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BUENOS AIRES — Argentina's peso ended a tumultuous week on Friday having shed 20 per cent in its value against the US dollar as both Fitch and S&P cut the south American country's long-term credit rating, citing increased uncertainty and a rising risk of default.
The peso gained 2.75 per cent to trade at 58.12 to the dollar on Friday, after several days of freefall were halted on Thursday following a joint appeal for calm by President Mauricio Macri and his centre-left rival Alberto Fernandez.
But the outlook remains uncertain after markets went into turmoil following Macri's crushing defeat by the populist Fernandez in nationwide primary polls on Sunday.
"The Argentine peso has stabilised over the past few trading days but the collapse earlier this week has made a sovereign debt default highly likely", said analysts Capital Economics in a note.
Ratings agency Fitch downgraded the crisis-hit government's credit rating two notches to "CCC" from "B". Standard & Poor's dropped it a single grade from "B" to "B-".
"The pronounced turbulence of the financial market, with a significant depreciation of the Argentine peso and a rise in interest rates... has significantly weakened the already vulnerable financial profile," added S&P.
"The downgrade of Argentina's ratings reflects elevated policy uncertainty... a severe tightening of financing conditions and an expected deterioration in the macroeconomic environment that increase the likelihood of a sovereign default or restructuring of some kind," Fitch said in its announcement.

Increased risk

Fitch said the centre-right's crushing political defeat in the primaries "increases risks of a break from the policy strategy of the current administration of Mauricio Macri guided by a programme with the International Monetary Fund (IMF)".
Fernandez, now the clear favourite to unseat Macri in October's presidential election, has questioned the reform programme backed by a $56 billion rescue package from the IMF.
The country is currently in a recession and posted 22 per cent inflation for the first half of the year — one of the highest rates in the world — but the IMF said Macri's reform programme was beginning to yield results.
Macri reacted on Wednesday by announcing salary hikes and tax cuts in a bid to win back voters with the October 27 presidential election looming.
Macri said the measures would "benefit 17 million workers and their families and all small and medium-sized businesses, formal and informal, state and private".
He also announced an unspecified increase in the monthly minimum wage — currently 12,500 pesos, or $208 — saying it would benefit two million workers.
In Buenos Aires, the sudden crisis left many businesses reeling.
"It took us by surprise," said Juan Manuel Bujia, commercial manager of the Rodo home appliance chain that employs 400 people.
"A lot of people anticipating the increases have been coming in to buy knowing prices are going to be higher next week and next month," Bujia told AFP.
He said his suppliers had already priced in 10 per cent increases on Argentine products and up to 15 per cent on imports. "We are trying to pass on as little as possible" to customers, he said.
US retailer Walmart, which has 92 branches in Argentina, said it had seen a 15-20 per cent hike in sales volumes between Monday and Wednesday and had not yet increased prices.
"It happens to us when there is a foreign exchange movement and people want to beat any price shift, especially with essentials like oil, sugar, flour, yerba mate and some dairy products," Walmart official Juan Pablo Quiroga told AFP.
Quiroga said some suppliers had notified the retailer of price increases "from the end of this week or next week".
Buenos Aires has a fraught history with the IMF, and Fitch said "policy credibility and market access could still be severely tested amid weak economic conditions, high public debt and inflation".
Argentina defaulted on its debt in 2001 during the worst economic crisis in its history, and it took years before it could restore its credibility in world financial markets.
Fernandez said this week he considered an exchange rate of 60 pesos to the dollar as "reasonable" and said it should no longer fluctuate wildly.
Going into last weekend's primary elections, the peso was trading at 46.5 to the dollar.

NEW YORK — Global stock markets rose on Friday as investors put economic growth fears and trade jitters to one side, deciding that they had had enough drama and losses for one week.
"We're ending a turbulent week on a more positive note as exhausted traders the world over head into the weekend in a more buoyant mood," said Craig Erlam, senior market analyst at the Oanda trading group.
Equities have had a volatile five days, during which US-China trade talk hopes came and went and economic data and bond yields pointed to a possible worldwide downturn.
On Wall Street, the Dow on Wednesday suffered its worst day of the year, before recovering slightly on Thursday, and bouncing back strongly on Friday.
The index gained 1.2 per cent, as investors found relief in hope for progress in the US-China trade war, and housing data offered enough good news not to ruin the party, despite a disappointing report on consumer sentiment, but was still down for the week.
"In the last couple of days, the sellers have been exhausted," said Maris Ogg of Tower Bridge Advisers. "The volatility continues. But I don't think this is the beginning of a trend."
Investors also were cheered after Der Spiegel reported that the German government was ready to boost public spending to head off any coming recession — something many economists have been urging.

