Business

BEIJING — China's economy grew at a steady 6.4 per cent pace in the first quarter from a year earlier, defying expectations for a further slowdown, as industrial production jumped sharply and consumer demand showed signs of improvement. 

The upbeat readings, which also showed faster growth in retail sales and investment, are likely to add to optimism that China may be starting to stabilise, relieving some investor anxiety over the sputtering global economy.

But analysts say it is too early to call a sustainable turnaround, and further policy support is likely still needed to keep the momentum going. Many had expected a recovery only in the second half of 2019.

Beijing has ramped up fiscal stimulus this year to bolster growth, announcing billions of dollars in additional tax cuts and infrastructure spending, while Chinese banks lent a record 5.8 trillion yuan ($865 billion) in the first quarter, more than the gross domestic product (GDP) of Switzerland.

"We think we need more evidence to call a full-fledged recovery of the Chinese economy. Our view for the economy is still cautious," said Jianwei Xu, senior economist, Greater China at Natixis in Hong Kong.

"We think it [the stronger-than-expected data] is somewhat linked to the stimulus, but we can't attribute it all to it." 

Analysts polled by Reuters had expected gross domestic product (GDP) growth to slow slightly to 6.3 per cent in the January-March quarter, the weakest pace in at least 27 years.

Government support measures are gradually having an effect on the economy, although it still faces downward pressure, Mao Shengyong, spokesman at the National Bureau of Statistics, cautioned on Wednesday.

First-quarter growth was supported by a sharp jump in industrial production, which surged 8.5 per cent in March from a year earlier, the fastest pace in over four-and-a-half years. The reading easily beat analysts' estimates of 5.9 per cent and the 5.3 per cent seen in the first two months of the year.

Construction materials such as steel and cement showed strong gains.

Industrial output will likely maintain steady growth, with exports expected to keep expanding, Mao said.

China's exports rebounded more than expected in March. But economists have cautioned that the export gains could have been due to seasonal factors rather than a recovery in sluggish global demand.

Tit-for-tat US-China tariffs also remain in place, although the two sides appear to be nearing a deal that could end their nine-month-long trade war.

The jump in industrial output was also somewhat at odds with trade data last week, which showed imports shrank for the fourth straight month, pointing to still sluggish domestic demand.

Improving retail sales 

Retail sales rose 8.7 per cent in March, also exceeding analyst's estimates of 8.4 per cent growth and the previous 8.2 per cent. 

Sales were led by sharply higher demand for home appliances, furniture and building materials, pointing to strength in China's residential property market. 

New home prices grew slightly faster in March after slowing in the previous month, data on Tuesday showed, bolstered by price gains in smaller cities.

Auto sales extended their decline in March, falling 4.4 per cent from a year earlier compared with a 2.8 per cent drop in the previous month. 

The fall in China's auto output and sales are expected to ease and return to growth, the statistics bureau's Mao said. 

Fixed-asset investment expanded 6.3 per cent in January-to-March from a year earlier, in line with estimates and picking up from the previous period.

Real estate investment rose 11.8 per cent in the first three months, quickening slightly from the 11.6 per cent gain in the January-to-February.

Analysts polled by Reuters expect China's economic growth to slow to a near 30-year low of 6.2 per cent this year, as sluggish demand at home and abroad and the Sino-US trade war continues to weigh on activity despite a flurry of support measures.

The government aims for economic growth of 6-6.5 per cent in 2019. 

China has rolled out many policies to support growth — the key is to implement them, Mao said.

On a quarterly basis, GDP in the first quarter grew 1.4 per cent, as expected, but dipped from 1.5 per cent in October-December.

Analysts do not expect a sharp rebound in China's economy like recoveries in the past, which produced a strong reflationary pulse worldwide, noting its latest stimulus measures have so far been relatively more restrained.

Support measures will take time to fully kick in, and corporate balance sheets are expected to remain under stress if profits are slow to recover from their worst slump in more than seven years.

The central bank has already slashed banks' reserve requirement ratio five times over the past year and is widely expected to ease policy further in coming quarters to spur lending and reduce borrowing costs.

But some analysts said authorities could be more cautious about further stimulus if data remains solid.

