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Tag: Economic policy

  • Asian benchmarks mixed as markets eye COVID, inflation risks

    Asian benchmarks mixed as markets eye COVID, inflation risks

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    TOKYO — Asian shares were mixed in Monday trading as momentum faded from last week’s rally on Wall Street amid varied sentiments about coronavirus restrictions easing in China and global interest rate increases.

    Benchmarks fell in Japan and South Korea, while rising in China. Analysts say some investors are being cheered by signs inflation is abating in the U.S. earlier than initially thought, while they warn factors remain that could refuel inflation, including geopolitical risks.

    “But it is far too hasty to declare a decisive conclusion to inflation risks,” said Venkateswaran Lavanya at Mizuho Bank.

    Japan’s benchmark Nikkei 225 slipped 0.8% in morning trading to 28,047.58. Australia’s S&P/ASX 200 was little changed, inching up less than 0.1% to 7,163.10. South Korea’s Kospi lost 0.2% to 2,479.52. Hong Kong’s Hang Seng jumped 2.1% to 17,688.84, while the Shanghai Composite rose 0.4% to 3,099.19.

    “We also have the Democrats holding the Senate while the Republicans look likely to control the House. Policy paralysis at a time of economic crisis is not a good look for what may lay ahead over the next two years. The current stock rally may have only days to run,” said Clifford Bennett, chief economist at ACY Securities, referring to the U.S. midterm election results.

    Wall Street closed last week with a rally, amid hopes inflation pressures had eased. That would make the Federal Reserve less likely to keep raising interest rates. But some analysts said the Wall Street rally was overdone.

    The S&P 500 rose 36.56 points, or 5.5%, for its best day in more than two years, to 3,992.93. Its 5.9% gain for the week was its third in the last four and its biggest since June.

    The Dow rose 32.49, or 0.1%, to 33,747.86, and the Nasdaq climbed 209.18, or 1.9%, to 11.323.33. Both also notched hefty gains for the week.

    Markets are getting a boost from China’s relaxing some of its strict anti-COVID measures, which have been hurting the world’s second-largest economy. Easing of restrictions translates to potentially more growth in China, a definite plus for the Asian region.

    A report last week showed inflation in the United States slowed by more than expected last month. The Fed has already lifted its key overnight interest rate to a range of 3.75% to 4%, up from basically zero in March. The likely scenario is still for further hikes into next year.

    In energy trading, benchmark U.S. crude gained 22 cents to $89.18 a barrel. U.S. crude gaining 2.9% to $88.96 per barrel Friday. Brent crude, the international standard, added 29 cents to $96.28 a barrel.

    In currency trading, the U.S. dollar rose to 139.20 Japanese yen from 138.76 yen. The euro cost $1.0391, down from $1.0356.

    ———

    Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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  • UK’s self-billed ‘Scrooge’ promises tax rises, spending cuts

    UK’s self-billed ‘Scrooge’ promises tax rises, spending cuts

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    Britain’s Treasury chief, Jeremy Hunt, has warned a spending crunch and tax increases are on their way as he bids to fill the “black hole” in the country’s finances

    LONDON — Britain’s Treasury chief warned Sunday of a coming spending crunch and tax increases for cash-strapped Britons as he bids to fill the “black hole” in the country’s finances.

    Billing himself as a Scrooge figure ahead of Thursday’s Autumn Statement, when he will update Parliament on the government’s budget measures, Jeremy Hunt said he was forced to make “very difficult decisions” in his attempt to curb inflation and put the economy back on an even keel.

    He told British broadcasters that he was determined to make an expected recession as shallow as possible, and warned that everyone could expect to pay more tax.

    “I’m a Conservative chancellor and I think I’ve been completely explicit that taxes are going to go up, and that’s a very difficult thing for me to do because I came into politics to do the exact opposite,” he told the BBC, using his official title, Chancellor of the Exchequer.

    Hunt is seeking to make up to 60 billion pounds ($71 billion) in savings and extra revenue in a bid to tighten up public finances and undo some of the damage economists say was done by his predecessor, Kwasi Kwarteng, and former prime minister Liz Truss.

    According to the Resolution Foundation, a think tank, Truss and Kwarteng blew 20 billion pounds on unfunded cuts to national insurance and stamp duty, with a further 10 billion lost to higher interest rates and Government borrowing costs.

    Hunt said he would continue his predecessor’s pledge to help Britons with soaring energy bills, but added government departments could expect to see cuts.

    Earlier he told The Sunday Times in an interview “I’m Scrooge who’s going to do things that make sure Christmas is never canceled.”

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  • Australian PM wants to ask China’s Xi to lift trade barriers

    Australian PM wants to ask China’s Xi to lift trade barriers

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    CANBERRA, Australia — Australian Prime Minister Anthony Albanese said Friday he would ask Chinese President Xi Jinping to lift billions of dollars in trade barriers in the event that the two leaders hold their first bilateral meeting.

    Both leaders will attend a Group of 20 meeting in Indonesia and then an Asia-Pacific Economic Cooperation forum meeting in Thailand next week.

    Albanese was speaking in Sydney before departing Australia on Friday for an East Asia Summit in Cambodia, which Xi is not expected to attend.

    A face-to-face meeting between the Chinese and Australian leaders would mark a major reset in a bilateral relationship that plumbed new depths under the nine-year rule of Australia’s previous conservative government.

    Beijing had banned minister-to-minister contacts and imposed a series of official and unofficial trade barriers on products including wine, coal, beef, seafood and barley in recent years that cost Australian exporters 20 billion Australian dollars ($13 billion) a year.

    Albanese said a meeting with Xi was “not locked in at this point in time.”

    “We obviously will be attending the same conferences, or at least two of them (G-20 and APEC) over the next nine days. And I would welcome a meeting if it occurs over that time,” Albanese said.

    China lifting economic sanctions was the first priority in returning to normal relations, he said.

    “We have some AU$20 billion of economic sanctions against Australia. That is not in Australia’s interest in terms of our jobs and the economy, but it’s also not in China’s interest,” Albanese said.

    “Australia has world class products — in seafood, in meat, in wine, in other products that we export to China. It’s in China’s interest to receive those products, it’s in Australia’s interest to export them. So I’m very hopeful — we’ll continue to put our case that these sanctions are not justified, that they need to be removed,” Albanese added.

    Asked what China wanted from Australia to improve relations, Albanese replied: “It’s not up to me to put forward their case.”

    “What I want to see with the relationship with China is cooperation where we … maintain our Australian values where we must,” Albanese said.

    Bilateral relations soured over issues including Australian demands for an independent inquiry into the COVID-19 pandemic, a ban on Chinese telecommunications giant Huawei’s involvement in the Australian 5G networks on security grounds and recent laws that ban covert foreign interference in domestic politics.

    China’s Ambassador to Australia Xiao Qian said in August that Beijing would discuss with Australia whether conditions were right in November for Albanese to meet Xi during the G-20 summit.

    China’s People’s Daily English-language newspaper reported this week that “signs of resetting bilateral ties have emerged” since Albanese’s center-left Labor Party came to power in May.

    The White House has confirmed President Joe Biden will hold talks with Xi on Monday on the sidelines of the G-20 summit in Indonesia, their first face-to-face meeting since Biden became president in January 2021.

    The meeting would come as competition for influence among South Pacific island nations heightens between China and the United States, with its allies including Australia, since Beijing struck a security pact with the Solomon Islands early this year that has raised fears of a Chinese naval base being established in the region.

    Albanese said Australia has “strategic competition in the region” with China.

    “China, of course, has changed its position. And it is much more forward-leaning than it was in the past,” Albanese said.

    “That has caused tensions in the relationship, and we need to acknowledge that that’s the context in which the relationship exists,” he added.

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  • Watches, daggers and cricket ice cream: Asian summit treats

    Watches, daggers and cricket ice cream: Asian summit treats

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    BANGKOK — A custom wristwatch from Cambodian leader Hun Sen at the ASEAN summit in Phnom Penh, a foot-long dagger at the G-20 meetings in Bali, and cricket ice cream and Thai noodles with worm sauce at the APEC talks in Bangkok.

    World leaders have a surfeit of swag and surprises awaiting them as they attend back-to-back-to-back summits in Asia starting this week.

