Business

LONDON — Equities slid on Monday, extending last week's losses on fears that a second wave of virus infections could spark fresh lockdowns and snub out economic recovery.

"Markets around the world have sold off again on heightened fears around a second wave of coronavirus infections and deaths," said Investment Director Russ Mould at stockbroker AJ Bell.

Tokyo tumbled to a loss of 3.5 per cent by the close, Hong Kong slid 2.2 per cent and Shanghai lost 1 per cent on signs that the deadly COVID-19 disease has returned in China amid a resurgence in the United States.

Stocks in Europe dived more than 2 per cent at the open, but later trimmed their losses, as European nations press ahead with easing their strict lockdowns.

Oil prices also extended last week's losses on fears that a second wave could ravage demand for the commodity.

Under pressure 

"It seems a combination of a new spike in COVID-19 cases in Beijing and disappointing Chinese data is weighing on sentiment at the start of the week," noted analyst Craig Erlam at trading firm OANDA.

"The numbers are still very low in the Chinese capital but the risks are high which may explain the apprehension we are seeing in the markets."

Beijing has carried out mass testing and locked down several neighbourhoods after 79 cases were linked to a single wholesale food market in the capital. City official Li Junjie on Monday said cases had also been found at another market.

The city has raced to quash the new outbreak, closing the affected markets, deploying paramilitary police and putting nearby housing estates under lockdown.

That came as more than a dozen US states, including populous Texas and Florida, reported their highest-ever daily case totals, while Rome and Tokyo have also seen fresh spikes.

"It means the virus hasn't lost its infectiousness, it isn't weakening... we shouldn't let down our guard," World Health Organisation Deputy Director Ranieri Guerra told Italian journalists.

AxiCorp analyst Stephen Innes warned that new US infections could be an ominous sign for markets.

"Falling infection rates have provided investors the confidence that the lockdown approach was working, allowing equity investors to look forward to 2021 as impressive monetary and fiscal policy provide a post-pandemic bridge."

"However, rising new daily COVID-19 cases in two of the three most populous states in the US will test that resolve."

Despite the latest equity losses, global stock markets have soared up to 50 per cent from their March troughs thanks to the lifting of stay-at-home orders and trillions of dollars of stimulus by governments and central banks.

On Monday in Europe, Germany, Belgium, France and Greece reopened their borders to EU countries from Monday. Austria will follow on Tuesday and Spain on Sunday.

France on Monday allowed cafes and restaurants to serve customers inside, as well as on terraces.

MADRID — Spanish Prime Minister Pedro Sanchez announced a 3.75 billion-euro aid plan for the car industry, a pillar of its economy that has been badly hit by the coronavirus pandemic.

“The government has worked hand in hand with the sector to develop a comprehensive plan that meets their needs and also serves to achieve an urgent ecological transition,” he said in a television address. 

The plan, which will be officially presented on Monday, “will be financed from a budget of 3.75 billion euros”, he added. 

The plan would set aside money to renew the car fleet, with special attention to electric vehicles. There would be aid for research and innovation and tax incentives to make the sector more competitive.

Aid for the purchase of electric vehicles is in line with the government’s ecological transition plan, which by 2040 aims to have all new vehicles in the country “zero emissions”.

The automotive sector is one of the pillars of the economy of Spain, the second European manufacturer behind Germany. 

It makes up 10 per cent of the gross domestic product (GDP), a fifth of Spain’s exports and directly or indirectly employs two million people, said Sanchez. 

It was also hit hard by the coronavirus pandemic with factories in Spain shut down for several weeks.

Japanese group Nissan recently announced the closure of its factories in Barcelona, affecting 20,000 jobs, directly and indirectly, while US giant Ford announced 350 job losses in its factory in Valencia. 

Other countries have announced automobile aid plans such as France, where President Emmanuel Macron announced in late May a recovery plan for the sector of more than 8 billion euros.

