FirstFT: Joe Biden pledges to defend Taiwan

US president Joe Biden has pledged to defend Taiwan militarily if China were to invade in remarks made during his first visit to Japan as US president.

“Yes. That is the commitment we made,” Biden said at a joint news conference in Tokyo when asked whether he was willing to get involved militarily to defend Taiwan.

Speaking alongside Fumio Kishida, Japan’s prime minister, Biden added that if China were to take Taiwan by force, “it will dislocate the entire region and be another action similar to what happened in Ukraine”.

Biden’s response appeared to conflict with the decades-old US policy of “strategic ambiguity” under which Washington does not make clear if it would defend Taiwan in the face of a military attack from China.

The ambiguous stance is designed to warn Taipei not to declare independence — which would almost certainly spark a Chinese attack — while forcing the Chinese military to reconsider action against Taiwan.

Elsewhere on his trip to Asia, the US president is poised to launch a new trade initiative with 12 Indo-Pacific countries, in his first serious effort to boost economic engagement in the region and help other nations resist Chinese pressure.

Jake Sullivan, US national security adviser, said allies such as Japan, Australia, New Zealand and South Korea would join the agreement. India and seven south-east Asian nations — Singapore, Malaysia, Indonesia, Vietnam, the Philippines, Thailand and Brunei — will also join the Indo-Pacific Economic Framework, which includes nations that represent 40 per cent of the global economy.

Over the weekend, Biden and South Korean president Yoon Suk-yeol committed to exploring “new and additional steps” to reinforce deterrence as Pyongyang continues to develop nuclear weapons.

Before we get to the rest of the day’s news I must apologise for an error that appeared in Friday’s edition of FirstFT. I incorrectly referred to the New York City mayor’s surname as Daniels. It should of course have been Eric Adams. Thanks to the readers who got in touch. Here’s the rest of the day’s news — Gordon

1. Broadcom in talks to buy VMware US chipmaker Broadcom is in talks to buy software group VMware for up to $50bn. Broadcom, led by the Malaysian-American billionaire Hock Tan, has been on the hunt for a software deal since its attempt to acquire chipmaker Qualcomm was blocked in 2018 by the Trump administration.

2. HSBC suspends banker over climate change comments HSBC has suspended Stuart Kirk, global head of responsible investing at the bank’s asset management division, pending an internal investigation into a presentation he made at the FT Moral Money Summit last week in which he said the financial risks of climate change were overstated.

3. Saudi Arabia signals support for Russia as Opec+ partner As Russian output falls and the oil group’s production quotas are set to expire in three months, Saudi energy minister Prince Abdulaziz bin Salman told the Financial Times that Riyadh would stand by Russia despite tightening western sanctions on Moscow and a potential EU ban on Russian oil imports.

4. ‘Millions’ at risk of death as Ukraine war hits food supplies Egypt’s finance minister has warned that “millions” could die because of the food price crisis triggered by the Ukraine war, echoing recent warnings made by the UN and G7 countries as worries about a worldwide wheat shortage intensify.

5. Capital Group’s €8bn European bank sell-off A single portfolio manager at Capital Group, one of the world’s biggest fund managers with $2.7tn of assets, drove an €8bn sell-off of European bank stocks this year. Led by respected portfolio manager Nick Grace, Capital had built up large stakes in some of Europe’s leading lenders, including Barclays, Deutsche Bank, Commerzbank and UBS.

The day ahead

Australia’s new PM makes first foreign trip Anthony Albanese will fly to Tokyo today for a meeting with the leaders of the US, Japan and India, hours after being sworn into office. Albanese’s Labor party secured victory in the nation’s general election over the weekend, defeating Scott Morrison’s conservative Liberal-National coalition. But after a close contest it is the Green party that could hold the balance of power.

Davos 2022 World leaders, chief executives and celebrities will finally gather again in Davos, Switzerland, for the World Economic Forum annual meeting this week, after Covid-19 delayed the in-person summit for more than two years. Company executives and investors warned ahead of the meeting in the Swiss Alps that three decades of globalisation risk going into reverse. The FT will be hosting a series of special events alongside the meeting.

Outlook for US markets Equities on Wall Street look set to open in positive territory after flirting with a bear market on Friday. The S&P 500 fell as much as 2.3 per cent, temporarily dragging the index down more than 20 per cent from its recent high, the common definition of a bear market. It pared losses late in the session, however, to eke out a small gain.

JPMorgan investor day America’s biggest bank holds its first investor day in two years amid criticism of chief executive Jamie Dimon’s pay package and his spending plans for the lender. Last week JPMorgan shareholders delivered a rebuke to Dimon after just one-third of them backed the chief executive’s pay award.

Monetary policy Raphael Bostic, president of the Atlanta branch of the Federal Reserve, discusses the economic outlook at an event hosted by the Rotary Club of Atlanta and Esther George, president of the Kansas City Fed, will speak at an agricultural symposium hosted by her bank.

Company earnings Profits at Zoom Video Communications are predicted to have dropped 40 per cent in the first quarter as the return to work for many office workers holds back the company’s performance. A tech-stock sell-off has become an additional challenge for Zoom — its shares have more than halved this year.

What else we’re reading

Is the global economy heading for recession? Four different problems are stalking the global economy as it recovers from the pandemic: strict Covid-19 lockdowns, tightening monetary policy, a soaring cost of living crisis, and food crises. Chris Giles lays out the deteriorating outlook facing policymakers and investors.

Column chart of Inflation rates and forecast (%) showing Households in many advanced economies face a cost of living crisis

Overdue reality check for Fed and markets has barely begun The US central bank and financial markets are experiencing a long-overdue reality check on inflation and interest rates, writes Sonal Desai, chief investment officer at Franklin Templeton Fixed Income. Markets have barely begun to take into account how far the world has changed, she argues.

How London lawyers helped Russia’s super-rich Top London law firms have made fat profits helping Russian oligarchs with issues such as alleged libel or data protection — but the equation has changed in the wake of the Ukraine war, bringing these legal arrangements under increasing scrutiny.

FT Executive Education Ranking 2022 France’s HEC Paris has topped the FT’s twin annual executive education rankings for open-enrolment programmes and custom courses for corporate clients for the first time, as leading academic institutions reported a surge in demand for non-degree courses. Read the full rankings and profiles of all the top schools.

Vive la différence between work and play France’s attempt in 2017 to allow employees a “right to disconnect” is now being taken up across Europe. Italy and Spain are taking similar steps and Portugal forbids companies from contacting employees outside working hours. Meanwhile, the EU is drafting a directive to reduce work-related digital overload.

  • More on work: Employers believe the impression of productivity is just as important, if not more so, than actual productivity. But leadership consultant Nels Abbey urges an end to the curse of presenteeism.

How To Spend It

From Lake Como to Colombia, Bordeaux to the Bahamas, How To Spend It is full of ideas for getting away this summer in the special travel issue, with an opening letter from editor Jo Ellison.

The Vineyard House is a two-bedroom cottage on the Château Troplong Mondot estate in Bordeaux
The Vineyard House is a two-bedroom cottage on the Château Troplong Mondot estate in Bordeaux © Cécile Perrinet-Lhermitte