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Europe stocks slip before US economic updates

By - Jan 25,2023 - Last updated at Jan 25,2023

LONDON — European stock markets slid on Wednesday as investors awaited key company earnings and economic growth data in the United States.

Traders "are waiting for some direction from across the Atlantic as US earnings season gets into full swing and key economic announcements loom at the end of the week", said AJ Bell Investment Director Russ Mould.

Investors will later track the latest results from electric carmaker Tesla, headed by Twitter owner and billionaire Elon Musk.

That follows this week's earnings gloom from US corporate titans Microsoft and Johnson & Johnson.

"Traders are keen to see how Musk's primary business performed over the period," added Tickmill analyst James Harte.

Markets will then absorb fourth-quarter economic growth data for the world's biggest economy on Thursday.

Asian equities fluctuated as traders in several countries returned from the Lunar New Year break with recession fears still causing concern.

While markets have enjoyed a strong start to the year as a slowdown in inflation gives central banks room to temper their interest rate hikes, focus is now turning to the economic impact of last year's increases.

Worries about the growth outlook, and the impact of higher rates on company profits, are also offsetting optimism over China's reopening from years of zero-COVID measures.

Data showing a slight improvement in US factory and services activity was unable to settle nerves, with figures still showing the sectors in contraction.

Focus is also turning to next week's Federal Reserve policy meeting, with speculation growing that it will lift rates by 25 basis points.

Oil firmed as traders weighed the prospects of recession against the outlook for demand from China as it emerges from its zero-COVID policy.

Hong Kong, Shanghai and Taipei remained closed for the Lunar New Year holiday.

Lebanese protest central bank chief as pound hits new low

By - Jan 25,2023 - Last updated at Jan 25,2023

Lebanese protesters demonstrate against the monetary policies of Lebanon's Central Bank governor in the capital Beirut, on Wednesday (AFP photo)

BEIRUT — Lebanese protesters on Wednesday blocked roads and burnt tires near the central bank in Beirut as the weakened local currency plummeted to a new low against the dollar.

Since 2019, Lebanon has been in the throes of an economic crisis dubbed by the World Bank as one of the worst in recent global history, pushing much of the population into poverty.

Alaa Kharchib of the Depositors' Outcry Association that had organised the demonstration warned of an impending "social explosion".

"No one trusts our corrupt officials or the central bank governor," Kharchib told AFP.

Lebanese banks have imposed draconian restrictions on withdrawals since the country's economy collapsed three years ago, essentially cutting off people from their savings and prompting public anger.

Dozens of protesters gathered Wednesday near the central bank headquarters amid heavy deployment of security forces, AFP correspondents said.

Protesters chanted slogans lambasting long-time central bank governor Riad Salameh, one of several officials widely blame for Lebanon's economic demise, and burnt images of him.

Salameh is under an international investigation in Europe on suspicions of financial misconduct including money laundering and embezzlement.

Demonstrators held up posters calling Salameh "public enemy number one" and others saying: "We won't go hungry, we'll eat you," taking a jab at the country's ruling elite, the correspondents said.

The Lebanese pound, which had already lost more than 95 per cent of its value since 2019, plunged to nearly 56,000 to the US dollar on the parallel market, dealers said.

The main official exchange rate still pegs the pound at 1,507 to the greenback — its value before the crisis.

"People are tired, hopeless and migrating," said Kareem, a 38-year-old protester who only gave his first name.

"All we want is a solution, a dollar will soon be worth 60,000 pounds yet nothing is being done," the telecoms employee told AFP. 

As the local currency nosedived, fuel prices have soared, reaching about $19 for 20 litres of petrol.

Lebanon's economic woes have been exacerbated by mounting political troubles.

The country has been effectively leaderless for months, without a president and ruled by a caretaker cabinet.

Lawmakers have failed to elect a president 11 times since Michel Aoun's mandate expired last year, and politicians have yet to agree on the makeup of a new government.

Earlier this week, the judge investigating the deadly 2020 Beirut Port blast resumed work after a 13-month hiatus, charging high-level officials.

The surprise move has sparked controversy, with Lebanon's top judge rejecting judge Tarek Bitar's return to the politically-charged case.

