Business

PARIS — Stock markets diverged on Monday following last week's strong performance, as traders await a meeting of central bankers that could give fresh signals about the US interest-rate outlook.

Positive data last week eased concerns about the health of the US economy after markets were hammered earlier this month due to recession fears and a Japanese interest-rate hike.

Traders are now turning their attention to the annual symposium of central bank chiefs later this week in Jackson Hole, Wyoming.

The highlight will be Friday's speech by Federal Reserve Chairman Jerome Powell, with investors hoping that he will flag an interest rate cut when Fed policymakers meet next month.

"Investors and analysts alike will be paying close attention to any signals from Fed officials about the future direction of US interest rates," said Luca Santos, currency analyst at ACY Securities.

"There's growing speculation that... Powell might hint at the possibility of starting rate cuts as early as September. But the size of the cut is still up in the air."

Santos said a "modest" cut of 0.25 percentage points seems likely while a larger 0.50-point reduction "would need stronger evidence of a weakening US job market".

All three main indexes on Wall Street rose on Friday, leaving them back near the record highs touched before their August 5 rout as investors grow confident the US economy will avoid recession as the Fed cuts rates.

Asian and European markets wavered after a positive start to Monday.

Hong Kong, Shanghai, Singapore, Sydney, Mumbai, Taipei, Manila and Bangkok rose, although Tokyo, Seoul, Jakarta and Wellington dipped.

Paris and Frankfurt were up around midday while London was slightly in the red.

Bets on a series of Fed rate cuts weighed on the dollar, with the yen among the big gainers as traders assess the chances of another Bank of Japan hike at its next meeting.

Gold held above $2,500 after breaking the barrier for the first time on Friday, fuelled by expectations for Fed cuts that will make the precious metal more attractive to investors.

And oil prices were down again after last week's losses, on the back of demand worries as China's economy struggles to recover.

Investors are also keeping tabs on talks to mediate a ceasefire between Israel and Hamas in Gaza amid fears of a wider war in the crude-rich Middle East.

Major oil producer Iran has threatened to retaliate against Israel for last month's killing of Hamas political leader Ismail Haniyeh in Tehran, which has been widely blamed on Israel.

US Secretary of State Antony Blinken met prime minister Benjamin Netanyahu and other Israeli leaders on Monday to try to unblock the process for an end to hostilities.

LONDON — Accountancy firm PwC has been fined by the UK's Financial Conduct Authority for failing to report suspicions of fraud during an audit of the LCF fund, in the watchdog's first ever fine against an auditor.

The 2019 collapse of London Capital & Finance (LCF) — which sold high-yield bonds that turned out to be high-risk — was one of the biggest City scandals in recent years.

The markets watchdog handed PwC a £15 million ($19 million) fine after it signed off an audit of the group in 2016, and did not report suspicions around the group's financial conduct. 

PwC faced "significant issues" during the "very complex" audit, the watchdog said, with LCF giving the auditors "inaccurate and misleading information".

According to the FCA, this "led PwC to suspect that LCF might be involved in fraudulent activity".

But while PwC suspected fraud, the firm did not report this to the FCA as quickly as possible — which is required under UK regulations — and signed off on the audit.

"Auditors have a central role to play in keeping our markets clean," said Therese Chambers, joint executive director of enforcement and market oversight.

NEW YORK — Boeing's quality control practices will be placed under a microscope this week at a two-day National Transportation Safety Board hearing investigating a January Alaska Airlines flight on a 737 MAX.

Representatives of Boeing, supplier Spirit AeroSystems and the Federal Aviation Administration are among the witnesses commenting on the near-catastrophic incident, which follows other problems at Boeing since the MAX was introduced more than a decade ago.

2011

August 30: Boeing presents the 737 MAX, its latest version of the top-selling single-aisle jet.

2017

March 8: US regulators with the Federal Aviation Administration certify the 737 MAX 8, which in takes its first commercial flight weeks later.