LONDON — Stock markets rose on Tuesday to new six-month highs after reassuring data about the health of China's economy and economic sentiment in Germany helped investors brush aside disappointing bank earnings.

The latest leg higher in a three-month long global rally comes as a degree of calm has descended across financial markets, with European stock volatility falling to its lowest since January 2018, exacerbated by a shortened trading week for the Easter holidays.

The pan-European STOXX 600 topped its strongest since October, and the MSCI world equity index also rose to a new six-month high.

Germany's DAX extended its gains to rise 0.66 per cent after the monthly ZEW survey showed the mood improved among German investors for the sixth consecutive month, while Britain's FTSE 100 also strengthened.

Wall Street was set to open higher.

The broader moves were tempered, however, after a Reuters story quoted European Central Bank sources expressing doubt about a projected eurozone growth rebound.

Italian assets sold off after the Bank of Italy warned that the country's deficit would breach European Union regulations in 2020.

Natixis Cross Asset Strategist Florent Pochon said investors were mainly focused on US earnings, especially after the first flurry of bank results made for mixed reading. 

"After the strong rally we have seen in equities, people are now waiting for the next catalyst," Pochon said. "We do expect some more positive data from Europe which should give a bit of fresh air [to European assets]." 

The US-China trade dispute, signs of slowing global corporate earnings and fears about an economic downturn have weighed on riskier assets in the past year, but investors have been quick to seize on positive news to keep the bull-market running.

All eyes are now on Chinese quarterly economic growth data due on Wednesday. After a worrying start to the year, Chinese numbers have been more positive as authorities ramped up stimulus measures, soothing investor fears about a slowdown in the world's second-biggest economy.

German government bond yields rose three basis points to 0.058 per cent, reflecting the positive sentiment as investors bought into riskier assets.

Lira under pressure

Turkey's lira was stuck near its weakest levels since October, with tumbling industrial production numbers adding to concerns about the country's economy. The lira was off 0.2 per cent at 5.8150 by 10:50 GMT. 

After a rally to five-month highs on tightening global supplies, crude oil paused on the prospect of Russia and OPEC boosting production to fight for market share with the United States.

US West Texas Intermediate rose slightly to $63.5 per barrel, while Brent crude, the global benchmark, was little changed at $71.22 a barrel.

Spot gold prices dipped as risk appetite dented demand for the precious metal's save-haven credentials.

In currency markets, the euro dipped 0.2 per cent after the Reuters story on ECB sources questioning forecasts for an economic rebound. The single currency later recovered to $1.1301, down marginally, while the dollar was unchanged.

The Australian dollar dived after the central bank said an interest rate cut would be appropriate should inflation stay low and unemployment trend higher.

The Aussie shed 0.4 per cent to $0.7144.

Many investors are now waiting on Chinese gross domestic product. A Reuters poll forecast first-quarter growth to have cooled to 6.3 per cent, the weakest pace in at least 27 years, but a flurry of measures to boost domestic demand may have put a floor under slowing activity in March.

Stephen Gallo, European head of FX Strategy at BMO Capital Markets, said investors should scrutinise price moves in oil, emerging market equities and base and precious metals for the remainder of this week.

"For the most part, those indicators demonstrate that the global 'reflation and growth stabilisation trades' have already come a long way," he wrote in a research note to clients.

"This further emphasises the fact that, broadly speaking, investors are waiting for catalysts, which will take the form of either 1) big news on trade talks, 2) a sustained and convincing shift in the economic data one way or another or 3) new central bank action." 

AMMAN — The Amman Stock Exchange (ASE) is still receiving the quarterly reports of the period that ended in March 31, 2019, from all ASE-listed companies, ASE Chief Executive Officer Nader Azar said.

In a statement posted on the ASE website, he said the listed companies must submit quarterly reports reviewed by their auditors within one month after the end of the said quarter, in accordance with the market’s directives.

He added that the ASE will suspend the shares of the breaching companies as of the first working day following the deadline of receiving the reports until the companies submit the required reports. 

The ASE will announce the names of breaching companies that did not submit their reviewed interim reports via media outlets, according to the ASE statement.

Such a step seeks to enhance transparency in Jordan Capital Market and helps investors to become acquainted with companies’ results. 

The ASE circulates the reports to brokerage firms and posts them on its website, the statement indicated. 

