US Business

Twitter’s lawsuit to force Elon Musk to complete his $44 billion buyout bid is set to go to trial on October 17, a US judge has ordered, in a case with major stakes for both sides.

The trial is due to open in a court in the eastern state of Delaware and is set to last five days to decide whether Musk can walk away from the deal.

The Tesla boss wooed Twitter’s board with a $54.20 per-share offer, but then in July announced he was “terminating” their agreement on accusations the firm misled him regarding its tally of fake and spam accounts.

Twitter has countered by saying Musk already agreed to the deal and can’t back out now.

An order from the judge handling the case, Kathaleen McCormick, lays out an expedited schedule to resolve a fight that has left Twitter in limbo.

She reminds both sides that they “shall cooperate in good faith” on matters like handing over information to each other, a key topic that can result in delays. 

Billions of dollars are at stake, but so is the future of Twitter, which Musk has said should allow any legal speech — an absolutist position that has sparked fears the network could be used to incite violence.

Twitter blamed disappointing results last week on “headwinds,” including the uncertainty imposed on the company by Musk’s chaotic buyout bid.

European stock markets rose robustly on Friday as official data showed eurozone growth holding up in the face of soaring inflation.

Stock markets in Asia ended the session lower after data showed that the US economy contracted again, reinforcing recession fears.

Wall Street opened higher, adding to Wednesday’s rally on expectations that the US Federal Reserve will slow its pace of interest rate hikes.

After an extended period of pessimism on trading floors, investors were beginning to speculate that the market may be bottoming out. 

The EU’s official data agency said the 19-country eurozone’s economy grew by 0.7 percent in the second quarter, even though inflation rose to a new record of 8.9 percent in July. 

A day earlier, US data showed the world’s biggest economy shrank by 0.9 percent in the period from April to June after already contracting by 1.6 percent in the preceding three months. 

But the reading was taken as a sign of good news, since it could give the Fed room to take its foot off the pedal and treasury yields — considered a barometer of future interest rates — eased.

Officials were expected to continue raising US interest rates, but analysts estimate they would announce a half-point rise in September, compared with three-quarters of percentage point at the past two meetings.

“Stocks continued their rally in Europe on Friday … as market sentiment improved following reassuring macro data in addition to positive corporate results,” said ActivTrades analyst Pierre Veyret.

The prospect of US interest rates not rising as fast as previously expected has knocked the dollar slightly after soaring against other major currencies in recent months.

A second successive contraction in growth is widely considered a technical recession, although it is not officially considered so in the United States until identified as such by the National Bureau of Economic Research.

But while debate rages over that issue, the consensus is that the economy is struggling.

“The more important point is that the economy has quickly lost steam in the face of four-decade high inflation, rapidly rising borrowing costs, and a general tightening in financial conditions,” said Sal Guatieri, of BMO Capital Markets.

China is also struggling, hit by Covid-induced lockdowns in major cities including Shanghai and Beijing that have hammered all sectors and supply chains.

The euro failed to get much mileage from the surprisingly good eurozone growth figures as investors focused on the inflation data, which was worse than expected.

“This means that consumers are facing even more pressure on their disposable incomes, which should translate into lower spending and thus weaker economic activity,” said Fawad Razaqzada at City Index and FOREX.com.

After initially rising after the data release, it later fell back against the dollar.

Crude prices jumped by three percent as traders focused on supply concerns, with the main US contract, WTI, rising back above $100 per barrel.

“Oil prices are rising again amid reports that OPEC+ will leave output targets unchanged next month when it meets on Wednesday,” said Craig Erlam at OANDA trading platform.

