US Business

Stock markets slid Friday as a much stronger-than-expected US jobs report raised the prospect that the Federal Reserve will maintain its aggressive monetary policy to combat inflation.

Official data published Friday showed the US economy added 528,000 positions, defying all expectations of a slowdown.

Friday’s data also showed US wages jumped, which will add to inflation concerns and likely push the Fed to raise rates aggressively again next month.

The Fed has previously said its decision will be guided by data.

“The key takeaway from the report is that it squashes the friendly notion that the Fed can turn friendly with its monetary policy decisions sooner rather than later,” said Patrick O’Hare, analyst at Briefing.com.

Wall Street stocks opened lower with the Dow and S&P falling one percent and 0.7 percent respectively, while the tech-heavy Nasdaq Composite was down nearly 1.4 percent.

The dollar gained against other major currencies.

Officials have said the US economy remains healthy despite four-decade high inflation and a sharp lift in borrowing costs.

The jobs data “make a mockery of claims that the economy is on the brink of recession”, said Michael Pearce, senior US economist at Capital Economics, said.

“All the details appear to support continued aggressive rate hikes from the Fed,” he said in a note.

In Europe, London equities retreated 0.2 percent one day after the Bank of England unveiled a half-point interest rate hike and forecast UK inflation topping 13 percent on surging domestic energy bills.

The BoE’s rate increase followed more aggressive monetary policy from the European Central Bank and the Fed as authorities crack down on rampant inflation in the wake of Russia’s invasion of Ukraine.

Back in the eurozone, Frankfurt stocks slipped 0.4 percent and Paris sank 0.7 percent.

– ‘Stagflation awaits’ –

“The dire warnings from the BoE are impossible to ignore as other central banks desperately try to avoid a similar fate,” OANDA analyst Craig Erlam told AFP.

“It seems only a matter of time until others are forced to accept that a recession is the price to pay for getting inflation under control.”

He added: “A period of stagflation now awaits the UK — and others may not be far behind as the crushing impact of energy prices wreaks havoc on living standards and saps demand.”

Stagflation is a toxic mixture of stubbornly high consumer prices and low economic growth.

India’s central bank on Friday lifted borrowing costs for the third time in four months to the highest level since summer 2019.

Asian equities mostly rose Friday, with Taipei surging on easing concerns over a conflict with Beijing — even as China conducts its largest-ever military exercises around Taiwan in response to US House Speaker Nancy Pelosi’s visit earlier this week.

Oil prices fell further, one day after WTI crude fell to the level where it had stood before the Ukraine conflict sent the market soaring. 

– Key figures at around 1330 GMT –

London – FTSE 100: DOWN 0.2 percent at 7,430.67 points

Frankfurt – DAX: DOWN 0.4 percent at 13,599.79

Paris – CAC 40: DOWN 0.7 percent at 6,465.23

EURO STOXX 50: DOWN 0.5 percent at 3,640.03

New York – Dow: DOWN 0.7 percent at 32,498.29

Tokyo – Nikkei 225: UP 0.9 percent at 28,175.87 (close)

Hong Kong – Hang Seng Index: UP 0.1 percent at 20,201.94 (close)

Shanghai – Composite: UP 1.2 percent at 3,227.03 (close)

Euro/dollar: DOWN at $1.0153 from $1.0246 Thursday

Pound/dollar: DOWN at $1.2021 from $1.2160

Euro/pound: UP at 84.44 pence from 84.26 pence

Dollar/yen: UP at 134.78 yen from 132.89 yen

Brent North Sea crude: DOWN 1.0 percent at $93.14 per barrel

West Texas Intermediate: DOWN 1.2 percent at $87.41 per barrel

burs-raz/lth

A British cabinet member admitted Friday “I don’t know where Boris is” as the prime minister checked out on holiday, in a week that saw the Bank of England warn a year-long recession is coming.

Boris Johnson has since Wednesday been on a belated honeymoon with wife Carrie, according to Downing Street.

Aides said he still remained at the helm, rather than handing over temporarily to Deputy Prime Minister Dominic Raab, but refused to confirm the honeymoon destination. 

The UK embassy in Ljubljana confirmed that Johnson was on a private visit to Slovenia.

Johnson will have a lot more time on his hands after September 6, when he is due to hand over to either Liz Truss or Rishi Sunak as Conservative leader, but decided to take a break sooner.