EasyJet hikes profit forecast on demand boom

By - Jan 25,2023 - Last updated at Jan 25,2023

In this file photo taken on October 31, 2020, EasyJet airplanes are parked in Schoenefeld, southeast of Berlin (AFP photo)

LONDON — British airline EasyJet hiked on Wednesday its annual profit guidance after record demand and falling quarterly losses, as customers prioritise holidays and shrug off the cost-of-living crisis.

The carrier believes it will outstrip expectations for annual pre-tax profit of £126 million ($156 million) for its financial year to the end of September, despite global economic gloom that is rooted in soaring inflation.

"Whilst we remain mindful of the uncertain macroeconomic outlook across the globe, based on current high levels of demand and strong bookings, EasyJet anticipates beating the current market profit expectations" for 2022-2023, it said in a statement.

EasyJet had already been expected to rebound into the black as the industry recovers from COVID fallout, having logged three annual losses in a row.

The carrier posted a reduced 2021-2022 loss in November, but this was far less than during the worst of the COVID pandemic.

EasyJet added Wednesday that it trimmed pre-tax losses to £133 million in its first quarter, or three months to December.

That was down sharply from £213 million last time around.

Traffic rebounded 47 per cent to 17.5 million passengers in the reporting period.

EasyJet saw a major rebound in traditional New Year holiday bookings, with three record-breaking weekends so far in January.

That means it hopes to curb first-half losses significantly this year.

"We have seen strong and sustained demand for travel over the first quarter," said chief executive Johan Lundgren.

"Many returned to make bookings during the traditional turn-of-year sale where we filled five aircraft every minute in the peak hours, which culminated in three record-breaking weekends for sales revenue this month."

Lundgren noted that customers were seeking to "prioritise spending on holidays for the year ahead".

He added: "This will set us firmly on the path to delivering a full-year profit."

Investors welcomed the company's brightening outlook, sending EasyJet shares almost 10 per cent higher on London's rising stock market.

The global aviation sector is flying high after a tumultuous period in the wake of the deadly coronavirus crisis, which erupted in early 2020 to ground flights, sparking huge financial losses and job cuts.

Britain scrapped its remaining COVID travel restrictions in March 2022, but airlines and airports have since struggled to cope with resurgent demand.

"Since the end of last year, the shares have soared in anticipation that the airline, as well as the wider aviation sector will be able to finally throw off the shackles of COVID, the soaring cost of living, and the fallout of the Russian invasion of Ukraine," said CMC Markets analyst Michael Hewson.

"Last year the sector also had to deal with the challenges of capacity constraints at major airports as well as staff shortages, which resulted in huge delays and cancellations."

US auto giant Ford to axe 3,200 jobs in Germany — union

By - Jan 24,2023 - Last updated at Jan 24,2023

The logo of US carmaker Ford can be seen on the rim of a Ford car at the International Motor Show (IAA) Germany, on September 8, 2021, in Munich, Germany (AFP file photo)

BERLIN — US auto giant Ford is planning to axe 3,200 jobs in Germany, a union said on Monday, adding it was extremely concerned about the future of the company's sites in Europe's top economy.

The news came amid fears in the EU that companies could shift their operations to the United States because of the recently passed landmark Inflation Reduction Act that offers tax cuts for US-made electric cars and batteries.

A spokesman for the IG Metall union told AFP the cuts will be mainly in Cologne, where Ford has a major plant, but all sites across Germany are threatened. 

"We at IG Metall are extremely concerned about the future of the German development divisions and, as a whole, about the future of the German Ford sites," said a statement from the union after an extraordinary meeting with management.

As well as the Cologne site, Ford has a development centre in nearby Merkenich. 

The carmaker did not immediately respond to a request for comment. 

The development centre has "successfully designed models for the European market, which often brought global success for the company", said IG Metall, which represents workers in the key electrical and metal sectors. 

Ford's German workers can continue to develop successful electric models for Europe if given the chance, the union said. 

But the US company risks "taking the axe to its own future" with the planned cuts, IG Metall said, urging the carmaker to reconsider the move.

Just last year, Ford had said it would make a major investment in Germany in a bid to make all of its passenger vehicles sold in Europe electric by 2030. 