2018

October 29: A 737 MAX 8 operated by Lion Air crashes shortly after liftoff, killing all 189 people on board.

2019

March 10: A 737 MAX 8 operated by Ethiopian Airlines crashes about six minutes after liftoff, killing all 157 people on board.

March 11: Chinese regulators are the first to ground the 737 MAX, a move soon followed by other aviation authorities, including the FAA.

March 14: Boeing suspends deliveries of the 737 MAX.

April 4: Boeing acknowledges that flaws with a software programme called the Maneuvering Characteristics Augmentation System played a role in the crashes.

December 16: Boeing announces the suspension of 737 MAX production in January.

December 23: Boeing announces the ouster of CEO Dennis Muilenburg, who was criticized for his handling of the crisis.

2020 January 13: David Calhoun, a longtime Boeing board member, takes over as CEO of Boeing.

February 18: Boeing vows to tighten controls after finding potentially dangerous debris in fuel tanks of undelivered 737 MAX aircraft.

May 27: Boeing resumes production at low volumes of the 737 MAX.

September: Boeing says that recently discovered manufacturing problems with the 787 Dreamliner will impact deliveries. Deliveries on the jets end up being slowed or entirely halted for about two years.

November 18: The FAA clears the 737 MAX to resume service.

2021

January 7: Department of Justice (DOJ) announces a deferred prosecution agreement with Boeing in which the planemaker agrees to pay $2.5 billion in fines and restitution, and to upgrade its compliance and quality control efforts. The agreement is designed to expire in three years if Boeing meets the conditions.

January 27: European officials authorise the 737 MAX to resume service. Chinese officials do not clear the jets back into service until January 2023.

June 18: The first ever flight of the 737 MAX 10, the biggest model of the jet. The aircraft, along with the 737 MAX 7 — the smallest version in the family — have yet to be certified.

2022

April 27: Boeing pushes back the timeframe for its giant 777X, which was originally meant to go into service in 2020. The current plan is for the jet to enter service in 2025.

2023

April 14: Boeing operations are hit after supplier Spirit AeroSystems notifies that it identified "a non-standard manufacturing process" on two fittings on the fuselage of four 737 models.

December 22: China accepts its first new Boeing jet since 2019, a 787 Dreamliner. Deliveries of the 737 MAX resume in January.

December 28: Boeing urges airlines to undertake inspections after an international operator discovered a bolt with a missing nut while performing routine maintenance.

2024

January 5: A 737 MAX 9 operated by Alaska Airlines makes an emergency landing after a fuselage panel blows out mid-flight, plunging Boeing back into crisis mode.

February 26: An audit released by an FAA advisory panel offers 53 recommendations to improve Boeing's safety culture, characterizing staff as confused and distrustful of changes.

February 28: An FAA audit gives Boeing 90 days to devise a plan to significantly upgrade its quality control processes.

March 25: Boeing announces that Calhoun will step down at the end of 2024 as the company embarks on a CEO search. The aviation giant also replaces its head of commercial planes, as well as its chairman of the board.

April 17: A Senate panel hears from a Boeing whistleblower and other critics who accuse the company of punishing or sidelining criticism and downplaying problems.

May 14: The DOJ concludes that Boeing flouted its obligations under the 2021 DPA, opening up the company to possible prosecution.

May 30: Boeing submits a comprehensive plan to the FAA for upgrading safety.

July 7: Boeing and the DOJ announce an agreement that includes a guilty plea by the company to a fraud charge connected to the MAX certification.

July 31: Boeing announces that former Rockwell Collins head Robert "Kelly" Ortberg will become the CEO to begin August 8.

LONDON — Global stocks mostly rose on Tuesday as attention turned to economic data and its impact on interest rates.

The week's main focus is expected to be US consumer inflation figures on Wednesday, but investors got reassuring wholesale price data on Tuesday.

The producer price index (PPI) rose by 0.1 per cent in July, down slightly from a 0.2 rise in June, the US Labor Department said in a statement.

