US Business

Asian markets fluctuated Tuesday as investors struggled to maintain a global rally, with inflation continuing to niggle owing to a pick-up in oil prices while a top Federal Reserve official pressed for a series of sharp interest rate hikes.

With Wall Street closed for a holiday there were few catalysts to help extend the gains enjoyed in recent days, allowing inflation and borrowing costs to take centre stage.

Crude prices built on Monday’s advance after the European Union reached a deal on a partial embargo of Russian imports as part of a punishment for its invasion of Ukraine.

Brent broke above $122 for the first time in two months and WTI was sitting around $117 as European chiefs said the latest sanction would ban purchases of Russian oil delivered by sea, though there would be a temporary exemption for pipelines.

While widely expected, the agreement adds further upside to crude just as China begins to ease Covid restrictions in Shanghai and Beijing, raising the likelihood of a jump in demand from the world’s number two economy.

The lift in oil prices will help fan already elevated inflation and pile further pressure on central banks to tighten monetary policy to prevent it running out of control.

In a sign of the struggle policymakers face, German prices are rising at their fastest pace ever while Spain’s topped forecasts. 

In the United States, the chances of an extended period of rate hikes were increased after Federal Reserve Governor Christopher Waller said he favoured half-point hikes “for several meetings” until inflation slows towards the bank’s two percent target. 

He added that his goal was in line with market expectations, which is about 2.75 percent in December. 

Joe Biden is due to hold talks with Fed boss Jerome Powell on Tuesday to discuss the inflation situation. US jobs data Friday will provide an update on the state of the US economy in light of soaring prices and rising rates.

The prospect of a period of rates rising higher for longer lifted the dollar against the euro, pound and yen as well as other currencies. 

Asian equity markets swung through the morning, though there was some cheer from data showing China’s manufacturing shrunk in May at a slower rate than expected.

Hong Kong edged slightly lower after two days of gains that saw it put on around five percent, while Shanghai was also marginally off.

Sydney, Taipei and Manila were also in the red, though Tokyo, Seoul, Singapore, Jakarta and Wellington rose.

But AXA Investment Managers’ Chris Iggo warned that another 10-15 percent retreat for stocks could still be a possibility.

“The mood is temporarily better in markets,” he said, adding that “I think the worst is over for bond markets but picking the bottom in equities is trickier.”

– Key figures at around 0230 GMT –

Tokyo – Nikkei 225: UP 0.1 percent at 27,404.14 (break)

Hong Kong – Hang Seng Index: DOWN 0.2 percent at 21,092.51

Shanghai – Composite: DOWN 0.1 percent at 3,147.12

Euro/dollar: DOWN at $1.0754 from $1.0779 on Monday

Pound/dollar: DOWN at $1.2621 from $1.2650

Euro/pound: DOWN at 85.20 pence from 85.21 pence

Dollar/yen: UP at 128.10 yen from 127.59 yen

Brent North Sea crude: UP 0.4 percent at $122.20 per barrel

West Texas Intermediate: UP 2.2 percent at $117.54

New York – Dow: Closed for a holiday

London – FTSE 100: UP 0.2 percent at 7,600.06 points (close)

A Mexican judge has indefinitely suspended construction of part of President Andres Manuel Lopez Obrador’s flagship tourist train project in the Yucatan peninsula on environmental grounds, campaigners said Monday.

The ruling follows a legal challenge brought by opponents, including scuba divers, who are concerned about the impact of the Mayan Train on wildlife, caves and water-filled sinkholes known as cenotes.

The indefinite halt to work on the 60-kilometer (37-mile) section between the resorts of Playa del Carmen and Tulum goes a step further than a provisional suspension order issued in April.

The federal judge cited the “imminent danger” of causing “irreversible damage” to ecosystems, according to one of the plaintiffs, the non-governmental group Defending the Right to a Healthy Environment.

Authorities were found to have failed to carry out the necessary environmental impact studies before starting construction of the section, one of several being built by the military, it said in a statement.