CBJ sets new ceiling for contactless payments

Decision to support Jordanian markets, respond to consumer demand

By - Jan 23,2023 - Last updated at Jan 23,2023

Central Bank of Jordan (JT file photo)

AMMAN — The Central Bank of Jordan (CBJ) has allowed all banks operating in the Kingdom and e-payment companies to set a new ceiling for contactless payments, where the value of one transaction should not exceed JD100 and the total value of transactions per day should not exceed JD300. 

The CBJ said that clients have the right to set the maximum limit for one contactless payment or the total per day through mechanisms offered by banks and companies issuing payment tools, the Jordan News Agency, Petra, reported on Monday.

The decision was made in response to the needs of the Jordanian market and consumer demands, as well as giving more flexibility in executing payments using electronic tools that support contactless features, especially in light of clients’ heavy reliance on such methods, especially for payments outside the Kingdom.

CBJ Governor Adel Sharkas said that contactless payments in the Kingdom have witnessed "unprecedented growth" after the Central Bank, in late 2020, obliged all banks and e-payment companies not to issue cards and not to use points of sale (POS) devices that do not support contactless features.

Sharkas also said that the CBJ also directed banks and e-payment companies to replace all cards of clients and POS devices of merchants with new ones that support contactless features.

The governor also said that the number of payment cards issued in the Jordanian market exceeded 5.7 million by the end of 2022, all of which support contactless payments, where e-payments for the commercial sector could be made through more than 69,000 points of sale across the Kingdom.

He added that the total value of contactless payments made in the Jordanian market in 2022 amounted to JD1.4 billion, or 37 per cent of the total value of e-payments.

Sudan's prized gum trees ward off drought but workers wither

By - Jan 22,2023 - Last updated at Jan 22,2023

DEMOKAYA — A vast belt of trees vital for global production of fizzy drinks helps Sudanese farmers adapt to climate change, but in the harsh drylands many are reluctant to take up the trade.

Gum arabic, golden blobs of resin tapped from thorny acacia trees, is an emulsifying agent virtually irreplaceable for global industry. The ingredient is used in everything from soft drinks to chewing gum and pharmaceuticals.

Sudan, in northeastern Africa, is among the countries hardest hit by climate change but is also the world's largest producer of the raw gum.

"It's an important tree to fight desertification as it is drought resistant — and also increases the soil fertility, essential to increasing crop production," said Fatma Ramly, coordinator of the Gum Arabic Farmers' Association, which counts seven million members.

To harvest the amber-coloured resin, farmers must suffer the same climatic extremes as their trees.

"We work for hours on end under a burning sun," said Mohammed Moussa, who collects resin at the state-owned Demokaya research forest, about 30 kilometres  from the North Kordofan state capital, El Obeid.

Moussa faces a constant struggle with the shortage of water in largely desert Sudan. His earnings from the trees barely "provide enough money to buy water to cover us until the autumn" rainy season.

 

'Laborious' 

 

Recorded temperatures in Sudan's Kordofan region have increased by almost two degrees Celsius in less than three decades, more than double the global average, according to the UN Food and Agriculture Organisation (FAO).

"Water scarcity is one of the key challenges for people" living in the acacia zone, said Madani Ismail, of the state-run Agricultural Research Corporation. 

Farmers also have to contend with wide fluctuations in the price of gum on world commodity markets.

Forty-five kilogrammes (100 pounds) of raw gum can fetch 22,000 to 25,000 Sudanese pounds ($43), depending on the day's price.

The return barely covers the cost of production for Abdelbaqi Ahmed, 52, who owns a 28-hectare (70-acre) plot of acacia trees in Botei, North Kordofan.

He cultivates other crops to help boost his income from the trees, whose bark he cuts with a "sunki" — a sharp blade attached to a long wooden shaft able to reach up high in the tree.

"It is a laborious task," said Ahmed, who sometimes hires others to help with the tapping. "So it doesn't usually pay off."

Others can't be bothered at all. 

Some cut down the trees for building materials or firewood. Many work in the nearby gold mines, like four of Ahmed's five sons.

For Abdallah Babiker, who also works in Demokaya, it's the same. His three sons would rather prospect for gold than tend acacia trees. 

"They want work that earns more," said Babiker, 72.

 

Export leader 

 

Since South Sudan broke away a decade ago, taking with it its large oil reserves, gum arabic has been one of Sudan's main foreign currency earners. 

Exports totalled 88,000 tonnes in 2021, earning $110 million, according to central bank figures.

