Business

HONG KONG — Asian and European markets rose on Thursday following a surge on Wall Street fuelled by hopes that the Federal Reserve (Fed) could slow its pace of inflation-fighting interest rate hikes.

The dollar also struggled to bounce back from a sell-off — sitting at a three-week low against the yen — that came in response to comments by Fed chief Jerome Powell suggesting its next super-sized increase could be its last.

However, analysts cautioned that the initial joy, which sent New York's three main indexes soaring, could be short-lived as the global economy continued to face several headwinds and inflation would likely not come down quickly.

As expected, the Fed lifted borrowing costs 75 basis points to a range of 2.25 to 2.5 per cent, close to the neutral level it considers neither stimulating nor slowing economic growth.

Forecasts have rates going as high as 3.8 per cent in 2023, as the bank tries to control runaway inflation.

There is a growing concern that the sharp rise in rates is bearing down on the world's top economy and could send it into recession.

In his post-meeting comments, however, Powell said he did not consider that was the case, because "there are too many areas of the economy that are performing too well". 

He did note that growth was slowing.

Powell added that officials would not give any guidance on their next move, instead taking each decision on a meeting-to-meeting basis. 

While he said another "unusually large increase could be appropriate" in September and officials "wouldn't hesitate" to lift by 1 percentage point, markets took heart from the suggestion that the bank was ready to take its foot off the gas towards the end of the year.

On Wall Street, the Dow and S&P rallied and the Nasdaq soared more than 4 per cent — its best one-day rise since late 2020 — as tech firms caught a wave of optimism. The sector is more susceptible to higher rates.

Asia followed suit, though with more muted gains.

Shanghai, Tokyo, Sydney, Seoul, Singapore, Mumbai, Manila, Jakarta and Wellington were also well in the green.

But Hong Kong dipped as the city's de facto central bank followed the Fed in lifting rates owing to its currency peg.

London, Paris and Frankfurt were up in the morning.

The prospect of a slower pace of rate hikes weighed on the dollar against most other currencies, and on Thursday it hit its lowest level against the yen since July 6.

There was a warning that the positive mood likely will not last, however.

"This market move is the victory of hope over experience," Jeffrey Rosenberg, at BlackRock Inc, told Bloomberg Television. "I'd be a little bit cautious here."

Citigroup's Andrew Hollenhorst and Veronica Clark added that traders appeared to be misjudging Powell's remarks.

"We read Chair Powell's press conference as more hawkish than the market's interpretation," they said, adding that inflation readings excluding food and energy will "push the Fed to hike more aggressively than they or markets anticipate".

All eyes were now on the release of second-quarter growth data that was due on Thursday. After a 1.6 per cent contraction in the previous three months, another negative reading would put the economy into a technical recession.

An expected phone call between US President Joe Biden and his Chinese counterpart Xi Jinping will also be high on the agenda for investors as the world's superpowers try to navigate a period of rising tensions. Updates on US tariffs and Taiwan will be among the main areas of focus.

Oil prices rose after data showed a big drop in US stockpiles, while Powell's comments on the economy eased recession concerns and the weaker dollar made the commodity cheaper for buyers with other currencies.

FRANKFURT — German automaker Mercedes-Benz said on Wednesday it was upgrading its forecast for full-year sales as its decision to focus on top-of-the-range models begins to pay off despite supply constraints in the industry. 

The Stuttgart-based group said in a statement that its net profit inched forward to 3.2 billion euros ($3.3 billion) in the second quarter from 3.1 billion euros a year earlier on a 7 per cent increase in revenues to 36.4 billion euros. 

Unit sales, however, declined by seven per cent in the period from April to June, as a shortage of semiconductors — a key component in cars' electrical systems — put the brakes on production. 

Mercedes its resilient revenue figures resulted from its decision to focus on higher-end models with larger margins.

The carmaker said it was raising its revenue outlook for the full year to "significantly above" the 167.9 billion euros it booked last year.

Mercedes also raised its forecast for underlying or operating profit. 

Chief Executive Ola Kallenius said the group had managed the bottlenecks in supply as well as "increasingly complex macroeconomic and geopolitical challenges". 

Russia's invasion of Ukraine has clouded the outlook for the economy in Europe and raised fears of a recession, as Moscow threatens to cut off gas supplies to the continent.

