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European Markets Rebound as Asia Recovers from Sell-Off

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European stock Markets

European markets opened higher on Tuesday with Germany’s DAX, France’s CAC 40, and London’s FTSE 100 all showing gains after a significant sell-off on Monday.

Japan’s benchmark Nikkei 225 index soared nearly 11% on Tuesday, recovering from a sharp drop that had contributed to a global market slump on Monday. Other Asian markets also saw a rebound, though to a lesser extent, indicating a stabilization after the week’s turbulent start.

Monday’s market plunge was reminiscent of the 1987 crash, sparking fears of a slowing US economy. The Nikkei gained nearly 11% early Tuesday and was trading 10.3% higher by early afternoon as investors sought bargains after the previous day’s 12.4% drop. On Monday, the S&P 500 dropped 3%, marking its worst day in nearly two years, closing at 5,186.33. The Dow Jones Industrial Average fell by 1,033 points, or 2.6%, to 38,703.27, while the Nasdaq composite slid 3.4% to 16,200.08 as major tech companies like Apple and Nvidia experienced significant losses.

The global sell-off that began last week was further fueled by a report showing a slowdown in US hiring, raising concerns that the Federal Reserve’s prolonged high interest rates might be stifling the economy too severely. A report from the Institute for Supply Management on Monday showed slight growth in US services businesses, particularly in arts, entertainment, recreation, accommodations, and food services.

Professional investors cautioned that technical factors might have amplified the steep losses. South Korea’s Kospi index dropped 8.8% on Monday, and Bitcoin fell below $54,000 from over $61,000 on Friday. Even gold, typically a safe haven during market turmoil, slipped about 1%.

On Tuesday, nearly all Asian markets, except Singapore, saw gains. The Kospi jumped 4.3% to 2,546.64. Hong Kong’s Hang Seng index rose 0.5% to 16,775.65. Australia’s S&P/ASX 200 edged 0.3% higher to 7,677.50. Taiwan’s Taiex gained 1.2% after an 8.4% drop the day before. The Shanghai Composite index, which had largely bypassed Monday’s turmoil, was up slightly to 2,861.87.

The dramatic market moves reflect fears that the US economy might be harmed by the Federal Reserve’s high interest rates, leading to speculation about a possible emergency rate cut. The yield on the two-year Treasury, closely tied to Fed expectations, briefly sank below 3.70% on Monday before recovering to 3.89%.

“The Fed could ride in on a white horse to save the day with a big rate cut, but the case for an inter-meeting cut seems flimsy,” said Brian Jacobsen, chief economist at Annex Wealth Management, noting that such actions are usually reserved for emergencies.

Despite the recent declines, the US economy is still growing, and a recession is not certain. The stock market remains up significantly for the year, with double-digit gains for the S&P 500, Dow, and Nasdaq Composite.

Other factors contributing to Monday’s market plunge include the Bank of Japan’s recent interest rate hike, which led to a stronger yen and impacted global trading strategies. Big Tech companies, particularly those involved in artificial intelligence like Nvidia, saw sharp declines amid fears that their stock prices had risen too quickly.

In commodities, early Tuesday saw US benchmark crude oil up $1.18 to $74.12 per barrel, and Brent crude rising $1.00 to $77.30 per barrel. The euro edged up to $1.0956 from $1.0954.

As markets continue to react to economic data and global events, the path forward remains uncertain, but Tuesday’s gains suggest a temporary stabilization after a volatile start to the week.

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Myanmar Struck by Aftershocks as Earthquake Death Toll Rises

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Myanmar continues to be rocked by aftershocks following the devastating 7.7-magnitude earthquake that struck on Friday, killing at least 1,644 people. The latest tremor, a 5.1-magnitude quake, hit near Mandalay on Sunday morning as rescue operations remained underway in the hardest-hit areas.

According to Myanmar’s ruling military junta, the earthquake has also left 2,376 people injured and 3,408 missing. While there were no immediate reports of further damage from Sunday’s aftershock, fears of continued tremors have kept thousands of people sleeping outdoors in Mandalay, Myanmar’s second-largest city.