The National Fund for the Promotion of Tourism, the government agency overseeing the project, said that it expected the work to be allowed to continue after the environmental impact statement is finalized.

It said the document would contain “numerous mitigation actions in favor of the environment.”

Lopez Obrador hopes to inaugurate the roughly 1,500-kilometer (950 mile) rail loop linking popular Caribbean beach resorts and archeological ruins by the end of 2023.

The original plan for the disputed section was for an overpass over a highway, but the route was modified early this year to go through jungle at ground level.

Opponents fear that the construction will cause irreparable damage to a subterranean network of caves, rivers and freshwater sinkholes connected to the Caribbean Sea.

Lopez Obrador has insisted the railroad will not affect the cenotes and alleged that environmentalists have been infiltrated by “impostors.”

EU leaders on Monday backed a ban on most Russian oil imports, after a compromise deal with Hungary to punish Moscow for the war in Ukraine.

The 27-nation bloc has spent weeks haggling over a proposed total embargo on Russian oil but came up against stubborn resistance from Hungarian Prime Minister Viktor Orban.

EU leaders meeting in Brussels hatched a compromise deal to exempt deliveries arriving in Europe by pipeline from the ban, after Budapest warned halting supplies would wreck its economy.

“Agreement to ban export of Russian oil to the EU. This immediately covers more than two thirds of oil imports from Russia, cutting a huge source of financing for its war machine,” European Council chief Charles Michel tweeted during the summit. 

“Maximum pressure on Russia to end the war.”

The head of the EU’s executive, Ursula von der Leyen, said the move “will effectively cut around 90 percent of oil imports from Russia to the EU by the end of the year” as Germany and Poland had committed to renounce deliveries via a pipeline to their territory. 

“Russia has chosen to continue its war in Ukraine. Tonight, as Europeans, united and in solidarity with the Ukrainian people, we are taking new decisive sanctions,” French President Emmanuel Macron tweeted, echoing the figure of 90 percent by the end of 2022. 

The wrangling over the sixth package of sanctions has rocked European unity in the face of the Kremlin’s attack on Ukraine after five waves of unprecedented economic punishment on Russia.

The compromise excluded the Druzhba pipeline from the oil embargo and only imposed sanctions on crude shipped to the EU by tanker vessel.

Despite the gap in the embargo left by Hungary’s opposition, the latest round of sanctions represents some of the most damaging measures taken by the EU so far.

The EU imports some 26 percent of its oil from Russia and has been criticised for keeping money flowing to Moscow’s coffers at the same time as it seeks to halt the Kremlin’s war. 

Michel said the sanctions package also involved disconnecting Russia’s biggest bank Sberbank from the global SWIFT system, banning three state broadcasters and blacklisting individuals blamed for war crimes.

He also said that the EU had agreed to to send Ukraine nine billion euros ($9.7 billion) to support Kyiv’s “immediate liquidity needs” as it grapples with Russia’s invasion. 

– Stop ‘quarrels’ –

The negotiations over the oil ban had dogged the EU for weeks and the bloc’s leaders got chivvied along Monday by Ukraine’s President Volodymyr Zelensky.

Zelensky, in a video address, called on them to adopt “effective” sanctions against Russian oil to make the Kremlin pay the price for its war on Ukraine.

“All quarrels in Europe must end, internal disputes that only encourage Russia to put more and more pressure on you,” Zelensky told the EU summit.

“It is time for you to be not separate, not fragments, but one whole.”

Orban, often the odd man out in EU decision making, had called the proposal only to stop oil deliveries to the EU by ship a “good solution” before the talks began.

“It means that an atomic bomb won’t be thrown on the Hungarian economy,” he said. 

But he warned that Budapest needed a “guarantee” it could keep on receiving Russian oil by sea if anything happened to the pipeline crossing Ukraine.

Michel said the EU had “decided to take the appropriate measures to react and to make sure that we will protect the security of supply”.

– Return to Hungary issue? –

Landlocked Hungary imports 65 percent of its oil from Russia through the Druzhba pipeline and, along with Slovakia and the Czech Republic, had asked for an exception from the import ban.

