US Business

Stocks slid further Monday and the dollar rallied as traders continued to digest Federal Reserve chief Jerome Powell’s warning of more interest rate hikes to fight inflation.

Wall Street’s main indices opened lower, extending losses of between three and four percent on Friday immediately following Powell’s speech where he clearly stated his priority is bringing inflation down from four-decade highs, even at the expense of economic growth.

“Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance,” he told the Jackson Hole gathering of global monetary policymakers.

The comments dealt a blow to markets, which had in recent weeks enjoyed a bounce from June lows as weak economic data and a slowdown in price rises fanned hopes the Fed would temper its interest rate hike drive and bring down rates next year.

Powell “didn’t splash some cold water on the stock market’s face,” said market analyst Patrick O’Hare at Briefing.com. “He dumped a whole bucket of ice water on it and the stock market wasn’t ready for the ice bucket challenge.”

Yanxi Tan of Malayan Banking said: “The game of assessing the Fed outlook has shifted from guessing how high the peak rate might be to also understanding how long it might stay there for.” 

Analysts said the chances of a third successive 75 basis-point increase next month had risen, with US Treasury yields — a gauge of future interest rates — surging. That in turn helped propel the dollar higher.

The dollar closed in on the 140 yen mark not seen since 1998, but an easing in European gas prices helped the euro recup its losses.

“Powell sent the dollar rallying … on the back of a solid divergence between the decidedly hawkish Fed, and more hawkish, but increasingly worried other central banks,” said Swissquote Bank analyst Ipek Ozkardeskaya.  

“Other major central banks are also hawkish, but they are less aggressive than the Fed,” she added.

Asian stocks ended sharply lower save for Shanghai, which eked out a small gain.

In afternoon European trading Paris and Frankfurt were also nursing losses. London was closed for a holiday.

European gas prices retreated from record highs set last week after Germany said Sunday that it is replenishing its gas stocks more quickly than expected and should meet an October target early despite drastic Russian supply cuts.

An emergency meeting of EU energy ministers was called for next week, with European Commission chief Ursula von der Leyen saying the bloc is working on an “emergency intervention” to rein in electricity prices sent soaring by Russia’s war in Ukraine as well as a structural reform of the market.

Oil prices extended gains despite talk that surging interest rates could choke off the economic recovery as traders focused on supply concerns.

The commodity has fallen in recent weeks on bets that demand will be hit by an expected drop in economic output, particularly from China as it continues to battle a Covid-19 outbreak with lockdowns.

But fresh unrest in Libya, warnings that an Iran nuclear deal was not imminent and a possible OPEC output cut kept prices elevated.

 

– Key figures at around 1330 GMT –

New York – Dow: DOWN 0.8 percent at 32,039.07 points 

EURO STOXX 50: DOWN 1.1 percent at 3,562.85

Frankfurt – DAX: DOWN 0.9 percent at 12,858.66

Paris – CAC 40: DOWN 1.2 percent at 6,199.37

London – FTSE 100: Closed for a holiday

Tokyo – Nikkei 225: DOWN 2.7 percent at 27,878.96 (close)

Hong Kong – Hang Seng Index: DOWN 0.7 percent at 20,023.22 (close)

Shanghai – Composite: UP 0.1 percent at 3,240.73 (close)

Euro/dollar: UP at $1.0002 from $0.9964 Friday

Pound/dollar: DOWN at $1.1713 from $1.1743

Euro/pound: UP at 85.40 pence from 84.85 pence

Dollar/yen: UP at 138.46 yen from 137.38 yen

West Texas Intermediate: UP 1.7 percent at $94.65 per barrel

Brent North Sea crude: UP 1.5 percent at $102.51

burs-rl/lth

France’s tax authority said Monday that a new artificial intelligence system had found thousands of undeclared swimming pools, allowing it to collect millions of euros from homeowners who failed to report the facilities.

Developed by Google and Capgemini, the AI software learned how to spot pools on aerial images of nine French departments during a trial run last year, which were then cross-checked with land registry databases.

Since pools boost property values, they usually lead to higher property and residency taxes — unless the owner neglects to notify tax authorities.

Private pool sales had already been booming in France before the Covid pandemic, which saw a surge in installations as millions of employees began working from home more often.

According to the Parisien newspaper, which reported the results of the AI test, an average pool of 30 square metres (320 square feet) would be taxed at 200 euros ($200) a year.