Rescue Efforts Hindered by Damage and Conflict

Rescue operations remain challenging due to widespread destruction, damaged roads, and unreliable communication networks. The impact of the ongoing civil war has further complicated efforts, leaving civilians and local volunteers to handle much of the initial search and recovery work. Many affected areas remain inaccessible, and people have been digging through rubble by hand in scorching 41-degree Celsius heat.

“It’s mainly been local volunteers, local people who are just trying to find their loved ones,” said Cara Bragg, the Yangon-based manager of Catholic Relief Services in Myanmar. She added that while some countries are now sending search and rescue teams to Mandalay, hospitals are overwhelmed with the injured, and medical supplies are running low. Many survivors are also struggling to find food and clean water.

Mandalay, home to 1.5 million people, saw many buildings destroyed, including infrastructure such as bridges and the city’s airport. The disaster has left many residents homeless or too afraid to return to their homes due to the risk of further aftershocks.

Regional Impact and International Response

The earthquake’s effects were also felt in neighboring countries. In Thailand, at least 17 people were reported dead, with 83 still missing. The tremors even caused a tower to collapse in Bangkok. China also experienced the quake’s impact, though reports of casualties remain unclear.

Myanmar’s Shadow National Unity Government (NUG), which leads the resistance against the military junta, announced a partial ceasefire on Saturday to allow for rescue operations. The NUG’s armed wing, the People’s Defence Force (PDF), will suspend offensive military operations in the earthquake-affected areas starting Sunday.

While some international aid is beginning to reach Mandalay, the scale of the disaster has left many survivors in dire conditions. The coming days will be critical for search and rescue efforts, as well as for providing essential supplies to those left homeless by the quake.

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Federal Judge Blocks Trump Administration’s Effort to Dismantle Voice of America

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A federal judge has temporarily halted the Trump administration’s attempt to dismantle Voice of America (VOA), calling the move a “classic case of arbitrary and capricious decision-making.” The decision prevents the US Agency for Global Media (USAGM), which oversees VOA, from firing more than 1,200 employees or shutting down its affiliated services.

Judge Blocks Mass Firings and Funding Cuts

Judge James Paul Oetken issued a restraining order blocking the USAGM from taking further action to terminate, furlough, or place employees on leave. The order also prevents the agency from cutting grant funding to other international broadcasters, including Radio Free Europe/Radio Liberty, Radio Free Asia, and Radio Free Afghanistan.

The decision came after a coalition of VOA journalists, labor unions, and the nonprofit advocacy group Reporters Without Borders filed a lawsuit against the Trump administration. The plaintiffs argued that the administration’s efforts violated a legal precedent protecting VOA journalists from political interference.

Following the ruling, USAGM announced it was restoring funding to Radio Free Europe after another court in Washington, D.C., ordered it to do so.

White House Justifies Defunding VOA

The Trump administration has been critical of VOA, claiming it harbors a “leftist bias” and fails to project “pro-American” values. The White House labeled the broadcaster “The Voice of Radical America” and justified its defunding as an effort to prevent taxpayers from supporting what it called “radical propaganda.”

Citing coverage it deemed too favorable to former President Joe Biden, as well as reports on topics like white privilege, racial profiling, and transgender asylum seekers, the administration sought to slash funding for USAGM and six other federal agencies.

VOA, founded in 1942, is mandated by Congress to function as a non-partisan news organization, providing independent journalism to global audiences. Critics argue that the Trump administration’s actions threatened press freedom and democracy.

Judge Criticizes Administration’s “Sledgehammer” Approach

During a hearing in Manhattan, Judge Oetken condemned the administration for dismantling a long-established agency with “no consideration of the effects.” He also singled out USAGM special adviser Kari Lake for making sweeping changes “seemingly overnight” without a clear strategy.

