Business

LONDON — European and US stock markets mostly rose on Monday with traders assessing company earnings and looking ahead to an ECB rate decision and UK budget later in the week.

Asian markets closed mixed following last week's gains, with investors keeping a worried eye on a fresh COVID outbreak in China that could drag on the already stuttering economy.

Oil prices pressed higher, with Brent at a three-year high above $86 per barrel, while WTI rose above $85 for the first time since October 2014.

The latest gains for crude come after Saudi Arabia said OPEC and other major producers would be cautious in lifting output despite surging demand, warning that the pandemic still posed a threat to the outlook.

The euro dropped with data showing Germany's business climate worsened in October for the fourth month in a row, as supply chain woes weighed on the country's export-driven economy.

Long-running worries about inflation, meanwhile, continued to cast a shadow over trading, though a healthy batch of earnings has tempered those concerns in the past couple of weeks and Wall Street has scaled new summits.

"Records were set last week by the S&P 500 and Dow Jones Industrial Average. More could be coming this week, but there is a big earnings hill to climb if that is going to happen," said market analyst Patrick J. O'Hare at Briefing.com.

US tech titans including Amazon, Apple, Facebook and Microsoft provide their own earnings updates this week, which will be closely followed for an idea about what impact supply chain snarls and rising prices are having on their bottom lines.

Their forward guidance will also be of interest as businesses contemplate tighter central bank monetary policies.

News that Chinese Company Evergrande had paid interest due on a bond before Saturday's deadline provided a much-needed boost to market confidence, though it remains to be seen whether the property developer can meet obligations on other notes due before the end of the year.

Chinese markets also got some extra cheer from Evergrande saying it had resumed work on more than 10 projects. 

But there were concerns about the property sector after reports that China plans to expand pilot property tax reforms.

The latest Delta variant outbreak in mainland China, meanwhile, comes just over three months before the country hosts the Winter Olympics.

The latest spike has forced authorities to reimpose strict containment measures, but there are fears of a wider lockdown that would weigh on economic growth. 

STOCKHOLM — Swedish car brand Volvo said on Monday it has set a fixed share price of 53 kronor ($6.20) for its listing on the Stockholm Stock Exchange later this week.

The price is at the bottom end of the range that Volvo announced last week — which was between 53 and 68 kronor per share — ahead of its initial public offering (IPO).

In a statement on Monday, the carmaker also lowered the amount it plans to raise by going public from 25 billion kronor ($2.9 billion) to 20 billion kronor ($2.3 billion).

It said its first day of trading will be on October 29, one day later than previously announced. 

Volvo first said its plans to go public in early October, while noting that China's Geely would remain the largest shareholder.

The Swedish automaker had been struggling until Geely acquired it from US giant Ford for $1.8 billion in 2010.

Volvo's image and sales have dramatically improved since then, riding the wave of popularity of SUVs. The company plans to go all-electric by 2030.

Volvo Cars CEO Hakan Samuelsson said in the statement that "the proceeds raised from the IPO together with our strong balance sheet will secure the funding of our fastest transformer strategy and the delivery of our mid-decade ambitions".

WASHINGTON — The stunning recent runup in global oil prices could threaten economic growth, and is unlikely to retreat until 2023, the World Bank said on Thursday.

Average crude prices are expected to end the year at $70 a barrel, 70 per cent higher than in 2020, according to the latest Commodity Markets Outlook.

That in turn is pushing up other energy prices like natural gas, the report said.

"The surge in energy prices poses significant near-term risks to global inflation and, if sustained, could also weigh on growth in energy-importing countries," said World bank chief economist Ayhan Kose. 

The increases have been "more pronounced than previously projected" and "may complicate policy choices as countries recover from last year's global recession".

Oil prices in recent weeks have surged above $80 a barrel, the highest point in years, as economies reopen following the pandemic shutdowns and amid shipping bottlenecks.

The World Bank uses an average of Brent, West Texas Intermediate and Dubai which it said will "remain at high levels in 2022 but will start to decline in the second half of the year as supply constraints ease".

The 2022 average is projected to rise to $74 before falling to $65 in 2023, the World Bank said.

But the report warns that "additional price spikes may occur in the near-term amid very low inventories and persistent supply bottlenecks".

LONDON — Britain's upcoming budget will invest almost £7 billion ($9.6 billion, 8.3 billion euros) on transport outside London, the Treasury said on Saturday, as part of plans to cut economic inequality.

Finance Minister Rishi Sunak will unveil the transport initiative during his autumn budget and spending review due on Wednesday.

Prime Minister Boris Johnson's so-called "levelling up" programme is seen as vital to keeping voters in former strongholds of the main opposition Labour Party who backed him in the 2019 general election.

His Conservative party won a swathe of seats in northern England on a promise to deliver Britain's Brexit divorce from the European Union, as well as boost jobs and growth.

Recipients of the transport project cash include regions in the former Labour "red wall" that turned Tory blue two years ago and will be seen as payback for their support.

According to the finance ministry, the government will invest £5.7 billion in city regions to boost productivity via train and station upgrades, and tram network expansion.

It will also inject £1.2 billion into overhauling bus services.

