Business

SINGAPORE — US oil prices rebounded above $14 a barrel on Wednesday, a day after a sell-off sparked by a major fund selling its short-term holdings of the commodity amid virus-triggered storage concerns.

      West Texas Intermediate, the US benchmark, for June delivery jumped 14.5 per cent to $14.13 a barrel in Asian morning trade.

      It had plunged by more than 21 per cent at one point Tuesday after the United States Oil Fund - a major US exchange-traded fund (ETF) - started selling its short-term contracts of the commodity.

      Brent crude, the international benchmark, was trading 3.27 per cent higher at $21.13 a barrel.

      Traders "are bargain hunting after a couple of days of massive sell-offs", OANDA senior market analyst Jeffrey Halley told AFP.

      ANZ Bank said in a note that the market was hit by volatility Tuesday "as ETFs and index funds moved contract positions amid renewed concerns of negative prices" in short-term holdings.

      The Oil Fund had sold its contracts due to expire in June to move into longer-dated holdings amid fears about storage space running out in the short term. 

      Following the US ETF's move, Standard & Poor's also told clients to sell their stakes in the June contracts and move them into July, ANZ said.

      S&P operates the GSCI commodity index, which is tracked by pension funds and other big investors.

      Other indices, including the Bloomberg Commodity Index, took similar steps.

      Oil prices have fallen to historic lows this month, with WTI crashing deep below zero for the first time as governments worldwide shut down businesses and air travel grinds to a halt due to the virus.

      An agreement by top crude-producing nations to cut output by 10 million barrels a day from May 1 has done little to calm the market.

      The production cuts "will probably take weeks to show up in the physical market, hence we are still stuck with the inventories issues that will continue to curb any semblance of bullish appetite", said AxiCorp global market strategist Stephen Innes.

LONDON — British energy giant BP on Tuesday said it slumped into a $4.4-billion net loss in the first quarter as the coronavirus pandemic crushed demand for oil, triggering a price crash.

      "Our industry has been hit by supply and demand shocks on a scale never seen before," BP's new chief executive Bernard Looney said in an earnings statement, having seen crude prices plunge from around $70 per barrel at the start of the year to close to $10 currently. He confirmed there would be job losses.

      "The economic impact of the COVID-19 pandemic coupled with pre-existing supply and demand factors have resulted in an exceptionally challenged commodity environment," BP said, having reported profit after tax of $2.9 billion in the first-quarter of 2019.

      BP said it planned to reduce cash costs by $2.5 billion by the end of 2021 relative to 2019.

      "Some of these cost savings may have associated restructuring charges," the company added.

      Looney later told the Financial Times that "there will be job cuts globally towards the end of this year".

      It expects also to produce less oil in the second quarter, with companies unable to store the excess crude.

      BP's first-quarter output dropped 2.8 per cent to 3.7 million barrels per day.

      "BP's warning about the second quarter being difficult should not be ignored... especially on a day when oil has fallen sharply yet again," said Chris Beauchamp, chief market analyst at IG trading group.

      BP's share price rallied 1.2 per cent to 317.7 pence in midday deals on the rising London stock market.

      Crude futures plunged to record lows this month, with US prices sinking briefly into negative territory, also following a vicious price-war between major oil producers Saudi Arabia and Russia.

      BP on Tuesday added that its underlying replacement cost profit -- a widely-watched measure stripping out exceptional items and changes in the value of oil inventories -- stood at $800 million in the first quarter, compared with $2.4 billion for the same period a year earlier.

      "The result reflected lower prices, demand destruction in the downstream particularly in March, a lower estimated result from (Russian partner) Rosneft and a lower contribution from oil trading."

      BP on Monday said that crashing oil prices had prompted it to tweak the terms of a gigantic deal to sell off its Alaska operations.

      Hilcorp Alaska in August agreed to purchase the assets, including operations in the mammoth Prudhoe Bay oilfield, for $5.6 billion in a move that sees BP exit the US state after a 60-year presence.

      The overall price tag remains the same but the structuring and phasing of payments has been modified.

      The first quarter meanwhile saw the departure of long-time chief executive Bob Dudley, with the American leaving after a decade at the helm.

      Soon after starting, Irish national Looney set BP a target to achieve "net zero" carbon emissions by 2050.

