Business

LONDON — As the coronavirus pandemic continues to weigh on global oil demand, the OPEC oil producers' club on Monday began a meeting in which they are expected to decide on an extension of production cuts.

"2020 continues to be a year of immense challenges caused by the COVID-19 pandemic," Abdelmadjid Attar, who currently holds the rotating presidency of the Organisation of the Petroleum Exporting Countries (OPEC) and is also Algeria's energy minister, said in a speech broadcast live at the beginning of the group's videoconference meeting.

The common goal of the 13 member states, who will be joined by Russia and other allies forming the OPEC+ grouping on Tuesday, is to keep afloat a crude market devastated by the COVID-19 pandemic and which is slowly recovering from the depths into which prices plunged at the end of April.

That month, OPEC members agreed to cut production by 7.7 million barrels per day (bpd), which was meant to be eased to 5.8 million bpd in January 2021.

However, most observers expect the cut instead to be extended by three to six months to take into account the ongoing effects of the virus.

“A second wave of the pandemic and related lockdowns put a damper on demand," Attar told the ministerial meeting.

"The shock to the oil industry is massive and its severe impacts will likely reverberate in the years to come," Attar said.

Despite encouraging news from trials for vaccines by pharmaceutical companies, global deployment would take time and its effects might not become significantly apparent before the second half of 2021, Attar cautioned.

Just this March, the last of their meetings to be held at OPEC headquarters in Vienna before the pandemic forced them online turned into a fiasco when Saudi Arabia and key ally Russia failed to reach an agreement and spent the next month engaged in a fratricidal price war.

Whether all members are currently sticking to the output quotas that have already been assigned to them has also become a sensitive topic.

Those exceeding their allotted output — foremost among them Iraq and Nigeria — regularly come in for a scolding from Prince Abdelaziz Bin Salman, energy minister of OPEC kingpin Saudi Arabia.

Crude oil prices have picked up by 25 percent since the beginning of the month and have returned to roughly their pre-pandemic levels of between 45 and 50 dollars per barrel for both the US benchmark, West Texas Intermediate, and Europe's Brent North Sea contracts.

However, they were down on Monday morning in what analysts say was a sign of investor jitters ahead of the meeting.

GENEVA — A plan in Switzerland to impose the world’s strictest corporate responsibility rules, which would have made Swiss-headquartered multinationals liable for abusive business practices worldwide, failed to pass in a vote on Sunday.

The proposal would have amended the Swiss constitution and forced such companies to ensure they and their suppliers respected strict human rights and environmental protection standards.

But it failed to reach the double majority required for initiatives to pass, under federal Switzerland’s system of direct democracy.

Initiatives require support from a majority of voters nationwide, and from a majority of Switzerland’s 23 cantons, three of which are split in half.

While Swiss voters overall backed the initiative by a very narrow margin, a majority in most cantons voted against it.

Some 1,299,173 voters, or 50.7 per cent, backed the initiative, according to full results published by the ATS national news agency. The turnout was 46.7 per cent.

However, it only achieved a majority in eight-and-a-half cantons — including the four major cities of Zurich, Geneva, Basel and the capital Bern — with the rest voting against.

Softer counter-proposal triggered 

The initiative was launched by an alliance of 130 non-governmental organisations and had the backing of trade unions and church groups.

It was opposed by both the government and parliament, which warned that while its intention was good, the proposed legislation went “too far”.

The rejection by voters automatically activated the government’s counter-proposal, which also requires companies to report on rights, environmental protections and corruption issues — but without being liable for violations.

Supporters of the rejected initiative plastered Swiss towns and cities with posters highlighting environmental degradation and human suffering caused by Swiss-based companies.

Multinationals are important drivers of the Swiss economy, which at the end of 2018 counted close to 29,000 such corporations, accounting for more than a quarter of all jobs in the country, according to official statistics.

The Swiss business community argued that the amendments could have been detrimental for all Swiss companies, not just those that behave badly.

Businesses and employer organisations voiced particular concern over a provision that would have made Swiss-based firms liable for abuses committed by subsidiaries unless they could prove they had done required due diligence.

Weapons financing ban rejected 

Meanwhile voters rejected a separate proposal to ban funding companies that manufacture weapons and other materials of war — a move which could have blocked billions of dollars worth of investments.

The initiative would have barred the Swiss central bank and pension funds from investing in companies that make more than five per cent of revenues from sales of war material — while arms manufacturers would have been denied credit lines in Switzerland.

The initiative failed on both counts.

Some 1,460,755 voters, or 57.5 per cent, voted against the proposal, on a 46.4 per cent turnout, according to the results published by ATS.

Furthermore, a majority in only three-and-a-half cantons voted in favour.