Chancellor of the Exchequer Nadhim Zahawi is also on holiday this week, and the opposition Labour party accused the government’s two senior-most members of being “missing in action”.

“I don’t know where Boris is, but I’m in constant contact with him,” Business Secretary and Truss supporter Kwasi Kwarteng told Times Radio. 

He said he exchanges WhatsApp messages with both Johnson and Zahawi “all the time”, and insisted that criticism the government was doing nothing about the economic crisis was “false”.

Zahawi said he had remained in touch with Bank of England governor Andrew Bailey on Thursday after the central bank hiked interest rates from 1.25 to 1.75 percent, the biggest rise in 27 years.

The bank is trying to rein in surging inflation, which it warned could peak at 13.3 percent, as it forecast the UK economy would enter a recession in the fourth quarter that will last until late 2023.

“For me, like I’m sure lots of others, there is no such thing as a holiday and not working. I never had that in the private sector, not in government,” Zahawi said in a statement.

– ‘Magical solutions’ –

Foreign Secretary Truss and Sunak, Zahawi’s predecessor as chancellor, clashed anew over how to address the crisis in a televised debate late Thursday.

“The reality is we’re facing a recession if we carry on with our business-as-usual policies,” Truss, who is leading in surveys of Tory members, told reporters on Friday.

She plans an emergency budget to lower taxes immediately to combat the cost-of-living crisis, and to review the independent Bank of England’s inflation-fighting mandate.

But Sunak said tax cuts financed with more borrowing would force the bank to increase interest rates even more, insisting on the need to maintain fiscal rigour and tame the price pressures first.

Former cabinet minister Liam Fox, who supports Sunak, warned against “magical solutions” via debt-financed tax cuts as proposed by Truss.

The two candidates were due later Friday to host another hustings event in front of Tory members, who have until September 2 to vote. 

At Thursday’s Sky News debate, Truss was forced on the back foot after the moderator highlighted her shifting stances over the years, including a major policy U-turn this week on pay for public-sector workers.

But Sunak also faced embarrassment after video emerged of him telling grassroots Tories in wealthy Kent last week that, as chancellor, he had diverted government funds away from “deprived urban areas”.

His campaign said that in the video, obtained Friday by the New Statesman magazine, Sunak had merely stressed the need to shift the focus of government help to other towns and rural areas.

But senior Labour MP Lisa Nandy said: “This leadership race is revealing the Conservatives’ true colours. 

“It’s scandalous that Rishi Sunak is openly boasting that he fixed the rules to funnel taxpayers’ money to prosperous Tory shires.”

From a 14-minute flight by Drake’s private plane to Taylor Swift’s carbon footprint, celebrities are struggling to shake off a firestorm over their jet emissions amid the climate crisis.

Fury erupted in July when reality star Kylie Jenner shared a picture to her 364 million Instagram users of her and her partner, rapper Travis Scott, in front of two jets with the caption: “you wanna take mine or yours?”

Critics on social media swiftly attacked Jenner, calling her a “climate criminal”.

Then last week, British sustainability marketing firm Yard named and shamed the “worst private jet CO2 emission offenders” among celebrities.

Normally used to topping music charts, US pop star Taylor Swift headlined the unenviable list, prompting a torrent of social media outrage, memes and jokes that she was using her jet to pick up food.

Her jet has flown 170 times since January, with total flight emissions for the year reaching 8,293.54 tonnes, or 1,184.8 times more than the average person, Yard said.

In second place was boxer Floyd Mayweather followed by rapper Jay-Z.

Jenner’s half-sister, reality TV star Kim Kardashian, ranked seventh, having recently flaunted her jet’s cashmere-clad interior. Rapper Scott was 10th while Jenner herself was 19th.

Yard cautioned that its list was “not conclusive to the biggest offenders” as it is based on the “Celebrity Jets” Twitter account, which tracks the flights thanks to public data. It was also impossible to determine if the stars were on all the recorded flights.

“Taylor’s jet is loaned out regularly to other individuals,” Swift’s publicist told media. “To attribute most or all of these trips to her is blatantly incorrect.”

While Drake escaped the top 10 list, the Canadian rapper faced heat over a 14-minute flight between Toronto and Hamilton in July, especially after he said that the “Air Drake” plane was empty.

“This is just them moving planes to whatever airport they are being stored at for anyone who was interested in the logistics… nobody takes that flight,” he said on Instagram.