The spooky yield curve

The week's most nerve-wracking event was a so-called inversion of the yield curve in the US debt market that Erlam said "has spooked a lot of people".
The yield on the 10-year US Treasury bond slid on Wednesday below the yield on the two-year note, while the 30-year yield fell below 2 per cent for the first time ever.
The so-called "inversion" phenomenon — when short-term interest rates are higher than longer-term ones — is viewed as a reliable harbinger of recession.
Economists have warned for months that trade tensions would drag down sentiment, which was already suffering owing to China's economic slowdown and fears of Brexit's impact on Britain and Europe.
The tensions have hit global demand with data this week showing China's industrial output had plummeted to a 17-year low. Pro-democracy protests in Hong Kong were adding to the negative sentiment.

GE rebounds after accusations

In New York, industrial titan General Electric (GE) surged close to 10 per cent after CEO Larry Culp bought nearly $2 million in shares, boosting investor confidence after whistleblower Harry Markopolos accused the company of massive accounting fraud — a charge the company vehemently denied.
In Asia, Cathay Pacific on Friday announced the shock resignation of its chief executive Rupert Hogg, days after the Hong Kong carrier was censured by Beijing because some staff had supported pro-democracy protests in the city.
Paul Loo, Cathay's chief customer and commercial officer, also resigned.
Until recently Cathay had been celebrating a turnaround in fortunes after Hogg initiated a three-year cost cutting programme.
Elsewhere, the opening of London's benchmark FTSE 100 shares was delayed nearly two hours by a software problem, the London Stock Exchange said.
"London Stock Exchange experienced a technical software issue this morning that affected trading in certain securities, including FTSE 100 and [second-tier] FTSE 250 stocks," said a statement.
The pound, meanwhile, continued its recovery, "aided by a series of better-than-expected [UK] economic releases in recent days", helping to offset Brexit uncertainty, according to David Cheetham, chief market analyst at XTB trading group.

MAPUTO — Energy major Total on Friday said it remained committed to a Mozambique liquefied natural gas project on the country's remote northern coast despite deadly militant insurgent attacks.

Total will become the operator of the $25 billion Rovuma LNG Project whose construction began on August 5 in the Afungi Peninsula.

The company is also set to acquire US energy giant Anadarko's assets in Algeria, Ghana, Mozambique and South Africa, strengthening Total's position in Africa.

But the area where the project is located has been targeted by jihadists since October 2017, claiming more than 300 lives.

Attackers in February launched an assault on a convoy of vehicles from an Anadarko contractor, killing one worker and injuring others. 

This led to the suspension of operations for a few months, with activities only resuming after the government announced the deployment of armed forces.

Several hundred suspected attackers have been arrested, according to authorities, but sporadic assaults continue.

On Friday Total's CEO Patrick Pouyanne reaffirmed Total's commitment to the LNG project saying it "is a unique asset which perfectly fits our strategy and our skills”.

"Please be assured of the commitment of Total to bring the best of our human, technical and financial capacities to further strengthen the project execution... in the interests of all those involved, including the government and people of Mozambique," he said in a statement.

The project is expected to be transformational for Mozambique, creating an estimated 5,000 direct jobs and 45,000 indirect jobs.

The country's gas deposits are estimated at 5,000 billion cubic metres and would make Mozambique a major exporter of liquefied natural gas.

The use of natural gas is on the rise globally as countries struggle to meet energy demands and shift away from using coal.

WASHINGTON — American consumers spent far more than expected in July, as retail sales jumped on strong online purchases, according to government data released on Thursday.

Retail sales rose 0.7 per cent compared to June, to $523.5 billion, as ecommerce produced the biggest gain: a 2.8 per cent surge for non-store retailers, the Commerce Department reported.

Gasoline and food services posted big gains as well, but auto sales declined in the month, according to the data.

Total retail sales are up 3.4 per cent compared to July 2018.