In the nine test departments, the software detected more than 20,000 pools, which led to the collection of some 10 million euros in tax revenue last year.

The DGFiP public finances authority said the programme would now be rolled out nationwide, potentially leading to 40 million euros in new levies in 2023.

It could also eventually be used to find undeclared home extensions, patios or gazebos, which are also used to factor property taxes, the authority said.

Indian billionaire Mukesh Ambani on Monday announced an investment of $25 billion to launch 5G networks in India, aiming to strengthen his grip on one of the world’s fastest-growing smartphone markets.

In his annual speech delivered virtually to shareholders of Reliance Industries — India’s most valuable company — Asia’s second-richest person said he believes “digital freedom is the birthright of every Indian”.

Ambani’s multi-billion-dollar empire was built on oil and petrochemicals, but he has diversified into new areas including telecoms, retail and renewable energy in recent years.

The launch of telecom arm Jio — offering ultra-cheap data at high speeds — in 2016 sparked a brutal price war, forcing competitors into years of losses.

Earlier this month, Jio swept up more than a third of the available spectrum in India’s first-ever 5G airwave auction, bidding 881 billion rupees ($11 billion).

Announcing an investment of two trillion rupees ($25 billion), Ambani said Jio will launch 5G services in major cities including Delhi, Mumbai, Kolkata and Chennai in time for the Indian festival of Diwali in late October.

A pan-India roll-out will follow, Ambani said, with an aim to cover every district in the country by December 2023 — an area of 3.3 million square kilometres.

“We are committed to make India the largest data-powered economy in the world, even ahead of China and the United States. Jio 5G will be the world’s largest and most advanced 5G network,” Ambani said.

Global tech giants such as Google, Facebook owner Meta, Intel and Qualcomm have invested billions of dollars into Reliance’s digital unit Jio Platforms in recent years.

A newly-launched collaboration between Meta and Jio will allow users to shop for groceries via instant messaging app WhatsApp, Ambani said.

“This is our first-ever end-to-end shopping experience on WhatsApp — people can now buy groceries from JioMart right in a chat,” Facebook founder and Meta CEO Mark Zuckerberg said in a Facebook post.

In June, Ambani’s 30-year-old son Akash was appointed chairman of Jio Infocomm, a subsidiary of Jio Platforms, sparking speculation about succession planning.

Ambani stopped short of announcing leadership changes at Monday’s AGM, instead asking shareholders to extend their blessings to his three children Isha, Akash and Anant.

The 65-year-old business tycoon was until this year Asia’s richest person but was unseated by fellow Indian billionaire Gautam Adani.

India is home to the second-highest number of smartphone users after China. 

The country’s long-delayed 5G push comes as the world’s sixth-largest economy tries to bridge a technology gap with rivals such as South Korea, China and the United States.

Shares in Reliance Industries closed 0.69 percent lower in Mumbai following the announcements.

With Europe facing a major energy crisis, Spain wants to become the new gateway for gas through an ambitious trans-Pyrenees pipeline and is hoping supply-starved Germany will pressure a reluctant France.

Madrid has long been hoping for the revival of plans to build a pipeline connecting the Iberian Peninsula via France to central Europe, which was abandoned in 2019 over regulatory and funding issues. 

But Russia’s war on Ukraine and its reduction of gas deliveries to Europe has revived interest in the project, notably from Germany, with Chancellor Olaf Scholz saying such a pipeline could make “a massive contribution” to easing the supply crisis.

He has invited Spain’s Pedro Sanchez for talks on Tuesday with energy likely to be a key issue.

Beyond the gas crisis, Spain is hoping that improving its connectivity with the rest of Europe will open the way for it to become the European Union’s new hub for green hydrogen — a key energy source of the future.

And for that, a pipeline across the Pyrenees would be crucial. 

– France obstacles –

In 2013, work began on the so-called MidCat project, a pipeline linking Spain’s northeastern region of Catalonia to the south of France through the Pyrenees, aimed at connecting Spain and Portugal to central Europe’s gas network.

Six years later it was dropped by regulators in France and Spain over its environmental impact and lack of economic viability.

And despite the current energy crisis, France has been decidedly unenthusiastic about reviving the project.

But that has done little to cool the ardour of the Spanish premier, who is determined it will go ahead — even if it means resorting to “plan B”: building an underwater connection to Italy, he said in Bogota last week.

