US Business

Asian and European stocks rebounded Friday on China’s interest rate cut, but US equities continued to slump on fears that sky-high inflation will spark a global downturn.

“Markets have been looking for an excuse to bounce, and a China rate cut provided the reason,” IG analyst Chris Beauchamp told AFP.

China’s central bank announced it would lower its five-year loan prime rate — a key interest rate governing how lenders base their mortgage rates — to 4.45 percent from 4.6 percent.

The news comes in contrast to other major central banks — like the US Federal Reserve and the Bank of England — that are raising borrowing costs to combat rocketing consumer prices.

“It isn’t much when set against the broader (rate) tightening we are seeing globally, but equities do look a bit stretched to the downside in the short term,” Beauchamp added.

The Chinese move sparked optimism among traders that it could boost the world’s second-largest economy from its Covid-induced stupor.

“The rate cut announced by the PBOC (People’s Bank of China) is obviously good news and is clearly targeted at revitalising the ailing property market which continues to suffer due to the crackdown last year and Covid lockdowns this,” said Craig Erlam, senior market analyst at OANDA.

“This could help to revive a hugely important part of the economy,” he added, but “whether it’s enough to help China hit its 5.5 percent growth target this year is another thing.” 

Asian stocks closed with gains, as did Europe’s main markets although those faded as the day wore on. 

Wall Street opened higher, but then sank lower in morning trading. 

“Stocks remain on a shaky footing,” said market analyst Fawad Razaqzada at City Index and FOREX.com.

He said investors are worried about inflation, interest rate hikes, low economic growth, stagflation, and recession.

“Perhaps most importantly for stocks, the Fed is not there to provide cushion, like before,” he added, as the US central bank is raising interest rates to get to grips with inflation.

– Rollercoaster ride –

Markets had taken a beating Thursday on intensifying recession worries.

Wall Street has faced the brunt of selling, suffering its worst batterings in two years over the past couple of sessions.

Downcast earning reports from retailers have heightened market uncertainty at a time of rising interest rates, surging energy prices, China’s Covid lockdowns and Russia’s ongoing war on Ukraine.

“It has been a rollercoaster ride for markets this week after Thursday’s bloodbath when US equities suffered their worse session since 2020 with that negativity reverberating across global stock markets,” said Victoria Scholar, head of investment at trading firm Interactive Investor.

Major stock indices have lost huge portions of their value in recent months, with the tech-heavy Nasdaq Composite down 30 percent from the peak it set in November, while the blue-chip Dow is off 15.9 percent.

In Europe, both Paris and Frankfurt stocks are down between 14 and 15 percent, while London’s main index has shed a modest 3.9 percent.

– Key figures at around 1530 GMT –

New York – Dow: DOWN 0.7 percent at 31,026.51 points

EURO STOXX 50: UP 0.5 percent at 3,657.03

London – FTSE 100: UP 1.2 percent at 7,389.98 (close)

Frankfurt – DAX: UP 0.7 percent at 13,981.91 (close)

Paris – CAC 40: UP 0.2 percent at 6,285.24 (close)

Hong Kong – Hang Seng Index: UP 3.0 percent at 20,717.24 (close)

Shanghai – Composite: UP 1.6 percent at 3,146.57 (close)

Tokyo – Nikkei 225: UP 1.3 percent at 26,739.03 (close)

Brent North Sea crude: UP 0.4 percent at $112.52 per barrel

West Texas Intermediate: UP 0.4 percent at $112.65 per barrel

Euro/dollar: DOWN at $1.0555 from $1.0588

Pound/dollar: UP at $1.2475 from $1.2467

Euro/pound: DOWN at 84.61 pence from 84.93 pence

Dollar/yen: UP at 127.88 yen from 127.79

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An Israeli city is testing whether an artificial intelligence programme that detects drowning threats can help save lives off its beaches.

The programme, developed by a company called SightBit, uses information collected from surveillance cameras to determine who is in the water — an adult or child, for example — if they are moving or limp, and the current’s movement at that location.

If a threat is determined, the programme sends an alert to a tablet held by the user — a lifeguard, in this case — with urgent instructions to act.

SightBit’s chief executive Netanel Eliav told AFP that he developed the technology after identifying a shortfall in how closed-circuit footage was being applied to boost safety in the water.

