US Business

Equities fell in Asian trade Wednesday as traders nervously awaited what is expected to be the biggest Federal Reserve interest rate hike in more than two decades.

With inflation showing little sign of easing from its 40-year highs, the US central bank has set itself on a hawkish course of tightening this year, sending shivers through world markets.

The prospect of higher borrowing costs has been compounded by a range of crises including the war in Ukraine, elevated oil prices and China’s Covid lockdowns that have strangled crucial global supply chains.

The Fed now has to walk a fine line between getting control of surging prices and making sure it does not knock the recovery in the world’s top economy off course.

“The Fed remains very focused on bringing inflation down, however, any further hawkish pivots will likely be tempered to some extent by the desire to achieve a soft landing,” said Blerina Uruci at T. Rowe Price.

The Fed is expected to announce a 50 percentage point lift Wednesday — its biggest since 2000 — but boss Jerome Powell’s post-meeting news conference will be closely watched for an idea about future hikes.

Speculation was swirling that 75 points could be on the table at some point this year.

“Powell will fall back to ‘we are not on pre-set rate hikes’ or something along those lines — ‘we go in with an open mind each meeting and will talk it over and we’ll see where we go from there’,” said Tony Farren, managing director at Mischler Financial Group.

“The market would take that as hawkish. For his comments to seem dovish, he’d have to shut down the talk of 75 basis points. And while I don’t think he’ll endorse it, I don’t think he’ll shut it down.”

– Russian oil ban –

After a broadly positive lead from Wall Street, Asian markets struggled in holiday-thinned trade.

Hong Kong, Sydney, Seoul, Mumbai and Singapore slipped but Taipei and Manila rose while Wellington was flat.

Tokyo, Shanghai, Jakarta, Kuala Lumpur and Bangkok were closed.

London, Paris and Frankfurt rose in the opening minutes.

Oil prices rose after European Commission president Ursula von der Leyen on Wednesday said the European Union would impose a gradual Russian oil ban in retaliation for the war in Ukraine.

The news offset the expected hit to demand from China’s coronavirus lockdowns, including in the country’s biggest city Shanghai.

A huge release of crude from reserves by dozens of countries including the United States has also helped keep prices tempered.

Investors are waiting for a meeting Thursday of OPEC and other major producers including Russia, where they will discuss whether or not to lift output more than expected.

– Key figures at around 0720 GMT –

Hong Kong – Hang Seng Index: DOWN 1.2 percent at 20,856.96 

London – FTSE 100: UP 0.1 percent at 7,565.78

Tokyo – Nikkei 225: Closed for a holiday

Shanghai – Composite: Closed for a holiday

Euro/dollar: DOWN at $1.0512 from $1.0519 on Tuesday

Pound/dollar: DOWN at $1.2486 from $1.2491

Euro/pound: UP at 84.18 pence from 84.17 pence

Dollar/yen: UP at 130.15 yen from 130.14 yen

West Texas Intermediate: UP 1.4 percent at $103.79 per barrel

Brent North Sea crude: UP 1.2 percent at $106.19 per barrel

New York – Dow: UP 0.2 percent at 33,128.79 (close)

Investors shifted cautiously in Asian trade Wednesday as they nervously awaited what is expected to be the biggest Federal Reserve interest rate hike in more than two decades.

With inflation showing little sign of easing from its 40-year highs, the US central bank has set itself on a hawkish course of tightening this year, sending shivers through world markets.

The prospect of higher borrowing costs has been compounded by a range of crises including the war in Ukraine, elevated oil prices and China’s Covid lockdowns that have strangled crucial global supply chains.

The Fed now has to walk a fine line between getting control of surging prices and making sure it does not knock the recovery in the world’s top economy off course.

“The Fed remains very focused on bringing inflation down, however, any further hawkish pivots will likely be tempered to some extent by the desire to achieve a soft landing,” said Blerina Uruci at T. Rowe Price.

The Fed is expected to announce a 50 percentage point lift Wednesday — its biggest since 2000 — but boss Jerome Powell’s post-meeting news conference will be closely watched for an idea about future hikes.

Speculation was swirling that 75 points could be on the table at some point this year.

“Powell will fall back to ‘we are not on pre-set rate hikes’ or something along those lines — ‘we go in with an open mind each meeting and will talk it over and we’ll see where we go from there’,” said Tony Farren, managing director at Mischler Financial Group.