Ecology Minister Teresa Ribera told Antena 3 television last week the Italian alternative was being studied, but admitted it would be best to go for “the easiest option… across the Pyrenees”, saying such a pipeline “could be operational by late 2023 or early 2024”.

“It’s not a bilateral issue between Spain and France,” added Ribera in an interview published Monday in Spanish daily El Mundo. 

“It’s about the European project. I wonder where is France’s European ideal.”

Germany is already onboard. 

“I have been very active in talks with… the French president and the president of the European Commission in advocating that we take on such a project,” Scholz said on August 11.

It could make “a massive contribution” to easing the supply crisis, he added.

Spain has six liquefied natural gas (LNG) terminals for converting deliveries made by sea into gas, making it the country with the biggest regasification capacity in the EU. 

Portugal also has a plant, meaning the Iberian peninsula has the capacity to become a hub for gas shipped in from the United States while the transition to renewable energies is being completed. 

– Hydrogen hub –

Spain and Portugal want the EU to foot the bill for building such a connection, estimated at some 440 million euros ($440 million). 

Such a pipeline could never be ready in time to ease the anticipated shortages this winter, but could be a key conduit for exporting green hydrogen, an area in which Spain is already taking a lead. 

Green hydrogen is produced by passing an electric current through water to split it between hydrogen and oxygen, a process called electrolysis. It is considered green because the electricity comes from renewable energy sources that don’t create harmful emissions.

When fossil fuels burn, they emit harmful greenhouse gases, but hydrogen only emits harmless water vapour.

“Spain is going to become the world’s leading hub for the transport of green hydrogen which is the future of the European economy,” Josep Sanchez Llibre, head of Catalonia’s Foment del Treball business confederation, told Spain’s public television this month.

Visiting Paris last week, Felix Bolanos, a cabinet minister and close ally of the Spanish premier, said MidCat was “a long-term project”.

“The idea is that over the medium- to long-term, it will be able to transport green hydrogen as well as blue hydrogen,” he said.

Blue hydrogen is produced by using methane in natural gas. 

“Spain must take the lead in making us the great European and global gas and hydrogen interconnection,” said Sanchez Llibre. 

French-Israeli diamond magnate Beny Steinmetz was back in court in Switzerland on Monday to appeal his conviction in what has been described as the mining sector’s biggest-ever corruption case.

The 66-year-old businessman was convicted in January 2021 of setting up a complex financial web to pay bribes to ensure his company could obtain permits in Guinea’s southeastern Simandou region, which is estimated to contain the world’s biggest untapped deposits of iron ore.

He was sentenced by a Geneva court to five years in prison and also ordered to pay 50 million Swiss francs ($52 million) in compensation.

Steinmetz, wearing a dark blue suit, arrived at the court house as a free man. He has not begun serving his sentence, since he was issued a legal free-passage guarantee to attend the first trial, and was permitted to leave Switzerland after it ended. 

He has been issued another free-passage for the appeal, which is expected to last until September 7, with the verdict set to fall later.

Steinmetz maintained his innocence throughout the original trial and immediately appealed against the ruling, decrying it as a “big injustice”.

He changed his legal team for the appeal, and his new lead lawyer Daniel Kinzer presented an impassioned defence on Monday’s first day, detailing a long line of alleged missteps, errors and misunderstandings in the trial.

– ‘No bribes’ –

“I am confident the appeals court can be convinced,” he told AFP in an email before the hearings, adding a deeper look at the case revealed “a totally different picture than the one painted by the first verdict”.

“We expect that the tribunal recognises that Beny Steinmetz did not bribe anyone.”

During the first trial, Swiss prosecutors convinced the court that Steinmetz and two partners had bribed a wife of the then Guinean president Lansana Conte and others in order to win lucrative mining rights in Simandou.

The prosecutors said Steinmetz obtained the rights shortly before Conte died in 2008 after about $10 million was paid in bribes over a number of years.

Conte’s military dictatorship ordered global mining giant Rio Tinto to relinquish two concessions which were subsequently granted to Beny Steinmetz Group Resources (BSGR) for around $170 million in 2008.

Just 18 months later, BSGR sold 51 percent of its stake in the concession to Brazilian mining giant Vale for $2.5 billion.