Mercedes, whose home market would be acutely affected by a shutdown in gas supplies, said it was looking at ways of "substituting the use of natural gas in vehicle production".

The carmaker said it could reduce its usage by "around 50 per cent".

Mercedes was also steeling itself against a general economic downturn, but had "good reasons to remain confident, with ongoing strong demand", Kallenius said.

BERLIN — Russian energy giant Gazprom drastically cut gas deliveries to Europe via the Nord Stream pipeline on Wednesday to about 20 per cent of its capacity, German authorities said.

The Russian state-run company had announced on Monday that it would choke supply to 33 million cubic metres a day — half the amount it has been delivering since service resumed last week after 10 days of maintenance work.

EU states have accused Russia of squeezing supplies in retaliation for Western sanctions over Moscow's war in Ukraine.

Gazprom cited the halted operation of one of the last two operating turbines for the pipeline due to the "technical condition of the engine".

The German economy ministry dismissed the explanation, saying there was "no technical reason for a reduction of deliveries". Government spokeswoman Christiane Hoffmann spoke on Wednesday of a "power play" by Moscow.

Klaus Mueller, head of Germany's energy regulator, said gas flows had dropped to 20 per cent of the pipeline's capacity on Wednesday from 40 per cent.

"We'll see today if it stays that way," he said in a statement.

In parallel, Italian energy major Eni said Gazprom had informed the group it would only deliver "approximately 27 million cubic metres" on Wednesday, down from around 34 million cubic metres in recent days.

Kremlin spokesman Dmitry Peskov blamed EU sanctions for the limited supply.

"Technical pumping capacities are down, more restricted. Why? Because the process of maintaining technical devices is made extremely difficult by the sanctions adopted by Europe," Peskov said. 

"Gazprom was and remains a reliable guarantor of its obligations... but it can't guarantee the pumping of gas if the imported devices cannot be maintained because of European sanctions."

Mueller praised consumers and industry for voluntarily reducing energy use, saying that even correcting for warmer summer temperatures, recent consumption had been cut between 5 and 7 per cent.

He said this would allow Germany to add to its gas reserves, which currently stand at about 65 per cent of capacity. Economy Minister Robert Habeck outlined targets last week for stocks to reach 95 per cent by November 1 ahead of the cold German winter.

"In the autumn, the situation will change and gas use will rise," Mueller said, noting the country's strong reliance on gas for its heating.

"Germany has got to use less gas," he said, calling energy part of Russian "foreign policy and war strategy". 

The European Union on Tuesday agreed a plan to reduce gas consumption in solidarity with Germany, Europe's top economy. Berlin takes a major share of the 40 per cent of EU gas imports that came from Russia last year.

"It is true that Germany, with its dependence on Russian gas, has made a strategic mistake but our government is working... to correct this," Habeck said on Tuesday. 

German daily Sueddeutsche Zeitung called the bloc's plan a "lesson in humility for the EU's would-be schoolmaster", Germany. 

"Suddenly we are not the strong ones and are dependent on others' help," it said. 

The Rheinische Post newspaper said the EU agreement was welcome, but noted that if President Vladimir Putin "turns off the taps completely, then 15 per cent will start looking like a drop in the ocean".

WASHINGTON — Surging inflation and severe slowdowns in the United States and China prompted the International Monetary Fund (IMF) to downgrade its outlook for the global economy this year and the next year, while warning on Tuesday that the situation could get much worse.

"The outlook has darkened significantly since April. The world may soon be teetering on the edge of a global recession, only two years after the last one," IMF Chief Economist Pierre-Olivier Gourinchas said.

In its latest World Economic Outlook, the International Monetary Fund cut the 2022 global gross domestic product (GDP) estimate to 3.2 per cent, four-tenths of a point lower than the April forecast, and about half the rate seen last year.

Last year's "tentative recovery" from the pandemic downturn "has been followed by increasingly gloomy developments in 2022 as risks began to materialise", the report said.

"Several shocks have hit a world economy already weakened by the pandemic," including the war in Ukraine which has driven up global prices for food and energy, prompting central banks to raise interest rates sharply, the IMF said.

Ongoing COVID-19 lockdowns and a worsening real estate crisis have hindered economic activity in China, while the Federal Reserve's aggressive interest rate hikes are slowing US growth sharply.