– Key figures at around 1330 GMT –

London – FTSE 100: UP 1.0 percent at 7,446.27 points

Frankfurt – DAX: UP 1.3 percent at 13,449.94

Paris – CAC 40: UP 1.8 percent at 6,453.45

EURO STOXX 50: UP 1.4 percent at 3,704.06

New York – Dow: UP less than 0.1 percent at 32,534.12

Tokyo – Nikkei 225: DOWN 0.1 percent at 27,801.64 (close)

Hong Kong – Hang Seng Index: DOWN 2.3 percent at 20,156.51 (close)

Shanghai – Composite: DOWN 0.9 percent at 3,253.24 (close)

Euro/dollar: DOWN at $1.0158 from $1.0197 Thursday

Pound/dollar: DOWN at $1.2081 from $1.2177 

Euro/pound: UP at 84.10 pence from 83.70 pence

Dollar/yen: UP at 134.35 yen from 134.25 yen

Brent North Sea crude: UP 3.0 percent at $110.39 per barrel

West Texas Intermediate: UP 3.8 percent at $100.12 per barrel

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A key US inflation measure accelerated again in June, outpacing gains in income, government data showed Friday, heaping pressure on President Joe Biden and policymakers trying to ease the pain for American families.

The data showing the biggest inflation surge in four decades comes on the heels of dismal economic growth figures and another super-sized interest rate increase by the Federal Reserve.

The Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) price index, rose 6.8 percent compared to June 2021, the Commerce Department reported.

And inflation jumped 1.0 percent compared to May, in line with economists’ expectations but outpacing personal income, which rose just 0.6 percent, the same increase as the prior month, according to the report.

Consumers buoyed by a stockpile of savings during the pandemic splurged on goods, cars and homes last year, but global supply chain snarls and worker shortages pushed prices higher — factors worsened by Russia’s war on Ukraine, which sent food and energy prices soaring worldwide.

Excluding the volatile food and energy components, the “core” PCE price index gained a more moderate 4.8 percent in the last 12 months, just a tenth higher than May but continuing a gradual slowing.

The Fed focuses on the PCE price index, as it reflects consumers’ actual spending, including shifts to lower cost items, unlike the more well-known consumer price index, which jumped 9.1 percent in June.

The PCE also gives less weight to things like rent, vehicles and airline fares, which have contributed to the blistering pace of the CPI rise

The Fed has been aggressively raising borrowing rates this year, with the fourth increase announced Wednesday, as it aims to cool the economy.

Central bankers face the difficult task of easing price pressures that are squeezing US households without causing a severe economic downturn.

One concern is that demands for higher pay amid a worker shortage could cause a wage-price spiral.

In a separate data report, the Labor Department said worker compensation, including wages and benefits, rose 1.3 percent in the three-months ended in June and up 5.1 percent in the latest 12 months.

Nancy Vanden Houten of Oxford Economics said the hotter-than-expected gain does not provide the compelling evidence of slowing inflation the central bank is seeking.

“The Q2 employment cost data doesn’t provide any evidence that wage growth is slowing and leaves the Fed on track to lift the funds rate another 75bps at its September meeting,” she said.

Higher prices helped Procter & Gamble score increased quarterly profits despite a hit to China sales, and executives on Friday described inflation as having a relatively limited impact thus far on demand.

Chief Executive Jon Moeller alluded to “significant headwinds” faced by the consumer products giant including a strengthening US dollar, higher costs and Covid upheaval, but praised the performance of the firm behind well-known brands like Pampers diapers and Crest toothpaste.

The company “delivered strong top-line growth, earnings growth and significant cash return to shareholders in the face severe cost and operational headwinds,” Moeller said in a statement.

Profits in the final quarter of the company’s fiscal year rose $3.1 billion, up five percent on revenues of $19.5 billion, which were three percent higher than the year-ago period.

Sales were boosted by an eight percent increase in pricing. 

However, P&G executives said sales in China suffered an 11 percent hit due to Covid-19 lockdowns, with the earnings release highlighting the impact in beauty, grooming and health care.

With restrictions in China easing “we are seeing a gradual return to consumer mobility,” said Chief Financial Officer Andre Schulten. “And that is certainly helping consumption.”

Schulten said P&G has seen relatively little incidence of consumers “trading down” to lower-priced products because of inflation.

“You see consumers may be skimp for a period of time, use up inventory,” he told reporters on a briefing. “But it’s more benign than we would have expected based on historical data.”