But in 2013, Guinea’s first democratically-elected president Alpha Conde launched a review of permits allotted under Conte and later stripped the VBG consortium formed by BSGR and Vale of its permit.

– ‘Pact of corruption’ –

To secure the initial deal, prosecutors claimed Steinmetz and representatives in Guinea entered a “pact of corruption” with Conte and his fourth wife Mamadie Toure.

Toure, who has admitted to having received payments, has protected status in the United States as a state witness. 

Before the court, Kinzer decried that much of the prosecutor’s case relied on her testimony, despite no insight into the opaque US deal and that the defence had never been given access to her.

He asked for all her testimony to be deemed inadmissable.

“One cannot legitimately rely on prosecution witnesses who have secret agreements with law enforcement, whose testimony has not been fully disclosed and who were not cross-examined on trial,” he told AFP.

His co-counsel Christian Luscher highlighted significant concerns around the handling of the case by Claudio Mascotto, the prosecutor initially in charge of the investigation, suggesting he had struck a deal with another witness in the case, and asking that he be questioned in court.

Steinmetz’s team also rejects the narrative that corruption was behind the transfer of mining rights from Rio Tinto to BSGR, insisting that Rio Tinto had lost half of its concessions for failing to develop them, in line with Guinea’s mining laws.

“The mining rights were withdrawn from a competitor because it was hoarding them and then awarded to BSGR on the basis of a solid and convincing business case, with no need to bribe a public official,” Kinzer told AFP.

Japanese auto giant Honda and South Korean battery maker LG Energy Solution announced a joint venture Monday to invest $4.4 billion in a new US electric car battery plant.

The move comes after California last week ruled that all new cars sold in America’s most populous state must be zero-emission from 2035, with other US states expected to follow suit.

In a joint statement, the firms said they expected construction of the plant to begin next year, aiming for “mass production of advanced lithium-ion battery cells by the end of 2025”.

The tie-up was decided “based on the shared belief that expanding local electric vehicle production and ensuring the timely supply of batteries would put them in the best position to target the rapidly-growing North American EV market”, the companies added.

Last month, Japanese electronics giant and Tesla supplier Panasonic announced its own $4 billion investment to build a new battery factory in the United States for electric vehicles.

Panasonic CEO Kazuo Tadanobu said the new plant, the company’s second electric battery operation in the United States, was “critical to help meet demand”.

Earlier this year, Honda said it planned to invest nearly $40 billion in electric vehicle technology over the next decade as it works towards switching all sales away from traditional fuel cars.

It wants to launch 30 EV models by 2030, with an annual production volume of more than two million units, and aim to have electric and fuel cell vehicles account for 100 percent of all sales by 2040.

The success of Elon Musk’s Tesla, built solely on electric vehicles, and growing government pressure to move away from cars with combustion engines, are pushing traditional automakers to speed up the transition to electric.

Washington state’s governor has backed a move similar to California, while the European Union has taken steps to ban the sale of gas- or diesel-fuelled cars — and even hybrids — by 2035.

China wants at least half of all new cars to be electric, plug-in hybrid or hydrogen-powered by that time.

Markets sank Monday and the dollar rallied after Fed boss Jerome Powell warned of more interest rate hikes to fight inflation and poured cold water on the prospects of a cut in the new year.

The hefty selling tracked a painful day on Wall Street, where all three main indexes tanked between three and four percent as investors contemplated an extended period of monetary tightening.

In a much-anticipated speech to global finance chiefs Friday, Federal Reserve Chair Powell said his priority was bringing inflation down from four-decade highs, even at the expense of economic growth, adding that failure to act now would cause more pain later.

“Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance,” he told the symposium at Jackson Hole, Wyoming.

The comments dealt a blow to markets, which had in recent weeks enjoyed a bounce from June lows as weak economic data and a slowdown in price rises fanned hopes the Fed would temper its interest rate hike drive.

Analysts said the chances of a third successive 75 basis-point increase next month had risen, with US Treasury yields — a gauge of future interest rates — surging.

“The game of assessing the Fed outlook has shifted from guessing how high the peak rate might be to also understanding how long it might stay there for,” Yanxi Tan, of Malayan Banking, said.

In Asian trade, investors ran for the hills as they contemplated an era of high borrowing costs with Charles Schwab & Co’s Liz Ann Sonders saying that once the Fed gets to “whatever the final hike is, they’re going to stay there for a while”.