Sanchez also announced that a tourism sector support plan will be presented on Thursday. Tourism, which accounts for 12 per cent of GDP, has been hit badly by the coronavirus crisis. 

BEIRUT — Dozens of demonstrators angered by a deepening economic crisis rallied for a third consecutive day on Saturday after a night of violent riots sparked condemnation from the political elite.

Rallying against the surging cost of living and the government's apparent impotence in the face of the worst economic turmoil since the 1975-1990 civil war, protesters gathered in central Beirut, brandishing flags and chanting slogans.

In the northern city of Tripoli, young men scuffled with security forces who fired rubber bullets to disperse crowds.

The stand-off began after young men blocked a highway to prevent a number of trucks carrying produce destined for Syria from passing through, according to the official National News Agency.

The Lebanese Red Cross said it treated nine people wounded in Tripoli.

The rallies came ahead of a speech by Prime Minister Hassan Diab at 15:00 GMT.

"We are here to demand the formation of a new transitional government" and early parliamentary elections, Nehmat Badreddine, an activist and demonstrator told AFP in central Beirut.

Lebanon is caught in a spiralling economic crisis, including a rapid devaluation of the Lebanese pound, which has triggered a fresh wave of demonstrations since Thursday.

Lebanese media reported that the exchange rate had tumbled to 6,000 per dollar on the black market early on Friday, compared to the official peg of 1,507 in place since 1997.

After a crisis meeting on Friday, President Michel Aoun announced that the central bank would implement measures from Monday including "feeding dollars into the market", in a bid to support the Lebanese pound. 

Despite the government's pledges, roughly 200 young men gathered on mopeds in central Beirut on Friday night. Some of them defaced shop fronts and set fire to stores, causing serious damage.

Security forces fired tear gas to disperse them and some of the young men threw stones and fire crackers back. Tension petered out after midnight. 

In Tripoli, demonstrators threw stones and Molotov cocktails towards soldiers late on Friday and damaged the facades of several banks and shops. Soldiers responded with tear gas.

The next day, Diab called on officials to assess damage in central Beirut.

Former premier Saad Hariri toured the area, condemning vandalism and riots.

Interior minister Mohammed Fahmi said security forces would find those responsible for damaging property in the capital.

Lebanon — one of the most indebted countries in the world with a sovereign debt of more than 170 per cent of gross domestic product — went into default in March.

It started talks with the International Monetary Fund last month in a bid to unlock billions of dollars in financial aid. Dialogue is ongoing.

Unemployment has soared to 35 per cent nationwide.

The country enforced a lockdown in mid-March to stem the spread of the novel coronavirus, dealing a further blow to businesses.

LONDON — Global stock markets struggled on Wednesday ahead of a US Federal Reserve (Fed) policy decision as investors lost their appetite for risk that had fuelled a recent rally as coronavirus lockdowns eased.

Europe jumped out of the blocks at the open, but swiftly fell back as caution prevailed before the conclusion of the Fed's latest monetary policy gathering.

Earlier, Asia had already turned in a subdued performance.

Wall Street was also on tip toes as nervous punters tried to guess the US central bank's next moves.

'Pivotal' 

The meeting "could well be pivotal in deciding whether markets continue to rally", said Scope Markets analyst James Hughes.

"The Fed has thrown an unprecedented amount of stimulus at the US economy over the last three months, and what Chairman Jerome Powell says will impact the direction of global markets."

Most observers did not expect any rate easing after the Fed pledged vast sums of cash as a backstop to financial markets, but some action was likely.

"The Fed orchestrated this market recovery, and [is] now set to offer its latest thoughts, estimates and, hopefully for market sentiment, an actionable go-forward plan," said AxiCorp's Stephen Innes.

While many expect the Fed to add ammunition to its anti-virus efforts, some believe the central bank could take a step back as some signs are pointing towards a rapid recovery, including a blockbuster US jobs report last week.