“The market would take that as hawkish. For his comments to seem dovish, he’d have to shut down the talk of 75 basis points. And while I don’t think he’ll endorse it, I don’t think he’ll shut it down.”

After a broadly positive lead from Wall Street, Asian markets were mixed in holiday-thinned trade.

Hong Kong, Singapore and Manila slipped but Sydney, Seoul, Taipei and Wellington dropped.

Tokyo, Shanghai, Jakarta, Kuala Lumpur and Bangkok were closed.

Oil prices enjoyed gains after another drop on Tuesday fuelled by the expected hit to demand from China’s coronavirus lockdowns, including in the country’s biggest city Shanghai.

The measures have offset supply concerns caused by the Ukraine war and bans on imports of Russian fuel, even as the European Union discusses following US and British embargoes.

A huge release of crude from reserves by dozens of countries including the United States has also helped keep prices tempered.

Investors are waiting for a meeting Thursday of OPEC and other major producers including Russia, where they will discuss whether or not to lift output more than expected.

– Key figures at around 0230 GMT –

Hong Kong – Hang Seng Index: DOWN 0.8 percent at 20,943.01 

Tokyo – Nikkei 225: Closed for a holiday

Shanghai – Composite: Closed for a holiday

Euro/dollar: UP at $1.0528 from $1.0519 on Tuesday

Pound/dollar: UP at $1.2494 from $1.2491

Euro/pound: UP at 84.28 pence from 84.17 pence

Dollar/yen: DOWN at 130.09 yen from 130.14 yen

West Texas Intermediate: UP 1.0 percent at $103.43 per barrel

Brent North Sea crude: UP 0.9 percent at $105.93 per barrel

New York – Dow: UP 0.2 percent at 33,128.79 (close)

London – FTSE 100: UP 0.2 percent at 7,561.33 (close)

Wall Street has grown nervous as the Federal Reserve is set to make its biggest rate hike in more than two decades to crush inflation that has reached levels not seen since the 1980s.

The central bank’s policy setting Federal Open Market Committee (FOMC) wraps up its two-day meeting on Wednesday and is expected to announce a half-percentage point rate hike, taking the key borrowing rate above 0.75 percent after sitting at zero from the start of the pandemic through 2021, even as inflation picked up speed.

The expected hike is part of what the Fed has billed as a tightening cycle likely to continue throughout this year and into 2023, with the goal of taking the steam out an inflation wave that has pushed consumer prices to the highest levels in four decades.

The US central bank hiked rates by a quarter percentage point in March, the first increase since 2018, but top officials including Fed Chair Jerome Powell have said officials will move quickly and front-load the increases. 

While Wall Street sentiment has showed signs of improving this week, the central bank’s hawkish posture played a role in the equity bloodletting seen in recent weeks.

April was the worst month for the S&P 500 since the pandemic, while the Nasdaq’s tech stocks, which are particularly sensitive to higher interest rates, suffered their biggest loss since October 2008.

The Fed’s goal is to engineer a “soft landing,” reining in inflation but avoiding a contraction in economic activity.

But with China’s pandemic lockdowns worsening global supply snarls and the war in Ukraine pushing commodity prices higher, analysts fear factors beyond the central bank’s control could undermine that goal, and perhaps plunge the world’s largest economy into a recession.

“We don’t know if a recession will be realized; it will depend critically upon what the Fed does and how quickly the Ukrainian situation is resolved,” Robert Eisenbeis of Cumberland Advisors said in a note. 

He warned, “Near-term probabilities are not favorable and suggest caution.”

– Many shocks –

Interest rate hikes are aimed at dampening demand, to take the steam out of consumer prices that jumped 8.5 percent over the 12 months to March, the biggest annual jump since December 1981, caused in part by consumers spending more for scarce goods.

Fed officials have signaled they view the economy as healthy enough to withstand higher rates, since unemployment has retreated almost to where it was before the pandemic, and recent data has shown strong consumer and business spending, even though the economy fell in the first quarter.

However, in addition to the external factors, central bankers cannot engineer a solution for the worker shortages that have challenged businesses and raised fears of a wage-price spiral, when employees demand higher salaries and fuel price increases. 

Powell, who will speak following the FOMC meeting — the announcement is scheduled for 1800 GMT — and could provide more insight on the Fed’s thinking.

The policy committee also is expected to provide details on the plans for shedding its massive holdings of bonds built up during the pandemic, a strategy to keep credit flowing through the economy. 

That also could unsettle financial markets and act as a brake on activity.