The report gave a reassuring picture of the US consumer, a bedrock that has enabled the US economy to outperform other leading economies even as American manufacturing has weakened. 

Sectors with higher sales included clothing (+0.8 per cent), electronics and appliances (+0.9 per cent) and furniture (+0.3 per cent), while sporting goods saw a 1.1 per cent decline.

The report came on the heels of Dow's worst session of the year when a closely-watched bond market benchmark raised recession risks.

But the data shows the consumer "remains in very good shape", said Ian Shepherdson, chief economist at Pantheon Macroeconomics. 

"Gains at this pace can't be sustained... but we see zero evidence that the consumer is being dragged down by the troubles in manufacturing," he added.

LONDON — Stock markets nervously traded sideways on Thursday as investors all but gave up hope that a US-China trade war could be nearing its end.

Fears over the stand-off between the world's two biggest economies added to jitters over the state of the world economy which had inflicted heavy losses on equities on Wednesday, including the worst one-day fall this year on Wall Street's Dow.

"Every time investors find the strength to pick themselves up off the floor, the trade war delivers another blow and knocks them down again," said Craig Erlam at Oanda.

"This morning that came in the form of reports that China is threatening retaliation against Trump's tariffs that are due to come into force on 1 September."

'Huge shake down' 

The yield on the 10-year US Treasury bond slid on Wednesday below the yield on the two-year note, an "inversion" that has been a reliable harbinger of recession for decades.

"The slew of negative news has seen a huge shake down in global equity markets, and money has poured into government bonds," noted David Madden, analyst at CMC Markets UK.

European stocks gave up an early attempt at a rebound, while US stocks managed to claw back a tiny part of Wednesday's heavy losses at the New York opening bell, having plunged around 800 points, or 3.1 per cent, the previous day.

"US stocks have overcome early choppiness and are higher in early action, modestly trimming yesterday's plunge that came amid heightened global recession concerns," Charles Schwab analysts said. 

'More sinister' 

The trade war has hammered global demand, with data this week showing China's industrial output had struck a 17-year low, while investment and retail sales have also slowed in the world's second biggest economy.

"US-China trade tensions have metastasised into something more sinister by affecting global growth to such a large degree that bond markets are pricing-in a high probability of a worldwide recession," warned Stephen Innes, managing partner at VM Markets.

Weeks of pro-democracy protests in Hong Kong have added to the uncertainty, with Beijing referring to increasingly violent demonstrations as "terrorism", stoking fears of a Chinese crackdown.

Economists have warned for months that trade tensions threatened investment and dampened global sentiment, which was already suffering owing to China's economic slowdown and fears over Brexit's impact on Britain and Europe, where the German economy is showing signs of contraction.

The pound climbed against the dollar and euro as data showed British retail sales rose unexpectedly by 0.2 per cent in July.

"The UK's retail data surprised the investors by posting an upbeat reading and traders pushed the [pound] currency higher," said Naeem Aslam, chief market analyst at Think Markets.

He warned, however, that "there is no light at the end of the Brexit tunnel" so far.

NEW YORK — After some false starts, CBS and Viacom announced on Tuesday they will combine to form the latest media empire in a wave of mergers driven by the need for companies to reformulate themselves for the streaming era.

The new company will have more than $28 billion in revenue and comprise brands such as MTV, Comedy Central and Showtime, as well as Paramount Pictures and publisher Simon & Schuster.

The transaction will bolster their ability to develop original programming that can win subscribers to premium channel, score well with advertisers and resonate with audiences in international markets, the companies said.

The deal recombines two entities that were under the same corporate umbrella until they were broken apart in 2006 by Sumner Redstone, chairman emeritus of National Amusements, which holds almost 80 per cent of both companies.

The deal comes on the heels of other large transactions in media, including Disney's $71.3 billion acquisition of key assets from Rupert Murdoch's 21st Century Fox, and AT&T's $85 billion purchase of Time Warner.

"I am really excited to see these two great companies come together so that they can realise the incredible power of their combined assets," said Shari Redstone, who will chair the new company, ViacomCBS.

"My father once said 'content is king,' and never has that been more true than today," she said in a statement. "We will establish a world-class, multi-platform media organisation that is well-positioned for growth in a rapidly transforming industry."

The two companies failed in their earlier attempts to pull off a merger, due in part to opposition from former CBS chief executive Les Moonves, who was ousted in September 2018 amid sexual harassment allegations.

