US Business

Stock markets tumbled, the pound crashed against the dollar and oil prices slumped Friday on growing recession fears after central banks this week ramped up interest rates to fight decades-high inflation.

With price rises showing no solid sign of letting up, monetary policymakers have gone on the offensive, warning that short-term hits to economies are less painful than the long-term effects of not acting.

The Federal Reserve’s decision Wednesday to lift borrowing costs by 0.75 percentage point for a third successive meeting was followed by a warning that more big rises were in the pipeline and that rates would likely come down only in 2024.

There were similar moves by central banks in other countries including Britain, Sweden, Norway, Switzerland, the Philippines and Indonesia — all pointing to a dark outlook for markets.

Wall Street extended losses Friday, with the Dow finishing at its lowest level since November 2020, while European equities sank in afternoon deals and Asia finished lower.

“A negative end to the week in Asia, and Europe has quickly followed as the prospect of much more tightening and a recession weighs on sentiment,” said Craig Erlam, analyst at trading platform OANDA.

The British pound tumbled to a 37-year low under $1.10 as a tax-cutting budget sparked public finance concerns while recession fears mounted.

“Equity markets are also plunging on concerns that this (UK) package could further push inflation even higher, and thus make it more difficult to bring back down,” said Michael Hewson, chief market analyst at CMC Markets UK.

“Sterling is in the firing line as traders are turning their backs on all things British. There is a creeping feeling the extra government borrowing that is in the pipeline will severely weigh on the UK economy,” added David Madden, market analyst at Equiti Capital.

In the eurozone, recession fears deepened as data showed its economic activity fell once again in September.

The S&P eurozone PMI dropped to 48.2 in September — with a score under 50 representing economic contraction.

The euro hit a new two-decade low at $0.9751.

“A eurozone recession is on the cards as companies report worsening business conditions and intensifying price pressures linked to soaring energy costs,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

He added that falling UK business activity this month indicates that the British economy is likely already in recession.

Recession fears also caused oil prices to fall, with the main US contract, WTI, finishing below $80 a barrel for the first time in seven months.

Traders were keeping a close eye as well on developments following the Japanese finance ministry’s intervention to support the yen, after it hit a new 24-year low of 146 against the dollar.

The first such intervention since 1998 helped strengthen the yen but it remained above 140.

Analysts warned the move was unlikely to have much long-term impact and the yen remained vulnerable owing to the Bank of Japan’s refusal to tighten policy — citing a need to boost the economy.

– Key figures at around 2040 GMT –

New York – Dow: DOWN 1.6 percent at 29,590.41 (close)

New York – S&P 500: DOWN 1.7 percent at 3,693.23 (close)

New York – Nasdaq: DOWN 1.8 percent at 10,867.93 (close)

London – FTSE 100: DOWN 2.0 percent at 7,018.60 (close) 

Frankfurt – DAX: DOWN 2.0 percent at 12,284.19 (close)

Paris – CAC 40: DOWN 2.3 percent at 5,783.14 (close) 

EURO STOXX 50: DOWN 2.3  percent at 3,348.60 (close) 

Hong Kong – Hang Seng Index: DOWN 1.2 percent at 17,933.27 (close)

Shanghai – Composite: DOWN 0.7 percent at 3,088.77 (close)

Tokyo – Nikkei 225: Closed for a holiday

Pound/dollar: DOWN at 1.0852 from $1.1252 Thursday

Euro/dollar: DOWN at $ 0.9695 from $0.9839

Euro/pound: UP at 89.28 pence from 87.40 pence 

Dollar/yen: UP at 143.31 yen from 142.35 yen

West Texas Intermediate: DOWN 5.7 percent at $78.74 per barrel

Brent North Sea crude: DOWN 4.8 percent at $86.15 per barrel

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The White House on Friday rebuked the head of the World Bank David Malpass, who is battling charges of climate denial for dodging questions on the role of man-made emissions in global warming.

Under mounting fire, Malpass has rejected suggestions he might quit over the uproar — and has moved to clarify his position several times in recent days.

“Look, it’s clear that greenhouse gas emissions from human activity are adding to, are causing climate change,” he told Politico Friday, affirming that none of the bank’s member countries had asked him to leave and that he was “not resigning.”

“The task for us, for the world, is to pull together the projects and the funding that actually has an impact,” he said.

Malpass is a veteran of Republican US administrations and was tapped to lead the bank in 2019 by then-president Donald Trump, who famously and repeatedly denied the science behind climate change.

Climate activists have previously called for Malpass to be removed for what they say is an inadequate approach to the climate crisis — but the chorus grew suddenly louder after his appearance at a New York Times-organized conference this week.

Asked on stage to respond to a claim by former US vice president Al Gore that he was a climate denier, Malpass declined multiple times to say whether he believed man-made emissions were warming the planet — responding, “I’m not a scientist.”

“We condemn the words of the president,” Press Secretary Karine Jean-Pierre told a White House briefing in response to the incident.

