Business

By Lewis Krauskopf

NEW YORK — World stocks fell for a third straight day on Friday on pessimism about global economic growth and trade tensions, putting them on track for their first weekly drop this year, while the US dollar was on track for its biggest weekly gain since August.

MSCI's gauge of stocks across the globe shed 0.60 per cent on the day, and was set to fall for the week following six consecutive weekly increases.

Investors were digesting economic and trade developments from Thursday, when the European Commission sharply cut its forecast for eurozone growth this year and next and President Donald Trump said he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline to achieve a trade deal. 

Thursday's trade developments "took off the table what the market was probably starting to price in, which was a resolution by March 1", said Anthony Saglimbene, global market strategist at Ameriprise Financial in Troy, Michigan. "It just adds to the fact that investors want some of these trade tensions off the front pages, and it doesn't look like we are going to get that."

Stocks pared some losses after a White House spokeswoman said US-China trade talks would resume next week in Beijing.

On Wall Street, the Dow Jones Industrial Average fell 155.79 points, or 0.62 per cent, to 25,013.74, the S&P 500 lost 9.31 points, or 0.34 per cent, to 2,696.74, and the Nasdaq Composite dropped 14.80 points, or 0.2 per cent, to 7,273.55.

Adding to the dour mood, analysts now expect first-quarter earnings for S&P 500 companies to decline 0.1 per cent from a year earlier, which would be the first such quarterly profit decline since 2016, according to IBES data from Refinitiv.

"The sentiment continues to be investor anxiety about US -China trade relations, the slowing global growth, and I think this week what is starting to really creep into investors' anxiety is around corporate earnings," said Michael Arone, chief investment strategist at State Street Global Advisers in Boston.

The pan-European STOXX 600 index lost 0.56 per cent.

The dollar edged higher against a basket of currencies, keeping it on track for its strongest weekly gain in six months, as traders piled into the greenback in a safe-haven move on worries about a weakening global economy.

The dollar index rose 0.14 per cent, with the euro down 0.16 per cent to $1.1322.

"The rally that propelled the dollar broadly higher last year has enjoyed renewed life with US growth remaining solid while peers abroad lose momentum," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

US Treasury yields fell for a fourth straight session.

Benchmark US 10-year notes last rose 6/32 in price to yield 2.6339 per cent, from 2.654 per cent late on Thursday.

Oil prices were little changed on the day, but were heading for a weekly loss on renewed concerns about slowing global demand.

US crude rose 0.15 per cent to $52.72 per barrel and Brent was last at $62.07, up 0.71 per cent on the day.

LONDON — Mounting global growth worries thrust share markets into reverse on Thursday, while the dollar scored its longest winning run since a hot streak in early October that helped trigger a wave of worldwide “bear” markets.

Wall Street looked set to suffer back-to-back losses later after Europe had set the tone. 

Some poor earnings and weak data out of Germany ensured most of the main bourses were lower and kept MSCI's main index of world stocks in the red for a second day, too.

The extent of the current slowdown in the global economy was highlighted, as India unexpectedly cut its interest rates and the euro got hit to $1.1346 by Germany's fourth consecutive drop in industrial output.

That only compounded the 1.3 per cent the euro has lost over the last week and the tailwind behind the dollar, which has risen every day since Friday's strong US jobs data. It has also recovered almost all the losses suffered after the Federal Reserve all but abandoned plans for more rate hikes last month.

"Another day, another piece of terrible German data. EUR/USD risks a move to $1.1300," said ING's chief EMEA FX and interest rate strategist, Petr Krpata.

Elsewhere the pound was struggling near $1.29 again after the Bank of England kept rates on hold, while gloomy jobs data saw New Zealand's dollar suffer a similar flop as its Australian counterpart had seen the previous day. 

The kiwi slid to $0.6744, losing nearly 2 per cent in the past 24 hours, as investors wagered on the risk of a cut in interest rates there. New Zealand's central bank holds its first meeting of the year next week. 