The programme has been in use for more than a year in Ashdod, a city on Israel’s Mediterranean coast that chose to deploy SightBit technology in an area at a distance from the nearest lifeguard.

“We chose to locate the technology in areas away from the lifeguard towers, so the additional ‘eyes’ there help the lifeguards very much,” said Arie Turjeman, director of Ashdod’s coast division.

Eliav voiced confidence that SightBit can “save lives”, in a country that sees dozens of drowning deaths a year. 

According to official figures, last year 29 people died during Israel’s March to October beach season, 22 of them in the Mediterranean, and 21 in areas with no lifeguard services.

Thirty-two people drowned during the 2020 season and 27 in 2019.

Billionaire Elon Musk arrived in Brazil Friday, announcing a project to bring internet access to schools in the Amazon and improve satellite monitoring of the rainforest.

The world’s richest man touched down in a private jet at an airfield outside Sao Paolo, according to the G1 news portal.

Mush was set to meet Brazil’s far-right President Jair Bolsonaro at a luxury hotel in Porto Feliz, some 100 kilometers (60 miles) outside Sao Paulo, according to the O Globo newspaper.

“Super excited to be in Brazil for launch of Starlink for 19,000 unconnected schools in rural areas & environmental monitoring of Amazon!” tweeted Musk, CEO of SpaceX and Tesla.

Communications Minister Fabio Faria, who met Musk in Texas last November, tweeted the businessman was visiting “to discuss Connectivity and Protection of the Amazon with the Brazilian government.” 

He added: “Since we are going to connect the Amazon, we brought one of the largest entrepreneurs in the world to help us in this mission.”

A large security detail kept journalists at a distance from the hotel where the meeting was to take place. An AFP reporter saw two helicopters land nearby.

– ‘A very important person’ –

On Thursday, Bolsonaro announced he would have a meeting “with a very important person who is recognized throughout the world.”

“He is coming to offer his help for our Amazon,” the president said in his weekly social media broadcast, without naming Musk.

The Amazon is a hot topic in Brazil, with deforestation rising sharply under the government of Bolsonaro — which is accused of promoting impunity for gold miners, farmers and timber traffickers who illegally clear the rainforest.

The Brazilian government said in November it was negotiating with SpaceX to secure satellite internet in the Amazon rainforest and boost detection of illegal deforestation.

In a bid to provide high-speed internet around the world, especially to areas underserved by fixed and mobile networks, Musk’s SpaceX company has placed thousands of Starlink satellites into orbit, with many more launches planned.

The service has more than 100,000 subscribers worldwide.

Musk attracted renewed worldwide attention when he announced last month that he planned to buy Twitter in a deal worth $44 billion dollars.

His comments on loosening restrictions in the name of free expression were welcomed by many supporters of Bolsonaro, who is accused of using fake news as a political weapon and has had several social media posts deleted.

O Globo said Faria and Defense Minister Paulo Sergio Nogueira would attend the Musk-Bolsonaro meeting, along with 13 business leaders including bosses of the country’s main telecommunications companies. 

The meeting comes hours after Musk rejected allegations on Twitter that he groped and exposed himself to a flight attendant six years ago.

Asian and European stocks rebounded Friday on China’s interest rate cut, after sinking the previous day on fears that sky-high inflation would spark a global downturn.

“Markets have been looking for an excuse to bounce, and a China rate cut provided the reason,” IG analyst Chris Beauchamp told AFP.

“It isn’t much when set against the broader (rate) tightening we are seeing globally, but equities do look a bit stretched to the downside in the short term.”

China’s central bank announced it would lower its five-year loan prime rate — a key interest rate governing how lenders base their mortgage rates — to 4.45 percent from 4.6 percent.

That injected optimism among traders that it could boost the world’s second-largest economy from Covid-induced stupor.

The news comes in contrast to other major central banks — like the US Federal Reserve and the Bank of England — that are raising borrowing costs to combat rocketing consumer prices.

European equities were buoyed Friday also by a surprise jump in UK retail sales last month, despite the nation’s inflation striking a 40-year peak of nine percent.

“European markets are staging gains to round up a hectic week for markets,” said Victoria Scholar, head of investment at trading firm Interactive Investor.

Markets had taken a beating Thursday on intensifying recession worries.