Joining forces will allow them to bolster investment in premium entertainment and boost their global reach, with broadcast networks in Britain, Argentina and Australia and content in 45 languages, the companies said in a press release. The deal also should result in $500 million in annual savings.

"The more scale you have, the more clout you have when [you] go to in to negotiate with distributors or even with direct-to-consumers," said Tuna Amobi, analyst at CFRA Research. "It gives them a better chance to compete."

Streaming era 

The traditional media industry is battling to deal with the rise of Netflix, Hulu and other streaming ventures that erode the position of conventional cable packages and broadcasters unveil "over-the-top" options.

CBS itself has launched its "All Access" service which provides on-demand programming for $5.99 per month with limited commercial interruptions or $9.99 per month for ad-free service.
In November, Disney plans to launch a new "Disney+" service at a starting price of $6.99 monthly that offer its films and television shows as well as the library it acquired through the Fox deal.

Under the all-stock transaction in the latest tie-up, existing CBS shareholders will own 61 per cent of the company, while Viacom shareholders will own 39 per cent. Bob Bakish, chief executive of Viacom, will assume that post in the newly-combined company, while Joe Ianniello, acting chief executive at CBS, will become chairman and CEO of CBS, overseeing CBS-branded assets.

Shares of Viacom fell 5.6 per cent to $30.75, while CBS rose 1.4 per cent to $48.70. 

SAN FRANCISCO — Samsung on Wednesday unveiled a new-generation Galaxy Note large-screen handset starting at $950 and said it will work closer with Microsoft so that services function better across its array of devices.

The Note 10 "phablet" which is set for release on August 23, comes in two sizes, with the larger beginning at $1,100. The price puts the model at the premium end of a cooling global smartphone market.

The latest generation Note was introduced at a media event in New York by DJ Koh, head of IT and mobile communications, who touted it as "the world's most powerful mobile device".

"Every element of the Galaxy Note 10 was designed to help users achieve more," Koh said.

"Whether they're finishing a big project for work, capturing and editing a video, or playing their favorite mobile game, the Galaxy Note 10 will help them do it faster and better."

Samsung's introduction of the first Note some eight years ago is credited with sparking a "phablet" trend of large-screen mobile devices that combine capabilities of smartphones with the screen size of tablet computers.

The unveiling of Note 10 and Note 10+ included an on-stage appearance by Microsoft Chief Executive Satya Nadella and an announcement by Samsung that it will be working more closely with the US maker of the Windows operating systems and related software.

Microsoft has long worked with companies behind Windows-powered computers or laptops.

"For years applications were built for single devices, but in a world of 5G, cloud and AI [artificial intelligence] we get to rethink it all," Nadella said.

"Our ambition is to help people be productive on any device, anywhere. We are very excited about this partnership."

Versions of Note 10 will be compatible with 5G ultra-fast telecommunications networks that promise to enable stunning new experiences on smartphones or tablets.

Both Note models come with the trademark "S Pen" for writing on screens and gesture controls. The smaller has a 6.3-inch screen while the larger measures 6.8 inches.

Samsung also unveiled a new Galaxy notebook computer, billed as super-slim and ultra-light, with a mobile data chip from Qualcomm and built-in Microsoft Windows software.

Samsung executives called the Galaxy Book S a laptop with the "essence of a smartphone". It will hit the market in September at a starting price of $999.

MECCA, Saudi Arabia — In the Saudi city of Mecca, dotted with fast food eateries and stalls selling Chinese-made trinkets, vendors are ready to cash in on the annual hajj pilgrimage.

"Business is going very well," said Faisal Addais from his stall close to the Grand Mosque — Islam's holiest site.

"The customers are foreigners and speak all languages," added the 41-year-old Yemeni, who sells religious souvenirs.

To overcome linguistic challenges, sales are often conducted with the help of a calculator.

Potential customers stroll past the stalls and shops, while pigeons coo at their ankles on the bustling thoroughfare.

Retailer Ali said his sales were expected to "increase five-fold" during Hajj, which this year is expected to attract 2.5 million worshippers from Saudi and across the world between Friday and Tuesday. 

Completing Hajj is one of the five pillars of Islam and every Muslim with the means is obliged to undertake it at least once in their lives.

The pilgrimage draws vendors to the holy city, the majority peddling religious wares.