Asian trading was still light overall though with China on holiday and no major economic data on the diary.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.1 per cent as it rose to its highest since early October. 

The index has risen steadily since early January as the US Federal Reserve changed its tune and emerging markets have surged more broadly after a torrid 2018.

Australia's benchmark stock index jumped 1.2 per cent amid expectations of easy monetary policy after the central bank chief shifted away from his previous tightening bias.

Japan's Nikkei slipped 0.6 per cent though and the caution quickly spread to Europe. 

London's FTSE was the only major bourse clinging to positive territory, helped by a weak pound, whereas the rest were down at least 0.6 per cent as were E-Mini futures for the S&P 500 and Dow. 

We are all doves now 

One of the day's big surprises came from India where its central bank unexpectedly lowered interest rates to 6.25 per cent to boost a slowing economy after a sharp slide in the inflation rate.

Italian bonds were back under pressure with the European Commission slashing its 2019 growth forecast.

Italy agreed a deficit target of 2.04 per cent in December, averting a major fall-out with the EU, though this was based on a growth assumption of 1 per cent. Slowing growth in Italy could make it harder for the country to remain within EU rules.

However, Benjamin Schroeder, rates strategist at ING, said he did not expect the EU to demand more fiscal tightening from Italy, should its forecasts be reduced.

"The EU has another thing to deal with — Brexit — and the other thing is do you want to infuse the campaign ahead of the parliamentary elections with this topic." 

The next major trigger for markets will more likely be any breakthrough in the US-Sino tariff talks when the two sides meet in Beijing next week.

US President Donald Trump offered little new to chew on in his State of the Union speech but Treasury Secretary Steven Mnuchin said on Wednesday he and other US officials will aim to clinch a deal next week to avert a March 2 increase in US tariffs on Chinese goods.

Probably more pressing though for the US markets is the threat of another government shutdown, Nick Twidale, an analyst at Rakuten Securities Australia said.

"With both sides of the house standing firm on the contentious border wall issue at present, and the deadline approaching swiftly on February 15, we could be back where we were just a few weeks ago." 

The broad dollar gains put pressure on gold, which eased to $1,303.96 per ounce, slipping further from last week's top of $1,326.30.

Oil prices eased too after US crude inventories rose and as production levels in the country held at record levels.

Brent crude futures slipped 23 cents to $62.46. U.S. crude eased 19 cents to $53.82 a barrel.

LONDON — The Australian dollar nosedived on Wednesday after its central bank opened the door to a possible rate cut, in yet another indication the global economic slowdown is persuading policymakers to go easy on rate hikes. 

World stocks too stalled just off two-month highs , undermined by the growth worries as well as US President Donald Trump's combative State of the Union address in which he unveiled no new policy initiatives. European shares traded marginally in the black and equity futures signalled a flat to weaker open on Wall Street.

Australia's central bank is only the latest to signal policy easing in the face of economic headwinds — the US Federal Reserve has all but abandoned plans for further rate hikes, while the European Central Bank also sounded less certain that it will start tightening policy later this year.

The U-turn pushed the Australian dollar 1.5 per cent lower, putting it on track for its biggest daily drop in a year. Australian short-dated bond yields were set for their biggest one-day drop in more than two years, down 10 basis points on the day.

"When I look at the global economy, Germany on is on the cusp of recession, Italy is in recession, Japan in on the cusp, the Chinese economy is seeing the lowest growth in three decades. The Fed had a look at the picture and said the world is slowing, it is maybe appropriate to pause," said Rhys Petheram, a fund manager in the multi-asset team at Jupiter Asset Management.

"I want to be more defensive in my allocation to risk," he added.

Wall Street finished strong on Tuesday and is now some 16 per cent off December lows but sentiment was knocked by the US president's failure in his annual speech to unveil new infrastructure plans. 

He also raised the possibility of another government shutdown should financing not be forthcoming for a US-Mexico border wall.

Futures indicated a weaker open on US stocks with the S&P and Nasdaq both down 0.1 per cent. 