SAN FRANCISCO — Apple and its allies on Monday will kick off a jury trial against chip supplier Qualcomm Inc. in San Diego, alleging that Qualcomm engaged in illegal patent licensing practices and seeking up to $27 billion in damages. 

Qualcomm, for its part, alleges that Apple forced its longtime business partners to quit paying some royalties and is seeking up to $15 billion.

Filed by Apple in early 2017, the lawsuit in federal court revolves around the modem chips that connect devices like the iPhone or Apple Watch to wireless data networks. Qualcomm has spent the past two years mounting a pressure campaign of smaller legal skirmishes against Apple, seeking — and in some cases obtaining — iPhone sales bans for violating its patents.

The trial before Judge Gonzalo Curiel will play out on Qualcomm's home turf of San Diego, where for decades the city's National Football League team played in Qualcomm Stadium and nearly every business district hosts the mobile chip firm's logo.

For Apple, the trial is about the freedom to determine its own technology path for blockbuster products by buying chips without having to pay what it calls a "tax" on its innovations in the form of patent licensing fees to Qualcomm that take a cut of the selling price of its devices. 

For Qualcomm, the trial, along with similar allegations from US regulators in a January court hearing, will determine the fate of its unique blend of selling chips and licensing more than 130,000 patents. 

Licensing generates most of Qualcomm profits. The model propelled Qualcomm from a small contract research and development shop when founded in 1985 to a global chip powerhouse important enough to US national security that President Donald Trump personally intervened to prevent a hostile takeover of the company last year.

"This is the day of reckoning that Qualcomm has been very fortunate to avoid for many years," said Gaston Kroub, a patent attorney with Kroub, Silbersher & Kolmykov who is not involved in the case. "In Apple, they've finally come up against a potential licensee that has the resources and the will to put Qualcomm's business model and licensing practices on trial."

Qualcomm requires device makers to sign a license to its patents before it will supply chips, which it views as a commonsense measure to ensure it does not do business with companies violating its patents. But Apple and other device makers around the world have called the "no license, no chips" policy a form of "double dipping" — that is, charging for the same intellectual property once during licensing discussions and then again in the price of the chips where the patents are embodied.

Apple and allies are asking for an end to that practice and a refund of about $9 billion — an amount that could be tripled if a jury finds in Apple's favour for antitrust allegations — for contract factories such as Hon Hai Precision Industry’s Foxconn, who paid the royalties and were reimbursed by Apple. Apple alleges the practices kept rivals like Intel Corp. out of the market for years.

"Even very big companies like Intel have felt at a disadvantage," said Michael Salzman, an antitrust attorney with Hughes Hubbard & Reed not involved in the case.

Qualcomm will argue that it had been working successfully with contract factories for years before Apple introduced its iPhone. But Apple used its heft in the industry to get those factories to break their longstanding contracts with Qualcomm, depriving it of at least $7 billion in royalties it was due, the chip supplier alleges. 

The chip supplier will also argue that its licensing practices have been consistent for decades and only came under fire when Apple, known in the electronics industry for pushing suppliers to contain costs, took issue with it. A victory would secure Qualcomm's status as a major technology provider for 5G, the next generation of mobile data networks coming online this year.

"I don't think [a Qualcomm victory] would be great for Apple, but if it's about money, they've got plenty of money," said Stacy Rasgon, an equity analyst for Bernstein who follows Qualcomm. "For Qualcomm, it's an existential attack on the meat of their business model."

WASHINGTON — US Treasury Secretary Steven Mnuchin said on Saturday a US-China trade agreement would go “way beyond” previous efforts to open China’s markets to US companies and hoped that the two sides were “close to the final round” of negotiations.

Speaking to reporters on the sidelines of the International Monetary Fund and World Bank spring meetings, Mnuchin said that he and US Trade Representative Robert Lighthizer would hold two calls next week with Chinese Vice Premier Liu He. The officials also were discussing whether more in-person meetings were necessary to conclude an agreement.

“I think we’re hopeful that we’re getting close to the final round of concluding issues,” Mnuchin said.

Beijing and Washington are seeking a deal to end a bitter trade war marked by tit-for-tat tariffs that have cost the world’s two largest economies billions of dollars, disrupted supply chains and rattled financial markets.

