AFP

Sales of existing US homes dropped for the second straight month in March, an industry survey said Wednesday, a sign that higher mortgage rates and rising prices are taking the wind out of the booming sector’s sails.

Sales fell 2.7 percent last month to a seasonally adjusted annualized rate of 5.77 million, which was 4.5 percent lower than in the same month last year, the National Association of Realtors (NAR) reported.

Home prices rose nationwide, and the median price increased to $375,300, a 15 percent jump compared to March 2021, according to the survey.

The drop in sales pushed supply up to two months at the current sales pace, 11.8 percent higher than in February. 

NAR Chief Economist Lawrence Yun pointed to the impact of tighter lending conditions and increasing prices across the economy.

“The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power,” he said. “Still, homes are selling rapidly, and home price gains remain in the double-digits.”

Sales fell in all regions with the exception of the West, where they were flat. The Midwest saw the biggest decline of 4.5 percent, while in the South they dipped three percent, about the same as the drop in the Northeast.

The Federal Reserve is moving to hike interest rates this year to curb record US inflation, which will have effects across the economy.  

Mortgage rates have climbed above five percent and Yun predicted they would rise further, causing existing home purchases to fall 10 percent this year.

Lydia Boussour of Oxford Economics agreed that low supply and high prices would put downward pressure on sales, though she said they would only fall so far.

“Resilient demand and strong income gains should keep a floor under home sales, however, particularly if home price growth moderates,” she said.

Venice plans to trial a reservation system for day-trippers, an official said Wednesday, in a bid to ease over-tourism as visitors flock back to the Italian city following the pandemic.

The pay-to-visit scheme will not cap tourist numbers but aims entice some people to visit during the low season by charging them less.

“We will start with an experimental phase during which the reservation will not be mandatory, but optional” and will cost nothing, Venice’s deputy tourism councillor Simone Venturini told AFP.

Visitors just popping in for the day will be encouraged to sign up through incentives “such as discounts on museum admissions”, he said. The start date will be announced in the coming weeks.

The system, which has been in the works for years, will become compulsory in 2023 and will see day-trippers pay between three and ten euros (around $3 to $10), depending on the season.

Visitors who sleep in Venice, already subject to the so-called tourist tax, will be exempt.

Life in the hugely popular watery city has slowly been returning to normal after the coronavirus pandemic, when the Grand Canal was emptied of gondolas as tourists disappeared.

Easter weekend drew a vast number of visitors, with 100,000 sleeping over nightly and some 40,000 others coming in for a few hours, to marvel at St. Marks or sigh at the Bridge of Sighs, said Venturini.

The sheer numbers cause long lines at vaporetto ferry stops or in front of museums, and overbooking in hotels. The crowds also make life difficult for the few locals who still live in the historic centre.

Venice’s mayor Luigi Brugnaro, determined to save the city from becoming little more than a resort, said the reservation system was “the right road to take, for a more balanced management of tourism”.

“We will be the first in the world to carry out this difficult experiment,” he said on Twitter.

Once the reservation becomes mandatory, controls will be carried out at the bus and train stations, the two main access points to the city dubbed the “Serenissima”.

European and US stocks rose Wednesday as investors tracked developments in the Ukraine conflict and corporate earnings, with Netflix shares sinking after the streaming giant reported a drop in subscribers.

Oil rebounded slightly, having slumped the previous day on demand concerns.

“The upbeat market mood which helped Wall Street close firmly higher yesterday has followed through into Europe,” City Index senior market analyst Fiona Cincotta told AFP.

Frankfurt won 1.2 percent and Paris rose 1.4 percent, aided by news of a return to growth in eurozone industrial output in February.

London was barely in the green, however, as drops in industrial metals prices hit mining shares.

Europe equities and oil had dropped Tuesday as Moscow launched its eastern offensive and after the International Monetary Fund slashed its global 2022 economic growth forecasts by 0.8 percentage points, largely over inflationary crises linked to the Ukraine war and the coronavirus pandemic. 

“Whilst the Russian war remains a key driver in the markets, the bad news has been priced in for now,” Cincotta said. 

“Instead, some areas of optimism are arising with banks outperforming after the ECB (European Central Bank) soothed nerves with news that all big banks in the eurozone can withstand Russian write-offs,” she added.

– Netflix ‘shocker’ –

Wall Street opened higher following Tuesday’s rally on promising housing-starts data and solid earnings, with the Dow adding 0.7 percent.

But Netflix shares slumped after the streaming giant reported its first drop in quarterly subscriptions in a decade, blaming the quarter-over-quarter erosion to suspension of its service in Russia due to Moscow’s invasion of Ukraine.

“There is no two ways to look at it, Netflix was a shocker and is likely to take the wind out of the Nasdaq’s recent rally, or at least put it on pause,” Cincotta said.