“The market had trouble digesting that,” she told Bloomberg Television.

Tokyo, Hong Kong, Sydney, Seoul, Mumbai, Taipei, Singapore, Manila, Bangkok, Jakarta and Wellington were all well down, though Shanghai eked out a small gain.

Paris and Frankfurt were sharply lower in the morning. London was closed for a holiday.

The dollar jumped against its major peers, closing in on the 140 yen mark not seen since 1998, while an energy crisis in Europe kept the euro depressed.

Still, oil prices extended gains as talk that surging interest rates could choke off the economic recovery was not enough to offset supply concerns.

The commodity has fallen in recent weeks on bets that demand will be hit by an expected drop in economic output, particularly from China as it continues to battle a Covid-19 outbreak with lockdowns.

But fresh unrest in Libya, warnings that an Iran nuclear deal was not imminent and a possible OPEC output cut kept prices elevated.

 

– Key figures at around 0810 GMT –

Tokyo – Nikkei 225: DOWN 2.7 percent at 27,878.96 (close)

Hong Kong – Hang Seng Index: DOWN 0.7 percent at 20,023.22 (close)

Shanghai – Composite: UP 0.1 percent at 3,240.73 (close)

Dollar/yen: UP at 138.72 yen from 137.38 yen Friday

Euro/dollar: DOWN at $0.9941 from $0.9964

Pound/dollar: DOWN at $1.1672 from $1.1743

Euro/pound: UP at 85.17 pence from 84.85 pence

West Texas Intermediate: UP 1.1 percent at $94.06 per barrel

Brent North Sea crude: UP 0.8 percent at $101.81

New York – Dow: DOWN 3.0 percent at 32,283.4 points (close)

London – FTSE 100: Closed for a holiday

Under a blazing sun in Mali’s capital, Amadou Menta leant over to measure a gutter then jotted down the results on a mapping app on his smartphone.

“We’re collecting data,” said the 27-year-old geography student, helping to chart the roadside drains of central Bamako with two friends.

Until recently Mali’s capital was largely uncharted on the web.

With street names or fixed public transport routes often missing in the city of some two million, people tend to ask for directions to find their way.

But the lack of maps is a major obstacle to developing its infrastructure — whether to prevent traffic jams, collect wastewater and rubbish, or prevent flooding.

Tech-savvy young Malians are striving to change this, cataloguing the city’s features in the hope it will improve the lives of its residents.

Armed with smartphones, dozens of volunteers have been collecting data for the local branch of OpenStreetMap, a free, online geographic database — which is then used by sites including Google Maps.

Menta and fellow mappers have been charting the channels collecting waste and rainwater in Daoudabougou, a central district often hit by floods.

The gutter project is receiving financial support from the World Bank, and has been welcomed by the authorities.

But it’s just one of the avenues the group is exploring — and there is plenty more work to do.

Founder Nathalie Sidibe said there was previously “no freely available data in Mali”. 

“We saw mapping as a concrete way to contribute to developing the area,” she said.

“We need to change habits here — and to do that, we need to encourage people to use digital tools.”

– Data to ‘get ahead’ –

Mobile data access is still poor in Mali.

Countrywide, only one in 10 women is connected to mobile broadband, compared to one in five men, a World Bank report found last year.

But the OpenStreetMap Mali team has been busy.

So far, its volunteers have drawn up a map of Bamako’s public minibus routes, household waste collection points, and basic social services.

Adama Konate, deputy mayor in charge of sanitation, said the group’s efforts had helped Bamako.

“We only had basic knowledge before this project,” Konate said.

“Now we know that this place needs drainage, and that place needs a rubbish dump.”

Mahamadou Wadidie, director of the Regional Development Agency in Bamako, said the youth mapping project had made his job much easier.

On the agency’s website, he showed off a regularly updated map of all the health centres and schools in Bamako drawn up from OpenStreetMap data.

“Instead of taking two months to find out about these things, mayors can now get this information from their computer,” he said.

“Digitisation is allowing us to get ahead, to lose less time.”

Mali — an impoverished country with severe governance challenges that has been battling a decade-long jihadist insurgency — does not have many resources to devote to digitising data, he said.

But Menta and his young colleagues, he said, have shown it is possible to launch ambitious mapping projects “without spending a lot of money”.