But the IMF offered a stark caveat to the forecasts, cautioning that "risks to the outlook are overwhelmingly tilted to the downside", and if they materialise could push the global economy into one of the worst slumps in the past half-century.

Key among the concerns is the fallout from the war in Ukraine including the potential for Russia to cut off natural gas supplies to Europe, as well as a further spike in prices and a food shortage due to the chokehold the war has on grain supplies that could trigger famine.

In an ominous warning, the WEO said "such shocks could, if sufficiently severe, cause a combination of recession accompanied by high and rising inflation ['stagflation']."

That would slam the brakes on growth, slowing it to 2 per cent in 2023. The global growth rate has only been slower five times since 1970, the IMF said.

Inflation priority 

The top priority for policymakers is to rein in soaring prices, even at the cost of inflicting pain on their citizens, the fund said, since the damage caused by allowing inflation to rage out of control would be much worse.

Gourinchas, in a blog post about the report, noted that the "synchronised" moves by major central banks to deal with the inflation threat "is historically unprecedented, and its effects are expected to bite".

"Tighter monetary policy will inevitably have real economic costs, but delaying it will only exacerbate the hardship," he said.

The IMF now sees consumer prices jumping 8.3 per cent this year, nearly a full point higher than previously forecast, while emerging market economies face a 9.5 per cent increase in consumer prices.

But, "further supply-related shocks to food and energy prices from the war in Ukraine could sharply increase headline inflation."

That would increase the pain for poor nations least able to withstand the shock, where food makes up a larger share of family budgets.

US, China slowdown 

While the global economy did a bit better than expected in the first three months of the year, it appears to have "shrunk in the second quarter — the first contraction since 2020", the IMF said.

The IMF downgraded growth forecasts for most countries, including big revisions for the United States and China, which cut more than a point off the prior forecasts.

The fund now sees US growth this year of just 2.3 per cent, amid slowing consumer spending and rising interest rates, and the report said a recession — defined by two quarters of negative growth — may already have begun.

China's economy is expected to slow dramatically in 2022, expanding just 3.3 per cent — the lowest in more than four decades other than the 2020 pandemic crisis — due to COVID concerns and the "worsening crisis" in the property sector, the report said.

"The slowdown in China has global consequences: Lockdowns added to global supply chain disruptions and the decline in domestic spending are reducing demand for goods and services from China's trade partners," the report said.

There were some exceptions to the gloomy outlook, including upgrades for Italy, Brazil and Mexico, as well as for Russia which is still expected to contract but is benefitting from rising oil prices due to Western sanctions, the WEO said.

AMMAN — The Industrial Producers' Price Index rose by 15.86 per cent in the first five months of 2022, reaching 138.55 points compared to 119.58 points in the same period of 2021, according to the Amman-based Department of Statistics (DoS) figures released on Tuesday.

The Industrial Producers' Price Index for May reflected an increase by 18.90 per cent to 145.71 points up from 122.54 points at the end of the same month of 2021, the DoS said in a statement carried by the Jordan News Agency, Petra, on Tuesday.

However, this index reflected a slight drop when compared to the 2022 April figure. In May 2022, the index saw an 0.08 per cent drop when compared to the previous month, registering 145.71 points compared to 145.83 in April of 2022, according to the DoS figures.

LONDON — European and American stocks advanced on Monday as markets began a busy week, with the US Federal Reserve (Fed) poised to lift interest rates again and some of the world's biggest companies scheduled to publish their latest earnings reports.

Asian markets ended lower.

The Fed is widely tipped to hike borrowing costs by 0.75 percentage points on Wednesday as it battles soaring inflation.

US second-quarter gross domestic product data are due Thursday, with some observers warning it could show a second successive contraction — which is considered a technical recession.

Investors are also awaiting the release of earnings from business titans Apple, Amazon and Google parent Alphabet.

"Stock markets are modestly in the green, with a fair amount of straw clutching at play once more," said market analyst Craig Erlam at OANDA.

"Earnings not being as bad as feared, the Fed only hiking by 75 basis points and China putting together a plan in the hope of averting the next wave of the property crisis is among the reasons being given for stock markets rising."

"It all seems a bit desperate."

Patrick J. O'Hare at Briefing.com said that bad news has been priced in by investors. 

"Hence, when bad news isn't as bad as expected, it is cheered for being better than feared, whereas good news is just the bee's knees," he said.