The Nasdaq Composite rose 0.4 percent as trading got underway, however.

“That said, broadly speaking earnings season has been reasonably solid so far, economic data hasn’t revealed any major cracks either, which is helping to keep risk sentiment buoyant,” she added.

In Asia trading, concerns about China’s economy hit trading in Shanghai and Hong Kong.

Shanghai’s main stocks index was Asia’s biggest faller, losing 1.4 percent as the People’s Bank of China (PBoC) kept key lending rates unchanged amid uncertainty over the impact of ongoing Chinese Covid restrictions.

Hong Kong — which plummeted on Tuesday over concerns about Beijing’s ongoing tech-sector crackdown — also ended down.

“PBoC policymakers realise the futility of cutting rates during a lockdown as policies incentivising lending will have minimal a short-term positive impact on activity so long as mobility restrictions remain in place,” noted independent analyst Stephen Innes.

– Key figures around 1330 GMT –

London – FTSE 100: UP less than 0.1 percent at 7,606.05 points

Frankfurt – DAX: UP 1.2 percent at 14,320.62

Paris – CAC 40: UP 1.4 percent at 6,626.63

EURO STOXX 50: UP 0.6 percent at 3,766.81

New York – Dow: UP 0.7 percent at 35,144.31

Tokyo – Nikkei 225: UP 0.86 percent at 27,217.85 (close)

Shanghai – Composite: DOWN 1.4 percent at 3,151.05 (close) 

Hong Kong – Hang Seng Index: DOWN 0.4 percent at 20,944.67 (close)

Euro/dollar: UP at $1.0840 from $1.0788 late on Tuesday

Dollar/yen: DOWN at 127.81 yen from 128.91 yen

Pound/dollar: UP at $1.3058 from $1.2998

Euro/pound: DOWN at 82.97 pence from 82.99 pence

Brent North Sea crude: UP 0.7 percent at $107.99 per barrel

West Texas Intermediate: UP 0.8 percent at $102.83 per barrel

burs-rl/lth

Quarterly profits edged higher at Procter & Gamble as the consumer goods giant implemented price increases with only a limited hit to demand, the company said Wednesday.

Maker of the Tide, Old Spice and Crest brands, P&G has been buffeted by the economy-wide surge in commodity prices and freight service costs, most recently exacerbated by the Russian invasion of Ukraine.

As the company has lifted prices in recent months to offset these expenses, the consumer reaction so far has been “about 20 to 30 percent more favorable than we would have assumed based on historical data,” Chief Financial Officer Andre Schulten said on a conference call with reporters.

But Schulten noted there is no guarantee this trend will continue, saying “as more pricing flows through to the consumer, we expect that volume will have somewhat of a negative impact.”

P&G reported a seven percent jump in revenues to $19.4 billion, due in part to five percent higher pricing. Profits rose three percent to $3.4 billion.

All five of P&G’s product divisions scored higher net sales, with health leading, in part due to much greater sales of items to treat coughs, colds and the flu.

The company now sees $3.2 billion in additional costs in 2022 due to higher expenses for commodities and freight and unfavorable movements in the foreign exchange markets. That’s $400 million higher than the prior estimate.

P&G lifted its full-year sales outlook, but maintained its profit forecast.

In the most recent quarter, P&G saw some deceleration in price increases in transportation and warehousing costs compared with the prior six months “but still significantly up,” Schulten said.

The company is planning for continued inflation pressures due to supply chain woes and the impact of the Ukraine war on energy costs, Schulten said.

“It’s not irrational to assume that we will see continued increases, but at a slightly slower pace,” he said.

Shares of P&G rose 0.4 percent to $159.97 in pre-market trading.

European car sales sank in March as Russia’s invasion of Ukraine added more problems to a sector already struggling with shortages of semiconductors, industry data showed Wednesday.

Passenger car registrations fell 20.5 percent compared to the same period last year, with 844,187 units sold, according to the European Automobile Manufacturers’ Association (ACEA).

Excluding 2020 when the coronavirus pandemic paralysed the global economy, it was the worst performance for a month of March since statistics began in 1990. 

Car production has been hampered worldwide since last year by a severe shortage of semiconductors, a key component for modern cars as they power everything from anti-lock braking systems to airbags to parking assistance technology.

The war has led to shortages of other parts, such as the cables used in car wiring harnesses and of which Ukraine is a manufacturer.

Several factories in Europe have had to go idle due to the lack of cables, with Volkswagen temporarily suspending production at a number of German sites.

Europe’s top automaker saw sales fall by nearly a quarter in March, according to ACEA figures.

“The ongoing supply chain disruptions, further exacerbated by Russia’s invasion of Ukraine, negatively affected car production,” the ACEA said.

Most countries in Europe had double-digit drops in car sales in March, the association said, with a fall of 17.5 percent in Germany, the biggest market.