ZURICH — Swiss pharma giant Novartis on Tuesday reported higher profits for the first quarter as customers rushing to buy treatments during the coronavirus outbreak boosted the bottom line.

      Net profit for the first quarter rose 16 per cent to $2.1 billion while sales increased by 11 per cent.

      "COVID-19 did result in increased forward purchasing by customers, including at the patient level, as some patients filled prescriptions to cover a longer period of time," Novartis said.

      The pharma giant said the pandemic had had "no material impact on our underlying business, financial condition, cash collections or liquidity".

      Novartis added it feared no supply chain disruptions for most of its portfolio "at this time", and said it expected to be able to satisfy demand from continued forward purchases of drugs due to the pandemic.

      Consequently, it maintained its outlook for the full year 2020, in which it expects core operating income to rise by a high single or low double-digit percentage.

      Last week, Novartis said it would sponsor a clinical trial in the US using hydroxychloroquine to treat patients hospitalised with COVID-19.

      Novartis said it had reached an agreement with the US Food and Drug Administration to go ahead with a phase III clinical trial with around 440 patients to evaluate whether the drug is efficient in treating coronavirus.

HONG KONG — HSBC on Tuesday said first quarter pre-tax profits almost halved as the banking giant was battered by the global coronavirus pandemic while it embarked on a major restructuring.

      The lender reported pre-tax profits of $3.2 billion, down 48 per cent from the same period in 2019, citing credit losses from clients struck by the economic slowdown as a major cause.

      "The economic impact of the COVID-19 pandemic on our customers has been the main driver of the change in our financial performance since the turn of the year," newly confirmed CEO Noel Quinn said in a statement.

      Reported expected credit losses in the first quarter of the year were $3 billion -- $2.4 billion more than the first quarter of 2019 and the bank's biggest bad loan bundle in almost nine years.

      The Asia-focused lender has embarked on a huge cost-cutting initiative as it battles multiple uncertainties caused by the grinding US-China trade war, Britain's departure from the European Union and now the pandemic.

      Earlier this year it announced plans to slash 35,000 jobs, trimming fat from less profitable divisions, primarily in the United States and Europe.

      But COVID-19 has thrown a spanner into the works with HSBC on Tuesday confirming many of the redundancies would be put on hold for now "to reduce the uncertainty" many of its employees would face in a decimated jobs sector.

      Banks are being hammered by market volatility and the economic slowdown caused by the virus crisis.

      But they are also on the receiving end of huge bailouts and support from central banks and regulators.

      - Major overhaul -

      Quinn took over as acting CEO after the shock ouster in August of John Flint. He was finally confirmed as the bank's head last month.

      He is tasked with transforming the sprawling international bank, which spans more than 50 countries but makes the vast majority of its profits in Asia.

      In recent years HSBC's Asia business has done well -- fuelled primarily by China -- but Europe and the US have disappointed.

      Before the coronavirus went global the bank announced plans to make $4.5 billion in cost cuts by 2022, with restructuring costs of around $6 billion.

      Many of the cutbacks will be in the European and US investment banking sectors, while units in more profitable Asia and the Middle East would be bolstered.

      The restructuring plans are the most ambitious since 2012 when HSBC was caught up in a Mexican money laundering scandal.

      HSBC warned defaults would increase the longer the pandemic goes on, with the bank expecting between $7 billion and $11 billion in credit losses from clients in 2020.

      The biggest risks were currently coming from the "oil and gas, transport and discretionary consumer sectors", the bank said.

      But Quinn added it was facing down the global pandemic "from a position of strength" with "robust levels of capital, funding and liquidity".

      Jackson Wong, an analyst at Amber Hill Capital, said Tuesday's results were some of the worst for HSBC since the 2008 financial crash and that postponing some restructuring could help with operating costs.

      And things could improve if countries make headway against the virus.

      "This could be seen as the worst has already happened," he told AFP.

      Last month HSBC was one of a number of banks to cancel dividends and buybacks at the request of British regulators.

      The move is part of an effort to bolster cash reserves for the economic crisis but it caused anger among investors in Asia where some 90 per cent of HSBC's profits are made.

      HSBC's shares plunged after dividends were scrapped.

      Before the lunchtime break on Tuesday, the bank's shares were up 1.77 per cent in Hong Kong.