The United States is seeking sweeping changes to China’s economic and trade policies, including new protections for US intellectual property, an end to forced technology transfers and cyber-theft of trade secrets. Washington also wants Beijing to curb industrial subsidies, open its economy wider to US companies and increase purchases of American farm, energy and manufactured goods to shrink a $419 billion US trade deficit with China. 

Asked whether market openings in the agreement would go beyond what was contemplated in the 2016 Bilateral Investment Treaty negotiations, he replied: “we are making progress, I want to be careful. This is not a public negotiation... this is a very, very detailed agreement covering issues that have never been dealt with before,” Mnuchin said. “This is way beyond anything that looked like a bilateral investment treaty.”

The BIT talks, pursued by former President Barack Obama’s administration, stalled as China refused to satisfy US demands to open significant sectors of its economy to foreign investment. The talks were not taken up by the Trump administration, which pursued tariffs on Chinese goods instead, leading to the current talks.

Mnuchin said the two sides are negotiating an agreement with seven chapters that would be “the most significant change in the trading relationship in 40 years”.

He said the deal would have “real enforcement on both sides”, adding that the United States was open to being subjected to penalties if it failed to keep its commitments in the deal.

“I would expect that the enforcement mechanism works in both directions, that we expect to honour our commitments, and if we don’t, there should be certain repercussions, and the same way in the other direction,” said the Treasury chief, who is playing a key role in the negotiations with China.

CHICAGO — Normally US airlines compete to sell tickets and fill seats during the peak summer travel season. But operators of the grounded Boeing 737 MAX are facing a different problem: scarce planes and booming demand.

The grounding of Boeing Co.’s fuel-efficient, single-aisle workhorse after two fatal crashes is biting into US airlines’ Northern Hemisphere spring and summer schedules, threatening to disarm them in their seasonal war for profit.

“The revenue is right in front of them. They can see it, but they can’t meet it,” said Mike Trevino, spokesman for Southwest Airlines Pilots Association and an aviation industry veteran.

Southwest Airlines Co., the world’s largest MAX operator, and American Airlines Group Inc. with 34 and 24 MAX jetliners respectively, have removed the aircraft from their flying schedules into August.

Southwest’s decision will lead to 160 cancellations of some 4,200 daily flights between June 8 and August 5, while American’s removal through August 19 means about 115 daily cancellations, or 1.5 per cent of its summer flying schedule each day.

Low-cost carrier Southwest, which unlike its rivals only flies Boeing 737s, had estimated $150 million in lost revenue between February 20 and March 31 alone due to MAX cancellations and other factors.

So far, airlines have said it is too soon to estimate the impact of the MAX grounding beyond the first quarter, but the extended cancellations signal that they do not expect a quick return of Boeing’s fast-selling jetliner. The 737 MAX was grounded worldwide in March following a fatal Ethiopian Airlines crash just five months after a Lion Air crash in Indonesia. All on board both planes were killed.

Boeing is under pressure to deliver an upgrade on software that is under scrutiny in both crashes and convince global regulators that the plane is safe to fly again, a process expected to take at least 90 days.

The timing of a prolonged grounding could not be worse for Northern Hemisphere carriers. Planes run fullest during June, July and August, when airlines earn the most revenue per available seat kilometre, according to US Bureau of Transportation Statistics.

In a letter to employees and customers on Sunday, American Airlines’ top executives said they believed the MAX would be recertified “soon” but wanted to provide their customers reliability and confidence during “the busiest travel period of the year”.

American was cancelling about 90 flights per day through early June, but runs more flights and has less fleet flexibility in the peak summer travel months. 

“We’re not denying that it’s going to be a challenge for us,” American spokesman Ross Feinstein said. “That is why if we have to extend cancellations based on aircraft availability we will do so as far in advance as possible.”

A decline in seat capacity could mean higher last-minute summer fares, particularly for business class travelers, aviation consultants and analysts said.

United Airlines, with 14 MAX jets, has largely avoided cancellations by servicing MAX routes with larger 777 or 787 aircraft, but the airline president, Scott Kirby, warned last week that the strategy was costing it money and could not go on forever.

Overall the MAX represents just 5 per cent of Southwest’s total fleet and even less for American and United, but the strain on fleets increases as additional MAX deliveries remain frozen.