They include Chinese-made replicas of the Kaaba, a black structure inside the Grand Mosque towards which Muslims around the world pray, as well as call to prayer alarm clocks and water said to be holy.

"The religious and mercantile dimensions have always been linked in Mecca," said Luc Chantre, author of several books about the pilgrimage in the modern era.

Malls replace bazaars 

"When they had come from far away, pilgrims needed to trade to finance their stays — and some even went home in profit," Chantre told AFP.

"What's new is that these vast multistorey malls have replaced the old bazaars around the Grand Mosque."

Air-conditioned shopping centres near the Grand Mosque are home to leading luxury brands which welcome a constant stream of pilgrims — except during prayer times.

Beyond the religious souvenirs, visitors to Mecca can pick up highly-coveted Saudi gold, watches, clothes and more.

The city's restaurants and fast food outlets, either in narrow side streets or on main arteries, are deluged by worshippers around the clock.

As well as the five-day hajj, Muslims also travel to Mecca year-round to undertake the umrah, a lesser pilgrimage.

Mecca is unlike Christian pilgrimage sites such as Lourdes in France and Mexico's Basilica of Our Lady of Guadalupe where "trade is linked exclusively to souvenirs and religious offerings", said Chantre. 

Mecca's nearby city of Jeddah is the traditional home of western Saudi Arabia's mercantile families, partly owing to its vast port.

Religious tourism brings the conservative kingdom billions of dollars annually — an important revenue source as the oil-rich nation seeks to diversify its economy.

LONDON — The price of gold on Wednesday briefly rose above $1,500 per ounce, a key level last breached six years ago, as investors sought shelter from the fallout of a raging US-China trade war. 

At about 13:35 GMT, gold, a safe-haven favourite, jumped to $1,500.25 per ounce, the highest point since April 2013 and 1.7 per cent higher than late Tuesday.

Investors also sought safety in bonds on Wednesday as they shunned riskier assets such as stocks for the relative safety of government debt.

Official rate cuts from three central banks, including a surprisingly aggressive one by the Reserve Bank of New Zealand, served as a stark warning that a worsening US-China trade conflict is shaking confidence in global growth.

As bond prices surge, their yield or returns to investors fall, with benchmark 10-year government paper in the US and elsewhere dropping to multiyear lows.

French and German bond yields, already in negative territory, even set new record lows, highlighting how safety is now the first priority in the markets. 

“Nobody wants to be vulnerable, everybody is in risk aversion mode, and all ingredients are in place to push yields lower,” Aurelien Buffault, bond manager at Meeschaert, told AFP.

The US-China trade war is the main reason to worry about growth, analysts said, but the outlook for a no-deal Brexit is also weighing on sentiment.

‘Rates falling everywhere’ 

Markets now believe that the world’s key central banks will cut interest rates further to stave off, or at least alleviate, any coming recession, analysts said.

Crucially, the hefty cut by remote New Zealand may be a precursor to deeper US Federal Reserve easing, suggested Ipek Ozkardeskaya, Senior Market Analyst at London Capital Group.

“The surprise rate action from the RBNZ can only spur expectations of a similar size cut from the Federal Reserve,” she said.

US Treasury yields showed a fall of 0.102 percentage points on the day, outdone among developed economies only by New Zealand yields following the rate cut, and Italy.

Ten-year yields elsewhere eased by 0.05 points or more.

“Rates falling everywhere,” observed analysts at Moneycorp.

“They may not exactly be competing but the world’s central banks all seem to be pointing in the same direction towards lower rates. In every case there is concern, to a greater or lesser degree, about the global economy,” they said.

Commodity markets followed the logic of economic worry, with safe-haven investment gold surging and oil, the fuel of economic growth, falling.

“We see the ongoing steep rise in the gold price as an expression of the high risk aversion among market participants,” said Commerzbank analysts.

“Gold is quite clearly still in demand as a safe haven in the current market environment.”

Oil extended already steep weakness after the US Department of Energy reported a surprise increase in inventories — a sign of flagging demand.

European stocks had a rollercoaster session which started on an upbeat note but then turned sour when US stocks fell sharply at the New York opening bell “with escalated US-China trade concerns continuing to weigh on sentiment”, Charles Schwab analysts said.

But as Wall Street came off its morning lows, European equities regained their poise to close mostly higher.