      In its results statement HSBC said it plans to review the scrapped dividends policy towards the end of this year.

BEIRUT — Demonstrators blocked roads through Lebanon on Sunday to protest the deteriorating economic situation, according to the official news agency.

      Police quickly intervened to reopen the highways where the demonstrators burned tyres to block roads, the ANI national news agency said.

      In Zalqa sector, northeast of Beirut, six people were injured, Lebanese Red Cross official Rodney Eid told AFP without providing further details.

      An AFP photographer saw protesters setting tyres ablaze on the highway north of the capital, in the suburbs of Dbaiyeh, before the army and police moved in.

      Protesters also mobilised in the main northern city of Tripoli, according to ANI.

      And south of Beirut, young people set tyres ablaze on the Damour highway, the agency said.

      Protesters have staged several daytime demonstrations recently, including a convoy of cars in the capital last week, despite the coronavirus lockdown and nighttime curfew.

      A nationwide protest movement erupted in October last year, with hundreds of thousands of people demonstrating against the ruling elite and the rampant graft critics say has brought the economy to its knees.

      Lebanon's worst economic crisis since the 1975-1990 civil war is now compounded by the coronavirus lockdown. Poverty has risen to 45 per cent of the population, according to official estimates.

      Its economy is forecast to contract 12 per cent in 2020, according to the International Monetary Fund.

      The Lebanese pound has also plummeted against the dollar, resulting in high inflation.

HONG KONG — Equity markets rallied on Monday as the rate of coronavirus deaths dropped in several badly hit countries and leaders stepped up plans to reopen their economies, though oil prices tumbled again with supply glut fears overshadowing output reductions.

      Traders were also keeping a keen eye on meetings of key central banks this week, hoping for further financial support to offset the impact of the pandemic, which is expected to send the world into recession.

      But while more than 205,000 people have died from COVID-19 with nearly three million cases recorded, the latest figures from Europe's worst-hit countries provided some much-needed hope to markets that the peak of the crisis may have passed.

      Britain's daily tally was the lowest since March 31, while Italy and Spain's were the lowest in a month. France's toll was a drop of more than a third on the previous day's figures. Germany said on Monday it had seen the slowest pace of infections and deaths since March 29.

      The relative improvement in the data has allowed governments to start easing up on lockdowns that have kept half the planet stuck at home.

      In Italy, wholesale stores and restaurants will be allowed to resume business on May 4 and people will once again be permitted to stroll in parks and visit relatives, while other shops and museums will open three weeks later.

      Spain on Sunday let children play outside for the first time since mid-March and Swiss hairdressers, massage parlours, florists and garden centres reopened on Monday.

      Meanwhile, New York Governor Andrew Cuomo said that a first stage of a reopening would start on May 15 if hospitalisations decrease.

       Eyes on central banks

      "It is looking well short of a grand reopening in the US, but the fact that some folks are returning to work seems to have piqued the fancy of investors," said Stephen Innes at AxiCorp.

      Traders welcomed the developments. Tokyo ended 2.7 per cent up, while Hong Kong jumped 1.9 per cent.

      Taipei and Mumbai put on more than two per cent while Sydney, Seoul and Singapore were each more than one per cent higher.

      Bangkok and Shanghai were also up though there were small losses in Jakarta and Manila.

       In early trade, London added 1.7 per cent while Paris and Frankfurt surged more than two per cent.

      "Although life is not about to return to normal anytime soon, the hope that peak virus is upon us has lifted financial markets modestly in Asia," said OANDA's Jeffrey Halley.

      "The hopes that even a partial return to regular economic activity, to draw a line under the economic carnage wrought by the pandemic, should see markets such as equities outperform this week."

      Focus is now on central banks, with traders looking for signs of further support to embattled economies following unprecedented multibillion-dollar measures such as bond-buying and interest rate cuts.

      "The markets are bolstered today by central banks, who can support risk sentiment this week by signalling a willingness to expand existing asset-purchase schemes if conditions warrant," Innes said.

      The Bank of Japan was the first up on Monday, announcing a ramping up of its emergency monetary easing, lifting the cap on its buying of government bonds and increasing purchases of other assets.

      The move is "largely symbolic, but it‘s better than doing nothing", Taro Saito, senior economist at NLI Research Institute, told AFP ahead of the decision.