Southwest has 41 MAX jets pending delivery for 2019, while American has 16 and United 14.

To compensate, global MAX operators have added a flight or two to other aircrafts’ daily schedules and deferred some non-essential maintenance work. Some airlines are also weighing extending aircraft leases and bringing back idled planes, but with unclear MAX timing, no option is clear-cut or cheap, consultants said.

United is due to publish first-quarter results on April 16, followed by Southwest on April 25 and American on April 26.

MERIDA, Mexico — Mexican and US business leaders on Friday pushed back against President Donald Trump's threats to close the US-Mexico border and urged him to drop steel tariffs that have hindered the ratification of a trade deal brokered last year.

At a meeting in the eastern Mexican city of Merida attended by government officials from both countries, business lobbies united to call on Trump to drop his threats to disrupt border trade after days of hold-ups on the frontier.

Describing the US-Mexico relationship as a top priority, US Chamber of Commerce head Tom Donohue told a news conference the United States should exempt Mexico and Canada from steel and aluminum tariffs imposed by Trump last June before its Congress approves the deal struck to replace the North American Free Trade Agreement.

"That is why we are the first out of the gate to warn against the disastrous consequences of closing the US-Mexican border," Donohue said, sitting next to Mexican President Andres Manuel Lopez Obrador, who warmly applauded his speech.

Mexico is the United States' second biggest export market, and third biggest trading partner. US-Mexico trade is worth about half-a-trillion dollars a year.

Mexico and Canada want Trump to drop the metals tariffs before their lawmakers approve the deal agreed in September known as the United States-Mexico-Canada Agreement (USMCA).

Tensions over the border are further hindering the process.

Following a surge in asylum seekers who mostly travelled through Mexico from Central American countries, Trump last month threatened to close the border if Mexico did not immediately halt illegal immigration. His government then redeployed border agents to police the frontier, sparking delays which have cost businesses on both sides millions of dollars. 

After Donohue spoke, Carlos Salazar, president of Mexico's powerful CCE business lobby, weighed in to say he hoped the US government understood the need to keep the border open.

"And let's not confuse migration problems with trade problems and industry problems," Salazar said, seated on the other side of Lopez Obrador, who again applauded the speech.

Lopez Obrador himself, as he has for months, avoided any implicit or explicit criticism of Trump, instead offering thanks to the American president for "being open to deal with our commercial, migratory and security matters with respect".

Trump's Commerce Secretary Wilbur Ross looked on, seated next to Salazar, but did not address the news conference.

The event was part of the latest iteration of a recurring business forum known as the US-Mexico CEO Dialogue.

On the sidelines, Mexican Economy Minister Graciela Marquez met Ross and again urged the United States to end the metals tariffs for Mexico, part of a set of national security measures Trump had ordered under the so-called "Section 232" mechanism.

In addition, the minister asked that Ross push forward talks aimed at reaching a quick deal in a stop-start tomato dispute between Mexican and US producers.

Marquez was able to tout a workers' rights bill that Mexico's lower house of Congress approved late on Thursday, legislation that US House of Representatives Speaker Nancy Pelosi has called for to win Democratic support for USMCA.

US Deputy Energy Secretary Dan Brouillette met Mexico's Energy Minister Rocio Nahle and later said she had indicated to him that her government did not plan to roll back an energy overhaul passed by the previous administration.

The 2013-14 reform opened up oil production and exploration to private capital, drawing significant interest from US investors. At the time, Lopez Obrador roundly attacked the reform. However, he has since said he will give private operators time to show that they can increase output.

Lopez Obrador wants to revive state oil company Pemex and plans to build an $8 billion refinery in his home state of Tabasco. A US embassy spokesman said that Mexican officials hoped to help fund the project by reducing tax evasion.

LONDON — British business on Thursday gave a cautious welcome to yet another Brexit extension — but also urged an end to the "chaos" that has plagued the country’s withdrawal from the European Union.

European leaders have agreed with British Prime Minister Theresa May to delay Brexit until October 31 at the latest, saving the continent from a chaotic no-deal departure on Friday.

The Confederation of British Industry (CBI), which is the country's biggest employers' organisation, said that the overnight development avoids a messy no-deal "crisis".