    Hun Sen raised eyebrows a few weeks ago when he announced that he would be having special-edition watches made for U.S. President Joe Biden and other leaders attending the Association of Southeast Asian Nations summit, which runs through the weekend. Many speculated the former mid-level Khmer Rouge commander would feature his own mug on the timepiece in the narcissistic vein of autocratic leaders in the past, like Iraq’s Saddam Hussein or Libya’s Muammar Gaddafi.

    But the final product, which Hun Sen said was designed and made in Cambodia, is a sleek silver timepiece with coppery-gold hands and a leather strap, with “ASEAN Cambodia 2022” imprinted on its face.

    Hun Sen did not say what the gift was worth as he unveiled it this week on his Facebook page, but did say he’d be wearing it himself at all three summits — foregoing one of the rare, designer wristwatches in his collection whose $1 million-plus price tags have been a source of grumbling in impoverished Cambodia.

    In addition to Biden, many other world leaders who will be receiving the Cambodian watch, including Australia’s Anthony Albanese, Canada’s Justin Trudeau and Japanese Prime Minister Fumio Kishida, will travel from Phnom Penh next to the Indonesian island of Bali where there are some traditional trinkets in store for them at the Group of 20 summit.

    G-20 organizers this year say the leaders, also expected to include China’s Xi Jinping, will be asked to wear colorful shirts made of the traditional Balinese woven fabric endek, similar to those that Indonesia gave out at the 2013 APEC meetings they hosted in which the country revived the on-again, off-again summit tradition of a group photo in what some have dubbed “silly shirts.”

    The tradition was started in 1993 by then-President Bill Clinton, who gave out leather bomber jackets as a memento to leaders in attendance as a way to lighten the mood of the serious economic talks.

    In Indonesia, all 120 member and non-member states’ representatives attending will also be given shawls made from another Balinese fabric known as gringsing, typically red, off-white and black woven in a geometric pattern.

    Leaders will also receive a traditional kris dagger, a distinctive asymmetrical knife usually between 11 and 14 inches long with a wavy blade.

    According to organizers, each dagger takes between one and six months to make, and while used as combat weapons in the past they are today typically worn at special ceremonies.

    There were no “silly shirts” last year at the Asia-Pacific Economic Cooperation meetings, held virtually due to the pandemic, with host New Zealand instead providing merino wool scarves for the men and capes for the women.

    It looks like Thailand doesn’t plan on reviving the shirts this year at the upcoming APEC summit in Bangkok. Instead, organizers say they will be giving leaders silk neckties and shawls, as well as handkerchiefs and face masks.

    There is culinary excitement, however, as the country, renowned for its cuisine, brings in Thai food startups selected from a competition to highlight sustainability under a concept dubbed “plate to planet.”

    Biden isn’t expected to be on hand for the APEC meetings, but Vice President Kamala Harris, Xi and others will be given the opportunity to try out dishes like carb-free ramen noodles made from egg white protein, milk-free ice cream with kale and passion fruit, low-sodium Thai noodles with a sauce made from sandworms, and ice cream made from the protein from crickets, government spokesman Anucha Buraphachaisri said.

    Celebrity chef Chumpol Chaengprai is preparing the gala dinner to cap the event, under the concept of “sustainable Thai gastronomy.” Its menu has not yet been announced.

    —————

    Chalida Ekvitthayavechnukul in Bangkok, Niniek Karmini in Jakarta and Sopheng Cheang in Phnom Penh contributed to this story.

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  • Asian benchmarks advance as markets watch China, inflation

    Asian benchmarks advance as markets watch China, inflation

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    TOKYO — Asian stocks advanced Monday as investors weighed uncertainties such as the U.S. mid-term elections and China‘s possible moves to ease coronavirus restrictions.

    Oil prices fell and U.S. futures edged lower.

    China reported its trade shrank in October as global demand weakened and anti-virus controls weighed on domestic consumer spending. Exports declined 0.3% from a year earlier, down from September’s 5.7% growth, the customs agency reported Monday. Imports fell 0.7%, compared with the previous month’s 0.3% expansion.

    Speculation about a possible relaxation of China’s zero-COVID strategy has had a huge impact on markets. On Monday, Hong Kong’s Hang Seng index gained 2.8% to 16,612.61 and the Shanghai Composite rose 0.2% to 3,077.85.

    There has been no official confirmation in China of a major change.

    “Over the weekend, Beijing has dashed hopes of China re-opening in the horizon, by reasserting of zero-COVID policies. And this could induce fresh caution,” Tan Boon Heng at Mizuho Bank in Singapore said in a report.

    In the U.S., Tuesday’s election will decide control of Congress and key governorships. History suggests the party in power may suffer significant losses in the midterms, and decades-high inflation has become a significant issue for the Democrats.

    Analysts say regional markets may take a wait-and-see approach ahead of the U.S. mid-term vote.

    Japan’s benchmark Nikkei 225 jumped 1.2% to finish at 27,527.64. Australia’s S&P/ASX 200 gained 0.6% to 6,933.70. South Korea’s Kospi gained nearly 1.0% to 2,371.79.

    Shares rose in Taiwan and but edged lower in India.

    Wall Street stocks ended last week with a rally but only after yo-yoing several times. Market watchers had data on the U.S. jobs market to digest, considering what it might mean for interest rates and the odds of a recession.

    The S&P 500 recorded its first weekly loss in the last three, despite Friday’s gain 1.4% to 3,770.55. The Dow rose 1.3% to 32,403.22, and the Nasdaq climbed 1.3% to 10,475.25. Both also finished with losses for the week.

    The unemployment rate ticked higher in October, employers added fewer jobs than they had a month earlier and gains for workers’ wages slowed a touch. The slowdown was still more modest than economists expected. And so the Fed is expected to keep hiking rates.

    Fed Chair Jerome Powell has called out a still-hot jobs market as one of the reasons the central bank may ultimately have to raise rates higher than earlier thought. Such moves could cause a recession.

    The yield on the two-year Treasury fell to 4.68% from 4.72% late Thursday. The 10-year yield, which helps dictate rates for mortgages and other loans, edged higher to 4.16% from 4.15%.

    In energy trading, benchmark U.S. crude fell $1.26 to $91.54 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, lost $1.18 cents in London to $97.39 a barrel.

    In currency trading, the U.S. dollar edged up to 147.29 Japanese yen from 146.92 yen. The euro rose to 99.43 cents from 99.15 cents.

    ———

    Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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  • China trade down on weak global demand, virus curbs

    China trade down on weak global demand, virus curbs

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    BEIJING — China’s trade shrank in October as global demand weakened and anti-virus controls weighed on domestic consumer spending.

    Exports declined 0.3% from a year earlier to $298.4 billion, down from September’s 5.7% growth, the customs agency reported Monday. Imports fell 0.7% to $213.4 billion, compared with the previous month’s 0.3% expansion.

    China’s global trade surplus edged up 0.9% from a year earlier to $85.2 billion.

    Forecasters expected Chinese trade to weaken as global demand cooled following interest rate hikes by the Federal Reserve and other central banks to rein in surging inflation.

    At home, consumer demand has been hurt by a “Zero COVID” strategy that has repeatedly shut down large sections of cities to contain virus outbreaks. That has disrupted business and confined millions of people to their homes for weeks at a time.

    Economic growth picked up to 3.9% over a year earlier in the quarter ending in September from 2.2% in the first six months of 2022. But forecasters say activity is weakening as closures spread in response to a spike in infections.

    “The economy slowed again in October due to the tightened Covid controls as well as the slowing external demand,” said Larry Hu of Macquarie Group in a report.

    The downturn in Chinese demand hurts developing countries that supply oil, soybeans and other raw materials and the United States, Europe, Japan and other suppliers of consumer goods and microchips and other components and technology needed by manufacturers.

    Exports to the United States rose 35.3% over a year earlier to $47 billion despite lingering tariff hikes in a trade war over Beijing’s technology ambitions. Imports of U.S. goods rose $52.4% to $12.8 billion.

    China’s politically sensitive trade surplus with the United States swelled 29.9% to $34.2 billion.

    Imports from Russia, mostly oil and gas, more than doubled, rising 110.5% over a year ago to $10.2 billion.

    China can buy Russian energy exports without running afoul of sanctions imposed on President Vladimir Putin’s government by the United States, Europe and Japan. Beijing is stepping up purchases to take advantage of Russian discounts. That irks Washington and its allies by topping up the Kremlin’s cash flow and limiting the impact of sanctions.