European stocks, meanwhile, were undermined by the latest batch of earnings, which further underscored the weak local economy and the drag on companies from slower global trade.

Shares in BNP Paribas and carmaker Daimler slumped 1 per cent and 3 per cent respectively, ending the market's six-day rally. French-listed BNP Paribas lowered its profit and revenue growth targets for 2020 while Daimler's profits were hit by trade war and ballooning costs for developing electric and self-driving cars

Germany's DAX index lost 0.5 per cent.

Europe drags 

Europe's economic weakness prompted demand for bonds, with German 10-year government bond yields trading around 0.17 per cent, well off the 0.21 per cent highs hit on Tuesday. 

Investors have pushed back expectations that the European Central Bank will hike rates this year, a view reinforced after data showed German industrial orders fell on weak foreign demand in December.

Investors will also be looking to the European Commission's winter macroeconomic forecasts, due to be published on Wednesday or Thursday. Large downward revisions to growth and inflation are likely, many analysts predict. 

"The moderation of growth is so widespread it makes the ECB's job easier, as it was more difficult for them to justify their stance when Germany was leading the economic cycle while other countries were lagging growth," said Monica Defend, chief strategist and deputy head of research at Amundi.

The appetite for bonds also was evident in the 33 billion euros worth of orders investors had placed for Italy's new 30-year bond by 11:15 GMT.

Concerns for world growth fanned fears for global energy demand, hitting crude prices. Brent futures were trading around $61.59 a barrel.

On the Brexit front, sterling looked fragile at around $1.2951 after losing nearly 0.7 per cent on Tuesday when weak service sector data underscored damage to the economy from Brexit uncertainty.

Prime Minister Theresa May will travel to Brussels on Thursday to tell EU leaders they must accept legally binding changes to the Irish border arrangements of Britain's divorce deal or face a disorderly no-deal Brexit.

British blue chip shares hit their highest in more than two months on Tuesday after heavyweight BP doubled its annual profit and miners rallied on higher iron ore prices, feeding into an upbeat mood on global markets.

London's main index rose 1.1 per cent by 09:43 GMT, hitting levels not seen since December 3 and extending gains as sterling weakened.

The index of midcaps was more subdued, up just 0.1 per cent.

A dip in the pound generally boosts the main index, which earns a lion's share of its earnings abroad. All sectors on the FTSE 100 were in the black by 09:48 GMT.

Sterling's weakening, to near two-week lows, was not good news for domestically oriented companies, however, as it came in reaction to a survey showing dominant services sector firms reported job cuts for the first time in six years.

That signalled further risks to Britain's economy although retailers were lifted by data showing a pickup in consumer spending last month.

Asian markets extended gains on Tuesday as overnight strength on Wall Street and the US Federal Reserve's cautious turn supported appetite for riskier assets.

On Britain's main index, oil major BP gained 4.2 per cent — on course for its best day since September 2016 — after full-year numbers topped expectations.

Mining stocks hit their highest since late June last year after Brazil ordered top producer Vale to shut its tailings dams following the deadly incident last week, raising concerns about falling output. Singapore iron ore futures were up 3.4 per cent overnight.

Online retailer Ocado, among last year's best performing stocks, shed early losses to rise 1 per cent despite results showing investment hit earnings.

Drugmaker Indivior, however, sank as much as 25 per cent on news of a loss in its fight against generic competitors in a US court. 

Retail stocks were in favour as a survey showing British consumers picked up the pace of their shopping in January offered some respite to a sector that suffered its worst Christmas in a decade. Marks & Spencer was 1.2 per cent higher. 

Prime Minister Theresa May headed to Northern Ireland on Tuesday, promising to find a solution to the border issue at the centre of her Brexit headaches.

German Chancellor Angela Merkel on Monday called for a "creative" compromise to future Irish border arrangements on Monday and she said in Tokyo that there was "still time" for a solution.