Kathy Bostjancic of Oxford Economics said that for the moment, signals point to “relatively low but rising odds of a recession in the next 12 months” but she warned the chances will increase if the factors driving inflation worsen.

After 27 box office-shattering blockbusters, the Marvel superhero films have no more worlds to conquer — so they are headed off to parallel universes instead.

The highly anticipated “Doctor Strange in the Multiverse of Madness,” out Friday, sends Benedict Cumberbatch’s sorcerer hopping between colorful, creepy and downright bizarre new dimensions, with the help of teenager America Chavez (Xochitl Gomez).

It explores the “multiverse” concept popularized by superhero comic books, in which infinite universes — and infinite versions of each hero and villain — exist side-by-side.

“Oh yeah, we crack that door wide open,” said Cumberbatch at this week’s Los Angeles world premiere.

“And I’ll tell you one thing about it. It’s beautiful. It’s very, very beautiful.”

But for a Hollywood franchise that has thrived by making the sometimes arcane world of comic-book lore accessible to the broadest possible audiences, is it all getting a little too complicated? 

“Multiverse of Madness” — the second standalone “Doctor Strange” movie — is packed with references not just to films that preceded it, but also to Disney+ television series “WandaVision” and “Loki.”

A review from The Hollywood Reporter says the parallel universes concept — on top of Marvel films’ previous time-travel forays — “starts to look like a franchise-sustaining crutch.”

Marvel films already contain “a practically infinite number of weird characters and unlikely events” without the “rapidly aging plot device” of parallel universes, wrote reviewer John Defore.

Variety’s Owen Gleiberman said Marvel is already “the kind of place that even the most ardent comic-book fans have to dedicate themselves to keeping up with.”

Gleiberman called the film “a ride, a head trip… a what-is-reality Marvel brainteaser and, at moments, a bit of an ordeal.”

“It’s a somewhat engaging mess, but a mess all the same.”

– ‘Perfect time’ –

Still, recent history has taught Hollywood watchers to never underestimate the allure of the “Marvel Cinematic Universe” (MCU).

The franchise turned conventional wisdom about attention spans of Gen Z teens upside-down with hits like 2019’s “Avengers: Endgame” — the culmination of more than 20 interconnected movies and storylines going back to the original “Iron Man” (2008).

It earned almost $2.8 billion at the global box office, briefly becoming the highest grossing film of all time.

“Marvel are the epitome of success in Hollywood right now,” said Jeff Bock, senior analyst at Exhibitor Relations.

“And that’s why when we talk about $150 million, $200 million openings, nobody blinks an eye anymore.”

Kevin Feige, the president of Marvel Studios, said last week that planning for “the next decade” of the superhero films is well underway.

And the concept of multiple versions of beloved characters has already been successful, including December’s smash hit “Spider-Man: No Way Home.”

“Characters have come out of other universes into our own in the last Spider-Man picture,” said director Sam Raimi at Monday’s premiere.

“But this will be the first time that characters from our MCU journey out into other universes.”

Beyond the Marvel franchise, the recent, critically adored indie sci-fi hit “Everything Everywhere All at Once” also explores the idea of parallel universes.

“I think ‘Doctor Strange’ actually hits at the perfect time because everybody’s still talking about how great this multiverse concept is — it’s not played out,” said Bock.

– ‘Opening a box’ –

So far, “Multiverse of Madness” has a highly respectable — if below the Marvel average — 79 percent on review aggregator website Rotten Tomatoes.

IndieWire called the movie a “a violent, wacky, drag-me-to-several-different-hells at once funhouse of a film.”

“We are opening a box. And there’s going to be a lot of opportunities for storytelling moving forward,” said Elizabeth Olsen, who reprises her role as Wanda Maximoff.

“I’m looking forward to seeing what we do with that.”

Bookings on Airbnb hit a new high in this year’s first quarter, the home rental platform reported Tuesday, in a fresh signal that travel demand stifled by the Covid-19 pandemic is being unleashed.

Despite the Omicron surge and a persistent level of infections, Airbnb bookings for lodging and travel “experiences” topped 102 million in the first three months of this year, setting a new quarterly record, the company said in an earnings release.

“Guests are booking more than ever before,” Airbnb told shareholders in a letter.

“Looking ahead, we see strong sustained pent-up demand.”

The company’s stock price rose more than 3 percent to $150.50 in after-market trades following the release of the earnings figures.

