AFP

World stock markets mostly sank Thursday on intensifying recession fears, while oil prices receded before an OPEC output decision.

Frankfurt and Paris each tumbled 2.7 percent in early afternoon eurozone deals, and London shed 1.9 percent.

That followed a largely downbeat performance in Asia, although Shanghai rose after data showed a forecast-beating improvement in China’s services sector on easing Covid restrictions.

Crude futures drifted lower as major oil producers led by Saudi Arabia and Russia were Thursday expected to keep to a decision on a limited boost to output despite the risk of high oil prices may help push the global economy into recession.

– ‘Terrible mood’ –

Stock markets are “in a terrible mood across Europe”, said AJ Bell investment director Russ Mould.

“There really is a lack of good news for investors to cling onto, and the near-term outlook looks bleak.”

The threat of an extended period of elevated inflation and painful interest rate hikes has left traders fretting over the threat of a prolonged economic downturn, while the Ukraine war continues to sow uncertainty.

“Recession continues to be the primary concern at the moment… as countries continue to grapple with spiralling inflation and cost-of-living crises,” said Mihir Kapadia, head of Sun Global Investments.

The surge in inflation to multi-decade highs has forced central banks to swiftly raise interest rates, dealing a hefty blow to equities as companies faces higher borrowing costs.

The Federal Reserve is next month expected to announce a successive 75-basis-point hike in US interest rates.

There had been hope that policymakers would ease off their hikes as economies show signs of slowing, but analysts say some officials are less concerned about a recession than letting prices run out of control.

– Risk of ‘going too far’ –

Fed boss Jerome Powell, speaking at a European Central Bank conference Wednesday, hinted again that such hikes could lead to economic contraction.

“Is there a risk that we would go too far? Certainly there’s a risk,” Powell said.

“The bigger mistake to make… would be to fail to restore price stability,” he insisted.

ECB President Christine Lagarde stated this week that the guardian of the euro would go “as far as necessary” to fight inflation that was set to remain “undesirably high” for “some time to come”.

Wall Street’s Dow index closed up slightly Wednesday after plunging the previous session.

– Key figures at around 1100 GMT –

London – FTSE 100: DOWN 1.9 percent at 7,171.11 points

Frankfurt – DAX: DOWN 2.7 percent at 12,654.35

Paris – CAC 40: DOWN 2.7 percent at 5,867.61

EURO STOXX 50: DOWN 2.6 percent at 3,423.46

Tokyo – Nikkei 225: DOWN 1.5 percent at 26,393.04 (close)

Hong Kong – Hang Seng Index: DOWN 0.6 percent at 21,859.79 (close)

Shanghai – Composite: UP 1.1 percent at 3,398.62 (close)

New York – Dow: UP 0.3 percent at 31,029.31 (close)

Brent North Sea crude: DOWN 0.5 percent at $115.63 per barrel

West Texas Intermediate: DOWN 0.5 percent at $109.25 per barrel

Euro/dollar: DOWN at $1.0416 from $1.0442 Wednesday

Pound/dollar: UP at $1.2125 from $1.2124

Euro/pound: DOWN at 85.92 pence from 86.12 pence

Dollar/yen: DOWN at 136.38 yen from 136.59 yen

Production has been halted in the world’s biggest chocolate plant, run by Swiss giant Barry Callebaut in the Belgian town of Wieze, after salmonella contaminations was found, the firm said Thursday. 

A company spokesman told AFP that production had been protectively halted at the factory, which produces liquid chocolate in wholesale batches for 73 clients making confectionaries.

There have been no reports so far of any chocolate consumers infected by the salmonella, which causes salmonellosis, a disease that cause diarrhoea and fever but is only dangerous in the most extreme cases.    

“All products manufactured since the test have been blocked,” spokesman Korneel Warlop said. 

“Barry Callebaut is currently contacting all customers who may have received contaminated products. Chocolate production in Wieze remains suspended until further notice.”

Most of the products discovered to be contaminated are still on the site, he said.