Chief EU Negotiator Michel Barnier said the EU would not reopen its Brexit Withdrawal Agreement, but that alternatives to the controversial Irish backstop could be worked on after Britain leaves the bloc.

"We have been mercifully free of any Brexit discussion so far but the clock is ticking on that... I am not sure they see either side giving way which would make life a lot more difficult in the near term," said Chris Beauchamp, analyst at IG.

"I think we are having a calm before the storm which could easily start from next week."

If May fails to get parliament's approval for a revised deal on February 13, lawmakers will vote on next steps on February 14.

WARSAW — Several countries have started to cut the amount of beef they import from Poland after a TV documentary showed an abattoir killing sick cows, the head of the meat producers lobby said on Monday.

An undercover reporter got a job in a slaughterhouse outside Warsaw and broadcast footage last month of ill animals being mistreated, killed and sent on for human consumption.

A team of inspectors from the European Commission arrived in Warsaw on Monday to investigate the reports, Poland's chief veterinarian told a news conference.

No countries had cancelled meat imports from Poland, the head of the Polish Meat Association, Witold Choinski, told reporters. "But many countries are limiting their imports," he added.

He did not name any countries or give details on the size of the cuts.

Poland produces about 560,000 tonnes of beef a year, 85 per cent of it for export. 

Poland's Agriculture Minister Jan Ardanowski said on Monday that one case had been "exaggerated to an unimaginable size" and now threatened the image of Polish meat and food worldwide. 

The separate Polish association of beef producers and breeders said on Monday that local beef prices had fallen sharply in recent days and, if the trend continued, Polish producers could lose as much as 600 million zlotys ($160.27 million) this year.

AMMAN — The total value of shares bought by non-Jordanian investors in January was JD26.3 million, representing 29 per cent of the overall trading value, while the value of shares sold by the same bracket amounted to JD 26.1 million, according to the ASE website.

Subsequently, net non-Jordanian investment in January reflected an increase by JD0.2 million, compared with a decrease by JD7.3 million during the same month of 2018. 

Arab investors’ purchases during the first month of this year totalled JD5.4 million, or 20.7 per cent of the overall purchases by non-Jordanians, while the value of non-Arab purchases amounted to JD20.9 million, constituting 79.3 per cent of the total purchases. 

Arab investors’ sales amounted to JD22.9 million, 87.8 per cent of non-Jordanians total sales, while the value of non-Arab sales amounted to JD3.2 million, representing 12.2 per cent of the total sales by non-Jordanians.

Non-Jordanian investors' ownership in companies listed at the ASE by the end of January represented 51.6 per cent of the total market value, 36.8 per cent for Arab investors and 14.8 per cent for non-Arab investors.

At the sector level, the non-Jordanian ownership in the financial sector is 56.2 per cent, while in the service sector, it is 18.3 per cent, and in the industrial sector is 61.9 per cent, according to the ASE website.

LONDON — Japanese car manufacturer Nissan announced on Sunday it was cancelling plans to build its X-Trail SUV at its plant in northeast England despite Brexit assurances from the government, the Agence France Presse reported.

“While we have taken this decision for business reasons, the continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future,” Nissan Europe Chairman Gianluca de Ficchy said in a statement.

“We appreciate this will be disappointing for our UK team and partners,” he added. “Our workforce in Sunderland has our full confidence.”

In 2016, the car giant announced that it planned to build the model at its plant in Sunderland, but will now assemble it instead at Nissan’s global production hub in Kyushu, Japan. 

“Other future models planned for Nissan Sunderland Plant — the next-generation Juke and Qashqai — are unaffected” by the decision, according to the statement.

The company said it had decided to shift investment away from the British plant, and towards developing vehicle technology.

“A model like X-Trail is manufactured in multiple locations globally, and can therefore be reevaluated based on changes to the business environment,” explained Hideyuki Sakamoto, Nissan’s executive vice president for manufacturing and supply chain management.