The government wants to quicken journey times, simplify fares and increase services outside London, after repeated complaints that regions outside the British capital were ill-served by transport links, affecting business.

"Great cities need great transport and that is why we're investing billions to improve connections in our city regions as we level up opportunities across the country," said Sunak in the statement.

"This transport revolution will help redress that imbalance as we modernise our local transport networks so they are fit for our great cities and those people who live and work in them."

Transport policy is set separately in Scotland, Wales and Northern Ireland by the nations' devolved administrations in Edinburgh, Cardiff and Belfast. 

The government said the extra investment for England would mean additional cash for the three other UK nations under weighted public expenditure adjustments.

Chancellor of the Exchequer Sunak will also announce the latest growth forecasts for the economy, which is battling high inflation due largely to surging energy prices and a supply chain crisis that was sparked by Brexit and COVID.

NEW YORK — Tesla's third-quarter profits more than quadrupled on ‘sharply’ higher sales despite a global semiconductor shortage that has plagued the auto industry, according to company results released on Wednesday.

Elon Musk's electric car company posted a record profit of $1.6 billion for the three-month period, as revenues surged 57 per cent to $13.8 billion compared to the year-ago period. 

Tesla also delivered a record 241,391 vehicles during the period, with sales significantly ramping up in North America and China.

The results suggest Tesla's output has been less affected by the global shortage of semiconductors than some rival carmakers that have shuttered factories or cut production.

However, the company said chip shortages, as well as congestion at ports and rolling blackouts, "have been impacting our ability to keep factories running at full speed."

"We believe our supply chain, engineering and production teams have been dealing with these global challenges with ingenuity, agility and flexibility that is unparalleled in the automotive industry," Tesla said in its news statement. 

Tesla notched somewhat lower revenues on the sale of electric vehicle regulatory credits to other automakers compared with the year-ago period. The company also reported a $51 million impairment related to bitcoin.

But profit margins expanded, even as the company alluded to uncertainties amid the lingering supply chain challenges.

"We continue to run our production lines as close to full capacity as conditions allow," Tesla said in the news release. "While sequential growth remains our goal, the magnitude of growth will be determined largely by outside factors."

New capacity 

The electric carmaker said new factories in Germany and the US state of Texas remain on track.

Musk was on hand earlier this month at the unveiling of Tesla's "gigafactory" near Berlin, its first European plant that is expected to ultimately produce some 500,000 cars a year. 

The nearly-completed facility has been criticized by some NGOs in Germany, but Tesla said in Wednesday's press release that it expects to receive final permit approval by the end of the year.

Another gigafactory in Austin, Texas is "progressing as planned," Tesla said. Musk announced earlier this month that the company is shifting its headquarters to Texas from California.

Tesla is nearing assembly of its first production line cars in Austin and Berlin, but the "hardest work lies ahead" in ramping up output, chief finance officer Zack Kirkhorn said on an earnings call.

Tesla has completed a shift to its factory in Shanghai being its main hub for export vehicles, freeing up other plants to provide more cars for Europe and North America, according to executives.

The company's stated goal is to get on pace to produce millions of cars annually.

"There appears to be quite a profound awakening of desirability for electric vehicles," Kirkhorn said.

"It's called us a little bit off guard. Folks want to buy an electric car and folks want to buy a Tesla right now. It's very exciting for us."

Tesla said it is expanding new "full self-driving" technology to more drivers based on "demonstrated driver safety." 

But earlier this month, US highways safety regulators demanded details from Tesla on issues with the new autonomous system, building on a previously announced probe.

Executives on the call downplayed regulatory inquiries, saying they were to be expected with "cutting edge" technology and that they were cooperating "as much as possible."

CFRA Research analyst Garrett Nelson said the strong results were already priced into Tesla shares, describing the trading action as "muted." 

Moreover, the company's statement that the magnitude of its growth "'will be determined largely by outside factors' gives investors pause," Nelson said.

Tesla shares dipped 1.3 per cent to $854.40 in after-hours trading. Shares have risen more than 25 per cent in the last two months.

NEW YORK — American Airlines said on Thursday that the latest surge in Covid-19 hit profitability in the latest quarter, but that it was bullish on the upcoming holiday season.

The big US carrier enjoyed a profitable July before the spread of the Delta variant pushed the company into the red in both August and September, American executives said in a letter to employees.

The company reported $169 million in profit in the third quarter, but the bottom line would have been a loss without an infusion of US funds authorised by Congress for carriers to preserve airline jobs.

Revenues were $9 billion, more than double the year ago-levels, but about 25 per cent below those in the equivalent period of 2019.

"The American Airlines team continues to demonstrate its resilience and ability to execute, enabling us to deliver our best quarter since the pandemic began as measured by pre-tax financial results," said Chief Executive Doug Parker.

"While the rise of the Covid-19 Delta variant delayed some of our revenue recovery, it has not stopped our progress."

American said it is gearing up for "robust" demand during the holiday season, planning for fourth-quarter capacity to be down between 11 to 13 per cent compared with the 2019 quarter.

That is a higher level of utilisation than at rivals United Airlines and Delta Air Lines, which said they expected capacity down 23 per cent and 20 per cent compared with the 2019 period.

American Airlines shares rose 1.0 per cent to $19.72 in pre-market trading.