This was slightly cooler than the median forecast of economists surveyed by Dow Jones Newswires and The Wall Street Journal.

Core PPI that excludes volatile food and energy prices was flat. 

On an annual basis, PPI came in at 2.2 percent, down sharply from a revised 2.7 per cent rise a month earlier.

"The key takeaway from the report is the disinflation trend in total and core PPI, as that is moving in a necessary direction to drive a rate cut by the Fed," said Briefing.com analyst Patrick O'Hare.

While the mood on trading floors has calmed since last week's volatility, investors remained cagey before US consumer price figures that could influence the Federal Reserve's monetary policy decision-making.

Observers warned that the inflation readings could cause big market moves in either direction, with a weaker-than-expected print adding to worries about the world's biggest economy, while a strong reading could dent rate-cut bets.

"One of the major risks is the timing and magnitude of the Fed's rate cuts," said ACY Securities' Luca Santos.

"If the Fed delays easing monetary policy, the US economy could risk entering a deeper slowdown, leading to a potential recession.

"Conversely, if the Fed cuts rates too aggressively, it might reignite inflationary pressures or create financial market instability. Balancing these risks will be crucial for maintaining economic stability," Santos added.

Tokyo surged in Asian trading, with traders catching up with Monday's gains elsewhere after a long holiday weekend in Japan. 

London gave up early gains won after data showed Britain's unemployment rate had unexpectedly dropped in the second quarter and wage growth slowed to the lowest level in nearly two years.

But it picked up after the US wholesale inflation data, as did Frankfurt.

German investor confidence worsened more than expected in August, a survey showed Tuesday, as a hoped-for recovery in Europe's largest but struggling economy remains out of reach.

The ZEW institute's closely-watched economic expectations index fell to 19.2 points, a steep drop of 22.6 points from a month earlier.

Shares in Starbucks jumped 19 per cent at the start of trading after the coffee shop chain announced that Chipotle chief executive Brian Niccol would take over as chairman and CEO next month.

The leadership shifts come as Starbucks pushes to turn around its business, while contending with broad-based sales declines in its most recent financial results.

Chipotle shares slumped 9.5 per cent.

Crude futures dropped but remained well up over the week owing also to an escalation of tensions in the Middle East.

The White House warned that a "significant set of attacks" by Iran and its allies against Israel was possible as soon as this week after top leaders of Hizbollah and Hamas were assassinated in late July.

SAN FRANCISCO — US credit rating agency Fitch has downgraded Israel a notch, warning that its ongoing conflict against Hamas in Gaza could last "well into 2025" and weigh on economic activity.

Fitch lowered Israel's rating from "A+" to "A".

"The conflict in Gaza could last well into 2025 and there are risks of it broadening to other fronts," Fitch said in a note on Monday.

"In addition to human losses, it could result in significant additional military spending, destruction of infrastructure and more sustained damage to economic activity and investment, leading to a further deterioration of Israel's credit metrics."

Public finances have been hit, with Israel projected to run a budget deficit this year, Fitch said.

The office of Israeli Prime Minister Benjamin Netanyahu insisted the economy is "solid and functioning well".

"The rating will go up again when we win — and we will indeed win."

International mediators have invited Israel and Hamas to resume negotiations this week on a ceasefire and hostage release deal.

Hamas has urged mediators to implement a truce plan earlier presented by US President Joe Biden instead of holding more talks.

Fitch said that the conflict continuing into next year would force Israel to keep its military spending high and that there would be further disruption to tourism, construction and production in border areas.

Israel has exchanged near-daily cross-border fire with Hizbollah in Lebanon, prompting the mass evacuation of Israeli civilians from areas near the border.

Iran and its Lebanese ally Hizbollah have vowed revenge for the killings of Hamas's political leader in Tehran and of a Hizbollah commander in Beirut.

The United States and European allies called on Iran to "stand down" Monday, as fears mounted of an imminent attack on Israel that could spark an all-out war in the Middle East.