2% as low as $86.83.

Neither Israel nor Palestine are significant fossil fuel producers, but analysts are concerned that supplies from other countries could be affected if fighting spreads further through the region. Israel has been bombing Gaza in response to Hamas’s attack on civilians on 7 October, but it has so far not launched a promised ground invasion into the territory.

There is some relief in the oil market that Israel is holding off on a planned ground incursion of northern Gaza to negotiate a release of hostages, which opens up a window for diplomacy.

A ground siege is seen as a potential trigger for widening the Israel-Hamas conflict into the Middle East region, the factor behind crude’s risk premium over the past fortnight.

Elsewhere, one of the key manufacturers of Apple’s iPhone, Foxconn, has said it will cooperate with authorities following the revelation that it faces a tax investigation in China.

Chinese state-controlled media reported the existence of the probe on Sunday, and Foxconn – officially called Hon Hai Technology Group – confirmed its existence. It said:
Legal compliance everywhere we operate around the world is a fundamental principle of Hon Hai Technology Group (Foxconn). We will actively cooperate with the relevant units on the related work and operations.

Any move to rein in Foxconn could have geopolitical ramifications, given its importance to Apple – the world’s biggest public company – and therefore for the US economy. Unnamed sources told Reuters they believed only Foxconn’s probe was made public for political reasons. Reuters reported:
They highlighted the audit comes less than three months ahead of Taiwan’s presidential election and amid Foxconn’s diversification drive to move some production out of China.

The agenda
1:30pm BST: US Chicago Fed national activity index (September; previous: -0.16)