“We expect the World Bank to be a global leader” on the climate crisis response, she said, adding that the US Treasury Department “has and will continue to make that expectation clear to the World Bank leadership.”

Malpass has been seeking to course-correct since the row erupted earlier this week, and in an interview with CNN on Thursday he clearly acknowledged that climate-warming emissions were “coming from manmade sources, including fossil fuels, methane, agricultural uses and industrial uses.”

“I’m not a denier,” he told the network, saying his message had been “tangled” and he was “not always good at conveying” what he means.

But the uproar shows little sign of dying down, with the Union of Concerned Scientists the latest group to call for him to be “replaced immediately.”

Pressed on whether President Joe Biden still has confidence in Malpass and media reports that some US officials are seeking his removal, Jean-Pierre said: “Removing him requires a majority of shareholders, so that’s something to keep in mind.”

“The US believes the World Bank must be a full partner in delivering on the aggressive climate agenda, poverty reduction and sustainability development. Again, Treasury will hold Malpass accountable to this position and support the many staff working to fight climate change.”

– ‘I am worried’ –

Malpass’s initial nomination faced intense criticism but since taking the role he has been a staunch supporter of aid and debt relief for the poorest nations, in addition to consistently noting the dangers from climate change.

In a speech in June where he warned about the overlapping crises facing the global community amid soaring inflation and debt distress, he emphasized the need to “effectively address climate change.”

“It requires massive investments in cleaner energy, energy efficiency, and electricity grids and transmission. Gas flaring, methane leakage, and the operation of antiquated coal-fired power plants, with severe health and environmental impacts, continue with little abatement,” he said.

Even so, critics of the lending institution have grown increasingly loud.

“I am worried right now about the World Bank,” the Nobel Prize-winning economist Joseph Stiglitz told AFP earlier this week.

“Unfortunately the World Bank has not taken the kind of global leadership that the world needs right now” on climate and other critical issues, said Stiglitz, himself a former chief economist of the institution.

The head of the World Bank is traditionally an American, while the leader of the other big international lender in Washington, the IMF, tends to be European. 

Malpass is not the first leader of one of those institutions to come under fire for personal or professional behavior.

His predecessor Jim Yong Kim faced controversy over reforms and management of the Bank and then left early to join the private sector, while current IMF chief Kristalina Georgieva fell into hot water over changes made to data in a now discontinued World Bank report that painted China in a more positive light.

World Bank President David Malpass said Friday he had no plans to stand down, as he battles charges of climate denial for dodging questions on the role of man-made emissions in global warming.

Climate activists had previously called for Malpass to be removed for what they say is an inadequate approach to the climate crisis — and the chorus grew louder after his appearance at a New York Times-organized conference this week.

Pressed on stage to respond to a claim by former US vice president Al Gore that he was a climate denier, Malpass declined multiple times to say whether he believed man-made emissions were warming the planet — responding, “I’m not a scientist.”

Under mounting fire, Malpass has moved to clarify his position and did so again on Friday, as he rebuffed suggestions he might quit over the uproar.

“Not resigning,” Malpass said in an interview with Politico, when asked if he had envisaged quitting over the firestorm. “Nor have I” considered it, he said, affirming that none of the bank’s member countries had asked him to leave.

“Look, it’s clear that greenhouse gas emissions from human activity are adding to, are causing climate change,” he told Politico. “And so the task for us, for the world, is to pull together the projects and the funding that actually has an impact.”

In an interview with CNN a day earlier, Malpass had likewise acknowledged that climate-warming emissions were “coming from manmade sources, including fossil fuels, methane, agricultural uses and industrial uses.”

“I’m not a denier,” he told the network, adding that his message had been “tangled” and he was “not always good at conveying” what he means.

Despite his efforts at damage control, the uproar showed little sign of dying down, with the Union of Concerned Scientists the latest group to call for him to be replaced.

“People living in the Global South deserve to have the World Bank led by a fierce climate advocate, not someone who hasn’t spent enough time with the bank’s deep bench of scientists and experts to understand the most basic facts about the causes of climate change,” the group’s president, Johanna Chao Kreilick, said in a statement.

“Mr. Malpass should be replaced immediately,” she added.

– ‘I am worried’ –

While Malpass sought to emphasize the bank’s action on climate, its critics have grown increasingly loud.

“I am worried right now about the World Bank,” the Nobel Prize-winning economist Joseph Stiglitz told AFP earlier this week.

On critical issues including climate change, he said, “unfortunately the World Bank has not taken the kind of global leadership that the world needs right now.”

The head of the World Bank is traditionally an American, while the leader of the other big international lender in Washington, the IMF, tends to be European. 

Malpass is a veteran of Republican administrations in the United States and was appointed in 2019 while Donald Trump, who famously and repeatedly denied the science behind climate change, was president.

His term ends in 2024 and he can only be removed by a vote of the World Bank’s board.

