Business

LONDON — Global stock markets breathed a sigh of relief on Tuesday after Beijing appeared to de-escalate a conflict with the US over the level of its currency.

Equities had tumbled on Monday, with the biggest losses seen on Wall Street — in what analyst Fawad Razaqzada at Forex.com called "a bloodbath" — after China allowed the yuan to slide against the dollar, effectively weaponising the currency as a riposte to a new round of US tariffs on Chinese goods.

Tensions have escalated since last week, when US President Donald Trump announced fresh tariffs on Chinese goods from September 1 that would subject virtually all of the $660 billion in annual merchandise trade between the two economies to punitive duties.

The yuan's slump fuelled speculation that Beijing is allowing its currency to devalue to support exporters and offset Trump's threat to hit $300 billion in Chinese goods with 10 per cent tariffs.

Escalation? 'Not just yet' 

But on Tuesday, investors relaxed somewhat after the People's Bank of China fixed the yuan at a higher level against the dollar than analysts had expected, signalling a degree of detente after Washington slapped the "currency manipulator" label on China.

"Markets are relieved with the PBOC's decision to weaken the yuan at a slower pace, a sign that we might not just yet see the peak escalation in the US-China trade war," said Edward Moya, an analyst at OANDA.

Still, he said, "continued yuan depreciation should be expected, albeit at a staggered pace".

US equities were higher at the Wall Street opening bell, as were most European markets, after Asia pared early losses.

"Sentiment appears to be easing a bit as China took measures to stem the slide in its currency," Charles Schwab analyst said.

Analyst Michael Hewson at CMC Markets called the twist in the US-China standoff "this latest game of trade war cat and mouse" and said that "good sense has long since ceased to be an arbiter of future policy moves where the US and China are concerned".

The yuan broke above 7 yuan to the dollar on Monday, a level investors see as a key threshold in the Chinese currency's value.

The yuan stood at 7.0226 in the European afternoon Tuesday after hitting a fresh 11-year low at 7.0602 in Asian trades.

In Europe, investors also welcomed unexpectedly strong German factory orders, said David Cheetham, chief market analyst at XTB trading group.

SHANGHAI — The Chinese yuan fell to its lowest level against the dollar since August 2010 in morning trade on Monday, fuelling speculation that Beijing is allowing currency depreciation to counter threatened US tariffs.

The offshore currency weakened to 7.1085 to the dollar, days after US President Donald Trump announced a plan to impose fresh tariffs on another $300 billion in Chinese goods, sharpening trade war tensions between the world's two biggest economies.

The onshore yuan also tumbled, hitting 7.0307 in Monday morning trade to reach its lowest level since 2008.

Both the onshore and offshore yuan breached the 7.0 level against the dollar, which investors see as a key threshold in currency value.

Trump has frequently accused China of artificially devaluing its currency in order to support its exports — charges long denied by Beijing.

The US president jolted global stock markets last week when he issued the threat of more tariffs just a day after US and Chinese trade negotiators revived talks aimed at ending the year-long dispute.

The extra 10 per cent duties Trump threatened to implement from September 1 would mean he has now targeted virtually all of the $500 billion in goods America buys from China every year.

Currency instability 

China on Friday threatened to retaliate to any new US tariffs — it has already imposed its own duties on $110 billion in American goods, almost all of the products it imports from the country.

A report from Bloomberg News said China has also asked its state-owned enterprises to stop buying US farm goods, in a further sign of escalating tensions.

The yuan is not freely convertible and the government limits its movement against the US dollar to a 2 per cent range on either side of a central parity rate which the People's Bank of China (PBOC) sets each day to reflect market trends and control volatility.

The daily central rate was at 6.9225 per dollar on Monday, 0.33 per cent weaker from Friday.

"It appears that the tariffs hike suggests the return of tit-for-tat moves and a suspension of trade talks, and the PBOC sees no need to keep the yuan stable in the near term," Ken Cheung, a senior currency strategist at Mizuho Bank, told Bloomberg News.

In a statement on Monday morning, the PBOC said the exchange rate against the US dollar had been "affected by unilateralism and trade protectionism measures and the imposition of tariff increases on China".