Neutrality question 

Famously neutral Switzerland, which has not been to war in centuries, already bans the production of nuclear, biological and chemical weapons, as well as landmines and cluster munitions.

But a coalition of peace groups and left-leaning parties sought a constitutional amendment making it illegal to finance any companies that make any form of war material, including assault rifles, tanks and their components. 

According to a report earlier this month by research group Profundo, the central bank, large banks like UBS and Credit Suisse and other Swiss financial institutions have nearly $11 billion worth of loans and investments in arms companies, including BAE Systems, Lockheed Martin and Northrop.

Backers of the initiative claimed that the Swiss financial sector’s investments in arms companies were “incompatible” with Swiss neutrality.

But the government said the definition would effectively block funding of civil aviation firms such as Boeing, Airbus and Rolls Royce, and harm pensions.

NEW YORK — US online sales surged on the traditional "Black Friday" to set the country's second-highest one-day mark ever as virus-wary Americans shunned in-person shopping, the Adobe software company reported Saturday. 

American consumers, staying home amid the coronavirus pandemic, spent $9 billion online on Friday, a 21.6 per cent increase over the same day in 2019, Adobe said.

It said Friday's sales were surpassed only by those of last year's Cyber Monday, the Monday after Black Friday, when the focus is on online sales.

Notably, some 40 per cent of sales were conducted over smartphones, and many consumers supported small businesses. Their sales jumped by 545 per cent Friday compared to the average day in October.

Adobe said 38 per cent of consumers said they planned to support smaller local businesses ahead of the year-end holidays. 

This Monday, with the usual surge of Cyber Monday spending amplified by the COVID effect, analysts are predicting an all-time record.

Sales are expected to total from $10.8 billion to $12.7 billion, up by 15 to 35 per cent.

With more people working from home, demand has surged for bigger-ticket items such as computers and home fitness machines.

The National Retail Federation — pointing to optimism over COVID-19 vaccines, a strong stock market and disposable income that normally would have gone to travel or entertainment — projects a 2020 jump of between 3.6 per cent and 5.2 per cent in overall holiday sales from last year. 

LONDON — European equities dipped on Thursday as dealers nervously eyed coronavirus restrictions in subdued trade, with Wall Street shut for the Thanksgiving holiday, dealers said.

London’s stock market declined 0.4 per cent as investors digested news on the latest COVID-19 restrictions that will be imposed after England’s current four-week partial lockdown ends next week.

In the eurozone, both Paris and Frankfurt shed less than 0.1 per cent, shrugging off a broadly positive session in Asia that followed this month’s vaccine-fuelled markets rally.

Oil prices stepped lower, while the dollar rose against the euro but fell against the yen.

“There is always a certain weariness about European markets on Thanksgiving Day, knowing that they are almost certainly condemned to a directionless session with little volume and not much movement,” said analyst Chris Beauchamp at trading firm IG.

“Even when there is [movement] it is likely to be quickly unwound once the Americans get fully back in the saddle from Monday.”

Market analyst David Madden at CMC Markets UK also noted that “traders continue to take profit from the strong gains that were posted on Tuesday”.

Most Asian stocks rose but traders moved cautiously, with an eye on rising virus infections that are forcing governments to impose containment measures across the globe.

With at least three breakthrough COVID-19 vaccines in the pipeline and possibly rolled out within weeks, the general mood on trading floors is upbeat for 2021.

However, a fresh batch of US data underlined the immediate impact of the disease and the long road ahead for economies.

Minutes from the Federal Reserve’s (Fed) latest policy meeting warned that the country’s recovery would be tougher without a new stimulus package.

Official figures showed new jobless applications rose for a second straight week as businesses were hit by a sharp increase in new infections and deaths that have led several major cities including New York and Los Angeles to close bars and restaurants.

The readings gave traders a dose of reality following weeks of fervent buying in reaction to vaccine successes and Joe Biden’s election victory.

“The US data on Wednesday highlighted the economic fragility as the country battles an even more severe wave of COVID-19 than it was faced with earlier this year which is likely to continue to weigh in the coming weeks,” said OANDA Europe analyst Craig Erlam.

“The Fed minutes did not directly hint at more bond buying in December but given the COVID-19 spike and lack of a fiscal response, it is still looking very likely.”

Ahead of the Thanksgiving break, the Dow and S&P 500 ended lower on Wednesday after hitting records the day before, while the Nasdaq hit a new all-time high as tech firms surged.

“It’s going to be a very quiet end to the week with the US Thanksgiving bank holiday — and extended weekend for many — leaving a massive void in the markets,” Erlam said.

“The economic calendar was front-loaded this week as a result of the holiday, leaving just a few low-impact releases over the next couple of days and no major central bank decisions.”