Moeller, in an interview with CNBC, did not discount the possibility that the US economy could be heading into a recession, but said consumers were still showing robustness.

“We’ve got a very strong labor market. Consumer balance sheets are generally strong,” Moeller told the network. “So based on that slice that we see, at least some of the US economy, things are very good.”

P&G’s earnings-per-share of $1.21 missed analyst expectations by two cents, while revenues slightly topped estimates.

Shares fell 4.7 percent to $141.18 just after trading opened.

The World Bank said Friday it would not offer new funding to Sri Lanka unless the bankrupt island nation carried out “deep structural reforms” to stabilise its crashing economy.

Sri Lanka has suffered an unprecedented downturn with its 22 million people enduring months of food and fuel shortages, rolling blackouts and rampant inflation. 

The South Asian nation defaulted on its $51-billion foreign debt in April and huge protests earlier this month forced then president Gotabaya Rajapaksa to flee the country and resign.

The World Bank said it was concerned about the impact of the crisis on Sri Lanka’s people but was not ready to give funds until the government had bedded down necessary reforms. 

“Until an adequate macroeconomic policy framework is in place, the World Bank does not plan to offer new financing to Sri Lanka,” the lender said in a statement.

“This requires deep structural reforms that focus on economic stabilisation, and also on addressing the root structural causes that created this crisis.”

The World Bank said it had already diverted $160 million from existing loans to finance urgently needed medicines, cooking gas and school meals.

Sri Lanka is currently in bailout talks with the International Monetary Fund but officials say the process could take months.

The island nation has run out of foreign exchange to finance even the most essential imports, and chronic shortages have inflamed public anger.

Motorists stay in long queues for days to get rationed petrol and government officials have been told to work from home to reduce commuting and save fuel.

Inflation rose to 60.8 percent in July for a tenth consecutive monthly record, according to data from the Colombo Consumer Price Index (CCPI) released Friday, while the Sri Lankan rupee has lost more than half its value against the US dollar this year.

The UN World Food Programme estimates five out of every six Sri Lankan families have been forced to buy lower-quality food, eat less or in some cases skip meals altogether.

The crisis came to a head on July 9, when tens of thousands of protesters stormed Rajapaksa’s residence, forcing the president to flee to Singapore and resign.

His successor, Ranil Wickremesinghe, has declared a state of emergency and vowed a tough line against “trouble-makers”, with several activists who helped lead the mass demonstrations arrested this week.

So-called “ultra-fast fashion” has won legions of young fans who are able to snap up relatively cheap clothes online, but campaigners say the trend masks darker environmental problems. 

Britain’s Boohoo, China’s SHEIN and Hong Kong’s Emmiol are the main players in a sector that produces items and collections at breakneck speed and rock-bottom prices.

Their internet-based business model provides fierce competition to better-known “fast fashion” chains with physical stores, like Sweden’s H&M and Spain’s Zara.

According to Bloomberg, SHEIN generated $16 billion in global sales last year.

However, environmental pressure groups slam the “throwaway clothing” phenomenon as grossly wasteful — it takes 2,700 litres of water to make one T-shirt that is swiftly binned.

“Many of these cheap clothes end up… on huge dump sites, burnt on open fires, along riverbeds and washed out into the sea, with severe consequences for people and the planet,” Greenpeace says. 

Nevertheless, with inflation across the globe soaring to the highest level in decades, there is huge demand for low-price garments. 

And after the coronavirus pandemic, high-street shops with big overhead costs are struggling to compete.

– ‘Quantity not quality’ –

With T-shirts costing just the equivalent of $4.80 and bikinis and dresses selling for just under $10, for high-school students, such as 18-year-old Lola from the French city of Nancy, ultra-fast fashion shopping appears to offer unbeatable bargains. 

Turning a blind eye to the environmental cost, she says brands such as SHEIN allow her to follow the latest trends “without spending an astronomical amount”. 

Lola says she normally places two or three orders per month on SHEIN with an average combined value of 70 euros ($71) for about 10 items.