“It’s even worse if it flew empty,” said Beatrice Jarrige, long-distance mobility project manager at Shift Project, a non-profit focused on climate change.

– ‘Fly with climate bombs’ –

The aviation sector is responsible for two to three percent of carbon dioxide emissions.

But a report in May by Transport & Environment, a European non-government group, showed the carbon footprint of private jets is five to 14 times higher per passenger compared with commercial flights, and 50 times bigger than that of train riders.

“We are allowing people to fly with climate bombs,” said William Todts, executive director of the clean transport campaign group.

The usage of private jets has soared since the coronavirus pandemic, with wealthier customers seeking to avoid any cancellations.

Private jet flights increased by seven percent in 2021 compared to 2019, according to aviation data research firm WingX.

In Europe, celebrities using private jets could use the continent’s vast train network for the majority of their journeys instead, Todts said.

– Jets ‘like taxis’ –

The Celebrity Jets account was created by 19-year-old student Jack Sweeney in 2020 after he started following Elon Musk’s private plane.

He now has 30 accounts tracking sports stars, Meta boss Mark Zuckerberg and even Russian oligarchs.

Sweeney has inspired copycat accounts.

Sebastien, a 35-year-old aerospace engineer who refused to give his real name, created in April the “I Fly Bernard” account that follows flights by French billionaires including Bernard Arnault, the head of luxury giant LVMH.

“What I wish to condemn is their use of private jets like taxis,” he said, pointing to their multiple domestic and European flights.

Arnault has not yet responded to the online criticism. 

Jarrige hopes the anger on social media turns into political action.

“It is not a question of totally banning such flights, but the richest must make an effort to be more restrained,” she said, calling for more investment in railways.

Todts said celebrities can and should do more to encourage the development of biofuels rather than kerosene.

“If they actually use their power to buy clean fuels, it would encourage the industry to develop them,” he said.

The commercial aviation sector said last year that sustainable fuels are “key” to carbon neutrality objectives that it has set for 2050.

A British cabinet member admitted Friday “I don’t know where Boris is” as the prime minister checked out on holiday, in a week that saw the Bank of England warn a year-long recession is coming.

Boris Johnson has since Wednesday been on a belated honeymoon with wife Carrie. Downing Street has refused to say where, but The Times newspaper said the couple were in Slovenia.

Johnson will have a lot more time on his hands after September 6, when he is due to hand over to either Liz Truss or Rishi Sunak as Conservative leader, but decided to take a break sooner.

The opposition Labour party accused the government’s two senior-most ministers of being “missing in action” — with Chancellor of the Exchequer Nadhim Zahawi also on holiday this week.

“I don’t know where Boris is, but I’m in constant contact with him,” Business Secretary and Truss supporter Kwasi Kwarteng told Times Radio. 

He said he exchanges WhatsApp messages with both Johnson and Zahawi “all the time”, and insisted that criticism the government was doing nothing about the economic crisis was “false”.

Zahawi said he had remained in touch with Bank of England governor Andrew Bailey on Thursday after the central bank hiked interest rates from 1.25 to 1.75 percent, the biggest rise in 27 years.

The bank is trying to rein in surging inflation, which it warned could peak at 13.3 percent, as it forecast the UK economy would enter a recession in the fourth quarter that will last until late 2023.

“For me, like I’m sure lots of others, there is no such thing as a holiday and not working. I never had that in the private sector, not in government,” Zahawi said in a statement.

– ‘Magical solutions’ –

Foreign Secretary Truss and Sunak, Zahawi’s predecessor as chancellor, clashed anew over how to address the crisis in a televised debate late Thursday.

“The reality is we’re facing a recession if we carry on with our business-as-usual policies,” Truss, who is leading in surveys of Tory members, told reporters on Friday.

She plans an emergency budget to lower taxes immediately to combat the cost-of-living crisis, and to review the independent Bank of England’s inflation-fighting mandate.

But Sunak said tax cuts financed with more borrowing would force the bank to increase interest rates even more, insisting on the need to maintain fiscal rigour and tame the price pressures first.

Former cabinet minister Liam Fox, who supports Sunak, warned against “magical solutions” via debt-financed tax cuts as proposed by Truss.

The two candidates were due later Friday to host another hustings event in front of Tory members, who have until September 2 to vote. 