    Exports to the 27-nation European Union edged up 5.5% to $44.1 billion while imports of European goods shrank 15.5% to $21.4 billion. China‘s surplus with the EU widened by 38.1% to $22.7 billion.

    For the first 10 months of the year, China’s exports rose 11.1% to $3 trillion while imports gained 3.5% to $2.3 trillion, the General Administration of Customs announced. The country’s trade surplus was $727.7 billion.

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  • Macron welcomes French questions on climate ahead of COP27

    Macron welcomes French questions on climate ahead of COP27

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    PARIS — French President Emmanuel Macron released a selfie video on social media platforms Saturday asking the public to send him questions about what France should do about climate change and biodiversity.

    Thousands of responses quickly poured in. Several were hostile or questioned his sincerity, but they also included rigorous questions about fossil fuel subsidies, sea pollution and nuclear energy.

    Macron, who will take part in the U.N. climate talks opening in Egypt on Sunday, promised to respond to the questions starting next week.

    In the video, he read from a letter from the public asking why he doesn’t declare an “environmental state of emergency.” He said the letter “prompted me to ask questions about what we are doing about this ecological challenge, the challenge of our generation.”

    Early in his presidency, Macron pledged to make tackling climate change issues a top priority, but he has come under widespread criticism for not instituting enough tangible change.

    At the COP27 talks in Egypt on Monday, Macron is expected to discuss climate-related financing, protecting forests, Africa’s Great Green Wall, and other climate adaptation measures, according to his office.

    He’s also expected to raise the importance — and challenge — of sticking to climate commitments as Europe faces an energy crisis stemming from Russia’s war in Ukraine.

    Those are all key issues at the climate talks at the Red Sea coastal resort of Sharm el-Sheikh, which are expected to include more than 120 world leaders and run from Nov. 6-18.

    Laurent Fabius, the French diplomat who presided over the U.N. talks in 2015 that produced the Paris climate agreement, made a plea Saturday to those gathering in Egypt: “Keep in mind that the most beautiful announcements mean nothing if they’re not backed up by precise and rapid policies and actions.”

    ———

    Follow AP’s climate and environment coverage at https://apnews.com/hub/climate-and-environment

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  • Interest rates will keep rising. How high will they go? | CNN Business

    Interest rates will keep rising. How high will they go? | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN Business
     — 

    What will the Federal Reserve do at its meeting in December? Analysts can speculate all they want, but Fed officials say they will be using hard economic data to make their next decision.

    That means key housing, labor, and inflation reports will likely have outsized effects on the market as investors speculate about what they might mean for the future of interest rates.

    What’s happening: No one can move markets like Federal Reserve Chair Jerome Powell — with just a few words on Wednesday he crushed investors’ hopes of an interest rate pivot and sent stocks plunging. “We have a ways to go,” said Powell of the Fed’s current hiking regime meant to fight persistent inflation. “It’s very premature, in my view, to think about or be talking about pausing.”

    But Powell did add an important caveat. The Fed could start to slow the pace of those painful hikes as soon as December. “Our decisions will depend on the totality of incoming data and their implications for the outlook for economic activity and inflation,” Powell said on Wednesday.

    So what will the Fed be looking at between today and its next policy decision on December 14?

    The labor market: The Fed’s biggest worry is the super-tight US labor market, and Friday’s jobs report isn’t likely to soothe any nerves.

    The government report is expected to show the economy added another 200,000 positions in October — down from last month, but still a very solid number as demand for employment continues to outpace the supply of labor.

    That means more inflation. Businesses have to pay higher wages to attract employees and are able to charge more for their goods and services. The Fed will be looking closely at hourly wage growth in the report. In September, wages rose by 5% from a year ago.

    There is a possible upside: Another jobs report in December is expected ahead of the Fed meeting. If both reports show a downward trajectory in employment, that could be enough to placate Fed officials, even if the unemployment rate remains historically low.

    Inflation data: Expect new data from two major indexes that measure the pace of inflation ahead of the next Federal Reserve meeting.

    The Consumer Price Index (CPI) for October, which tracks changes in the prices of a fixed set of goods and services, is out on November 10.

    Core CPI prices, which exclude oil and food, rose 0.6% in September month-over-month, matching August’s pace and coming in well above expectations of a 0.4% increase, not a great sign for the Fed. And analysts expect to see another large 0.5% increase in October.

    The Fed will also get to see October data from its favored measure of inflation, Personal Consumption Expenditures (PCE), on December 1.

    PCE reflects changes in the prices of goods and services purchased by consumers in the United States. The Fed believes the measure is more accurate than CPI because it accounts for a wider range of purchases from a broader range of buyers.

    Core PCE climbed by 5.1% on an annual basis in September, higher than the August rate of 4.9% but below the consensus estimate of 5.2%, per Refinitiv.

    Housing: The housing market has been deeply impacted by the Fed’s efforts to fight inflation, and is one of the first areas of the economy to show signs of cooling.

    The 30-year fixed-rate mortgage averaged 6.95% last week, up from 3.09% just a year ago, and elevated borrowing costs are leading to a decline in demand.

    “The housing market was very overheated for the couple of years after the pandemic as demand increased and rates were low,” said Powell on Wednesday. “We do understand that that’s really where a very big effect of our policies is.”

    October’s new and existing home sales numbers, due on November 18 and 23, will show the continued impact of that policy ahead of the next meeting.

    The US economy is still standing strong in the face of rising interest rates, but things are softening much more quickly across the pond.

    The United Kingdom will face hard economic times and elevated interest rates well into next year, officials warned this week.

    The Bank of England raised interest rates by three-quarters of a percentage point on Thursday, the biggest hike in 33 years, as it attempts to fight soaring inflation.

    But the bank also issued a stark warning. It said that economic output is already contracting and that it expects a recession to continue through the first half of 2024 “as high energy prices and materially tighter financial conditions weigh on spending.”

    A two-year recession would be longer than the one that followed the 2008 global financial crisis, though the Bank of England said that any declines in GDP heading into 2024 would likely be relatively small.

    The central bank also doesn’t think inflation will start to fall back until next year. That will require more interest rate hikes in the coming months, warned policymakers.

    Elon Musk has been busy over at Twitter HQ. Aside from tweeting and deleting a conspiracy theory, he’s talked about implementing some big changes at his $44 billion acquisition. Here’s what’s happened so far:

    Layoffs begin: Elon Musk began laying off Twitter employees on Friday morning, according to a memo sent to staff. The email sent Thursday evening notified employees that they will receive a notice by 12 p.m. ET Friday that informs them of their employment status.

    The email added that “to help ensure the safety” of employees and Twitter’s systems, the company’s offices “will be temporarily closed and all badge access will be suspended.”

    Twitter had around 7,500 employees prior to Musk’s takeover.

    Several Twitter employees have already filed a class action lawsuit claiming that the layoffs violate the federal Worker Adjustment and Retraining Notification Act.

    The WARN Act requires any company with over 100 employees to give 60 days’ written notice if it intends to cut 50 jobs or more at a “single site of employment.”

    Consolidating strength: In less than a week since Musk acquired Twitter, the company’s C-suite appears to have almost entirely cleared out, through a mix of firings and resignations.

    Twitter’s board of directors was also dissolved last week, according to a securities filing.

    The company filing states that all previous members of Twitter’s board, including recently ousted CEO Parag Agrawal and chairman Bret Taylor, are no longer directors “in accordance with the terms of the merger agreement.” That makes Musk, according to the filing, “the sole director of Twitter.”

    Cashing blue checks’ checks: Musk on Tuesday said he planned to charge $8 a month for Twitter’s subscription service, called “Twitter Blue,” with the promise to let anyone pay to receive a coveted blue check mark to verify their account. That’s a steep haircut from his original plan to charge users $19.99 a month to get or keep a verified account.

    In a tweet, the world’s richest man used an expletive to describe his assessment of “Twitter’s current lords & peasants system for who has or doesn’t have a blue checkmark.” He added: “Power to the people! Blue for $8/month.”

    Advertisers hit pause: Elon Musk wrote an open letter to advertisers just hours before cementing his acquisition of Twitter, explaining that he didn’t want the platform to become a “free-for-all hellscape.” But that attempt at reassuring the advertising industry, which makes up the vast majority of Twitter’s business, doesn’t appear to be working.