The central bank said the yuan remained "stable and strong against the basket of currencies" and said it would "resolutely crack down on short-term speculation and maintain stable operation of the foreign exchange market and stabilise market expectations".

It went on to say that it had the "experience, confidence and ability to keep the RMB exchange rate basically stable at a reasonable and balanced level".

Julian Evans-Pritchard, senior China economist with Capital Economics, said the PBOC has "effectively weaponised the exchange rate" by linking the currency with the US trade war.

"Given that their goal is presumably to offset some of the impact from additional US tariffs, they are likely to allow the currency to weaken further, probably by 5-10 per cent over the coming quarters," said Evans-Pritchard.

SEOUL — The world's biggest smartphone and memory chip maker Samsung Electronics reported second-quarter net profits slumping by more than half in the face of a weakening chip market, and as a trade row builds between Seoul and Tokyo.

The flagship subsidiary of the sprawling Samsung Group has enjoyed record profits in recent years despite a series of setbacks but is now struggling with chip prices falling as global supply increases.

Net profits in the three months to June were 5.18 trillion won ($4.38 billion), Samsung Electronics said in a statement on Wednesday, down 53 per cent year-on-year.

"The weakness and price declines in the memory chip market persisted... despite a limited recovery in demand," it said.

In mobile phones, it achieved "stronger shipments on new mass-market models but was overall weighed down by slower sales of flagship models and increased marketing expenses", it added.

The results come hours after Apple, one of Samsung's main rivals, delivered better-than-expected results as growth from services helped offset weak iPhone sales.

The US firm has been shifting focus to digital content and services as sales of its flagship device weaken.

Facing hardware challenges of its own, Samsung launched its top-end S10 5G smartphone earlier this year after South Korea won the global race to commercially launch the world's first nationwide 5G network.

But in April it was embarrassingly forced to delay the release of its new and hotly anticipated Galaxy Fold phones after reviewers provided with early devices reported screen problems within days of use.

A simmering dispute between South Korea and Japan, which has seen Tokyo impose restrictions on chemical exports crucial to the South's world-leading chip and smartphone companies — is also expected to affect Samsung Electronics' key products.

"The company is facing challenges from uncertainties not only in business areas but also from changes in the global macroeconomic environment," it said.

Two of the chemicals and materials targeted by Tokyo, hydrogen fluoride gas and photoresists, are essential to making memory chips, while the third, fluorinated polyimide, is used for high-spec TV screens and smartphone displays, including folding models.

In the second half, Samsung Electronics said it "expects persistent uncertainties in the memory business", while "overall sluggish demand in the broad smartphone market may limit upside potential" as competition increases.

Second-Quarter profits were ahead of expectations, HMC Investment Securities Analyst Greg Roh told AFP, although smartphone sales lagged behind consensus forecasts.

He expected similar profits in the July-September period before sales pick up in the fourth quarter, but added: "One big variable is the trade spat with Japan."

The South Korean firm had spent nearly eight years developing the Fold as part of its strategy to propel growth with groundbreaking gadgets. 

While the model was not the world's first folding handset, the smartphone giant hoped it would help spark demand and potentially revive a sector that has been struggling for new innovations.

The firm earlier this month announced it has "made improvements" to the device and would release it in September, but analysts say its delivery is likely to be affected by the Seoul-Tokyo trade dispute.

"Because of the volume of chemicals required within the semiconductor manufacturing process, it is unlikely that the major chip suppliers will be able to find suitable quantities from suppliers outside of Japan," said Len Jelinek, executive director of semiconductor research at IHS Markit.

Tokyo's move has raised international concern about the effect on global tech supply chains and the possibility of price hikes for consumers worldwide.

TOKYO — Japanese car giant Toyota said on Friday its first quarter net profit rose thanks to solid sales and cost cutting efforts, but it revised down full-year profit partly due to a stronger yen.

The maker of the Camry sedan and Prius hybrid reported net profit of 683 billion yen ($6.4 billion) in the April-June period, up 3.9 per cent from a year before.

The company forecast full-year net profit would rise 14.2 per cent to 2.15 billion yen, down from the previous forecast of 2.25 billion yen.

It cited a stronger yen but Executive Vice President Moritaka Yoshida said foreign exchange was not the only issue.