Local MP Bridget Phillipson, Tweeted that the reports “represent deeply troubling news for the northeast economy — So many jobs and livelihoods depend on Nissan’s success”.

The car giant is a major employer in the region, a former industrial powerhouse that has suffered decades of economic decline, and which voted heavily in favour of Brexit.

Labour MP Julie Elliott said Brexit had played an “inevitable role” in the decision, adding: “none of it is conducive to encouraging business investment in this country”.

Nissan employs almost 7,000 people at the Sunderland plant — its largest in Europe — which has produced cars since 1986.

Current production includes the LEAF electric car, which reached production of 46,989 units last year.

Other multinational giants, including, Airbus warned this week that British jobs could suffer in the event of an unfavourable outcome.

The scenario of Britain exiting the European Union without a “divorce” deal is becoming ever-more possible as the clock runs down the official departure date of March 29. 

The timing of the company’s announcement comes just two days after an EU-Japan free trade agreement kicked in, which includes the European Union’s commitment to removing tariffs of 10 per cent on imported Japanese cars, according to Reuters.

Many Japanese companies had long seen Britain as the gateway into Europe, after being encouraged to open factories in the country by former prime minister Margaret Thatcher but Brexit has thrown that into doubt, prompting consternation in Tokyo.

Sunday’s announcement also comes as the firm continues to deal with the fallout from the arrest of its former boss Carlos Ghosn, which has clouded the outlook for the automaking alliance between Nissan, Renault and Mitsubishi.

FRANKFURT — Deutsche Bank returned to profit in 2018, its first in four years, despite a greater-than-expected loss in the fourth quarter, the German lender said on Friday.

Deutsche Bank has been trying to turn itself around under a new leadership, but has faced continuous hurdles, including allegations of money laundering, ratings downgrades and failed stress tests.

The bank has also turned into a subject of rampant merger speculation, and Friday's earnings figures underscore that the lender still has a long way ahead to post a sustainable profit. 

The fourth-quarter net loss of 409 million euros ($467.73 million) at Germany's flagship lender was greater than the 268 million euros expected on average by analysts, according to a consensus report on the bank's website.

The quarter was marked by continued weakness in its key trading business. Revenue at its cash-cow bond-trading division plunged 23 per cent. 

For the investment bank as a whole, revenue dropped 5 per cent in the fourth quarter.

However, Deutsche posted a full-year profit of 341 million euros, compared with a net loss of 735 million euros in 2017.

"Our return to profitability shows that Deutsche Bank is on the right track," Chief Executive Christian Sewing said on Friday.

The company's return to profit in 2018 is a huge achievement for Sewing, who took over in April 2018 and has embarked on plans to cut more than 7,000 jobs in an overhaul of the bank. 

"In 2019, we aim not only to save costs but also to make focused investments in growth. We aim to grow profitability substantially through the current year and beyond," he said.

The bank's shares lost more than half their value in 2018, though they have recovered slightly over the past month.

However, time is running out for Deutsche Bank to turn around on its own, making a merger with rival Commerzbank more likely, two people with knowledge of the matter said on Thursday.

A major investor is awaiting market reaction to both banks' earnings over the next couple of weeks before deciding on the need for a merger, said a person close to the investor.

Speculation of a merger between the two has heightened under the tenure of Finance Minister Olaf Scholz, who has spoken in favour of strong banks. His team has met frequently with executives of Deutsche, Commerzbank and major shareholders.

Deutsche is considered one of the most important banks for the global financial system, along with JPMorgan Chase, Bank of America and Citigroup.

But the German lender has been plagued by losses and a scandal.

 A $7.2 billion US fine in 2017 for its role in the mortgage market crisis was a major blow that spooked clients.

BARCELONA — US ride-hailing service Uber and its main Spanish rival Cabify said on Thursday they were suspending their services in Barcelona after local authorities passed new rules which severely restrict how they operate in the city.

Under new rules approved by the regional government of Catalonia which come into effect on Friday customers of ride-hailing services will have to book a ride at least 15 minutes in advance.