    General Mills

    (GIS)
    , Mondelez International

    (MDLZ)
    , Pfizer

    (PFE)
    and Audi

    (AUDVF)
    have reportedly joined a growing list of companies hitting pause on their Twitter advertising in the wake of Musk’s acquisition.

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  • Stocks end lower as the Fed continues to fight inflation

    Stocks end lower as the Fed continues to fight inflation

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    NEW YORK — Stocks racked up more losses on Wall Street and Treasury yields again rose to multiyear highs Thursday as investors looked ahead to a closely watched job market report from the government that could influence the Federal Reserve’s next move in its fight to bring down inflation.

    Technology stocks led the market pullback, which came a day after the central bank raised its benchmark rate for the sixth time this year and signaled that it may need to keep hiking rates for some time before its can successfully squash the highest inflation in decades.

    The S&P 500 fell 1.1%, while the Dow Jones Industrial Average dropped 0.5%. The tech-heavy Nasdaq composite closed 1.7% lower. The declines extended the major indexes’ losing streak to a fourth day. They’re each on pace for a weekly loss.

    Expectations of higher rates helped push up Treasury yields, weighing on stocks. The two-year Treasury note, which tends to track expectations for future Fed moves, rose to 4.72% from 4.61% late Wednesday and is now at its highest level since 2007, according to Tradeweb.

    The yield on the 10-year Treasury rose to 4.15% from 4.09% late Wednesday. The rise in the 10-year Treasury yield has prompted mortgage rates to more than double this year and it continues putting pressure on stocks.

    The Fed on Wednesday added another jumbo rate increase and suggested that the pace of rate hikes may slow. The central bank also indicated that interest rates might need to ultimately go even higher than previously thought in order to tame the worst inflation in decades.

    The central bank’s latest three-quarters of a percentage point raise brings short-term interest rates to a range of 3.75% to 4%, its highest level in 15 years. Wall Street is evenly split on whether the central bank ultimately raises rates to a range of 5% to 5.25% or 5.25% to 5.50% next year.

    Higher rates not only slow the economy by discouraging borrowing, they also make stocks look less appealing compared to lower-risk assets like bonds and CDs.

    Stubbornly hot inflation has been prompting central banks around the world to also raise interest rates. On Thursday, the Bank of England announced its biggest interest rate increase in three decades. The increase is the Bank of England’s eighth in a row and the biggest since 1992.

    European and Asian markets closed mostly lower.

    In the U.S., the S&P 500 fell 39.80 points to 3,719.89. The Dow lost 146.51 points to close at 32,001.25. The Nasdaq slid 181.86 points to 10,342.94. Smaller company stocks also lost ground. The Russell 2000 fell 9.41 points, or 0.5%, to 1,779.73.

    Technology and communication services stocks were among the biggest weights on the market. Apple fell 4.2% and Warner Bros. Discovery slid 5.6%.

    Those losses kept gains in industrial, energy and other sectors in check. Boeing jumped 6.3% and Marathon Petroleum rose 3%.

    Investors had been hoping for economic data signaling that the Fed might ease up on rate increases. The fear is that the Fed will go too far in slowing the economy and bring on a recession.

    Hotter-than-expected data from the employment sector this week has so far signaled that the Fed has to remain aggressive. On Friday, Wall Street will get a broader update from the U.S. government’s October jobs report.

    So far, hiring and wage growth have not fallen fast enough for the Fed to slow its inflation-fighting efforts. If the October data shows a stronger-than-expected rise in hiring or wages, that could put pressure on the Fed to keep raising interest rates.

    The Labor Department is expected to report that nonfarm employers added 200,000 jobs last month. That would be the worst showing since December 2020, when the economy lost 115,000 jobs.

    Investors will also be looking ahead to the latest data on inflation at the consumer level. That report, the consumer price index, is due out next week.

    “The next two or three quarters are incredibly important in assessing how far the Federal Reserve will need to go to achieve their objective of bringing down inflation,” said Bill Northey, senior investment director at U.S. Bank Wealth Management. “Why the CPI data is so important, why the labor report is so important, is because they feed into that next six-month cycle.”

    Wall Street has also been closely watching the latest company earnings reports. The reports have been mixed and many companies have warned that inflation will likely continue pressuring operations.

    Booking Holdings rose 2.7% after reporting strong third-quarter financial results. Robinhood Markets climbed 8.2% after the investing app operator reported third-quarter earnings that topped Wall Street’s forecasts. Chipmaker Qualcomm fell 7.7% after giving investors a weak profit and revenue forecast.

    ——

    Joe McDonald and Matt Ott contributed to this report.

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  • Bank of England makes biggest interest rate hike in 30 years

    Bank of England makes biggest interest rate hike in 30 years

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    LONDON — The Bank of England made its biggest interest rate increase in three decades Thursday, joining the U.S. Federal Reserve and other central banks worldwide in rapid hikes as it tries to beat back stubbornly high inflation fueled by Russia’s invasion of Ukraine and the disastrous economic policies of former Prime Minister Liz Truss.

    The central bank boosted its key rate by three-quarters of a percentage point, to 3%, after consumer price inflation returned to a 40-year high in September. The aggressive move comes even as the bank predicted a two-year economic contraction through June 2024, which would be the longest recession since at least 1955, according to the Office for National Statistics.

    “If we don’t take action to bring inflation down, it gets worse,” Bank of England Gov. Andrew Bailey told reporters. “There’s no easy outcome in this sense.”

    Even so, the central bank should not increase its key rate too far, he said, but with uncertainties ahead, policymakers will “respond forcefully” if needed.

    The interest rate decision is the first since Truss’ government announced 45 billion pounds ($52 billion) of unfunded tax cuts that sparked turmoil on financial markets, pushed up mortgage costs and forced Truss from office after just six weeks. Her successor, Rishi Sunak, has warned of spending cuts and tax increases as he seeks to undo the damage and show that Britain is committed to paying its bills.

    “High energy, food and other bills are hitting people hard. Households have less to spend on other things. This has meant that the size of the UK economy has started to fall,” the bank said in its November monetary policy report.

    The rate increase is the Bank of England’s eighth in a row and the biggest since 1992. It comes after the U.S. Federal Reserve on Wednesday announced a fourth consecutive three-quarter point jump as central banks worldwide combat inflation that is eroding living standards and slowing economic growth.

    Central banks have struggled to contain inflation after initially believing that price increases were being fueled by international factors beyond their control. Their response intensified in recent months as it became clear that inflation was becoming embedded in the economy, feeding through into higher borrowing costs and demands for higher wages.

    The war in Ukraine boosted food and energy prices worldwide as shipments of natural gas, grain and cooking oil were disrupted. That added to inflation that began to accelerate last year when the global economy began to recover from the COVID-19 pandemic.

    Europe has been particularly hard hit by a jump in natural gas prices as Russia responded to Western sanctions and support for Ukraine by curtailing shipments of the fuel used to heat homes, generate electricity and power industry and European nations competed for alternative supplies on global markets.

    The U.K. also has struggled as wholesale gas prices increased fivefold in the 12 months through August. While prices have dropped more than 50% since the August peak, they are likely to rise again during the winter heating season, worsening inflation.

    The British government sought to shield consumers with a cap on energy prices. But after the turmoil caused by Truss’ economic policies, Treasury chief Jeremy Hunt limited the price cap to six months instead of two years, ending on March 31.

    Meanwhile, food prices have jumped 14.6% in the year through September, led by the soaring cost of staples such as meat, bread, milk and eggs, the Office for National Statistics said. That pushed consumer price inflation back to 10.1%, the highest since early 1982 and equal to the level last reached in July.

    Increases in the cost of tea bags, milk and sugar mean that even the “humble” cup of tea, which people across the country turn to when they need a break from the pressures of daily life, is getting more expensive, the British Retail Consortium said Wednesday.

    “While some supply chain costs are beginning to fall, this is more than offset by the cost of energy, meaning a difficult time ahead for retailers and households alike,” said Helen Dickinson, the consortium’s chief executive.

    Truss’ failed economic plan made things worse, driving the pound to a record low against the dollar, threatening the stability of some pension funds and triggering predictions that the Bank of England would boost interest rates higher than expected. That increased mortgage costs as lenders repriced their products.

    The economic turmoil is putting homeownership further out of reach for many young people, according to research released this week by Hamptons, a U.K. real estate agency.

    Mortgage rates average around 6.5%, compared with 2% a year ago.