PARIS — France will enforce a new digital levy for online technology giants this year, breaking a truce with Washington over the long-running tax fight that could prompt a round of punitive US tariffs on French goods.

“The companies subject to this tax have been notified,” a French finance ministry official said on Wednesday, referring in particular to Google, Amazon, Facebook and Apple, collectively referred to as the “GAFA” in France.

A deposit on the estimated taxes owed will be required in December, with the remainder due next year, the official said.

US President Donald Trump has assailed the tax as unfairly targeting American tech heavyweights, and last year threatened import duties of 25 per cent on $1.3 billion worth of French products, including cosmetics and handbags by renowned brands.

France and other European countries are taking action after intense public pressure to make US multinationals pay a larger share of their revenues in taxes in the countries where they operate.

Under EU law, companies in the United States can declare profits from across the bloc in a single member state — and most pick low-tax jurisdictions such as Ireland or The Netherlands.

In 2019, President Emmanuel Macron’s government enacted a 3-per cent levy on the profits from providing online sales for third-party retailers — such as Amazon’s Marketplace — as well as on digital advertising and the sale of private data.

That year the taxes brought in around 400 million euros ($475 million), an amount expected to grow steadily in the coming years.

But Paris struck a deal with Trump’s administration last year to suspend collection of the levy while seeking a global digital tax deal under the auspices of the Organisation for Economic Cooperation and Development (OECD).

Progress on a deal has been elusive, however, and in June, US Treasury Secretary Steven Mnuchin called off the talks, which were being pursued by 137 countries with a target of securing an accord by the end of this year.

In October, the OECD acknowledged that no deal was likely before 2021, largely because of US opposition to the proposals.

“We suspended the collection of this tax so that the OECD talks could finish,” French Finance Minister Bruno Le Maire said last month.

“These talks have failed, so we will collect taxes from these digital giants in December,” he warned.

Biden hopes? 

Britain, Spain, Italy and other European countries have also announced digital taxes to give them a bigger share of the profits that tech firms make from their citizens.

The surge in sales for online retailers during the COVID-19 lockdowns across Europe this year raised pressure on governments to take a tougher fiscal stance, not least to help pay for massive aid programmes for businesses forced to close.

But France has spearheaded the effort to wrest a compromise from Washington, and Wednesday’s announcement might reflect hopes in Paris that the incoming administration of Joe Biden will prove more amenable to a global deal.

“The COVID-19 pandemic makes the need for a solution even more compelling,” the OECD said last month.

It added that failure to reach a comprehensive accord would encourage more countries to take unilateral action that would only stoke trade tensions further.

“We remain supportive of the OECD plan,” the French finance ministry official said, adding that France also hoped to see a common European position on taxing digital giants in early 2021.

The OECD proposals address two issues — how to tax firms in every country where they operate, and how to ensure each country gets a fair share of a multinational’s taxes.

An accord would likely set a minimum base tax, potentially of 12.5 per cent, that would apply to every company no matter where it is based or declares its income.

The digital tax fight is just one front in the trans-Atlantic trade battle launched by Trump — last year his administration imposed 25 per cent tariffs on wine, cheese, olives and other European delicacies in a battle over subsidies to planemaker Airbus.

The EU responded this month with its own round of tariffs on US imports after the World Trade Organisation faulted Washington over state aid for Boeing.

STOCKHOLM — Consumers continued to spend strongly to furnish their homes despite the coronavirus pandemic, the holding company that includes most IKEA stores said on Tuesday.

INGKA, which includes shops that account for 90 per cent of sales by the Swedish flat-pack furniture giant, suffered only a 5 per cent drop in revenue for its September 2019-August 2020 financial year, to 37.4 billion euros ($44.4 billion).

Net profit, however, fell by a third to 1.2 billion euros.

The drop in sales was considerably lower than one might have expected given the extent of store closures during the first wave of the pandemic.

Around three-quarters of the 378 IKEA stores owned by Ingka were closed for roughly seven weeks, which works out to a 15 per cent reduction in days open for business.

But the fact that sales were down only by a third of that "proves that COVID-19 has helped us as a society to pay attention to what's important in life: health, family, love but also home", INGKA Financial Director Juvencio Maetzu told AFP.

Many consumers used lockdown time to work on home improvement projects or invested in creating home offices.

"Our expectation so far is that this year will be even better than the year before," Maetzu added.

While he declined to cite figures, Maetzu noted that only around a quarter of the stores are currently closed as many countries experience a second or third wave of coronavirus infections.

INGKA decided in June to forgo government aid and return any it had received, because its performance hadn't suffered considerably from the pandemic.

Present in 38 countries with a staff of 217,000 people, IKEA has a complex structure. In addition to INGKA, there is the Inter IKEA holding company, which owns the brand, controls production and receives payment from franchises.