US Business

The leaders of Canada and Germany signed a green hydrogen deal on Tuesday, laying a path for a transatlantic supply chain as Europe seeks to lessen its dependence on Russian energy.

“It’s a vote of confidence for Canada as a leader in clean energy,” Prime Minister Justin Trudeau said during a joint press conference with visiting German Chancellor Olaf Scholz.

“We cannot as a world continue to rely on authoritarian countries that will weaponize energy policy, as Russia is, that don’t concern themselves with environmental outcomes or labor rights or even human rights,” Trudeau added.

Moscow has slashed its energy exports to Europe in response to punishing Western sanctions over Moscow’s invasion of Ukraine, forcing countries to scramble for alternatives.

Scholz said there was a need to discuss “short-term constraints and LNG (liquefied natural gas) but in the long run, the real potential lies in green hydrogen from the wind-rich, thinly populated Atlantic provinces.”

Canada aims to become a major producer and exporter of hydrogen and other related clean technologies to displace climate-warming fossil fuels, with Germany lined up to become a first customer.

In a joint declaration, Trudeau and Scholz outlined plans to “kickstart the hydrogen economy and to create a transatlantic supply chain for hydrogen.”

The plan is to make the first deliveries of Canadian hydrogen to Germany as early as 2025, the statement said.

Canada said it would also export hydrogen to the broader European market — “contributing to European energy security,” as the bloc looks to end its reliance on Russian energy — as well as to Asia.

The two leaders, with a sizeable German business delegation in tow, toured a site in Stephenville, Newfoundland, where US-based World Energy GH2 Inc. is looking to build a hydrogen production facility powered by a 164-turbine, one-gigawatt wind farm on the Port au Port Peninsula.

The former pulp mill boasts substantial wind resources, access to the power distribution grid and a port that can ship product to Europe.

The project is one of a dozen under consideration by the Newfoundland government since it lifted a moratorium on new wind farms, and in July issued a call for proposals to put turbines on government lands.

With an estimated $10 billion price tag, it would be the largest single investment ever made in Canada’s Atlantic region.

Global stocks were down Tuesday as the euro dove to a new two-decade low against the dollar and traders waited nervously for news on the next US interest rate hikes.

The single currency tumbled to $0.9901, but later clawed back losses as the greenback was hit by poor US economic data.

The dollar had strengthened this week against other currencies ahead of a speech Friday by US Federal Reserve chief Jerome Powell, as markets speculate that the central bank will continue tighten its monetary policy.

Higher interest rates boost the American currency as they make dollar-denominated debt more attractive to investors.

But the euro also has been weighed down by a gloomy outlook for the eurozone economy as Russia’s war in Ukraine has sent energy prices soaring.

The unit plunged below parity with the dollar Monday on recession fears to plumb the lowest levels since 2002, when it first came into physical circulation.

In the latest blow, S&P Global’s closely watched monthly composite purchasing managers’ index (PMI) showed that eurozone economic activity fell for the second month in a row in August.

– ‘Investors are bracing’ –

Wall Street indices ended mostly lower, with the Dow Jones falling 0.5 percent.

With the Jackson Hole central banking symposium this week, the focus is on what Fed chief Powell says about plans to tackle high prices, with many fearing officials could send the economy into recession.

“I think that investors are bracing for some hawkish commentary from Fed chair Powell this coming week,” said Jack Ablin of Cresset Capital.

European equities and Asian markets also slid amid stubborn worries about the Fed’s movements.

US natural gas prices meanwhile hit a fresh 14-year high on Tuesday at $10.028.

But across the Atlantic, European natural gas prices fell, although they remain elevated on fears of a halt to Russia’s gas deliveries. The Dutch TTF Gas Futures contract stood at 268.45 euros down from Monday.

Gas had spiked to record peaks in March after key producer Russia launched its invasion of neighboring Ukraine.

That has sparked surging domestic energy bills, fueling decades-high inflation that has prompted tighter monetary policy around the world.

Moscow’s maneuvers have hit the single currency hard because the bloc relies heavily on imported Russian gas, said Societe Generale analyst Kit Juckes. 