      "Given the circumstances, no one expects the latest policy can turn the economy around, and the same can be said about fiscal stimulus," he said.

      The Bank of Japan also forecast the Japanese economy could contract as much as five per cent in the year to March 2021.

      On oil markets, WTI lost more than 13 per cent, having endured a hammering last week, with worries about storage and near-non-existent demand overshadowing signs that some countries -- including Kuwait and Algeria -- are starting to slash production in line with a major deal hammered out this month.

      "Concerns surrounding rising global inventories, especially in the US with the coronavirus pandemic weighing on gasoline consumption, are pressuring oil prices," Kim Kwangrae, commodities analyst at Samsung Futures Inc, told Bloomberg News.

      "While OPEC has started to curb output, demand is still not being supported and that's going to be a down factor for prices."

LONDON — British energy major BP said on Monday that crashing oil prices had prompted it to tweak the terms of a gigantic deal to sell off its Alaska operations.

      Hilcorp Alaska had agreed in August 2019 to purchase the assets, including operations in the Prudhoe Bay oilfield, for $5.6 billion in a move that will see BP exit the US state after a 60-year presence.

      Crude futures have however plunged to record lows this month, with US oil futures sinking briefly into negative territory on the back of demand-destroying coronavirus and a vicious price war between Saudi and Russia.

      The energy sector -- whose profits and revenues are heavily linked to crude oil prices -- has been ravaged as COVID-19 slams the brakes on economic activity.

      "Reflecting recent significant market volatility and oil price falls, BP and Hilcorp have successfully renegotiated the financial terms of the deal to respond to the current environment," BP said in a statement.

      The overall price tag remains the same but the structuring and phasing of payments has been modified.

      The revised deal terms are "structured with flexibility to phase and manage payments to accommodate current and potential future volatility in oil prices", it added.

      BP said that it still expects the transaction to be completed in mid-2020.

      The disposal is part of BP's $15-billion divestment program to help the company shore up its balance sheet by 2021.

      The British oil major first entered oil-rich Alaska in 1959 -- the same year it officially became a US state -- and helped construct the 800-mile (1,300-kilometer) Trans-Alaska Pipeline.

BEIRUT — Prime Minister Hassan Diab said on Friday that Lebanese bank deposits have plunged $5.7 billion in the first two months of the year despite curbs on withdrawals and a ban on transfers abroad.

      Lebanon is grappling with a severe lack of liquidity and its worst economic crisis in decades, compounded since mid-March by a lockdown to stem the novel coronavirus.

      Banks have gradually restricted dollar withdrawals until halting them altogether last month, and transfers abroad have been banned.

      But reports have circulated of persistent capital flight, the latest announced by Diab during a televised speech on Friday.

      "Figures reveal the exit of $5.7 billion worth of deposits from Lebanese banks in January and February this year" alone, the premier said.

      A source close to the government said the large part of the $5.7 billion had likely been transferred abroad.

      "Some portion of that was withdrawn and likely kept in households within Lebanon," the source said.

      But "given that over the counter withdrawals were limited to relatively small amounts during that time period, one can logically conclude that a big portion of the $5.7 billion left the country," the source said.

      According to official estimates, $2.3 billion were transferred abroad last year after the start of mass protests on October 17 against a political class demonstrators accused of being corrupt and inept.

      The Lebanese pound has been pegged to the dollar since 1997, but in recent months it has lost more than half its value on the parallel exchange market.

      Diab criticised the central bank and called on its governor Riad Salameh to "come forward to announce the honest truth to Lebanese".

      He urged the governor, who has held the post since 1993, to explain his plans and when the exchange rate would stop rising.

      Central bank losses from the start of the year to mid-April have reached $7 billion, including $3 billion in the past four weeks alone, Diab said.

      The premier said a "neutral international company" had been tasked to audit the central bank's books, without giving a name.

      Salameh's supporters credit him for stabilising the Lebanese pound for more than two decades, in the wake of the country's 1975-1990 civil war.

      But his detractors accuse him of having contributed to Lebanon's endless borrowing and ballooning sovereign debt, leading to the country's first ever default in March.

      In recent months, the Lebanese pound has plummeted in value from around 1,500 pounds against the US dollar to almost 3,800 on the parallel market.