But the firm has contacted all its clients and asked them not to ship any products they have made with chocolate made since June 25 at these Wieze plant, which is in Flanders, northwest of Brussels.

“Food safety is of the utmost importance for Barry Callebaut and this contamination is quite exceptional. We have a well-defined food safety charter and procedures,” the firm said.

Belgium’s food safety agency AFSCA has been informed and a spokesman told AFP it had opened an investigation. 

An AFSCA spokesman said investigators would “gather all the information in order to trace the contamination”.

The Wieze plant does not make chocolates to be sold directly to consumers, and the firm has no reason yet to believe that any contaminated goods made by clients have yet made it onto shop shelves.

– Green light –

The scare comes a few weeks after a case of chocolates contaminated with salmonella in the Ferrero factory in Arlon in southern Belgium manufacturing Kinder chocolates. 

Belgian health authorities said on June 17 that they had given the green light to restart the Italian giant’s factory for a three-month test period.

Swiss group Barry Callebaut supplies cocoa and chocolate products to many companies in the food industry, including industry giants such as Hershey, Mondelez, Nestle or Unilever. 

World number one in the sector, its annual sales amounted to 2.2 million tonnes during the 2020-2021 financial year. 

Over the past financial year, the group, which has a head office is in Zurich, generated a net profit of 384.5 million Swiss francs ($402 million) for 7.2 billion francs in turnover. 

The group employs more than 13,000 people, has more than 60 production sites worldwide.

Salmonella bacteria have been discovered in the world’s biggest chocolate plant, run by Swiss giant Barry Callebaut in the Belgian town of Wieze, the firm said Thursday.

A company spokesman told AFP that production had been halted at the factory, which produces liquid chocolate in wholesale batches for 73 clients making confectionaries.

“All products manufactured since the test have been blocked,” spokesman Korneel Warlop said. 

“Barry Callebaut is currently contacting all customers who may have received contaminated products. Chocolate production in Wieze remains suspended until further notice.”

Most of the products discovered to be contaminated are still on the site, he said.

But the firm has contacted all its clients and asked them not to ship any products they have made with chocolate made since June 25 at these Wieze plant, which is in Flanders, northwest of Brussels.

Belgium’s food safety agency AFSCA has been informed and a spokesman told AFP it had opened an investigation.

The Wieze plant does not make chocolates to be sold directly to consumers, and the firm has no reason yet to believe that any contaminated goods made by clients have yet made it onto shop shelves.

The scare comes a few weeks after a case of chocolates contaminated with salmonella in the Ferrero factory in Arlon in southern Belgium manufacturing Kinder chocolates. 

Belgian health authorities announced on June 17 that they had given the green light to restart the Italian giant’s factory for a three-month test period.

Swiss group Barry Callebaut supplies cocoa and chocolate products to many companies in the food industry, including industry giants such as Hershey, Mondelez, Nestle or Unilever. 

World number one in the sector, its annual sales amounted to 2.2 million tonnes during the 2020-2021 financial year. 

Over the past financial year, the group, which has a head office is in Zurich, generated a net profit of 384.5 million Swiss francs ($402 million) for 7.2 billion francs in turnover. 

The group employs more than 13,000 people, has more than 60 production sites worldwide.

For all its tough talk against Russia, the UK’s government is failing to enforce its promises to clean up dirty foreign money, a hard-hitting report by MPs said Thursday.

It was “shameful” that after years of warnings, the government only began to clamp down on the illicit flows when Russia invaded Ukraine in February, the report by the House of Commons Foreign Affairs Committee said.

The government has brought in new legislation to prevent corrupt funds being laundered through Britain’s property market.

But it has failed to back this up with enough resources or powers for anti-corruption bodies such as the National Crime Agency and Serious Fraud Office, the report said.

“Without the necessary means and resources, enforcement agencies are toothless,” it said.

“The threat illicit finance poses to our national security demands a response that is seen to be serious.”

Rich Russians have long found it easy to acquire expensive properties in London, or a world-class education for their children in Britain’s private schools, or control of Premier League football clubs.