There were even larger falls of around almost 20 percent in France, around 30 percent in Italy and Spain, and nearly 40 percent in Spain.

Outside the European Union, sales fell by 14.3 percent in Britain.

Police enforced a curfew on Wednesday in a Sri Lankan town where an anti-government demonstrator was killed, a death that triggered international condemnation just as the crisis-hit country seeks an IMF bailout. 

Regular blackouts and acute shortages of food and fuel have sparked increasing public discontent in the island nation, which is dealing with its worst economic downturn since independence in 1948.

Huge protests have demanded the government’s resignation, including the Tuesday blockade of a key highway and railway line on the day Sri Lanka’s main petrol retailer announced another sudden price rise.

Police dispersed the crowd in the town of Rambukkana with tear gas and a volley of live rounds that left a 42-year-old father of two dead, with nearly 30 others wounded in the confrontation.

“I was hit with a baton on my leg and hand,” Vasantha Kumara, a local chef, told AFP on Wednesday. “I begged the cops not to beat me, but they didn’t listen.”

“People are angry. We are all poor people fighting for basics.”

Authorities extended the curfew in Rambukkana, around 95 kilometres (60 miles) east of the capital Colombo, into Wednesday with shops closed through the morning. 

Spent bullet cartridges littered the road hours after the previous evening’s protest, which saw thousands of people blocking rail tracks and the highway to the central city of Kandy. 

President Gotabaya Rajapaksa said he was “deeply saddened” by the police shooting and promised the public’s right to peacefully protest against his government would not be hindered.

Sri Lanka’s police force “will carry out an impartial and transparent inquiry”, he wrote on Twitter.

Police said they were forced to act when the crowd was about to set alight a fuel tanker — a claim dismissed by Sri Lanka’s political opposition.

“These people are not suicidal to burn a tanker and get killed in the process,” lawmaker Rohini Kumari Wijerathna said in parliament.

– International concern –

Tuesday’s incident was the first fatal clash since widespread anti-government protests began this month. 

At least 29 people, including 11 police officers, were wounded in Rambukkana, according to official figures. 

Later that night, police fired tear gas to break up another protest in Sri Lanka’s south, one of the dozens of demonstrations staged simultaneously across the country.

Colombo-based diplomats have expressed concern over the police shooting.

“A full, transparent investigation is essential and the people’s right to peaceful protest must be upheld,” US ambassador Julie Chung said.

British High Commissioner Sarah Hulton condemned the violence and “call[ed] for restraint.”

– IMF talks –

Sri Lanka opened talks with the International Monetary Fund in Washington this week after announcing an unprecedented default on the government’s $51 billion foreign debt. 

The IMF said it had asked Sri Lanka to restructure its borrowings before the lender finalises a bailout programme.

Talks with Sri Lanka were still at an “early stage”, the IMF said, expressing concern over the hardships suffered by the country’s people.

Sri Lanka’s economic meltdown began after the coronavirus pandemic torpedoed vital revenue from tourism and remittances.

The country is short of dollars to finance even the most important essentials, including food, fuel and medicines. Runaway inflation has worsened the population’s hardships.

The Colombo Stock Exchange has suspended trading to prevent an anticipated market collapse and the government has urged citizens abroad to donate money to help pay for desperately needed essentials.

A large crowd has been camped outside President Rajapaksa’s seafront office in Colombo since April 9, demanding the leader step down. 

Rajapaksa has acknowledged public anger over the ruling family’s mismanagement and appointed a new cabinet to navigate the country out of the crisis, but has refused to entertain calls for his resignation.

Asian markets were marginally higher on Wednesday while oil began recovering after a downgraded IMF global growth forecast for 2022 had sent crude prices plunging.

The International Monetary Fund slashed its outlook by 0.8 percentage points, largely over inflationary crises linked to the Ukraine war and the coronavirus pandemic — prompting a five percent dive in oil prices on Tuesday. 

“The economic effects of the war are spreading far and wide — like seismic waves that emanate from the epicenter of an earthquake,” IMF chief economist Pierre-Olivier Gourinchas said in a report.

Oil prices began to recover Wednesday, however, and Asian stocks also mostly rose following a positive lead from Wall Street, where US stocks rallied on the back of promising housing-starts data and solid corporate earnings.

Both main contracts climbed, but crude has suffered major shocks this year, from the war in Ukraine to the raging coronavirus outbreak in China, where the economy has been battered by anti-Covid restrictions.

Tens of millions are still barred from leaving home in economic centre Shanghai and tech hub Shenzhen, where a Covid-19 outbreak has broken down supply lines and shuttered businesses.

“China continues to stay wedded to deleveraging parts of the economy while attempting to add stimulus in a targeted sector manner,” said Jeffrey Haley, senior market analyst at Oanda. 