Markets were roiled last week when the European Central Bank (ECB) finally began ramping up interest rates to tackle runaway consumer prices in the eurozone.

The ECB had surprised investors on Thursday with a bigger-than-expected rate increase of 0.5 percentage points.

Consumer prices are soaring worldwide after economies reopened from pandemic lockdowns and as the Ukraine war keeps energy prices elevated.

That, in turn, has sparked aggressive rate hikes from major central banks to try and dampen inflationary pressures.

All three main indices on Wall Street ended last week with a loss, ending a three-day rally, following a big data miss on the crucial US services sector.

Fed chiefs have already said their main priority was bringing inflation down from four-decade highs, even at the expense of growth.

"We still see further downside for risky assets as recession fears accumulate and central banks remain committed to fighting inflation at the expense of growth," said Standard Chartered Strategist Eric Robertsen.

Others warned that while inflation could begin to ease, the Fed could still push borrowing costs to around five per cent and was unlikely to lower rates as soon as many traders hope.

RIYADH — For years, Haitham Al-Madini's house was like all the others on his block: a beige, nearly windowless facade sealed off from the outside world.

But two years ago, confined during a pandemic lockdown, Madini decided to open things up, adding a street-facing patio, redoing the exterior walls in limestone and installing soft lighting in the entryway.

Local architects and engineers say such features have become a hallmark of renovation and newly-built projects across the capital Riyadh as Saudis, spurred in part by revised building codes, embrace homes and businesses that are inviting rather than imposing.

The result is a kind of visual marker of the more welcoming narrative Saudi officials are pushing for the traditionally ultra-conservative kingdom. 

In recent years "there have been manifestations of an architectural openness", said Abdullah Al Jasser, owner of the AF Group design firm that worked on Madini's house.

"People have become more accepting of change, and of different patterns of decoration and design." 

In addition to his home's exterior walls and entryway, Madini spruced up the garden with tropical almond trees imported from Thailand and added a swimming pool, creating a new favourite lounge spot for his wife and seven children.

"Now there is an optimum use of the space," the 52-year-old human resources officer said, giving a tour in his traditional white robe and red-and-white headdress. 

"We have taken a step towards improving our way of life." 

Breaking with the past 

Traditional designs — like what Madini's home used to look like — still prevail on residential streets in Riyadh. 

On many homes, the only visible flourish comes in the form of tiny triangular windows typical of architecture in the central Najd region, where Riyadh is located. 

The size of the windows reflects a desire not to let in the sun, especially when temperatures stay for much of the day above 40ºC.

They also provide "greater privacy for the family", said Saudi architect Ali Alluhidan, owner of Alluhidan Engineering in Riyadh. 

But he and other champions of new, more modern architecture find fault with the old approach, and not just because it can result in living spaces that are poorly lit and ventilated.

It also carries "great social impact... It contributes to a culture of closing in on oneself", Alluhidan said. 

Closed off is exactly what the kingdom was, socially and geographically, with for example no cinemas or tourist visas until the last few years.

In 2018, the Saudi national building code committee updated guidelines for new buildings — mandating bigger windows, for example, in part to promote public health. 

Other trends, while not explicitly required, reflect changing social and gender norms, a main focus of reforms promoted by Crown Prince Mohammed Bin Salman.

Whereas in the past most houses featured separate reception areas with different entrances for men and women, newer floor plans envision everyone commingling in a single area, allowing for a more efficient use of space, Alluhidan said.

Earlier, exterior balconies were nearly fully enclosed, surrounded by latticed walls that let in air but not much light while now more open balconies and terraces are becoming the standard. 

Not everything has changed, however. 

Even though women gained the right to drive in 2018, new floor plans for affluent Saudis still often include a room for a live-in driver, detached from the rest of the house.

Nevertheless, Alluhidan is convinced the budding mania for modern design "will change the culture of architecture in Saudi Arabia within a few years". 

Open for business 

These new preferences are not limited to residential properties. They are also reshaping commercial complexes and other public spaces.

Saudi restaurants used to have separate entrances and seating areas for families and single men, but authorities did away with that rule in late 2019. 

The reform has helped drive a rethinking of how shopping centres should be organised, said Mohammed Abdel Moneim, supervisor of commercial design for a real estate development firm. 

"The old designs used to serve the idea of a culture of separation and segregation between families and singles," he said, describing what he termed a "radical change".