'Sell-off' 

"There is a risk we may see a pronounced sell-off in risk assets if the Fed turns out to be not as dovish as expected," cautioned Fawad Razaqzada, an analyst at ThinkMarkets.

Any Fed decision to phase out its quantitative easing stimulus programme could be the trigger for stock market weakness, but also for dollar strength, he said.

In recent weeks, global markets had fizzed higher on the back of economic recovery hopes.

SEOUL — A South Korean court on Tuesday declined to issue an arrest warrant for the heir to the country's Samsung empire over a controversial merger of two business units seen as a key step to his succession. 

Lee Jae-yong, vice chairman of Samsung Electronics, is already being retried on charges of bribery, embezzlement and other offences in connection with a corruption scandal that brought down former South Korean president Park Geun-hye.

The merger case is separate from his ongoing retrial, but adds to the difficulties for the Samsung group, by far the biggest of the family-controlled conglomerates, or chaebols, that dominate business in the world's 12th-largest economy.

Prosecutors had sought the arrest warrant for Lee on suspicion he was involved in price manipulation and illegal trading during the 2015 merger of Cheil Industries and Samsung C&T.

But the Seoul central district court turned down the prosecution's request, ruling there was not sufficient probable cause for his arrest or those of two former Samsung executives.

"There was insufficient explanation on the need to arrest the defendants against the principle of trial without detention," Judge Won Jung-sook said in a court statement.

"Prosecutors seem to have already secured a considerable amount of evidence through their investigation," she said.

Whether Lee committed illegal acts should be established at trial, she added.

Lee attended the hearing, which Yonhap news agency said lasted for about nine hours, and then awaited the court's decision at a detention centre. He emerged at about 2:40am on Tuesday and briefly greeted reporters but did not answer when asked how he felt about the decision. 

Lee then left in a black sedan.

The merger transaction was seen as helping ensure a smooth third-generational power transfer to Lee, a scion of Samsung's founding family.

Chaebol families often have only a small ownership stake in their empires, but maintain control through complex webs of cross-shareholdings between units.

Apology

Lee was the largest shareholder in Cheil Industries, and critics say Samsung sought to artificially lower the price of C&T to give him a bigger stake in the merged entity — a key part of the Samsung structure — consolidating his grip on the conglomerate.

Last week, the Samsung group rejected media reports of price manipulation as "groundless", saying in a statement Lee did not take part in "any illegal acts".

The prosecutors' request came weeks after Lee issued a wide-ranging apology for company misconduct and promised to end the line of family succession.

Lee, 51, has effectively been at the helm of Samsung — South Korea's biggest business group — since his father and Samsung group boss Lee Kun-hee suffered a heart attack in 2014.

HONG KONG — A blockbuster US jobs report that fanned optimism about the economic recovery from the coronavirus crisis helped push Asian stock markets even higher on Monday, while a decision to extend production cuts provided fresh support to oil prices.

As countries continue to ease lockdown measures and with trillions of dollars in stimulus and central bank support pledged, equities across the planet have surged since hitting a trough in March.

The release of data on Friday showing a staggering 2.5 million US jobs were created in May  —  compared with an expected loss of more than eight million  —  added to the optimism, pushing the Nasdaq and the S&P 500 on Wall Street to within spitting distance of record highs.

Canada also reported a surprise increase in employment, confounding forecasts of a big drop.

"While there are still significant uncertainties over the COVID-19 impact on corporate earnings, investors are encouraged by the reopening of economies that is likely to lead to a rebound in profitability later this year," said Iyad Abu Hweij of Allied Investment Partners PJSC.

Tokyo rose more than one per cent, while Wellington surged more than three per cent after New Zealand officials reported no active cases of coronavirus for the first time since the pandemic began, and said the country was free of the disease  —  adding that restrictions would be lifted.

Hong Kong inched up for a sixth straight gain, Seoul added 0.1 per cent, Shanghai closed up 0.2 per cent, while Mumbai, Taipei and Singapore jumped more than 1 per cent, with Jakarta 3 per cent higher.