Apple Music is to replace Pepsi as the title sponsor of the Super Bowl’s prestigious half-time show, the NFL announced on Friday.

Neither Apple nor the NFL disclosed terms of the sponsorship, described as a multi-year agreement. 

US media reported the NFL has been seeking around $50 million a year for sponsorship of the show, one of the traditional highlights of the biggest event on the US sporting calendar.

“We couldn’t think of a more appropriate partner for the world’s most-watched musical performance than Apple Music, a service that entertains, inspires, and motivates millions of people,” said Nana-Yaw Asamoah, the NFL’s senior vice president of partner strategy.

The sponsorship is the latest example of a technology giant embracing live sport in the United States.

Amazon has already started screening the NFL’s Thursday fixtures while Apple TV has also struck deals to stream live baseball and Major League Soccer.

Apple Music’s sponsorship of the Super Bowl half-time show will start in 2023, when the NFL’s championship game is staged in Glendale, Arizona on February 12.

More than 120 million viewers watched The Super Bowl half-time show in Los Angeles earlier this year, when stars such as Dr. Dre, Snoop Dogg, Eminem, Mary J. Blige and Kendrick Lamar appeared together.

Past half-time shows have featured a galaxy of music icons, such as Michael Jackson, Madonna, U2, the Rolling Stones and Bruce Springsteen.

Britain’s new government on Friday unveiled a multi-billion-pound package to support households and businesses hit by the highest inflation in decades, cutting taxes as the nation heads for recession.

Finance minister Kwasi Kwarteng, fresh from being appointed by new Prime Minister Liz Truss, said caps on soaring energy bills would cost £60 billion ($68 billion) in the first six months.

The costly plan aims to boost economic growth — but sterling collapsed to its lowest level against the dollar since 1985 as traders fretted over its impact on public finances.

“The PM has acted with great speed to announce one of the most significant interventions the British state has ever made,” Kwarteng told parliament in a so-called mini budget.

“People need to know that help is coming.”

In a controversial move as millions of Britons face a cost-of-living crisis, Kwarteng axed an EU-inherited cap on bankers’ bonuses following Brexit to bolster the financial services sector.

He brought forward a plan to cut the lowest rate of income tax, and reduced the highest to 40 percent from 45.

The chancellor of the exchequer also reversed a planned increase in tax on company profits signed off by Truss’s predecessor Boris Johnson.

He had announced Thursday that he would scrap a tax on salaries, reversing a 1.25-percentage-point rise in National Insurance implemented by predecessor Rishi Sunak.

It comes as economists warned that Britain was likely already in recession, with rocketing fuel and food prices taking their toll.

Opposition politicians slammed the budget for rewarding the rich.

“The chancellor has made clear who his priorities are today — not a plan for growth, a plan to reward the already wealthy,” said Rachel Reeves, finance spokeswoman for the main opposition Labour party.

– Pound collapse –

In an ominous sign, the pound tanked to $1.0897 — the lowest level since 1985 — and London’s stock market sank more than two percent as recession fears mounted.

“Sterling is in the firing line. There is a creeping feeling the extra government borrowing that is in the pipeline will severely weigh on the UK economy,” said IG analyst David Madden.

Kwarteng also lifted the point at which tax is levied on purchases of residential properties, as soaring interest rates put the brakes on the housing market.

Britain will meanwhile reintroduce VAT refunds to tourists, a scheme which had previously been scrapped following Brexit.

Kwarteng released his plan a day after the Bank of England suggested the country was slipping into recession as it hiked interest rates again to tame red-hot inflation.

With prices soaring, Britain on Wednesday announced a six-month plan to pay about half of energy bills for businesses.

Truss had already launched a two-year household energy price freeze. The caps will not kick in, however, until Britons face another large hike in gas and electricity bills from October.

The average household will have their annual energy bill capped at £2,500 until 2024 but many are expected to spend above that to keep homes warm over the winter.

Wholesale electricity and gas prices for companies — as well as charities, hospitals and schools — will also be capped.

Yet UK energy firms including BP and Shell will not get the cap, as their profits jumped after Russia’s war in Ukraine sent oil and gas prices soaring.

Labour has demanded that the government extends an energy-sector windfall tax launched by Sunak earlier this year.

But Truss ruled it out, arguing that additional taxes hinder economic recovery and efforts by energy groups to transition into greener companies.

She took office on September 6, two days before the death of Queen Elizabeth II, after winning an election of Conservative party members on a tax-cutting platform.

– ‘Unacceptable strikes’ –

Kwarteng on Friday confirmed plans to shake up the welfare system.

Some 120,000 people in part-time work would face a benefit cut should they fail to take new steps to look for more work.

The cost-of-living crisis has triggered some of the biggest strike action in more than 30 years, involving sectors from the rail industry to postal services and even lawyers.

Kwarteng told MPs the government would legislate “to ensure strikes can only be called once negotiations have genuinely broken down”.