    That means the average first-time homebuyer would have to make a down payment equal to 41% of the purchase price to keep their monthly repayments at the same level as a similar buyer who made a 10% down payment last year, Hamptons said.

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  • Brazil’s Lula to reclaim presidency after beating Bolsonaro

    Brazil’s Lula to reclaim presidency after beating Bolsonaro

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    RIO DE JANEIRO — Brazilians delivered a very tight victory to Luiz Inácio Lula da Silva in a bitter presidential election, giving the leftist former president another shot at power in a rejection of incumbent Jair Bolsonaro’s far-right politics.

    Da Silva received 50.9% of the vote and Bolsonaro 49.1%, according to the country’s election authority. Yet the morning after the results came in — and congratulations had poured in from world leaders — Bolsonaro still had yet to publicly concede or react in any way, even as truckers blockaded some roads across the country in protest.

    Bolsonaro’s campaign had made repeated — unproven — claims of possible electoral manipulation before the vote, raising fears that, if he lost, he would not accept defeat and try to challenge the results.

    For da Silva, the high-stakes election was a stunning comeback. His imprisonment for corruption sidelined him from the 2018 election won by Bolsonaro, who has used the presidency to promote conservative social values while also delivering incendiary speeches and testing democratic institutions.

    “Today the only winner is the Brazilian people,” da Silva said in a speech Sunday evening at a hotel in downtown Sao Paulo. “It’s the victory of a democratic movement that formed above political parties, personal interests and ideologies so that democracy came out victorious.”

    Da Silva is promising to govern beyond his party. He says he wants to bring in centrists and even some leaning to the right, and to restore the kind of prosperity the country enjoyed when he last served as president from 2003-2010. Yet he faces headwinds in a politically polarized society.

    Bolsonaro’s four years in office have been marked by proclaimed conservatism and defense of traditional Christian values. He claimed that his rival’s return to power would usher in communism, legalized drugs, abortion and the persecution of churches – things that didn’t happen during da Silva’s earlier eight years in office.

    This was the country’s tightest election since its return to democracy in 1985, and the first time that a sitting president failed to win reelection. Just over 2 million votes separated the two candidates; the previous closest race, in 2014, was decided by a margin of roughly 3.5 million votes.

    Some of Bolsonaro’s supporters outside his home in Rio on Sunday night screamed about electoral fraud. And overnight, truck drivers who backed Bolsonaro blocked several roads across the country, including a stretch of the Rio de Janeiro-Sao Paulo highway, local media reported. Videos posted on social media early Monday morning showed traffic at a complete halt. Similar reports popped up in several other states.

    Da Silva’s win extended a wave of recent leftist triumphs across the region, including Chile, Colombia and Argentina.

    The president-elect will inherit a nation straining against itself after he is inaugurated on Jan. 1, said Thomas Traumann, an independent political analyst who compared Sunday’s results to Biden’s 2020 victory.

    “The huge challenge that Lula has will be to pacify the country,” he said. “People are not only polarized on political matters, but also have different values, identity and opinions. What’s more, they don’t care what the other side’s values, identities and opinions are.”

    Among world leaders offering congratulations on Sunday night was U.S. President Joe Biden, who in a statement highlighted the country’s “free, fair, and credible elections.” The European Union also commended the electoral authority for its effectiveness and transparency throughout the campaign.

    Bolsonaro had been leading throughout the first half of the count and, as soon as da Silva overtook him, cars in the streets of downtown Sao Paulo began honking their horns. People in the streets of Rio de Janeiro’s Ipanema neighborhood could be heard shouting, “It turned!”

    Da Silva’s headquarters in downtown Sao Paulo hotel only erupted once the final result was announced, underscoring the tension that was a hallmark of this race.

    “Four years waiting for this,” said Gabriela Souto, one of the few supporters allowed in due to heavy security.

    Outside Bolsonaro’s home in Rio, ground-zero for his support base, a woman atop a truck delivered a prayer over a speaker, then sang excitedly, trying to generate some energy as the tally grew for da Silva. But supporters decked out in green and yellow barely responded. Many perked up when the national anthem played, singing along loudly with hands over their hearts.

    For months, it appeared that da Silva was headed for easy victory as he kindled nostalgia for his presidency, when Brazil’s economy was booming.

    Bolsonaro’s administration has been widely criticized for its handling of the COVID-19 pandemic and the worst deforestation in the Amazon rainforest in 15 years. But he has built a devoted base by presenting himself as protection from leftist policies that he says infringe on personal liberties while producing economic turmoil and moral rot. He sought to shore up support in an election year with vast government spending.

    “We did not face an opponent, a candidate. We faced the machine of the Brazilian state put at his service so we could not win the election,” da Silva told the crowd in Sao Paulo.

    Da Silva built an extensive social welfare program during his tenure at president that helped lift tens of millions into the middle class. The man universally known as Lula left office with an approval rating above 80%, prompting then U.S. President Barack Obama to call him “the most popular politician on Earth.”

    But he is also remembered for his administration’s involvement in vast corruption revealed by sprawling investigations.

    Da Silva was jailed for 580 days for corruption and money laundering. His convictions were later annulled by Brazil’s top court, which ruled the presiding judge had been biased and colluded with prosecutors. That enabled da Silva to run for president for the sixth time.

    Da Silva has pledged to boost spending on the poor, reestablish relationships with foreign governments and take bold action to eliminate illegal clear-cutting in the Amazon rainforest.

    “We will once again monitor and do surveillance in the Amazon. We will fight every illegal activity,” da Silva said in his speech. “At the same time, we will promote sustainable development of communities in the Amazon.”

    The president-elect has pledged to install a ministry for Brazil’s original peoples, which will be run by an Indigenous person.

    But as da Silva tries to achieve these and other goals, he will be confronted by strong opposition from conservative lawmakers.

    Unemployment this year has fallen to its lowest level since 2015 and, although overall inflation slowed during the campaign, food prices are increasing at a double-digit rate. Bolsonaro’s welfare payments helped many Brazilians get by, but da Silva has been presenting himself as the candidate more willing to sustain aid going forward and raise the minimum wage.

    In April, he tapped center-right Geraldo Alckmin, a former rival, to be his running mate. It was another key part of an effort to create a broad, pro-democracy front to not just unseat Bolsonaro, but to make it easier to govern.

    Building bridges among a diverse — and divided — country will be key to his success, said Carlos Melo, a political science professor at Insper University in Sao Paulo.

    “If Lula manages to talk to voters who didn’t vote for him, which Bolsonaro never tried, and seeks negotiated solutions to the economic, social and political crisis we have,” Melo said, “then he could reconnect Brazil to a time in which people could disagree and still get some things done.”

    ———

    Carla Bridi contributed to this report from Brasilia.

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  • US curbs on microchips could throttle China’s ambitions and escalate the tech war | CNN Business

    US curbs on microchips could throttle China’s ambitions and escalate the tech war | CNN Business

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    Hong Kong
    CNN Business
     — 

    Chinese leader Xi Jinping’s push to “win the battle” in core technologies and bolster China’s position as a tech superpower could be severely undermined by Washington’s unprecedented steps to limit the sale of advanced chips and chip-making equipment to the country, analysts say.

    On October 7, the Biden administration unveiled a sweeping set of export controls that ban Chinese companies from buying advanced chips and chip-making equipment without a license. The rule also restricts the ability of “US persons” — including American citizens or green card holders — to provide support for the “development or production” of chips at certain manufacturing facilities in China.

    “The US moves are a major threat to China’s technological ambitions,” said Mark Williams and Zichun Huang, analysts at Capital Economics, in a recent research report. The analysts pointed out that the global semiconductor industry is “almost entirely” dependent on the United States and countries aligned with it for chip design, the tools that make them, and fabrication.

    “Without these,” the analysts said, “Chinese firms will lose access not only to advanced chips, but to technology and inputs that might over time have allowed domestic chipmakers to climb the ladder and compete at the cutting edge.” They added: “The US has chopped the rungs away.”

    Chips are vital for everything from smartphones and self-driving cars to advanced computing and weapons manufacturing. US officials have talked about the move as a measure to protect national security interests. It also comes as the United States is looking to bolster its domestic chip manufacturing abilities with heavy investments, after chip shortages earlier in the pandemic highlighted the country’s dependance on imports from abroad.