Wall Street has faced the brunt of selling, suffering its worst batterings in two years over the past couple of sessions.

Downcast earning reports from retailers have heightened market uncertainty at a time of rising interest rates, surging energy prices, China’s Covid lockdowns and Russia’s ongoing war on Ukraine.

– Rollercoaster ride –

“It has been a rollercoaster ride for markets this week after Thursday’s bloodbath when US equities suffered their worse session since 2020 with that negativity reverberating across global stock markets,” added Scholar.

World oil prices edged lower as traders paused for breath at the end of a volatile trading week.

In Paris, EDF shares rose two percent to 8.46 euros despite announcing even more delays and vast cost over-runs for its planned giant nuclear plant in southwest England.

The French energy giant revealed Thursday that the cost will balloon to as much as £26 billion — and not begin generating electricity until June 2027.

Hinkley Point C, which aims to provide seven percent of Britain’s total power needs, had previously been expected to cost up to £23 billion with a start-up date of one year earlier.

EDF said in its statement that there would be no additional cost to British consumers.

– Key figures at around 1100 GMT –

London – FTSE 100: UP 1.9 percent at 7,437.83 points

Frankfurt – DAX: UP 1.8 percent at 14,133.45

Paris – CAC 40: UP 1.4 percent at 6,358.04

EURO STOXX 50: UP 1.6 percent at 3,700.34

Hong Kong – Hang Seng Index: UP 3.0 percent at 20,717.24 (close)

Shanghai – Composite: UP 1.6 percent at 3,146.57 (close)

Tokyo – Nikkei 225: UP 1.3 percent at 26,739.03 (close)

New York – Dow: DOWN 0.8 percent at 31,253.13 (close)

Brent North Sea crude: DOWN 0.2 percent at $111.77 per barrel

West Texas Intermediate: DOWN 0.3 percent at $111.84 per barrel

Euro/dollar: DOWN at $1.0579 from $1.0588

Pound/dollar: UP at $1.2471 from $1.2467

Euro/pound: DOWN at 84.84 pence from 84.93 pence

Dollar/yen: UP at 127.90 yen from 127.79

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Finance minister Rishi Sunak became Friday the first high-profile British politician to make the Sunday Times Rich List, weeks after his family’s tax arrangements attracted controversy and amid a cost-of-living crisis.

Sunak and his Indian wife Akshata Murty, whose father co-founded the IT behemoth Infosys, made the annual list for the first time with their joint £730 million ($911 million, 861 million euros) fortune.

The bulk of their wealth is believed to come from Murty’s £690-million stake in Infosys, but Sunak also had a highly lucrative career in finance before entering politics in 2015.

The listing, which started in 1989, this year estimates the minimum wealth of Britain’s 250 richest people or families, and features far fewer Russian billionaires due to Western sanctions following the invasion of Ukraine.

Sunak’s inclusion comes a month after it was revealed that his wife was sheltered from paying tax on foreign earnings to his Treasury department after claiming so-called non-domiciled status.

The “non-dom” scheme has become controversial in recent years, particularly now that Britons face tax rises and the cost-of-living crisis, with some opposition parties calling for its abolition.

It has been estimated Murty’s non-dom status could have saved her £20 million in taxes on dividends from her shares in Infosys.

Soon after the revelations emerged, she announced she would start paying UK tax on “all worldwide income”, noting that she did not want her tax affairs to be a “distraction” for her husband.

Sunak has also faced persistent criticism for doing too little to help hard-pressed Britons as his once-rosy prospects of succeeding Prime Minister Boris Johnson have ebbed rapidly.

Critics have accused him of hypocrisy for raising taxes on people as various prices surge, while his own family has seen millions of pounds in Infosys dividends shielded from his own Exchequer.

Just this week, he warned in a keynote speech to business leaders that Britons faced a “tough” few months ahead, with inflation confirmed as the highest rate in decades at nine percent.

The Sunday Times’ list calculates identifiable wealth — land, property, racehorses, art or significant shares in publicly quoted companies — but is unable to measure bank account balances and small shareholdings in private equity portfolios.

Sri and Gopi Hinduja, who run the Mumbai-based conglomerate Hinduja Group, topped the latest ranking after their wealth grew by more than £11 billion to £28.47 billion.