"It's not just about foreign exchange but because of the whole environment," he said.

"Competition is expected to be very fierce," he added, saying the automaker could not afford to be "complacent".

Toyota said its operating profit climbed 8.7 per cent to 742 billion yen, citing efforts to lower raw material costs, a strong sales push and a weaker yen against the dollar during the period.

Sales grew 3.8 per cent to 7.64 trillion yen.

Toyota said its group sales units expanded to 2.7 million in the first quarter from 2.6 million the previous year.

Satoru Takada, auto analyst at TIW, a Tokyo-based research and consulting firm, said: "Toyota is displaying a firm performance compared to its domestic rivals, as the auto industry is facing tough business conditions."

"A potential risk is the impact of the US-China trade war. A foreign exchange loss is also among its concerns," he told AFP before the earnings were announced.

Brexit worries 

The business environment for companies like Toyota has also been clouded by the US-China trade war and continued uncertainty from Brexit.

Yoshida said the company will continue to keep its eyes on "the potential impact on [its] businesses".

"We want to continue to produce more vehicles locally, and this could be a countermeasure" to the potential impact of the US-China trade war, he added.

Toyota executives have said previously there would be no way to avoid a negative impact in the event of a no-deal Brexit.

Its assembly plant in Burnaston in central England, which produces 600 vehicles per day, would be affected.

The plant operates under the company's famous "just-in-time" system, holding limited stock on site and relying on flexible imports of millions of component car parts from the EU.

Toyota shares were down 2.83 per cent before the lunch break but trimmed the losses in the afternoon session after the results were announced.

Honda on Friday said its net profit in the first quarter dropped 29.5 per cent to 172 billion yen due to the impact of foreign exchange and the increase of selling, general and administrative expenses.

Operating profit fell 15.7 per cent to 252 billion yen while sales dipped 0.7 per cent to 4 trillion yen.

Honda revised down its net profit for the year ending March 2020 to 645 billion yen from 665 billion yen. 

Toyota's crisis-hit rival Nissan reported last month a plunge in quarterly net profit as it struggles with weak sales and fallout from the arrest of its former chief. It also announced 12,500 job cuts.

Nissan's bottom line profit dropped to 6.4 billion yen for the three months to June.

AMMAN — Amman Stock Exchange’s (ASE) Acting CEO Bassam Abu Abbas said net profit of the ASE listed companies which provided their semi- annual financial reports rose by JD 573.2 million or 2 per cent compared with JD 561.8 million for the same period in 2018.

At the sector level, the service sector recorded a 40.7 per cent increase, followed by the industrial sector at 25.6 per cent, while the financial sector posted a drop by 4.9 per cent compared with the same period in 2018, he added.

AMMAN — Total investments in the mobile phone sector stood at around JD93 million during the last year, according to Telecommunication Regulatory Commission Chief Commissioner Ghazi Jbour.

He indicated that these investments amount to 68 per cent of the overall investments by the companies operating in the telecommunications sector, including property, technical equipment and specialised computer programmes and machines, according to the Jordan News Agency, Petra.

Investments in fixed lines rose in 2018 to around JD36 million, he added, saying most investments were used to update the fibreobtics network. The number of workers in the telecommunications and information technology sector posted a 1 per cent increase compared to 2017, and it reached 4,045, Jbour said.

LONDON — The dollar pushed higher on Thursday following the US Federal Reserve's [Fed] first rate cut in more than a decade, but a lack of clear signals on future easing whipsawed equity markets. 

The Fed decision sent the US dollar rallying to its highest level in more than two years against the euro and the pound.

The strong dollar made oil more expensive for customers in countries outside the United States, with the two main crude futures contracts losing more than 1.1 per cent.

"Commodities should still see some support on easy money flowing throughout all the major central banks in the world," said OANDA Markets Senior Analyst Edward Moya.

The move to ease the cost of borrowing had been well telegraphed and was meant to inoculate against global risks washing onto American shores.

Fed chair Jerome Powell said the US central bank decided on a 25-basis-point cut in the rate to "insure against downside risks from weak global growth and trade policy uncertainty".

He told reporters he remains confident in the American economy and sees no sectors ready to go "bust".