The rules also allow local city authorities in Catalonia — if they deemed it necessary — to lengthen the pre-booking time to a maximum of one hour. 

Barcelona's left-wing city hall quickly said it would apply the one-hour delay.

The new regulations were announced following pressure from taxi drivers who had been on open-ended strike in Barcelona and remain on strike in Madrid over the same issue.

Uber, which has faced problems in other European countries as taxi drivers complain of threats to their livelihoods, said in a statement that it was "forced to suspend" its UberX service, which competes with taxis, in Spain's second-largest city as of Friday because of the new rules.

"The obligation to wait 15 minutes... does not exist anywhere in Europe and it is totally incompatible with the immediacy of ride-hailing services like UberX," it added.

Cabify said it too would cease operating in Barcelona as of Friday, stating that the "only objective" of the new rules was to "expel" it from the region.

The company said 98.5 per cent of the rides booked through its app are reserved less than 15 minutes before the time of pick up.

The new rules will put 3,000 — 4,000 jobs at risk and force the closure of over 60 firms, according to Unauto VTC, an association of transport companies in Spain.

A company called Vector Ronda, whose fleet of vehicles and drivers use Cabify, announced plans on Wednesday to lay off 1,000 employees.

The conservative head of the regional government of Madrid, Angel Garrido, has so far refused to adopt the same measures, saying that Catalonia is "heading to the Middle Ages" with its solution to the row between taxis and ride-hailing services.

Like their counterparts in many other European countries, Spain's taxi drivers say that ride-hailing apps like Uber, or its main Spanish rival Cabify, have made it impossible to compete.

LONDON — Uncertainty over Brexit is hitting bookings for budget airline Wizz Air and could mean that full-year results come in towards the lower end of its guidance, the company said on Wednesday.

Wizz Air maintained its full-year net profit forecast range of 270-300 million euros but said that final results for the year to the end of March would depend on how badly Brexit hit consumer confidence.

“Consumers are uncertain and they [will] probably postpone their bookings. We’ve started seeing that in our bookings,” Chief Executive Jozsef Varadi told Reuters.

“These issues stand to be fairly temporary... It is not Brexit itself, but the uncertainties around it. So once there is certainty around how Brexit will play out, I think consumer confidence will be restored.”

Ryanair, Europe’s largest budget airline, issued a profit warning this month and warned of the risk of a further downgrade if Brexit causes disruption.

Although Varadi said he expected flights to continue after Brexit, much remains unclear about Britain’s scheduled departure on March 29. Wizz Air is the largest budget airline in central and eastern Europe.

Britain remains on a collision course with the European Union after lawmakers demanded that the prime minister reopen a divorce deal with the EU that the bloc said was not up for renegotiation.

Wizz Air has undertaken Brexit contigency planning. Wizz Air UK was launched in May 2018, and it was granted a UK route licence by the transport minister in the quarter ended December 31 to protect flights to non-EU destinations from Britain. 

The airline said the arrangement “future-proofs the status of Wizz Air UK Limited as a British airline, regardless of the outcome of the negotiations”, despite the impact of Brexit uncertainty on bookings.

Less room for error 

Wizz reiterated its profit guidance after lowering it in November, due to higher fuel prices and disruption from air traffic control strikes in the summer. 

The airline posted 15 per cent passenger growth in the quarter, while unit revenues were up 6 per cent. It said it had adjusted its growth capacity to boost yields in the face of the higher fuel price.

Shares in Wizz recovered from initial losses to trade 1.5 per cent higher by 09:25 GMT.

Analysts at RBC said that a softer March backdrop for bookings reflected the Brexit impact in the UK and meant there was “less room for error than before” for the airline, but retained its “top pick” rating on the stock.

Varadi, the Hungarian co-founder of the Budapest-based airline, said that yield performance in its core markets of central and eastern Europe was outperforming western Europe.

“I think we are seeing a fairly robust yield environment for our business,” he said. “We remain very confident in the yield environment.”