Diplomats said a two-year delay to the embargo had been offered to the countries concerned, but that Budapest wanted at least four years and nearly 800 million euros ($860 million) in EU funding to adapt its refineries.

Von der Leyen said that the EU would return “as soon as possible in one way or the other” to the issue of trying to ban oil through the Druzhba pipeline to Hungary.

Budapest’s intransigence came on the back of Orban’s recent resounding re-election to a fourth term and some experts are sceptical about the official claims of alarm over a Russian oil ban.

Further complicating the stand-off had been Hungary’s share of the EU’s 800-billion-euro recovery fund, which Brussels has yet to approve due to disagreements over Budapest’s respect for the rule of law.

burs-del/dc/mtp

Ukraine’s President Volodymyr Zelensky urged the European Union Monday to stop its “quarrels” and adopt fresh sanctions on Russia as the bloc’s leaders sought a compromise deal with Hungary to target Moscow’s key oil exports.

The 27-nation EU has spent weeks haggling over a proposed embargo on Russian oil but come up against stubborn resistance from Hungarian premier Viktor Orban.

Leaders meeting in Brussels were hoping to persuade Orban to accept a watered-down version of the ban that would keep the oil flowing by pipeline to a handful of countries, including Hungary. 

Zelensky, in a video address, called on them to adopt “effective” sanctions against Russian oil to make the Kremlin pay the price for its war on Ukraine.

“All quarrels in Europe must end, internal disputes that only encourage Russia to put more and more pressure on you,” Zelensky told the EU summit. 

“It is time for you to be not separate, not fragments, but one whole.”

Orban, often the odd man out in EU decision making, said a proposal only to stop oil deliveries to the EU by ship was a “good solution” as he arrived for the talks.

“It means that an atomic bomb won’t be thrown on the Hungarian economy,” he said. 

But he warned that Budapest still needed a “guarantee” it could keep on receiving Russian oil by sea if anything happened to the pipeline crossing Ukraine.

Orban said “there is no agreement at all” yet. 

He did not, however, threaten to veto the leaders’ planned summit statement, arguing that it was the European Commission’s job to fine-tune the sanctions package.

– ‘Getting closer’ –

A sixth wave of EU measures against Moscow was put on the table four weeks ago, but EU unity shown in implementing five earlier waves of unprecedented sanctions on Moscow appeared to have hit its limit.

The latest proposed compromise would exclude the Druzhba pipeline from the oil embargo and only impose sanctions on crude shipped to the EU by tanker vessel, which counts for two-thirds of Russian oil imports.

While French President Emmanuel Macron told reporters that a long-sought-after deal was “getting closer”, others doubted that.

“I don’t think we’ll reach an agreement today,” Estonian Prime Minister Kaja Kallas said ahead of the summit.

“Of course, we’re going to have discussions, but everybody needs to be on board,” she said, adding that she did not expect a solution before another summit to be held in late June. 

An EU official said the leaders would attempt to find a “political agreement” on the Russian oil ban, with exceptions for specific countries worked out “as soon as possible”.

EU sanctions require the backing of all member states and ambassadors fell short of finalising a deal just hours before the start of the summit. 

– ‘Orban’s antics’ –

Landlocked Hungary imports 65 percent of its oil from Russia through the Druzhba pipeline and, along with Slovakia and the Czech Republic, has asked for an exception from the import ban.

Diplomats said a two-year delay to the embargo had been granted to the countries concerned, but that Budapest wanted at least four years and nearly 800 million euros ($860 million) in EU funding to adapt its refineries.

“There is quite a lot of sympathy for Hungary’s oil supply issues, which are great, despite the antics by Orban,” an EU diplomat said on condition of anonymity.

Hungary’s intransigence comes on the back of Orban’s recent resounding re-election to a fourth term and some experts are sceptical about the official claims of alarm over a Russian oil ban.