However, the influential lobby group also called for May to end Brexit uncertainty and seek cross-party consensus on the way forward.

"This new extension means imminent economic crisis has been averted, but it needs to mark a fresh start," said CBI director-general, Carolyn Fairbairn.

"For the good of jobs and communities across the country, all political leaders must use the time well. 

"Sincere cross-party collaboration must happen now to end this chaos."

The CBI chief's remarks were echoed by Catherine McGuinness, policy chair at the City of London Corporation, a local government authority for the capital's powerful financial district.

"Day by day, as uncertainty persists, so does the threat of more businesses moving jobs and operations away from the UK," she said.

"It is vital that politicians in the UK and EU come together."

The deal struck during late night talks in Brussels means that, if London remains in the EU after May 22, British voters will have to take part in European elections — or crash out on June 1.

The British premier was given until October 31 to pass her withdrawal deal for leaving the bloc through parliament, having failed three times already to do so.

'Devastating precipice' in October 

UK car industry body the Society of Motor Manufacturers and Traders (SMMT) repeated its call for no-deal to be removed from the picture.

"Government and parliament must use this extension purposefully to take no-deal off the table for good, and guarantee a positive long-term resolution that delivers frictionless trade," said SMMT head Mike Hawes.

"If they fail, we face yet another devastating no-deal precipice on 31 October."

Adam Marshall, director-general of the British Chambers of Commerce which represents thousands of firms, said businesses remain frustrated at the lengthy process — almost three years after Britons voted to leave the EU.

"With less than 48 hours to go, the prospect of a messy and disorderly exit on Friday has again been averted," Marshall said.

"Businesses will be relieved — but their frustration with this seemingly endless political process is palpable."

CBI’s president, John Allan, also sounded a cautious note, saying companies would continue to bear the cost of holding extra stock in case of further turmoil.

"This isn't a definitive extension," Allan told BBC Radio 4.

"The cost of holding all that additional inventory will continue."

Allan called on politicians to start thinking about the national interest and added that a second referendum might be needed if politicians cannot break the impasse.

"My personal view is if the politicians can't get their act together... the only other option is to go back to the people and have a second referendum."

Earlier this month, the CBI joined forces with union leaders in an unusual alliance to warn May that Britain faced a "national emergency" over a no-deal Brexit.

The CBI and union umbrella organisation the Trades Union Congress had urged May to change tack and find a "Plan B" to avert a no-deal departure.

DUBAI/LONDON/MOSCOW — The Organisation of the Petroleum Exporting Countries (OPEC) cartel may raise oil output from July if Venezuelan and Iranian supply drops further and prices keep rallying, because extending production cuts with Russia and other allies could overtighten the market, sources familiar with the matter said.

Venezuelan crude production has dropped below 1 million barrels per day (bpd) due to US sanctions. Iranian supply could fall further after May if, as many expect, Washington tightens its sanctions against Tehran.

The combined supply cuts have helped drive a 32 per cent rally in crude prices this year to nearly $72 a barrel, prompting pressure from US President Donald Trump for OPEC to ease its market-supporting efforts. OPEC has been saying the curbs must remain, but that stance is now softening.

"If there was a big drop in supply and oil went up to $85, that's something we don't want to see so we may have to increase output," one OPEC source said. 

The market outlook remains unclear and much depends on how far Washington tightens the screw on Iran and Venezuela before OPEC's June meeting, the source added.

OPEC, Russia and other producers, an alliance known as OPEC+, are reducing output by 1.2 million bpd from January 1 for six months. They meet on June 25-26 to decide whether to extend the pact.

A Russian official indicated this week that Moscow wanted to pump more, in comments that a Russian energy source said were aimed at preparing the market for the end of output curbs.

However, President Vladimir Putin seemingly softened that stance.

A second OPEC source raised the prospect of amending the deal in June while still extending the pact, citing declines in Iranian and Venezuelan production plus volatility in Libyan supply.

"I expect an extension for a further period, but maybe there will be some adjustment," this source said.

In 2018, OPEC+ decided to increase output at its mid-year meeting, only to return to production cuts in 2019.

Output drops 

Output declines in OPEC due to the supply-cutting pact, plus the sanctions on Venezuela and Iran, have exceeded expectations.