Revenue in the first quarter was $1.5 billion, up 70 percent from the same period a year earlier, the company said, adding that its quarterly loss shrank to $19 million from a loss of $1.2 billion in the first quarter of 2021.

The San Francisco-based company’s earnings reflect an ongoing recovery in the travel industry and show that Airbnb is gaining share in the market, Baird analyst Colin Sebastian said in an investment note.

“Airbnb exceeded expectations on almost every line item, with strong bookings trends for the summer and balance of the year,” Sebastian told investors.

“Looking further ahead, travel recovery in urban areas, cross-border and (the Asia-Pacific region) should fuel additional bookings growth.”

The company said that trends of people booking stays away from urban areas and staying relatively close to home continue, but that guests are returning to cities and making cross-border trips.

The strong earnings come a week before a May 11 event at which chief executive Brian Chesky is to announce what the company bills as the biggest change to Airbnb in a decade.

“We will introduce a new Airbnb for a new world of travel,” the company said in their earnings letter, adding that “with a completely new way to search, guests will be able to discover millions of unique homes they never thought to search for.”

The booking platform has found traction around the globe, but is fighting various regulatory challenges in several jurisdictions.

In March, the European Union’s top court ruled that the property rental platform must share booking data with regional tax authorities in Brussels.

The families of victims of the two Boeing 737 MAX crashes in October 2018 and March 2019 asked a Texas judge Tuesday to overturn a $2.5-billion settlement between the aircraft manufacturer and the US government. 

Under that agreement, Boeing admitted to having committed fraud in exchange for the Department of Justice dropping some of the proceedings against it over the deadly crashes of Lion Air in Indonesia and Ethiopian Airlines, which killed 346 people total and caused the MAX to be grounded globally for 20 months. 

This January 7, 2021 arrangement was the focus of a court hearing Tuesday in Fort Worth, Texas.

“They messed up by making the crime fraud rather than manslaughter,” said Catherine Berthet, a French woman who lost her 28-year-old daughter when the Ethiopian Airlines plane crashed near Addis Ababa on March 10, 2019.

“We believe that the rights of the victims’ families have not been respected,” she told AFP. “We have not been consulted. We ask to be heard.”

The January 2021 agreement included a $500 million compensation fund for victims’ relatives, $1.77 billion in compensation to the airlines and a $243 million criminal fine. 

Boeing has admitted that two of its employees had misled a group within the Federal Aviation Authority that was to prepare training for pilots in using Boeing’s new MCAS flight software, which was implicated in both crashes.

“The judge listened carefully and I think had a lot of concerns about how was it that the Justice Department can seal this agreement from the families,” said Paul Cassell, lawyer for the families in the audience.

Relatives of the victims are now hoping for a quick decision from the Fort Worth judge.

“It’s been three years and I never go to sleep before four or five in the morning,” Berthet said. “I still have panic attacks. There are things I don’t do anymore. There are films that I can no longer see, music that I can no longer listen to.”

“I would like to see that the US Department of Justice is responsible enough to make sure that corporations don’t get away with murder,” said Paul Njoroge, who lost his 33-year-old wife, his children aged nine months, four and six, as well as his mother-in-law in the Ethiopia crash.

EU officials late Tuesday handed over a draft plan to member states on a new package of sanctions to punish Russia for its invasion of Ukraine, but some members are jockeying to opt out of an oil embargo.

Several EU officials and European diplomats in Brussels told AFP there were divisions over the plan.

It was only adopted late at night due to the stance of one of the member states. 

Ambassadors from the 27 European Union countries will meet on Wednesday to give the plan a once-over, and it will need unanimous approval before going into effect.

The commission’s proposal would phase in a ban on oil imports from Russia over six to eight months, with Hungary and Slovakia allowed to take a few months longer, EU officials told AFP.

But Slovakia, which like Hungary is almost 100 percent dependent for fuel on Russian crude coming through the Druzbha pipeline, has said it will need several years.

Slovakia’s refinery is designed to work with Russian oil and would need to be thoroughly overhauled or replaced to deal with imports from elsewhere — an expensive and lengthy process.

Other officials, speaking on condition of anonymity during the legally and diplomatically fraught negotiation, said Bulgaria and the Czech Republic could also seek sanctions opt-outs.

One European diplomat warned that granting exemptions to one or two highly-dependent states could trigger a domino effect of exemption demands that would undermine the embargo.

The European Commission is not planning to unveil the draft in public before its president, Ursula von der Leyen, addresses the European Parliament on Wednesday.