    Arthur Dong, a teaching professor at Georgetown University’s McDonough School of Business, described the recent US sanctions as “unprecedented in modern times.”

    Previously, the US government has banned sales of certain tech products to specific Chinese companies, such as Huawei. It has also required some major US chip-making firms to halt their shipments to China. But the latest move is much more expansive and significant. It not only bars the export to China of advanced chips made anywhere in the world using US technology, but also blocks the export of the tools used to make them.

    With its Made in China 2025 road map, Beijing has set a target for China to become a global leader in a wide range of industries, including artificial intelligence (AI), 5G wireless, and quantum computing. At the Communist Party Congress earlier this month, where he secured a historic third term, Xi highlighted that the nation will prioritize tech and innovation and grow its talent pool to develop homegrown technologies.

    “China will look to join the ranks of the world’s most innovative countries by 2035, with great self-reliance and strength in science and technology,” Xi said in the party congress report, released on October 16.

    Dong said the latest US sanctions will make it harder for China to advance in AI as well as 5G, given the role advanced chips play in both industries.

    “In any circumstances,” Williams from Capital Economics said, “China would find achieving global tech leadership hard to achieve.”

    One dramatic, and potentially disruptive aspect of the rules is the ban on American citizens and legal residents working with Chinese chip firms.

    Dane Chamorro, a partner at Control Risks, a global risk consultancy based in London, said such measures are usually “only enacted against ‘rogue regimes’” such as Iran and North Korea. The decision to use this against China is “unprecedented,” Chamorro said.

    Many executives working for Chinese firms may now have to choose between keeping their jobs or acting as lawful US residents. “You can’t do both,” Chamorro said.

    The ban could lead to a mass resignation of top executives and core research staff working at Chinese chip firms, which will hit the industry hard, Dong from Georgetown University said.

    So far it’s not clear exactly how many American workers there are in China’s domestic chip industry. But an examination of company filings indicates that more than a dozen chip firms have senior executives holding US citizenship or green cards. At Advanced Micro-Fabrication Equipment China (AMEC), one of the country’s largest semiconductor equipment manufacturers, at least seven executives, including founder and chairman Gerald Yin, hold US citizenship, the latest company documents show.

    A woman inspects the quality of a chip at a manufacturer of IC encapsulation in Nantong in east China's Jiangsu province Friday, Sept. 16, 2022.

    Other examples include Shu Qingming and Cheng Taiyi, who currently serve as vice chairman and deputy general manager, respectively, at GigaDevice Semiconductor, an advanced memory chip firm. The Financial Times report said in a recent report that Yangtze Memory Technologies has already asked American employees in core tech positions to leave, citing anonymous sources. But it’s unclear how many.

    AMEC, GigaDevice Semiconductor, and Yangtze Memory Technologies didn’t respond to requests for comments.

    If these senior executives depart, “this will create a leadership and technological void within China’s chipmaking industry,” Dong said, as the country loses executives with years of chipmaking experience in an industry with “one of the most complex manufacturing processes known to mankind.”

    While much of the world’s chip manufacturing is centered in East Asia, China is reliant on foreign chips, especially for advanced processor and memory chips and related equipment.

    It is the world’s largest importer of semiconductors, and has spent more money buying them than oil. In 2021, China bought a record $414 billion worth of chips, or more than 16% of the value of its total imports, according to government statistics.

    But some Western suppliers have already started preparing to halt sales to China in response to the US export curbs.

    ASM International

    (ASMIY)
    , the Dutch semiconductor equipment supplier, said Wednesday that it expected the export restrictions will affect more than 40% of its sales in China. The country accounted for 16% of ASML’s equipment sales in the first nine months of this year.

    Lam Researc

    (LRCX)
    h, which supplies semiconductor equipment and services, also flagged last week that it could lose between $2 billion and $2.5 billion in annual revenue in 2023 as a result of the US export curbs.

    The party congress, which recently wrapped up, has slowed China’s response to latest US export controls, analysts said. But as Beijing starts assessing the significance of the measures, it might retaliate. Xi is “concerned” about US plans to bolster domestic chip production as his administration moves to restrict China’s ability to make them, said US President Joe Biden in a speech on Thursday.

    “This conflict is just beginning,” said Chamorro.

    Chamorro said the most valuable “card” in China’s hand might be the supply of processed rare earth minerals, which Beijing could embargo. Rare earth minerals are important materials in electric vehicle production, battery making and renewable energy systems.

    “These are not easily or quickly replaced and China dominates the processing and supply chain,” Chamorro said.

    The Biden administration, meanwhile, is also weighing further restrictions on other technology exports to China, a senior US Commerce Department official said Thursday, according to the New York Times.

    If either country takes these steps, it could shift the tech arms race between the United States and China to a whole new level.

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  • Wall Street heads for first weekly win streak since summer

    Wall Street heads for first weekly win streak since summer

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    NEW YORK — Wall Street is rallying Friday, led by Apple, Exxon Mobil and other companies that made even bigger profits during the summer than expected.

    The S&P 500 was 1.2% higher in early trading and on pace to close out its first back-to-back weekly gains since August. The Dow Jones Industrial Average was up 533 points, or 1.7%, to 32,576, as of 10:30 a.m. Eastern time, and the Nasdaq composite was 1.1% higher.

    Stocks have revived recently in part on hopes that the big hikes to interest rates shaking the market may be set to dial down later this year. Some investors are even talking again about a “pivot” by the Federal Reserve away from a focus solely on beating down inflation through rate hikes, even if many analysts say such hopes may be overstretched. More recently, many big U.S. companies have been reporting stronger earnings than expected, though the bag remains decidedly mixed.

    Apple rose 5% and was the strongest force lifting the S&P 500 in its first trading after reporting fatter revenue and profit than expected for the latest quarter. Oil producers were also strong after delivering record earnings on the back of rising crude prices. Exxon Mobil climbed 2.8%, and Chevron rose 2%.

    They helped to offset a 10.8% drop for Amazon, which offered a weaker-than-expected forecast for upcoming revenue. It was the latest in a lengthening list of discouraging trends for some of the Big Tech companies that have dominated Wall Street for years with their seemingly unstoppable growth.

    Earlier in the week, Meta Platforms lost nearly a quarter of its value after reporting a second straight quarter of revenue decline amid falling advertising sales and stiff competition from TikTok. Microsoft and Google’s parent company also reported weaker trends than Wall Street expected.

    Rising interest rates have hit Big Tech stock prices harder than the rest of the market, and the pressure increased Friday as yields climbed.

    Data released in the morning showed the raises that U.S. workers got in wages and other compensation during the summer was in line with economists’ expectations. That should keep the Fed on track to keep hiking rates sharply in hopes of weakening the job market enough to undercut the nation’s high inflation.

    The yield on the two-year Treasury, which tends to track expectations for Fed action, rose to 4.38% from 4.28% late Thursady.

    The 10-year yield, which helps set rates for mortgages and many other loans, climbed to 3.98% from 3.93% and was briefly back above 4%.

    Trading in Twitter’s stock has ended, after Elon Musk has taken control of the company following a lengthy legal battle.

    In Europe, stock indexes were mixed in relatively muted trading.

    Shares fell 0.9% in Tokyo even as the government approved a massive stimulus spending package to help the world’s No. 3 economy cope with inflation. As expected, the Bank of Japan wrapped up a policy meeting by keeping its ultra-lax monetary policy unchanged even as it forecast higher inflation.

    ———

    Associated Press writers Elaine Kurtenbach, Matt Ott and Mari Yamaguchi contributed.

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  • A key US inflation gauge stayed at a high 6.2% in September

    A key US inflation gauge stayed at a high 6.2% in September

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    WASHINGTON — A measure of inflation that is closely monitored by the Federal Reserve remained painfully high last month, the latest sign that prices for most goods and services in the United States are still rising steadily.

    Friday’s report from the Commerce Department showed that prices rose 6.2% in September from 12 months earlier, the same year-over-year rate as in August.

    Excluding volatile food and energy costs, so-called core prices rose 5.1% last month from a year earlier. That’s also faster than the 4.9% annual increase in August, though below a four-decade high of 5.4% reached in February.

    The report also showed that consumers spent more last month, even after adjusting for inflation, a sign of Americans’ willingness to keep spending in the face of high prices. Consumer spending increased 0.6% from August to September, or 0.3% after accounting for price increases.