That income has become all the more important since international donors cut aid following a 2021 military coup led by army chief Abdel Fattah Al Burhan.

Sudanese exports account for 70 per cent of global gum supplies, according to AFD, the French agency for development.

Their importance to the world economy earned them a special exemption from the US trade embargo imposed during the three-decade rule of now-ousted strongman Omar Bashir.

Efforts have been made to counter deforestation by boosting farmers' incomes.

"We have been trying to replant trees in areas that experienced deterioration, and to prevent the gum arabic belt from receding," Ramly said.

Sudan's gum arabic belt covers about 500,000 square kilometres from Gedaref in the east through Kordofan to Darfur on the border with Chad.

The FAO has launched a $10 million project with Sudan's forestry authority to support farmers and protect the trees.

Acacia boosts "soil moisture retention", which helps farmers' other crops, the FAO said.

The project, which seeks to reforest 125,000 hectares (310,000 acres), is part of the wider Great Green Wall project, which aims to contain desert encroachment by planting trees from the Sahel to the Horn of Africa.

The challenge now is to persuade young people that they can make a living in gum production.

Almost "all of the people who are doing this job are over 60", Ramly said.

Ismail agreed. "Young people... often see it as unrewarding," he said.

Uber ordered to pay French drivers up to $21.7m compensation

By - Jan 22,2023 - Last updated at Jan 22,2023

This file photo taken on May 8, 2019, shows an Uber logo on a sign outside the company's headquarters location as people protest nearby in San Francisco, California (AFP photo)

LYON — App-based taxi service Uber has been ordered to pay up to 20 million euros ($21.7 million) compensation to drivers in the French city of Lyon, their lawyer Stephane Teyssier said on Friday.

The court ruled on the basis of a Court of Cassation decision from January 2020 that Uber drivers should be considered as employees rather than as self-employed.

"Uber was ordered to amend the contracts of 139 drivers at a cost of 17 to 20 million euros," Teyssier told AFP.

"A penalty on that scale is exceptional in France," he added.

The US firm, which has some 30,000 drivers using its platform in France, told AFP it intended to appeal.

Drivers in Lyon, France's third largest city, had taken the ride-hailing taxi giant before an employment tribunal to have their work relationship reclassified as an employment contract. 

This is the latest in several setbacks of its kind for Uber.

In March 2021, Britain's Supreme Court also classified Uber drivers as employees, rejecting the Silicon Valley company's contention that the drivers should be categorised as self-employed.

An Uber spokesman told AFP on Friday it rejected the French employment tribunal's decision.

"This decision goes against the widely shared view of labour courts and appeal courts that drivers using the [Uber] app are self-employed," he said.

"Drivers have no obligation to work, are not exclusively tied to Uber and are entirely free to organise their work as they choose," he said. 

UK retail sales slide on cost-of-living crisis

Key survey shows consumer confidence collapsing close to a near-record low

By - Jan 21,2023 - Last updated at Jan 21,2023

A pedestrian wheels a shopper past a shop advertising a closing-down sale in Bolton, north west England, on Friday (AFP photo)

LONDON — UK retail sales sank over the key Christmas trading period as consumers tightened belts in a cost-of-living crisis sparked by sky-high inflation, official data showed Friday.

Sales by volume dropped 1 per cent in December, the Office for National Statistics (ONS) said in a statement.

That marked a second monthly decline in a row after a drop of 0.5 per cent in November, the ONS said.

"Retail sales dropped again in December, with feedback suggesting consumers cut back on their Christmas shopping due to affordability concerns," said Heather Bovill, ONS deputy director for surveys and economic indicators.

Shoppers also curbed expenditure last month as wintry weather sparked soaring energy bills, while many had made their festive food purchases in November.

"Even Santa has bills to pay and when the household budget is feeling uncomfortably tight the only choice available is to spend less," said AJ Bell analyst Danni Hewson.

"For most people the fact the inflation number is falling doesn't mean anything."

The outlook darkened further Friday as a key survey showed consumer confidence collapsing close to a near-record low.

GfK's Consumer Confidence Index dropped three points in January to minus 45, close to the historic nadir struck in September.

Official data on Wednesday showed UK annual inflation slowed slightly to 10.5 per cent in December.