Riyadh Front, an upscale shopping and dining complex with fountains and a tree-lined promenade, is one of the more prominent examples of this, bringing male and female shoppers of all ages together. 

"There is demand now for these open spaces," Abdel Moneim said, "where there is communication without restrictions between everyone".

WASHINGTON — Twitter blamed disappointing results on Friday on "headwinds," including the uncertainty imposed on the company by Elon Musk's chaotic buyout bid. 

The firm is locked in a legal battle with Tesla boss over his effort to walk away from a $44 billion deal to purchase the platform, leaving the company in limbo.

Twitter missed expectations with revenue of $1.18 billion, due to "advertising industry headwinds... as well as uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk", the company reported.

Also, in the current context of tightening credit conditions and economic turbulence, many companies like Twitter that rely heavily on ads are suffering from a decrease in advertisers' budgets.

"Twitter is on a rowboat in the middle of a storm," said analyst Jasmine Enberg. "The Musk saga rocked the boat even harder." 

"Twitter is now in the unenviable position of convincing advertisers that its ad business is solid," she added.

Twitter also reported that the number of "monetisable" daily active users — those who can be shown advertising — increased by 8.8 million, less than expected by analysts, to 237.8 million. 

"Overall we would characterise the daily active user metrics as better than feared and holding up relatively firm in this environment," said analyst Dan Ives.

Despite the less than stellar results, Twitter's stock closed up nearly one per cent at $39.84, as investors seemed relieved the news wasn't worse.

By comparison, Snap's stock finished down 39 per cent a day after the parent company of messaging app Snapchat reported disappointing earnings. 

Twitter's results cover the period ending in June so they do not include Musk's move in July to try to "terminate" the deal on the argument that the platform was not forthcoming about its tally of fake accounts.

The social media network, which is a key exchange of ideas, news and entertainment, has countered by saying the Tesla chief already agreed to the deal and can't back out now.

"Twitter believes that Mr Musk's purported termination is invalid and wrongful, and the merger agreement remains in effect," it said in the earnings report.

Twitter left in limbo 

Twitter notched a victory earlier this week in its fight with Musk, when a judge agreed to a fast-track trial on whether to force the billionaire to complete the buyout.

Musk's lawyers had pushed for a February 2023 date, but the court in the eastern US state of Delaware hewed closely to the uncertainty-wracked platform's desire for speed and set an October start.

Billions of dollars are at stake, but so is the future of Twitter, which Musk has said should allow any legal speech — an absolutist position that has sparked fears the network could be used to incite violence.

While the deal remains in limbo, Twitter is left with anxious employees, wary advertisers and hamstrung management.

In early May, at an annual marketing event where companies negotiate large advertising deals, Twitter was "not able to give advertisers any clarity or confidence" that it would continue to be safe showcase for them, Angelo Carusone, president of watchdog group Media Matters, told AFP previously.

"They didn't go anywhere close to what they normally sell at that event. And it's obviously been sluggish since then," he said.

The San Francisco-based social network cannot afford to lose customers. 

Unlike big fish such as Google and Facebook parent Meta, which dominate online advertising and make billions in profits, Twitter lost hundreds of millions of dollars in 2020 and 2021.

The group will capture less than 1 per cent of global ad revenue in 2022, according to eMarketer, compared to 12.5 per cent for Facebook, 9 per cent for Instagram and nearly two per cent for booming upstart TikTok. 

WASHINGTON — In response to multiple global crises disproportionately impacting women, the International Monetary Fund (IMF) has adopted new policies to better consider gender in its work, the global crisis lender's managing director announced on Friday.

"I am most pleased and proud to announce that the Executive Board today approved the IMF's first Gender Strategy aimed at integrating gender into the Fund's core activities," said Kristalina Georgieva in a statement.

She explained that the Washington-based organisation would immediately begin implementing the strategy, which includes improving access to gender-disaggregated data as well as "setting up a robust framework to ensure that macro-critical aspects of gender are integrated in IMF country work".

"Successful implementation of this strategy will assist our member countries in achieving more inclusive and equitable economic growth and resilience," said Georgieva.

"When women do well, countries do well."

A Bulgarian economist who has worked for decades in international development, Georgieva added that "well-designed macroeconomic, structural, and financial policies can support efficient and inclusive outcomes and equitably benefit women, girls, and society in general".