Bangkok and Manila were also higher.

In early trade, London, Paris and Frankfurt dropped on profit-taking after surging on Friday. Sydney was closed for a holiday.

"In the space of four weeks we've seen history made as the US economy posted a record number of job losses in one month, only to be followed by a record number of jobs gains in the following month," said Michael Hewson at CMC Markets.

But he added: "Despite all of the enthusiasm over last month's jobs report it doesn't change the fact that US unemployment is still well above post financial crisis levels, and is likely to remain so for quite some time."

'Increased confidence' 

Jason Wong at BNZ markets added: "The data are consistent with activity indicators that show a recovery in activity as US lockdowns eased, following the big hole in the economy in April, and give increased confidence that activity is on a clear path upward from here as restrictions have eased further."

As Latin America experiences a spike in infections and deaths, Europe continues to reopen to some semblance of normality, providing a much-needed boost to the shattered tourism industry.

Adding to the positive sentiment was news that major oil producers had agreed to extend output cuts of almost 10 million barrels a day for another month through to the end of July.

The deal, which had been expected, provided further support to crude prices, which have surged over the past two months thanks to the cuts and the easing of lockdowns that has boosted demand.

The agreement "is hugely positive for sentiment as the presumption is this clampdown will accelerate the rebalancing of supply and demand", said AxiCorp's Stephen Innes.

"The recognition that the deep cuts need to continue for a month or perhaps longer shows that despite the recent surge in oil prices, the large producers remain worried about the fragile state of the oil markets."

TRIPOLI — The Libyan National Oil Company said on Sunday production had resumed at Al Sharara oil field, the country’s largest, which had been shut months ago by the forces of strongman Khalifa Haftar.

Al Sharara, about 900 kilometres south of Tripoli, produces 315,000 barrels per day — nearly one third of Libya’s crude output — but is frequently attacked and blocked by militias.

In January, valves at a pumping station were closed forcing a halt in production at Al Sharara and costing the treasury more than $5.2 billion, the National Oil Company (NOC) said.

It came as forces of Haftar, who is based in the east of Libya, was pushing an offensive he had launched in April last year to seize the capital Tripoli from the UN-recognised government.

A statement from NOC said the company “confirms the return of production at the Sharara oil field in south of the country, after lengthy negotiations by the NOC to reopen the Hamada valve, which had been illegally closed last January”.

The NOC said that production will resume at a capacity of 30,000 barrels of oil per day until it reaches full capacity within 90 days, due to damage sustained from the shutdown.

“We hope that the restart of production at the Sharara oil field will be a first step to reviving the Libyan oil and gas sector and preventing an economic collapse in Libya in these difficult times,” NOC Chairman Mutafa Sanalla was quoted as saying in the statement.

Oil exports are the source of almost all state revenue in Libya, which has the biggest proven reserves of crude in Africa.

Al Sharara is run by the Akakus company, a joint venture between NOC, Spanish oil giant Repsol, France’s Total, Austria’s OMV and Norway’s Stateoil.

Sunday’s announcement came as fighters loyal to the UN-recognised Libyan Government of National Accord kept up a counteroffensive against Haftar’s forces around the strategic coastal city of Sirte.

The central city and home of former Libyan leader Muammar Qadhafi is key for access to Libya’s crucial “oil crescent” in the east, where many oil fields are located.

The US embassy welcomed the resumption of production at Al Sharara, hailing it as “a significant step forward” and urging all sides “to reject attempts to militarise the energy sector”.

Libya plunged into chaos after the ouster and killing of Qadhafi in a 2011 NATO-backed uprising, with rival administrations and militias vying for control of the country and its oil wealth.

The situation has been exacerbated by the intervention of foreign powers, with Turkey backing the UN-recognised government and Russia and the United Arab Emirates supporting Haftar.