“However, the Shanghai lockdown and fears its Covid-zero policy will crimp growth this year continue to weigh on markets that clearly want more of the usual cast-of-thousands stimulus measures from years past.”

– Netflix shares plunge –

The Shanghai Composite Index was the biggest loser among major Asian markets, dropping 1.35 percent at the close.

Hong Kong — which plummeted on Tuesday over concerns about Beijing’s ongoing tech-sector crackdown — also ended down, with Chinese banks keeping lending rates unchanged.

“China disappointed markets that were looking for more comprehensive stimulus measures as it left both its one and five-year Loan prime Rates (LPR) unchanged,” Haley said. 

Tokyo gained 0.86 percent, buoyed by a cheaper yen. Jakarta, Sydney and Taipei all inched upward while Seoul was flat.

Despite the rally on Wall Street, there are concerns about the impact of the earnings report from Netflix showing a drop in subscriptions in the first quarter of the year.

This was the first such drop for Netflix in a decade and hammered the streaming giant’s shares, which dropped by a quarter of their value in after-market trading. 

Analysts have said this could dent Tuesday’s gains when US markets open.

After  closing lower on Tuesday over the IMF announcement, Europe’s major markets opened the day in positive territory, with London, Paris and Frankfurt all slightly up. 

– Key figures around 0830 GMT –

Tokyo – Nikkei 225: UP 0.86 percent at 27,217.85 (close)

Shanghai – Composite: DOWN 1.35 percent at 3,151.05 (close) 

Hong Kong – Hang Seng Index: DOWN 0.40 percent at 20,944.67 (close)

Dollar/yen: DOWN at 128.63 yen from 128.89 yen

Euro/dollar: UP at $1.0810 from $1.0796

Pound/dollar: UP at $1.3005 from $1.2998

Euro/pound: UP at 83.10 pence from 82.98 pence

Brent North Sea crude: UP 1.32 percent at $108.67 per barrel

West Texas Intermediate: UP 1.40 percent at $104.00 per barrel

New York – Dow: UP 1.5 percent at 34,911.20 (close)

London – FTSE 100: UP 0.12 percent at 7,610.32 points (close)

burs-ssy/cwl

Asian markets were flat on Wednesday as oil began clawing its way back up from a big drop after the International Monetary Fund downgraded its global growth forecast for 2022. 

The IMF lowered its outlook to 3.6 percent — a 0.8 percentage point slash from its previous estimate released in January — prompting a five-percent dive in oil prices on Tuesday. 

The Fund pointed to surging energy prices, rising debt, supply chain woes, and a series of inflationary crises linked to the war in Ukraine and the coronavirus pandemic.

“The economic effects of the war are spreading far and wide — like seismic waves that emanate from the epicenter of an earthquake,” IMF chief economist Pierre-Olivier Gourinchas said in the report.

While oil prices showed their first sign of susceptibility to global economic trends after the announcement, US stocks rallied on the back of promising housing-starts data and solid corporate earnings.

“In the absence of inventory buffers, there are only two things that can send oil lower, recession and or demand destruction. More folks were more willing to check one or both of those boxes overnight on the back of the IMF economic warning shot and China’s protracted lockdown,” said Stephen Innes at SPI Asset Management.

Tens of millions are still barred from leaving home in China’s economic centre Shanghai and tech hub Shenzhen, where a Covid-19 outbreak has broken down supply lines and shuttered businesses.

Alongside the positive corporate earnings and housing data, much of Wall Street’s strength also stemmed from the positioning of the market.

“It’s a nice reflex rally from an oversold position,” said Art Hogan, strategist at National Securities, who said the dynamics reflected a “pretty oversold market”.

In Tokyo, the Nikkei 225 opened slightly higher, buoyed by a cheaper yen, but the Hang Seng Index in Hong Kong was marginally lower after being battered by China growth concerns and Beijing’s crackdown on the tech sector on Tuesday.

Shanghai and Seoul were also down while Sydney, Jakarta, and Taipei were inching upward.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.56 percent at 27,135.27

Shanghai – Composite: DOWN 0.64 percent at 3,173.65 

Hong Kong – Hang Seng Index: DOWN 0.40 percent at 20,943.35 

Dollar/yen: DOWN at 128.65 yen from 128.89 yen

Euro/dollar: UP at $1.0806 from $1.0796

Pound/dollar: UP at $1.3032 from $1.2998

Euro/pound: DOWN at 82.92 pence from 82.98 pence

Brent North Sea crude: UP 0.50 percent at $107.79 per barrel

West Texas Intermediate: UP 0.67 percent at $103.25 per barrel

New York – Dow: UP 1.5 percent at 34,911.20 (close)

London – FTSE 100: DOWN 0.2 percent at 7,601.28 points (close)

burs-ssy/qan