Venezuela pumped 960,000 bpd in March, down almost 500,000 bpd from February, OPEC said in a report on Wednesday. The report pointed to a slightly under-supplied market in 2019 if OPEC kept pumping at March's level.

The International Energy Agency on Thursday reported an even lower figure for Venezuelan output in March and said the country's production would likely fall further this month.

Adding to the impact of the involuntary declines, top exporter Saudi Arabia has cut production by more than it agreed under the global pact.

A third OPEC source said there were talks about ideas such as whether OPEC should continue with the cuts alone, a deal extension of only three months to keep Russia on board, or pumping more if prices rise further.

"An increase is on the table, yes, if prices went to $80 and higher," this OPEC source said. "It all depends on where prices are by the end of May and June."

Saudi Arabia can add more oil to the market without adjusting production quotas since the kingdom's output in March was some 500,000 bpd below its OPEC target, this source added.

Russia is also ready to boost supplies. 

"Russia has started talks about an oil production rise as it can hardly follow the OPEC+ deal," said another Russian energy source. "The companies are struggling to curb production." 

LONDON — Britons have carried on spending despite their “Brexit fatigue”, Tesco said on Wednesday, as a forecast-beating rise in profit confirmed a turnaround at Britain’s biggest retailer.

Celebrating its 100th year, Tesco is deep into a recovery plan under Chief Executive Dave Lewis after a 2014 accounting scandal capped a dramatic downturn in its fortunes.

“After four years we have met or are about to meet the vast majority of our turnaround goals,” the former Unilever executive said. “I’m very confident that we will finish the job this year.” 

The 2018-19 results reflected revamped relationships with suppliers, lower prices versus major competitors, simplified and better quality product ranges and improved store standards.

Lewis said customers had responded well to the company’s “Exclusively at Tesco” brands, with 84 per cent of them trying the products.

The improvements have helped Tesco steer a steady course through a period of industry turmoil, as the country prepares to leave the European Union and as Tesco’s two biggest competitors try to merge to become the new industry number one.

Lewis said almost every assumption made when he set recovery targets had been up-ended by events such as Brexit, which has caused the pound to fall and a deepening political crisis. 

Customers were suffering “Brexit fatigue”, Lewis said, but were not changing their shopping habits or stockpiling.

“We’ve not seen any softening [in consumer confidence],” he told reporters. “We’ve not seen any discernable change in buying behaviour through the fourth quarter or indeed into the early part of this year.”

Brexit contingencies 

Shares in Tesco, which have risen by nearly a quarter this year and reached a six-month high on Tuesday, were up 0.8 per cent at 235.87 pence at 09:40 GMT.

Russ Mould, investment director at AJ Bell, said Lewis had “delivered the goods”.

“The core grocery business is ticking along nicely, profitability has improved markedly and the prospective threat from an Asda-Sainsbury combination is receding in the face of regulatory opposition,” he said.

Tesco has a leading 27.4 per cent share of Britain’s grocery market, according to the latest industry data, and looks set to retain that place after the competition regulator said in February it was minded to block Sainsbury’s ($9.6 billion) takeover of Walmart’s Asda.

While Brexit was not impacting customers, the effects were being seen on Tesco’s balance sheet as steps to secure supplies hit working capital.

“We have been proactive where we can in taking some provision if there were to be a difficulty; that impacts on the timing of the working capital in the business,” Lewis said.

“It’s dry, non-perishable items where it’s possible for our ourselves or our suppliers to hold stock.”

Analysts at Bernstein said full-year retail free cash of £906 million fell short of its £1.22 billion target due to the timing of receivables and Brexit-related stock building, but a lot of that would reverse.

Aside from working capital, Tesco beat market forecasts for profit, and was firmly on track to meet its margin goals.

Operating profit jumped 34 per cent to £2.21 billion ($2.89 billion) for the year ended February 23, while the company declared a dividend of 5.77 pence per share, up 92 per cent.

Group sales rose 11.5 per cent to £56.9 billion and Tesco recorded its 13th quarter of like-for-like sales growth in its main UK market with a 1.7 per cent rise in the final quarter.

The operating profit margin was 3.79 per cent in the second half, excluding Tesco’s acquisition of wholesaler Booker, Lewis said, “comfortably within” the 3.5-4 per cent target range set for this financial year.