Entrepreneur James Dyson and his family climbed to second with a wealth estimate of £23 billion.

However, one billionaire who headed in the opposite direction was Roman Abramovich.

The Russian former owner of Chelsea Football Club dropped from eighth to 28th after his finances plummeted from £12.2 billion last year to £6 billion this year in the wake of Western sanctions.

Asian markets saw a sustained bump Friday following China’s decision to lower a key benchmark rate, injecting optimism among traders that it could boost the world’s second-largest economy from its Covid-battered knees.

Downcast earning reports from retailers this week have heightened uncertainty in the world markets at a time of rising interest rates, surging energy prices, China’s Covid lockdowns and Russia’s ongoing war in Ukraine.

Wall Street took a beating Thursday, adding to its very bad week as the markets reacted to back-to-back earnings misses from Walmart and Target which revealed difficulties managing rising costs, as well as weaker-than-expected Chinese economic data.

On Friday morning, China’s central bank announced it would lower its five-year loan prime rate — a key interest rate governing how lenders base their mortgage rates — from 4.6 percent to 4.45 percent.

The move will help reduce mortgage costs, serving as a boost for demand as China undergoes a property slump and its economy bleeds from stopped ports and factories due to Covid lockdowns.

It is “without doubt a positive in terms of raising the market’s sentiment,” Niu Chunbao, fund manager at Shanghai Wanji Asset Management, told Bloomberg.

Tokyo, Seoul, Singapore and Sydney all saw a sustained one percent boost, while Hong Kong’s Hang Seng led the rally — up by more than 3 percent in the afternoon. 

The gains filtered through to Europe, where London, Frankfurt and Paris opened higher.

A strong fiscal stimulus “is also expected” from the central government given persistent headwinds to growth, said Chaoping Zhu, a Shanghai-based global market strategist with JP Morgan Asset Management.

“In addition to the conventional approaches including infrastructure investment and tax deduction, direct subsidies or cash payout to consumers may be adopted to stabilize domestic demand and employment,” he said. 

Data released this week from China showed the extent of economic pain inflicted by Beijing’s strict zero-Covid policy, with retail sales and factory production slumping to their lowest in over two years.

The unemployment rate also climbed in April to 6.1 percent — the highest in more than two years.

– Recession fears –

Leading indices in recent weeks have see-sawed at even the slightest anticipation of volatility — or relief — and the risk of a global recession is “top-of-mind” for investors, said Stephen Innes of SPI Asset Management.

“But as the procession to recession shortens, growth concerns are rising, leaving equities vulnerable to the negative feedback loop,” he added.

“What would typically be met with a shoulder shrug, incrementally weaker data can now amplify downside move. And with few positive developments of late, the market remains vulnerable to the prevailing narrative, with the negative feedback loop only growing louder in recent sessions.”

Fuelling worries are sky-high inflation across the world. This week, Japan posted consumer price figures for April that were at a seven-year high, while Britain’s inflation rocketed to a 40-year peak.

The US Federal Reserve — where inflation figures are also at a four-decade high — has tightened monetary policy, and Fed head Jerome Powell has said they would raise interest rates until there is “clear and convincing” evidence that inflation is in retreat. 

“There was no single trigger for the negative sentiment prevailing in markets this week, but rather a build-up of concerning information,” said Silvia Dall’Angelo, a senior economist at Federated Hermes Limited.

– Key figures at around 0830 GMT –

Hong Kong – Hang Seng Index: UP 3.0 percent at 20,717.24 (close)

Shanghai – Composite: UP 1.6 percent at 3,146.57 (close)

London – FTSE 100: UP 1.5 percent at 7,409.15 

Tokyo – Nikkei 225: UP 1.3 percent at 26,739.03 (close)

Brent North Sea crude: DOWN 0.4 percent at $111.58 per barrel

West Texas Intermediate: DOWN 0.5 percent at $111.65 per barrel

Euro/dollar: DOWN at $1.0568 from $1.0586 at 2030 GMT Thursday

Pound/dollar: FLAT at $1.2473 from $1.2473

Euro/pound: DOWN at 84.73 pence from 84.84 pence

Dollar/yen: UP at 127.95 yen from 127.80

New York – Dow: DOWN 0.8 percent at 31,253.13 (close)

— Bloomberg News contributed to this story —