Fears increased after Russia’s Gazprom said Friday the Nord Stream pipeline would be closed for maintenance at the end of the month, cutting Europe’s crucial gas deliveries.

“The euro’s problem is… the threat from continued squeezing of gas supplies and the cost of replacing Russian gas,” Juckes said.

Oil prices — which have fallen for weeks as recession worries hit demand expectations — rebounded after Saudi Arabia suggested OPEC and other major producers could cut output citing “volatility” in crude markets.

– Key figures at around 2030 GMT –

New York – Dow: DOWN 0.5 percent at 32,909.59 points (close)

New York – S&P 500: DOWN 0.2 percent at 4,128.73 (close)

New York – Nasdaq: UNCH at 12,381.30 (close)

EURO STOXX 50: DOWN 0.2 percent at 3,652.52 (close)

London – FTSE 100: DOWN 0.6 percent at 7,488.11 (close)

Frankfurt – DAX: DOWN 0.3 percent at 13,194.23 (close)

Paris – CAC 40: DOWN 0.3 percent at 6,362.02 (close)

Tokyo – Nikkei 225: DOWN 1.2 percent at 28,452.75 (close)

Hong Kong – Hang Seng Index: DOWN 0.8 percent at 19,503.25 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,276.22 (close)

Euro/dollar: UP at $0.9973 from $0.9943 Monday

Pound/dollar: UP at $1.1835 from $1.1767

Euro/pound: DOWN at 84.25 pence from 84.98 pence

Dollar/yen: DOWN at 136.7710 yen from 137.48 yen

West Texas Intermediate: UP 3.7 percent at $93.74 per barrel

Brent North Sea crude: UP 3.9 percent at $100.22

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Ukraine is on course to ship nearly as much grain this month as it did before the Russian invasion, in a triumph for international efforts to ease food shortages, a US official said Tuesday.

Ukraine is one of the world’s largest exporters of wheat, corn, barley and sunflower oil, shipping around five million metric tons of grain each month before the war.

Its exports ground to a trickle after the February 24 invasion, contributing to a spike in global food prices that has hit poor nations especially hard.

“Thanks to intensive international cooperation, Ukraine is on track to export as much as four million metric tons of agricultural products in August,” a senior US State Department official told AFP.

Ukraine and Russia in July reached a first wartime agreement through the mediation of Turkey and UN Secretary-General Antonio Guterres, with guarantees for ships to sail out of Ukraine’s Black Sea ports.

The State Department official said that the efforts have moved out more than 720,000 tons of grain from the ports through 33 ships over the past several weeks.

More significant so far has been a European initiative to ship Ukrainian grain by river, rail and road routes.

The so-called “Solidarity Lanes” established by the European Union rushed additional vehicles including trucks to the border, addressing hurdles including Ukrainian wagons’ incompatibility with European rail gauges.

The European effort is shipping 2.5-3 million tons of produce into the European Union and beyond to international markets each month, the official said.

As part of the agreement negotiated in Istanbul, Russia will also be guaranteed shipment of food and fertilizer without being subject to sanctions.

Guterres recently appealed for “unimpeded access,” saying that the world could face dangerous agricultural shortfalls next year unless Russian fertilizer reaches international markets.

The United States says that its sweeping sanctions on Russia over the Ukraine war have exempted agricultural products and accuses Moscow of seeking to distract the world from its own responsibility for shortages.

Last week the United States said it was contributing another $68 million to the World Food Programme to buy 150,000 metric tons of Ukrainian wheat to address food insecurity.

The UN agency warned on Friday that some 22 million people face starvation in Horn of Africa countries where the rising costs of imported food have exacerbated the effects of climate change.

Kenya, Ethiopia and Somalia have suffered the unprecedented failure of four straight rainy seasons.

Malaysia’s highest court Tuesday upheld former prime minister Najib Razak’s 12-year jail sentence for corruption in the 1MDB financial scandal, a decision analysts said could slam the door to a political comeback.

Najib’s daughter-in-law Nur Sharmila Shaheen said the family was told he was sent to Kajang Prison, located south of the capital Kuala Lumpur.

“My father-in-law asked us to take care of the family. He remained strong and calm,” she said.