According to multiple studies into the “Londongrad” phenomenon, they were enabled by a service industry encompassing blue-chip bankers, accountants, lawyers, property agents and public relations advisors.

And since Prime Minister Boris Johnson entered Downing Street in 2019, his Conservative party has stepped up a drive to entice cash-rich donors, including from wealthy backers originally from Russia.

Following the invasion of Ukraine, Johnson’s government has sanctioned dozens of wealthy, Kremlin-connected Russians and says their money is no longer welcome in Britain.

– Truss pushes back –

However, according to the MPs, “corrupt money has continued to flow into the UK”.

The committee called for the government to publish a review into a “golden visa” programme that enabled thousands of Russians to establish residency, or even citizenship, in Britain from the 1990s.

The scheme only ended in the week before Russia invaded Ukraine, and the report demanded to know what the government intends to do about Russians who obtained visas “without due diligence”.

One beneficiary of the scheme was the sanctioned oligarch Roman Abramovich, who has been forced to sell Chelsea football club.

Johnson meanwhile is refusing to release intelligence advice he received about his controversial appointment of Evgeny Lebedev, a Russian-born newspaper baron and son of Russian tycoon Alexander Lebedev, to the House of Lords.

“The UK’s status as a safe haven for dirty money is a stain on our reputation,” the Foreign Affairs Committee’s Conservative chairman, Tom Tugendhat, said.

“The government must bring legislation in line with the morals of the British people and close the loopholes that allow for such rife exploitation,” he said.

Foreign Secretary Liz Truss rejected the committee’s criticisms, without addressing its point that the government had failed to act in the years prior to Russia’s war.

“We passed emergency legislation as soon as this appalling war was perpetrated, as soon as Russia invaded Ukraine, and we’ve been able to hit Russia hard with sanctions,” she told Sky News.

“We have sanctioned, as a country, more individuals and entities in Russia than any other government in the world.”

Most markets fell again Thursday as traders fear that hefty rate hikes to rein in soaring inflation will spark a recession, though a slight improvement in Chinese data provided a little cheer.

The rally enjoyed across the world last week appears to have given way to nervousness about the economic outlook, while the Ukraine war continues to sow uncertainty.

The surge in inflation to multi-decade highs has forced central banks to swiftly tighten pandemic-era monetary policies, dealing a hefty blow to equities, particularly tech firms who are susceptible to higher borrowing costs.

The Federal Reserve has already sharply lifted rates and is expected to announce a second successive 75-basis-point lift next month.

There had been hope that policymakers would ease off their hikes as economies show signs of slowing, but analysts say some officials are less concerned about a recession than letting prices run out of control.

Fed boss Jerome Powell this month admitted the moves could lead to a contraction.

On Wednesday, Cleveland Fed chief Loretta Mester said she was keen to see the benchmark rate hit 3-3.5 percent this year and “a little bit above four percent next year”.

“There are risks of recession,” she told CNBC. “We’re tightening monetary policy. My baseline forecast is for growth to be slower this year.”

The threat of an extended period of elevated inflation and rate hikes has left traders weary, and markets in the red.

“With rapidly slowing US growth momentum and a Fed committed to restoring price stability, a mild recession, starting in the fourth quarter of 2022, is now most likely,” Nomura’s Andrew Ticehurst said.

“High US inflation appears to be a political as well as economic problem, and we don’t expect the Fed to be quick to blink as risk assets wobble.”

– China support hope –

Wall Street ended on a tepid note Wednesday, unable to bounce back from the previous day’s plunge.

And Asia also struggled, with Hong Kong, Tokyo, Sydney, Seoul, Singapore, Taipei, Manila and Wellington all down. London, Paris and Frankfurt tumbled.

However, Shanghai ended more than one percent higher. That came after official figures showed a forecast-beating improvement in China’s services sector thanks to the easing of painful Covid-19 restrictions in major cities including Shanghai and Beijing.

The non-manufacturing Purchasing Managers’ Index surged to 54.7 points in June, the first time it has been above the 50-point growth mark since February.