Some in the markets, as well as US President Donald Trump, thought the Fed might go for a bigger cut and signal that further easing was on the way, but Powell declined to commit to, or rule out, further cuts.

Moreover, the decision to cut rates on Wednesday was not unanimous, with two members voting against.

"Investors quickly came to the conclusion that, with an 8-2 vote and a reluctance to commit to further cuts, the Fed was less dovish than they had believed," said analysts at Moneycorp.

"They marked down equity prices and took the US dollar higher." 

On equity markets, Asian stock markets followed Wall Street lower.

European markets opened lower, but with weaker currencies good for export businesses, they pushed into positive territory as the morning wore on.

Trade talks end 

Shanghai stocks finished down 0.8 per cent a day after the latest round of US-China trade talks wrapped up in the city.

Negotiators on both sides said talks had been "efficient and constructive" but gave no signs of an imminent resolution to the impasse.

"While the bar has been set pretty low for progress, there was a level of disappointment after the meeting," said VM Markets managing partner Stephen Innes.

"The fact that they couldn't agree on the G-20's soft-peddled concessions is a worrying sign."

Investors are now turning their attention to key US economic data, including ISM's nationwide manufacturing index and Friday's employment data.

SHANGHAI — US and Chinese negotiators agreed to meet again in the United States in September after holding "frank" and "constructive" talks in Shanghai on Wednesday, state media said following meetings overshadowed by a Twitter tirade from President Donald Trump.

US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer met with Vice Premier Liu He in the Chinese financial hub for the first face-to-face negotiations since a trade war truce was declared last month.

"The two sides conducted frank, highly efficient and constructive in-depth exchanges on major issues of common interest in the economic and trade field," according to the official Xinhua news agency, adding that the purchase of US agricultural goods by China was discussed.

Washington and Beijing have so far hit each other with punitive tariffs covering more than $360 billion in two-way trade in a row centred on demands for China to curb the alleged theft of American technology and provide a level playing field to US companies.

The negotiators shook hands and exchanged pleasantries when they met Wednesday morning and then held talks for around four hours behind closed doors.

The talks were relatively brief and the negotiators emerged later, a little earlier than expected, for a group photo before the US trade officials left for the airport without speaking to reporters.

Agricultural goods 

Talks had broken down in May after Trump accused China of reneging on its commitments, but the US leader and President Xi Jinping agreed to a truce in June.

Lighthizer and Mnuchin had arrived on Tuesday and joined Chinese officials for dinner and informal discussions — just as Trump lambasted the Chinese side on Twitter, saying "they always change the deal in the end to their benefit".

The US leader said Beijing was supposed to start buying US agricultural products but they had shown "no signs that they are doing so".

Xinhua said on Wednesday the negotiators discussed "the issue of China increasing its purchases of US agricultural products according to its domestic needs" and the US creating "favourable conditions for these purchases".

Commerce Minister Zhong Shan, who is considered a tough negotiator and who has taken a more prominent role in the talks, was among the Chinese officials at the meeting.

"The two sides will hold the next round of high-level economic and trade consultations in the United States in September," Xinhua said.

Jake Parker, senior vice president at the US-China Business Council, said: "We are pleased the two sides agreed to move forward with agriculture purchases to provide some much needed relief to American farmers."

"We hope the negotiators will continue to take a pragmatic and realistic approach to compromise and reach a conclusion that leads to greater market access for foreign companies, improves the protection and enforcement of intellectual property, and ultimately levels the playing field for foreign companies operating in the market," Parker added.

 'Rip off the USA' 

Hours after Trump's tweets, a commentary in the Communist Party mouthpiece People's Daily on Wednesday complained that as the talks started, "the drums of some Americans struck again on the side, disturbing the main melody".

At a press briefing in Beijing on Wednesday, a foreign ministry spokeswoman made it clear which side China saw as responsible for the ongoing trade impasse.

"When one is ill it is useless to ask someone else to take the medicine," said Hua Chunying, when asked about the talks wrapping up in Shanghai.

"I believe the US should show more sincerity and good faith when it comes to trade negotiations."

Days before the Shanghai meeting, Trump threatened to pull recognition of China's developing nation status at the World Trade Organisation, which Beijing called "arrogance".