Federal Court chief justice Maimun Tuan Mat, speaking on behalf of a five-judge panel, said the tribunal found Najib’s “complaints as contained in the petition of appeal devoid of any merit”.

“On the totality of the evidence, we find the conviction of the appellant on all seven charges safe. We also find that the sentence imposed is not manifestly excessive,” she added.

The appeals are “unanimously dismissed and the conviction and sentence are affirmed”, Maimun said.

The 69-year-old former prime minister looked somber and dejected, seated by his wife Rosmah and two children as the verdict was read.

Journalists who were in an adjacent room watching the proceedings through video link saw Najib surrounded by family members, friends and party mates before the connection was cut off.

Outside the court, teary-eyed family members and supporters hugged each other.

Earlier in the day when Najib arrived in court, around 300 supporters mobbed his car chanting “bossku” — “my boss” in Malay — a rallying cry among his defenders.

Just before the verdict was read, Najib, who had said he received an unfair trial, made an impassioned plea asking for a two-month adjournment so he can adequately prepare for a defence.

During a break in the proceedings, he spoke to supporters, telling them “if I am guilty, please forgive me”.

– Barred from elections –

Najib is the UK-educated son of one of Malaysia’s founding fathers who had been groomed for the prime minister’s post from a young age.

The final ruling on the jail sentence also came four years after his long-ruling party’s shock election defeat in 2018, during which allegations he and his friends embezzled billions of dollars from state fund 1MDB were key campaign issues.

A lower court in July 2020 found Najib guilty of abuse of power, money laundering and criminal breach of trust over the transfer of 42 million ringgit ($10 million) from SRC International, a former unit of state fund 1MDB, to his personal bank account.

An appellate court in December denied his appeal, prompting him to go to the Federal Court for a final recourse.

Some analysts said the decision will likely derail any plans by Najib for a political comeback.

“Under Malaysian law, Najib cannot stand for this election and the next election (if found guilty),” James Chin, a professor of Asian studies at the University of Tasmania, told AFP before the verdict was announced.

“Obviously, his political career is gone.” 

There has been speculation that polls may be held this year, though elections are not due until September 2023.

But Oh Ei Sun, principal adviser for think-tank Pacific Research Center of Malaysia, said one way out for Najib is to get the king’s pardon.

“He could still apply for clemency (from the king),” he told AFP. “And if pardoned, as many expect, he could easily mount a comeback as his feudalistically minded supporters are numerous in number.”

Oh said, however, that the current Prime Minister Ismail Sabri Yaakob — who belongs to the same United Malays National Organisation party — must recommend a pardon.

Najib and his ruling party were voted out in 2018 following allegations of their involvement in a multibillion-dollar financial scandal at 1MDB.

He and his associates were accused of stealing billions of dollars from the country’s investment vehicle and spending it on everything from high-end real estate to pricey art.

US new home sales fell sharply in July to their lowest rate since early 2016, the government reported Tuesday, as rising lending rates cool demand.

Americans reduced their new home purchases by 12.6 percent compared to June, to an annual rate of 511,000, seasonally adjusted, continuing a downward trend, the Commerce Department reported.

The results were far weaker than the consensus among economists, who expected to see a much smaller decline. 

After low borrowing costs spurred a boom in homebuying during the pandemic, the sales pace has fallen 29.6 percent from July 2021, the data showed.

“July’s drop continues the steep downtrend in sales since the start of the year,” said Ian Shepherdson of Pantheon Macroeconomics, noting that “new home sales have fallen below pre-pandemic levels.”

Sales last month declined throughout the country by double digits, except in the Northeast.

Mortgage rates have been climbing sharply in recent months as the Federal Reserve cranks up interest rates in its battle against surging inflation.

Central bankers hope the aggressive moves will cool overheated demand throughout the economy, including the housing market, where builders have struggled to keep up amid supply snarls and a labor shortage.

Those factors have contributed to a steady climb in home prices, and the median cost of a new home rose to $439,400 from $414,900 in June.

However, the sales data can be volatile.

“These data are wild month-to-month,” Shepherdson said.

“It’s reasonable to assume that the steepest declines in sales are behind us, though they likely will fall a bit further.”