However, the rate remains close to a four-decade high that is causing mass strikes by workers, including nurses, teachers and the railway sector as they fight for wage increases to keep pace with inflation.

Inflation has galloped to its highest level in decades around the world, propelled by surging energy bills after key gas producer Russia invaded Ukraine almost one year ago.

Yet a recent drop in wholesale energy costs has fuelled hope of falling domestic electricity and gas bills this year, soothing inflationary worries in Britain and elsewhere.

Bank of England (BoE) Governor Andrew Bailey on Thursday forecast that inflation would fall "quite rapidly" this year — and that "a corner has been turned" with the December slowdown from 10.7 per cent in November.

"That has a lot to do with energy" costs dropping, Bailey told the Business Live website.

The UK government led by Prime Minister Rishi Sunak is partially subsidising domestic energy bills but this support ends in March.

The government believes the UK economy has already entered recession on fallout from rampant consumer price increases.

Stocks slide on returning recession fears

By - Jan 19,2023 - Last updated at Jan 19,2023

LONDON — Stock markets mostly slid and other major assets including the dollar and oil weakened Thursday after disappointing US data renewed worries about possible global recession this year.

The optimism that flowed through trading floors since the start of the year has taken a knock this week, hit in large part by weak US economic data and earnings.

The downbeat mood offset hopes that China's economy would enjoy a strong recovery this year as it moves away from its zero-COVID policy.

"An overnight sell-off in the US has soured sentiment," noted AJ Bell investment director Russ Mould.

"Weak US retail sales suggested consumers' resilience may have been pushed beyond breaking point."

Mould added that Microsoft's plan to slash 10,000 jobs "and a series of weak earnings reports also didn't help the market's mood".

European Central Bank chief Christine Lagarde on Thursday insisted that the eurozone economy would fare "a lot better" this year than initially feared. 

The economic "news has become much more positive in the last few weeks", Lagarde told an audience at the World Economic Forum in Davos.

Elsewhere, the New Zealand dollar and country's stock market suffered minor losses after Prime Minister Jacinda Ardern's shock announcement that she would step down next month, saying she no longer has "enough in the tank".

Expectations that US interest rates would not rise as much as previously feared weighed on the US dollar.

The yen bounced back strongly after Wednesday's slump that had been triggered by a Bank of Japan decision not to tweak monetary policy.

Several Federal Reserve officials have warned that the US central bank would continue to tighten its own policy until inflation is brought down from multidecade highs.

After five straight rises, Norway left its benchmark interest rate on hold at 2.75 per cent Thursday, but hinted at a fresh rise in March.

Worries about recession weighed also on oil prices, despite hopes for a spike in demand as China reopens to the world.

2023 economy will be 'a lot better than feared' — Lagarde

European Central Bank expects 0.5% growth in eurozone in 2023

By - Jan 19,2023 - Last updated at Jan 19,2023

President of the European Commission Ursula von der Leyen speaks during a session of the World Economic Forum annual meeting in Davos, on Tuesday (AFP photo)

DAVOS — The eurozone economy will fare "a lot better" this year than initially feared, European Central Bank (ECB) chief Christine Lagarde said on Thursday, as hopes grow that countries can avoid a painful recession.

The economic "news has become much more positive in the last few weeks", Lagarde told an audience at the World Economic Forum in Davos.

The rhetoric has shifted from talk of a recession in the 20-nation club to "a small contraction", she said, with some major economies like Germany possibly dodging a contraction altogether.

The ECB is expecting 0.5-per cent growth in the eurozone in 2023, according to its latest forecast.

"So it's not a brilliant year, but it is a lot better than what we had feared," Lagarde said.

The cautious optimism comes as sky-high energy prices, which soared last year because of the war in Ukraine, have started to fall. 

Mild winter weather has also helped, easing fears of gas shortages.

Lower energy costs have contributed to a drop in eurozone inflation, which peaked at 10.6 per cent in October.

Consumer price growth slowed to 9.2 per cent in December, fuelling hopes that inflation had finally passed its zenith.

Lagarde however warned that inflation was still "way too high".

The ECB has already hiked interest rates aggressively to tame inflation, lifting its key rates by 2.5 percentage points since July.

Lagarde reiterated that further interest rate raises would follow in order to bring inflation back to the ECB's 2 per cent target.

"We shall stay the course," Lagarde said.

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