    The latest figures come just as Americans have begun voting in midterm elections in which Democrats’ control of Congress is at stake and inflation has shot to the top of voters’ concerns. Republicans have heaped blame on President Joe Biden and congressional Democrats for the skyrocketing prices that have buffeted households across the country.

    The persistence of high inflation, near the worst in four decades, has intensified pressure on the Federal Reserve to keep aggressively raising its key short-term interest rate to try to wrestle rising prices under control. Last month, the Fed raised its key rate by a substantial three-quarters of a point for a third straight time, and next week it’s expected to do so for a fourth time.

    The central bank’s latest rate hikes far exceed the quarter-point increases that it typically used in the past when it sought to tighten credit to fight inflation. But after being caught off guard beginning late last year, when prices accelerated far more than the Fed’s policymakers had anticipated, the officials have been raising their benchmark rate at the fastest pace in four decades. In doing so, they are raising the risk of a recession — something that many economists expect to occur sometime next year as a result.

    The Fed’s hikes have led to much higher loan rates for businesses and consumers, particularly for mortgages. The average 30-year fixed mortgage rate surged past 7% this week, according to Freddie Mac, the highest level in two decades and more than twice what it was a year ago.

    The rapid run-up in borrowing costs has crushed the housing market. Sales of existing homes have dropped for eight straight months and are down nearly 25% in the past year. New-home sales and construction are also falling.

    A weaker housing market has slowed the economy, as fewer home purchases also drag down sales of furniture, appliances, and home improvement gear.

    Home prices, which rocketed during the pandemic, have started to fall as a result. The S&P Case-Shiller home price index fell from July to August for a second straight month, according to the latest data available,

    But those declines have yet to show up in the government’s measures of housing costs, which include rents, which are still rising for many people as they renew their leases. It could take until late spring or summer before falling home prices work their way into the government’s inflation indexes. That delay could keep official measures of inflation from falling much over the next few months.

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  • EXPLAINER: How will we know if the U.S. is in recession?

    EXPLAINER: How will we know if the U.S. is in recession?

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    WASHINGTON — The U.S. economy grew faster than expected in the July-September quarter, the government reported Thursday, underscoring that the United States is not in a recession despite distressingly high inflation and interest rate hikes by the Federal Reserve.

    But the economy is hardly in the clear, and the solid growth reported for the third quarter did little to alter the growing conviction among economists that a recession is very likely next year.

    Higher borrowing rates and chronic inflation will almost certainly continue to weaken consumer and business spending. And likely recessions in the United Kingdom and Europe and slower growth in China will erode the revenue and profits of American corporations. Such trends are expected to cause a U.S. recession sometime in 2023.

    Still, there are reasons to hope that a recession, if it comes, will prove a relatively mild one. Many employers, having struggled to find workers to hire after huge layoffs during the pandemic, may decide to maintain most of their existing workforces even in a shrinking economy.

    In the July-September quarter, the economy accelerated to a 2.6% annual pace, after two quarters of contraction. Consumers spent more and exports jumped, offsetting a sharp slowdown in home sales and construction.

    Six months of economic decline is a long-held informal definition of a recession. Yet nothing is simple in a post-pandemic economy in which growth was negative in the first half of the year but the job market remained robust, with ultra-low unemployment and healthy levels of hiring. The economy’s direction has confounded the Fed’s policymakers and many private economists ever since growth screeched to a halt in March 2020, when COVID-19 struck and 22 million Americans were suddenly thrown out of work.

    By far the biggest threat to the economy remains inflation, which is still near its highest level in four decades. Even for workers who received sizable raises, their pay has dropped once it’s adjusted for inflation. The pain is being felt disproportionately by lower-income and Black and Hispanic households, many of whom are struggling to pay for essentials like food, clothes, and rent.

    High inflation has also become a central issue in Republican attacks on President Joe Biden and his fellow Democrats, who have been thrown on the defensive as they seek to maintain control of Congress in the midterm elections.

    So what is the likelihood of a recession? Here are some questions and answers:

    ————

    WHY DO MANY ECONOMISTS FORESEE A RECESSION?

    They expect the Fed’s aggressive rate hikes and persistently high inflation to overwhelm consumers and businesses, forcing them to slow their spending and investment. Businesses will likely also have to cut jobs, causing spending to fall further.

    The Fed is poised to keep raising its benchmark interest rate after having already hiked it five times this year, from near zero to a range of 3% to 3.25%. Fed officials have projected that their short-term rate, which affects borrowing costs for consumers and businesses, will reach about 4.6% next year, which would be the highest level since late 2007.

    Consumers have been remarkably resilient so far this year. Still, there are signs that high inflation and borrowing costs have begun taking a toll. Last quarter, consumer spending grew at just a 1.4% annual rate, according to Thursday’s government report, down from 2% in the second quarter and less than half its pace of a year ago.

    Thursday’s figures also showed that businesses are cutting back on investment in buildings and factories, and the housing market has been hammered by rising mortgage costs. Those trends are expected to intensify, leading to a likely recession.

    ———

    WHAT ARE SOME SIGNS THAT A RECESSION MAY HAVE BEGUN?

    The clearest signal, economists say, would be a steady rise in job losses and a surge in unemployment. Claudia Sahm, an economist and former Fed staff member, has noted that since World War II, an increase in the unemployment rate of a half-percentage point over several months has always resulted in a recession.

    Many economists monitor the number of people who seek unemployment benefits each week, which indicates whether layoffs are worsening. Weekly applications for jobless aid have increased in recent months, but not by very much. Instead, employers have added a robust average of 370,000 jobs in the past three months.

    ———

    ANY OTHER SIGNALS TO WATCH FOR?

    Many economists monitor changes in the interest payments, or yields, on different bonds for a recession signal known as an “inverted yield curve.” This occurs when the yield on the 10-year Treasury falls below the yield on a short-term Treasury, such as the 3-month T-bill. That is unusual. Normally, longer-term bonds pay investors a richer yield in exchange for tying up their money for a longer period.

    Inverted yield curves generally mean that investors foresee a recession that will compel the Fed to slash rates. Inverted curves often predate recessions. Still, it can take 18 to 24 months for a downturn to arrive after the yield curve inverts.

    Ever since July, the yield on the two-year Treasury note has exceeded the 10-year yield, suggesting that markets expect a recession soon. And just this week, the three-month yield also temporarily rose above the 10-year, an inversion that has an even better track record at predicting recessions.

    ———

    WHO DECIDES WHEN A RECESSION HAS STARTED?

    Recessions are officially declared by the obscure-sounding National Bureau of Economic Research, a group of economists whose Business Cycle Dating Committee defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”

    The committee considers trends in hiring as a key measure in determining recessions. It also assesses many other data points, including gauges of income, employment, inflation-adjusted spending, retail sales and factory output. It puts heavy weight on jobs and a measure of inflation-adjusted income that excludes government support payments like Social Security.

    Yet the NBER typically doesn’t declare a recession until well after one has begun, sometimes for up to a year.

    ———

    DON’T A LOT OF PEOPLE THINK WE”RE ALREADY IN A RECESSION?

    Yes, because many people now feel much more financially burdened. With wage gains trailing inflation for most people, higher prices have eroded Americans’ spending power.

    And the Fed’s rate hikes have helped send the average 30-year fixed mortgage rate surging above 7% this week, the highest level in two decades. It has more than doubled from about 3% a year ago, thereby making homebuying increasingly unaffordable.

    ———

    DOES HIGH INFLATION TYPICALLY LEAD TO A RECESSION?

    Not always. Inflation reached 4.7% in 2006, at that point the highest in 15 years, without causing a downturn. (The 2008-2009 recession that followed was caused by the bursting of the housing bubble).

    But when it gets as high as it has this year — it reached a 40-year peak of 9.1% in June — a downturn becomes increasingly likely.

    That’s for two reasons: First, the Fed will inevitably sharply raise borrowing costs when inflation gets that high. Higher rates then drag down the economy as consumers are less able to afford homes, cars, and other major purchases.

    High inflation also distorts the economy on its own. Consumer spending, adjusted for inflation, weakens. And businesses grow uncertain about the future economic outlook. Many of them pull back on their expansion plans and stop hiring, which can lead to higher unemployment as some people choose to leave jobs and aren’t replaced.

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  • US stock indexes are mixed as Facebook parent company slumps

    US stock indexes are mixed as Facebook parent company slumps

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    NEW YORK — Stock indexes are mixed on Wall Street in afternoon trading Thursday as more big companies report quarterly results.