“This is a decisive victory for press freedom and the First Amendment,” said Andrew G. Celli Jr., the plaintiffs’ attorney. He described the ruling as a strong rebuke to the Trump administration’s disregard for democratic principles.

The plaintiffs also warned that VOA’s absence from the airwaves could leave a vacuum that might be filled by propaganda from authoritarian regimes.

Congressional Funding and Future Implications

Congress has allocated nearly $860 million (€794 million) for USAGM in the current fiscal year, signaling bipartisan support for the agency’s mission. However, the future of VOA and its affiliated networks remains uncertain as legal battles continue.

With this court ruling, the Trump administration’s push to defund VOA faces a significant legal hurdle, but the broader debate over the role of government-funded international broadcasting is far from over.

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Russia Demands SWIFT Reconnection as Condition to Revive Black Sea Initiative

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Russia has set forth a key demand for the restoration of the Black Sea Initiative—reconnecting its Agricultural Bank, Rosselkhozbank, to the SWIFT financial system. This request, which falls under the jurisdiction of the European Union (EU), comes amid ongoing negotiations between global powers on the war in Ukraine.

Partial Ceasefire and Black Sea Security Agreement

Following recent talks in Saudi Arabia, the United States announced that Russia and Ukraine had agreed to a partial ceasefire specifically covering energy facilities. While this fell short of the broader ceasefire pushed by former President Donald Trump, the parties also agreed on measures to ensure the safe navigation of commercial vessels in the Black Sea and to prevent their use for military purposes.

However, the Kremlin quickly detailed additional conditions, demanding the lifting of sanctions on food exports, fertilizers, agricultural machinery, and cargo insurance. Most notably, Russia is insisting that Rosselkhozbank and other financial institutions involved in agricultural trade be reinstated on SWIFT, a global messaging system that facilitates secure financial transactions.

EU’s Role and Sanctions History

SWIFT, headquartered in Belgium, falls under EU regulations. In response to Russia’s invasion of Ukraine, the EU removed several Russian banks from SWIFT in 2022, including Sberbank, Credit Bank of Moscow, and Rosselkhozbank. The exclusion was a significant blow to Russia’s financial system, as it restricted the country’s ability to conduct international transactions.

Rosselkhozbank, a state-owned institution, plays a critical role in facilitating payments for Russia’s agricultural exports, a major revenue source through the global sale of wheat, barley, and corn. While the EU has not directly sanctioned Russian agricultural exports, the banking restrictions have complicated payments for these transactions, leading to the collapse of the initial Black Sea Initiative brokered by Turkey and the United Nations.

Diplomatic Tensions and Uncertain Outcomes

The demand to reinstate Rosselkhozbank puts the EU in a difficult position. Granting this request could signal a willingness to make concessions, potentially encouraging Russia to seek further sanctions relief. However, refusing it could provoke tensions with the Trump administration, which is eager to secure a ceasefire.

President Volodymyr Zelenskyy has consistently opposed easing sanctions, arguing that they must remain in place until Russia ends its military aggression. European Commission President Ursula von der Leyen echoed this stance, stating that sanctions would only be lifted after Russia takes concrete steps toward peace.

As EU sanctions require unanimous renewal every six months, any member state could disrupt the process. Hungary, which has previously expressed opposition to sanctions, could leverage this situation to push for changes when restrictions are up for review on July 31.

Future of SWIFT and Global Financial Pressures

While the EU holds the power to reinstate Rosselkhozbank’s SWIFT access, the U.S. could signal leniency by ensuring that those engaging with the bank avoid legal repercussions. Analysts suggest that Russia’s demand may be a strategic move to test both Washington and Brussels, pressuring the EU to reconsider its stance on financial restrictions.

For now, the EU remains firm in its approach. France has indicated that sanctions should remain unless Russia agrees to a full ceasefire, reparations, and security guarantees for Ukraine. However, with negotiations ongoing and international pressure mounting, the debate over SWIFT and broader sanctions relief is unlikely to fade anytime soon.

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