Ultra-fast fashion’s young target demographic are looking for “quantity rather than quality,” says economics professor Valerie Guillard at Paris-Dauphine University.

Much of the success of SHEIN, which was founded in late 2008, is attributable to its massive presence on social media networks, such as TikTok, Instagram and YouTube.

In so-called “haul” videos, customers unwrap SHEIN packages, try on clothes and review them online.

On TikTok alone, there are 34.4 billion mentions of the hashtag #SHEIN and six billion for #SHEINhaul.

The brands also extend their reach via low-cost partnerships with so-called social-media influencers to build trust and increase sales.

Irish influencer Marleen Gallagher, 45, who works with SHEIN and other firms, praised them for offering broader-size ranges. 

“They are unrivalled when it comes to choices for plus-size women,” she told AFP.

– Carbon footprint –

But not only does the industry have a reputation for devouring valuable resources and damaging the environment, ultra-fast fashion companies have also been plagued by scandals over allegedly poor working conditions in their factories.

Swiss-based NGO Public Eye discovered in November 2022 that employees in some SHEIN factories worked up to 75 hours per week, in contravention of China’s labour laws.

Britain’s Boohoo similarly faced criticism following media reports that its suppliers were underpaying workers in Pakistan.

The industry’s carbon footprint is equally disastrous.

The French Agency for Ecological Transition estimates that fast fashion accounts for two percent of global greenhouse emissions per year — as much as air transport and maritime traffic combined.

It comes as no surprise, then, that climate campaigner Greta Thunberg is damning.

“The fashion industry is a huge contributor to the climate and ecological emergency, not to mention its impact on the countless workers and communities who are being exploited around the world in order for some to enjoy fast fashion that many treat as disposables,” Thunberg wrote last year. 

The authorities are also beginning to scrutinise the brands’ practices. 

The British Competition and Markets Authority has opened a “greenwashing” probe against Boohoo, Asos and George at Asda over concerns that some of the environmental claims about their products are misleading. 

Charlotte, 14, says she has decided to stop ordering from SHEIN and Emmiol. 

“I was happy to have new clothes, but then I felt guilty,” she said.

Now “I look for them on Vinted”, an online marketplace for buying and selling new and secondhand items, the teenager said. 

The World Bank said Friday it would not offer new funding to Sri Lanka unless the bankrupt island nation carried out “deep structural reforms” to stabilise its crashing economy.

Sri Lanka has suffered an unprecedented downturn with its 22 million people enduring months of food and fuel shortages, rolling blackouts and rampant inflation. 

The South Asian nation defaulted on its $51-billion foreign debt in April and huge protests earlier this month forced then president Gotabaya Rajapaksa to flee the country and resign.

The World Bank said it was concerned about the impact of the crisis on Sri Lanka’s people but was not ready to give funds until the government had bedded down necessary reforms. 

“Until an adequate macroeconomic policy framework is in place, the World Bank does not plan to offer new financing to Sri Lanka,” the lender said in a statement.

“This requires deep structural reforms that focus on economic stabilisation, and also on addressing the root structural causes that created this crisis.”

The World Bank said it had already diverted $160 million from existing loans to finance urgently needed medicines, cooking gas and school meals.

Sri Lanka is currently in bailout talks with the International Monetary Fund but officials say the process could take months.

The island nation has run out of foreign exchange to finance even the most essential imports, and chronic shortages have inflamed public anger.

Motorists stay in long queues for days to get rationed petrol and government officials have been told to work from home to reduce commuting and save fuel.

The UN World Food Programme estimates the crisis has forced five out of every six Sri Lankan families to buy lower-quality food, eat less or in some cases skip meals altogether.

The crisis came to a head on July 9, when tens of thousands of protesters stormed Rajapaksa’s residence, forcing the president to flee to Singapore and resign.

His successor, Ranil Wickremesinghe, has declared a state of emergency and vowed a tough line against “trouble-makers”, with several activists who helped lead the mass demonstrations arrested this week.