At Thursday’s Sky News debate, Truss was forced on the back foot after the moderator highlighted her shifting stances over the years, including a major policy U-turn this week on pay for public-sector workers.

But Sunak also faced embarrassment after video emerged of him telling grassroots Tories in wealthy Kent last week that, as chancellor, he had diverted government funds away from “deprived urban areas”.

His campaign said that in the video, obtained Friday by the New Statesman magazine, Sunak had merely stressed the need to shift the focus of government help to other towns and rural areas.

But senior Labour MP Lisa Nandy said: “This leadership race is revealing the Conservatives’ true colours. 

“It’s scandalous that Rishi Sunak is openly boasting that he fixed the rules to funnel taxpayers’ money to prosperous Tory shires.”

European stock markets slid Friday after the Bank of England’s gloomy recession warning raised the spectre of stagflation, and as investors awaited critical US payrolls data, dealers said.

London equities retreated 0.2 percent one day after the BoE unveiled a half-point interest rate hike and forecast UK inflation topping 13 percent on surging domestic energy bills.

The hike followed more aggressive monetary policy from the European Central Bank and US Federal Reserve as authorities crack down on rampant inflation in the wake of Russia’s invasion of Ukraine.

India on Friday lifted borrowing costs for the third time in four months to the highest level since summer 2019.

Back in the eurozone, Frankfurt stocks slipped 0.1 percent and Paris sank 0.5 percent, despite modest gains in Asia.

Oil prices held steady, one day after WTI crude fell to the level where it had stood before the Ukraine conflict sent the market soaring. 

– ‘Stagflation awaits’ –

“The dire warnings from the BoE are impossible to ignore as other central banks desperately try to avoid a similar fate,” OANDA analyst Craig Erlam told AFP.

“It seems only a matter of time until others are forced to accept that a recession is the price to pay for getting inflation under control.”

He added: “A period of stagflation now awaits the UK — and others may not be far behind as the crushing impact of energy prices wreaks havoc on living standards and saps demand.”

Stagflation is a toxic mixture of stubbornly high consumer prices and low economic growth.

Later on Friday, traders will focus on key US non-farm payrolls (NFP) data that could stoke fears of a prolonged downturn in the world’s number one economy.

“Market participants will closely scrutinize today’s NFP report for any signs that weakness in activity data in the US economy is starting to spill-over into the labour market with a lag which would heighten (US) recession fears,” said MUFG analyst Lee Hardman.

Asian equities mostly rose Friday, with Taipei surging on easing concerns over a conflict with Beijing — even as China conducts its largest-ever military exercises around Taiwan in response to US House Speaker Nancy Pelosi’s visit earlier this week.

And while many analysts are beating the drum of a global recession, traders are also hopeful of a reprieve from monetary tightening.

“The recent fall in oil prices, which are now trading below the levels immediately before Russia’s invasion of Ukraine, has contributed to the market’s perception that inflation is likely to peak soon, taking pressure off the Fed to raise rates as aggressively,” said National Australia Bank’s Rodrigo Catril. 

The Fed has said its rate decision will be guided by data, with signs of economic weakness seen as likely to mean any increases will be light.

Officials have said the US economy remains healthy despite four-decade high inflation and a sharp lift in borrowing costs.

– Key figures at around 1030 GMT –

London – FTSE 100: DOWN 0.2 percent at 7,434.14 points

Frankfurt – DAX: DOWN 0.1 percent at 13,648.93

Paris – CAC 40: DOWN 0.5 at 6,479.50

EURO STOXX 50: DOWN 0.4 percent at 3,740.74

Tokyo – Nikkei 225: UP 0.9 percent at 28,175.87 (close)

Hong Kong – Hang Seng Index: UP 0.1 percent at 20,201.94 (close)

Shanghai – Composite: UP 1.2 percent at 3,227.03 (close)

New York – Dow: DOWN 0.3 percent at 32,726.82 (close)

Euro/dollar: DOWN at $1.0225 from $1.0246 Thursday

Pound/dollar: DOWN at $1.2147 from $1.2160

Euro/pound: DOWN at 84.19 pence from 84.26 pence

Dollar/yen: UP at 133.00 yen from 132.89 yen

Brent North Sea crude: FLAT at $94.11 per barrel

West Texas Intermediate: FLAT at $88.52 per barrel

burs-rfj/lcm