      Economist Jad Chaaban said factors such as Lebanon's sizeable informal economy and the coronavirus lockdown that has impeded the influx of dollars in cash have contributed to the crash of the pound.

      He also faulted a banking control commission over its monitoring of the exchange rate.

      Lebanon is one of the most indebted countries in the world, with a debt equivalent to 170 per cent of its gross development product.

NEW YORK — Boeing said on Saturday it was pulling out of a $4.2 billion deal to acquire the commercial plane division of its Brazilian rival Embraer.

      The companies had planned to form a joint venture in which Boeing would take an 80 per cent stake in that division. The deal had been due to be finalised no later than Friday.

      But Boeing said on Saturday it was exercising its right to pull out of a preliminary deal reached in July 2018. It said in a statement, "Embraer did not satisfy the necessary conditions."

      "Boeing has worked diligently over more than two years to finalise its transaction with Embraer," said Marc Allen, the Boeing executive who led the joint venture plan.

      He said that over the past several months the companies held extensive talks on what he terms unsatisfied conditions in the initial accord.

      "We all aimed to resolve those by the initial termination date, but it didn't happen," Allen said, without explaining what the unresolved issues were. 

NEW YORK — Stock markets struggled on Friday as hopes of quickly finding a treatment for coronavirus were dashed, and more crushing economic data delivered a body blow to confidence.

      Investors were "reacting badly" to reports the initial trials of the remdesivir coronavirus drug being developed by Gilead Sciences had flopped, Oanda analyst Craig Erlam said.

      "This was a ray of hope earlier this week and already we're learning the pitfalls of getting too excited about these cures at the early stages of testing," Erlam told AFP.

      Key European markets were all lower at the close, but Wall Street soldiered to a positive daily finish.

      Despite that, indices were down for the week for the first time in three weeks, with the Dow posting a 1.9 per cent loss.

      'Crumbs of comfort'

      The United States this week approved nearly half a billion dollars for small businesses, which cheered investors despite unrelentingly grim economic data -- including a Congressional Budget Office prediction that the economy would contract 12 per cent in the second quarter. That brings total aid approved in the past six weeks to nearly $3 trillion.

      "The market is now comfortable with the second quarter being absolutely horrible," Karl Haeling of LBBW said. "It's a time issue about when the activity will start back up."

      However, Michael Hewson at CMC Markets UK predicted markets would probably be "swinging around" in coming weeks on the success or failure of antiviral and vaccine trials "as investors look for crumbs of comfort."

      European equities were knocked also by news that EU leaders are divided over the size of a financial rescue package to stimulate the bloc's economy, left battered by the pandemic.

      "They seem to have agreed on the idea of a recovery fund while leaving the details for a future date," Erlam said.

    Britain's retail sales by volume slumped by a record 5.1 per cent last month as the country's lockdown shut stores, despite surges in food and alcohol purchases and online buying, official data showed.

      JP Morgan Asset Management strategist Hannah Anderson warned that while some countries were moving to ease lockdowns and the virus was growing at a slower rate, dangers remain ahead.

      "It is important to not conflate medical and economic data," she said in a note.

      "Obviously a deceleration in infection rates is a positive development for the economy, but progress in combating this awful disease is not the same as returning the economy to the place it was" in late 2019.

      "Investors need to understand that the risks associated with lifting public health measures too early could further exacerbate market pain," she added.

      Further pain

      Oil was volatile, but posted a modest gain. That followed a 20 per cent surge for WTI on Thursday triggered by a new flare-up between Washington and Tehran.

      Iran warned the US of a "decisive response" after President Donald Trump said he had ordered the US Navy to destroy Iranian boats that harass American ships in the Gulf.

      But storage facilities are near to bursting with demand almost non-existent -- a situation that sent the May contract for WTI to minus $40 this week.

      On currency markets, the pound fell against the euro after the EU's chief Brexit negotiator accused Britain of stalling in ongoing post-Brexit negotiations.

      A round of talks on Friday brought scant progress, raising the possibility that the current transition period will end without a deal on crucial areas such as trade and fishing.

      And among secondary stocks markets, the Sao Paolo exchange, Latin America's biggest, plunged eight per cent in morning business after the resignation of Brazil's justice minister over "political interference."