The manufacturing gauge hit 50.2, which was also its first time in growth since February and provided some hope that the world’s number two economy could be picking up after the pain caused by lockdowns.

SPI Asset Management strategist Stephen Innes added that the government and People’s Bank of China could now have some room to provide growth support.

“With (consumer price) inflation low in China relative to its peers, there is plenty of scope for monetary and fiscal conditions to loosen in the second half of the year, supporting activity,” he said in a note.

Crude extended Wednesday’s loss as data showed demand in the United States appeared to be softening even as the driving season gets under way, and as recession fears begin to kick in.

“The higher price environment appears to be doing its job when it comes to demand,” Warren Patterson, of ING Group NV, said.

The drop comes as OPEC and other major producers including Russia prepare to meet on their output agreement, with most predicting they are unlikely to open the taps further.

“I am not expecting any surprises from the group. I would imagine it will be a fairly quick meeting,” Patterson said.

– Key figures at around 0810 GMT –

Tokyo – Nikkei 225: DOWN 1.5 percent at 26,393.04 (close)

Hong Kong – Hang Seng Index: DOWN 0.6 percent at 21,859.79 (close)

Shanghai – Composite: UP 1.1 percent at 3,398.62 (close)

London – FTSE 100: DOWN 1.7 percent at 7,190.99

West Texas Intermediate: DOWN 0.2 percent at $109.57 per barrel

Brent North Sea crude: DOWN 0.8 percent at $115.35 per barrel

Dollar/yen: DOWN at 136.23 yen from 136.66 yen Wednesday

Euro/dollar: UP at $1.0445 from $1.0444 

Pound/dollar: UP at $1.2154 from $1.2119

Euro/pound: DOWN at 85.95 pence from 86.15 pence

New York – Dow: UP 0.3 percent at 31,029.31 (close)

Japanese drinks giant Kirin said Thursday it has agreed to a buyout of its shares in a Myanmar joint venture with a junta-linked conglomerate as it seeks to exit the market after the 2021 coup.

Days after the putsch in February last year, Kirin announced it would end its joint venture Myanmar Brewery with the junta-linked MEHPCL, saying it was “deeply concerned by the recent actions of the military in Myanmar”.

But it struggled to disentangle itself from the secretive conglomerate and contested a bid by MEHPCL to dissolve the joint venture as it feared liquidation proceedings would not be fair.

Kirin said Thursday it has agreed a share buyback worth about 22.4 billion yen ($164 million) to transfer its 51 percent stake back into the subsidiary, ending the joint venture.

The deal remains to be approved and a date for the share transfer has not yet been set.

“We are relieved to settle this matter within the announced deadline by the most appropriate means among several options,” Yoshinori Isozaki, Kirin’s president and CEO, said in a statement.

But activists said the decision to sell the shares in Myanmar Brewery and the smaller Mandalay Brewery back to the company effectively hands control and revenue to the junta.

Justice for Myanmar spokeswoman Yadanar Maung called the deal “a windfall for the Myanmar military”, warning it would “ensure a continued stream of revenue to finance atrocity crimes”.

“Kirin must reverse this deplorable decision or be held accountable for aiding and abetting the military’s ongoing international crimes,” she added.

According to figures published by Kirin in 2018, Myanmar Brewery — whose beverages include the ubiquitous Myanmar Beer brand — boasted a market share of nearly 80 percent.

Investors piled into Myanmar after the military relaxed its iron grip in 2011, paving the way for democratic reforms and economic liberalisation.

But a raft of foreign companies have exited the market since the military seized power from Aung San Suu Kyi’s government, including oil giants TotalEnergies and Chevron and Norwegian telecoms operator Telenor.

Kirin’s Myanmar business generated 32.6 billion yen ($240 million at today’s rates) in revenue in 2019-20, less than two percent of the firm’s annual sales.

The Japanese giant had been under pressure even before the coup over its ties to the military, and launched an investigation after rights groups called for transparency into whether money from its joint venture had funded rights abuses.