Further complicating the stand-off is Hungary’s share of the EU’s 800-billion-euro recovery fund, which Brussels has yet to approve due to disagreements over Budapest’s respect for the rule of law.

burs-del/rmb/jj

Low-cost carrier Norwegian Air Shuttle said Monday it would buy 50 Boeing 737 MAX 8 planes, ending a dispute between the companies and helping revive the US-made aircraft after two deadly crashes.

The jets will be delivered between 2025 and 2028, or around the same time that Norwegian’s aircraft leasing deals come to an end, and the contract includes an option for 30 more, the company said in a statement.

The order is welcome news for the US manufacturer’s flagship Boeing 737 MAX 8, which was grounded for 20 months following two fatal accidents and has been gradually returning to service since late 2020. 

Norwegian’s order is part of “the resolution of a dispute we have” with Boeing, the company’s chief executive Geir Karlsen told broadcaster TV2.

The Nordic low-cost carrier and Boeing have been locked in a legal battle for several years, with the Norwegian carrier launching legal proceedings against the US giant for compensation following setbacks related to its 737 MAX and 787 Dreamliner long-range jets.

Without giving further details, Karlsen mentioned “a compensation of two billion kroner ($212 million, 197 million euros) that we used to buy planes under advantageous conditions.”

According to Karlsen, the price paid is “much lower” than the one Norwegian had to pay a few years ago for its first 737 MAX — which it has since sold — but also than the one offered by European competitor Airbus.

Norwegian said the deal remains subject to “various closing conditions” that it hopes will be concluded by the end of June.

The company, which currently operates 61 aircraft, plans to ramp up operations to have 70 in service this summer and 85 in the summer of 2023. 

– ‘Becoming more normal’ –

Plagued by over-ambitious expansion, technical problems and the Covid pandemic, the company narrowly avoided bankruptcy last year via an extensive restructuring that led it, among other things, to give up its long-haul flight, reduce its fleet and cancel numerous orders.

Securing the 50 aircraft means Norwegian is also returning to fully owning its own fleet after it was forced to rely on leased aircraft due to its financial woes.

Unless the option to buy more aircraft is implemented, Norwegian’s flight capacity is not expected to increase beyond what has already been announced. 

“This is rather a sign of an airline that is becoming more normal, that no longer lives exclusively on leased aircraft but owns part of its fleet itself,” Sydbank analyst Jacob Pedersen commented to business website e24.no. 

For Boeing, this order solidifies the revival of the 737 MAX aircraft.

The 737 MAX was temporarily grounded worldwide following two crashes in Indonesia and Ethiopia, in 2018 and 2019, that killed a combined 346 people.

After Caribbean Arajet and American Allegiant Air put in orders for the aircraft, British carrier IAG — parent company of British Airways — also just ordered 50 planes with an option for 100 more.

Norwegian on Monday also noted that the Boeing 737 MAX 8 is “approximately 14 percent more fuel-efficient compared to the previous-generation aircraft,” thus limiting emissions and cutting energy costs in view of rising fuel prices.

French officials on Monday continued their centuries-long battle to preserve the purity of the language, overhauling the rules on using English video game jargon.

While some expressions find obvious translations — “pro-gamer” becomes “joueur professionnel” — others seem a more strained, as “streamer” is transformed into “joueur-animateur en direct”.

The culture ministry, which is involved in the process, told AFP the video game sector was rife with anglicisms that could act as “a barrier to understanding” for non-gamers.

France regularly issues dire warnings of the debasement of its language from across the Channel, or more recently the Atlantic.

Centuries-old language watchdog the Academie Francaise warned in February of a “degradation that must not be seen as inevitable”.

It highlighted terms including train operator SNCF’s brand “Ouigo” (pronounced “we go”) along with straightforward imports like “big data” and “drive-in”.

However, Monday’s changes were issued in the official journal, making them binding on government workers.

Among several terms to be given official French alternatives were “cloud gaming”, which becomes “jeu video en nuage”, and “eSports”, which will now be translated as “jeu video de competition”.

The ministry said experts had searched video game websites and magazines to see if French terms already existed.

The overall idea, said the ministry, was to allow the population to communicate more easily.