Expectations were already low before the talks, and officials on both sides were keeping a low profile throughout their Shanghai trip.

US trade negotiators entered and left their hotel on Shanghai's waterfront through side doors without going through public areas, and did not stop to speak to press or show their faces.

Trump suggested on Tuesday that Beijing was hoping to delay a deal until after the US presidential election in November 2020, saying China wanted to see if a Democratic opponent wins the vote so it could "continue to rip off the USA".

But Trump also warned that "if & when I win, the deal that they get will be much tougher than what we are negotiating now ... or no deal at all".

"He [Trump] can't afford politically to step up and say 'I made a great deal with China' when it's not a great deal," said Derek M. Scissors, resident scholar at the American Enterprise Institute. 

"So the most likely outcome is we get nothing until the election."

AMMAN — The Jordan Petroleum Refinery Company reported a 57.8 per cent increase in its net profit recorded at the end of the first half of 2019, according to the Jordan News Agency, Petra.

Its net profit reached JD23.6 million against JD14.9 million at the end of the same period of 2018, Petra said.

Initial figures released by the company revealed that its sales from both its refinery operations and gas cylinder filling totalled around JD277.7 million, while those of its oils plant generated JD11.5 million. 

In addition, its sales of petroleum products amounted to JD449.3 million. 

The Jordan News Agency added that at the end of June, different government departments and institutions along with electricity companies owed the company the sum of JD675 million. 

The company’s CEO Abdul Karim Al Aween said the firm is taking steady strides towards the implementation of its 4th expansion project, saying several stages have been accomplished.

Initial studies pertaining to the project’s feasibility have been completed. Also, main design plans have been drawn out, he indicated.

The company supplies the local market with its needs of various petroleum products, and contributes to various economic sectors such as electricity, transport, industry and construction, according to its website.

LONDON — Stock markets on both sides of the Atlantic fell on Tuesday after US President Donald Trump lashed out at Beijing just as trade talks resumed, dealers said.

The British pound, meanwhile, continued its slide to fresh two-year lows as more investors were betting on a no-deal Brexit.

Trump ripped into China after US negotiators arrived in Shanghai to resurrect talks aimed at ending a year-long trade war between the world's two top economies.

"My team is negotiating with them now, but they always change the deal in the end to their benefit," Trump Tweeted.

 'Off the handle' 

Investors reacted by pulling out of equities in anticipation of worse to come.

"President Trump sends equity markets reeling, yet again," said Stephen Innes, at SPI Asset Management.

"Whatever shred of optimism markets had about the ongoing trade negotiations were dealt a severe blow when President Trump flew off the handle again at China for not buying American agricultural products," he said.

Renewed jitters over trade compounded a cocktail worries already weighing on stocks, said Fawad Razaqzada, market analyst at Forex.com.

US markets were also lower in early Wall Street business, but appeared more resilient than their European counterparts.

 Fed anticipation 'palpable' 

Frankfurt's benchmark DAX 30 index tumbled in the afternoon deals, with German airline Lufthansa slumping after weak profits.

Paris was hurt by figures showing France's economy stagnated in the second quarter, growing by a meagre, and lower-than-forecast, 0.2 per cent.

London's FTSE 100 index outperformed eurozone markets as the weak pound lifted UK-based multinationals who sell their goods abroad. 

Both the US Federal Reserve and the Bank of England are slated on Thursday to announce the outcomes of their latest monetary policy gatherings. Expectations are that the Fed could deliver the first interest rate cut in a decade.

"As we get closer to the Fed decision, the sense of anticipation in markets is almost palpable," said analyst Chris Beauchamp at spread-betting firm IG.

Pound plumbs new lows 

Meanwhile, the Brexit-hit pound continued to suffer as expectations grew of a no-deal British withdrawal from the European Union in October.

In Asian trading, sterling sank as low as $1.2119 — a level last seen in March 2017, before clawing back some ground.

"Prime Minister Boris Johnson said he had no intention of meeting EU leaders in person until they showed a willingness to change their position on the Irish backstop and withdrawal agreement," said CMC Markets chief analyst Michael Hewson.

"This hard line, so late in the day, appears to have prompted a sudden realisation that a no-deal Brexit has suddenly become a much more likely event."