    The S&P 500 fell 0.5% as of 2:11 p.m. Eastern. Roughly 70% of stocks within the benchmark index gained ground, but slides in several big technology stocks more than offset hose gains.

    The tech-heavy Nasdaq fell 1.5%. Facebook’s parent company, Meta Platforms, plummeted 23.7% after reporting a second straight quarter of revenue decline amid falling advertising sales and stiff competition from TikTok. It joins other tech and communications stocks, such as Google’s parent company, Alphabet, and Microsoft, in reporting weak results and worrisome forecasts over advertising demand.

    The Dow Jones Industrial Average rose 263 points, or 0.8%, to 32,099. Construction equipment maker Caterpillar jumped 8.2% and contributed greatly to the index’s gains after it handily beat analysts’ third-quarter profit forecasts.

    Long-term Treasury yields fell. The yield on the 10-year Treasury, which influences mortgage rates, fell to 3.95% from 4.01% late Wednesday. The two-year yield fell to 4.34% from 4.42%.

    “What you’re seeing is a little bit of relief,” said Megan Horneman, chief investment officer at Verdence Capital Advisors. “Earnings are not great but they’re not awful either.”

    The benchmark S&P 500 is still holding on to weekly gains and remains solidly on track to end October in the green.

    Earnings have been the big focus for Wall Street this week, but markets got some encouraging economic news Thursday as the government reported the U.S. economy returned to growth last quarter, expanding 2.6%. That marks a turnaround after the economy contracted during the first half of the year.

    The economy has been under pressure from stubbornly hot inflation and the Federal Reserve’s efforts to raise interest rates in order to cool prices. The central bank is trying to slow economic growth through rate increases, but the strategy risks going too far and brining on a recession.

    The rising interest rates have made borrowing more difficult, particularly with mortgage rates. Average long-term U.S. mortgage rates topped 7% for the first time in more than two decades this week.

    The latest economic data is being closely watched for any signs of a slowdown or that inflation might be easing as Wall Street tries to determine if and when the Fed might pull back on its interest rate increases.

    The central bank is expected to raise interest rates another three-quarters of a percentage point at its upcoming meeting in November. But traders have grown more confident that it will dial down to a more modest increase of 0.50 percentage points in December, according to CME Group.

    Central banks around the world have also been raising interest rates in an effort to tame inflation. The European Central Bank piled on another outsized interest rate hike on Thursday. Markets in Europe were mixed.

    Wall Street has more earnings to review later Thursday. Internet retail giant Amazon and iPhone maker Apple report results after the market closes. Exxon Mobil will report its latest financial results on Friday.

    ———

    Joe McDonald and Matt Ott contributed to this report.

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  • European Central Bank makes another large interest rate hike

    European Central Bank makes another large interest rate hike

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    FRANKFURT, Germany — The European Central Bank piled on another outsized interest rate hike aimed at squelching out-of-control inflation, increasing rates Thursday at the fastest pace in the euro currency’s history and raising questions about how far the bank intends to go with a recession looming over the economy.

    The 25-member governing council raised its interest rate benchmarks by three-quarters of a percentage point at a meeting in Frankfurt, matching its record increase from last month and joining the U.S. Federal Reserve in making a series of rapid hikes to tackle soaring consumer prices.

    The ECB has now raised rates for the 19-country euro area by a full 2 percentage points in just three months, distance that took 18 months to cover during its last extended hiking phase in 2005-2007 and 17 months in 1999-2000.

    Central banks around the world are rapidly raising interest rates that steer the cost of credit for businesses and consumers. Their goal is to halt galloping inflation fueled by high energy prices, post-pandemic supply bottlenecks, and reviving demand for goods and services after COVID-19 restrictions eased. The Fed raised rates by three-quarters of a point for the third straight time last month.

    Quarter-point increases have usually been the norm for central banks. But that was before inflation spiked to 9.9% in the eurozone, fueled by higher prices for natural gas and electricity after Russia cut off most of its gas supplies during the war in Ukraine. Inflation in the U.S. is near 40-year highs of 8.2%, fueled in part by stronger growth and more pandemic support spending than in Europe.

    Inflation robs consumers of purchasing power, leading many economists to pencil in a recession for the end of this year and the beginning of next year in both the U.S. and the 19 countries that use the euro as their currency.

    Markets will be watching ECB President Christine Lagarde’s news conference for clues about how far the bank intends to go.

    Analysts at UniCredit said Lagarde was not likely to provide clues about the peak level of rates but “we suspect that she will drop hints pointing to an increasing likelihood that rates will have to be raised into restrictive territory, and a slower pace of hikes following today’s bold move.”

    At the last meeting in September, she indicated that three-quarters of a point was not the “norm” but added that decisions are being taking on a meeting-to-meeting basis. Some analysts foresee a half-point increase at the last rate-setting meeting of the year in December and think the bank may pause after that.

    The ECB foresees inflation falling to 2.3% by the end of 2024.

    Higher rates can control inflation by making it more expensive to borrow, spend and invest, lowering demand for goods. But the concerted effort to raise rates has also raised concerns about their impact on growth and on markets for stocks and bonds. Years of low rates on conservative investments have pushed investors toward riskier holdings such as stocks, a process that is now going into reverse, while rising rates can lower the value of existing bond holdings.

    The head of the International Monetary Fund, Kristalina Georgieva, has warned that tightening monetary policy “too much and too fast” raises the risk of prolonged recessions in many economies. The IMF forecasts that global economic growth will slow from 3.2% this year to 2.7% next year.

    The ECB’s benchmark for short-term lending to banks now stands at 2%, a level last seen in March 2009.

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  • US economy likely returned to growth last quarter

    US economy likely returned to growth last quarter

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    WASHINGTON — The problems have hardly gone away. Inflation, still near a 40-year high, is punishing households. Rising interest rates have derailed the housing market and threaten to inflict broader damage. And the outlook for the world economy grows bleaker the longer that Russia’s war against Ukraine drags on.

    But for now anyway, the U.S. economy has likely returned to growth after having shrunk in each of the first two quarters of 2022.

    At least that’s what economists expect to see Thursday when the Commerce Department issues its first of three estimates of gross domestic product — the broadest measure of economic output — for the July-September period.

    Economists surveyed by the data firm FactSet have predicted, on average, that GDP grew at a 2% annual rate in the third quarter. That would reverse annual declines of 1.6% from January through March and 0.6% from April through June.

    Consecutive quarters of declining economic output are one informal definition of a recession. But most economists say they believe the economy has so far skirted a recession, noting the still-resilient job market and steady spending by consumers. Most of them have expressed concern, though, that a recession is likely next year as the Federal Reserve continues to steadily ratchet up interest rates to fight inflation.

    Preston Caldwell, head of U.S. economics for the financial services firm Morningstar, notes that the economy’s contraction in the first half of the year was caused largely by factors that don’t reflect its underlying health and so “very likely did not constitute a genuine economic slowdown.” He pointed, for example, to a drop in business inventories, a cyclical event that tends to reverse itself and generally doesn’t reflect the state of the economy.

    By contrast, consumer spending, fueled by a healthy job market, and stronger U.S. exports likely restored the world’s biggest economy to growth last quarter.

    Thursday’s report from the government comes as Americans, worried about high prices and recession risks, are preparing to vote in midterm elections that will determine whether President Joe Biden’s Democratic Party retains control of Congress. Inflation has become a signature issue for Republican attacks on the Democrats’ stewardship of the economy.

    The risk of an economic downturn next year remains elevated as the Fed keeps raising rates aggressively to try to tame stubbornly high consumer prices. The central bank has raised its benchmark short-term rate five times this year, and it’s expected to announce further hikes next week and again in December. Chair Jerome Powell has warned bluntly that taming inflation will “bring some pain’’ — namely, higher unemployment and, possibly, a recession.

    Higher borrowing costs have already hammered the home market. The average rate on a 30-year fixed-rate mortgage, just 3.09% a year ago, is approaching 7%. Sales of existing homes have fallen for eight straight months. Construction of new homes is down nearly 8% from a year ago.

    Still, the economy retains pockets of strength. One is the vitally important job market. Employers have added an average of 420,000 jobs a month this year, putting 2022 on track to be the second-best year for job creation (behind 2021) in Labor Department records going back to 1940. The unemployment rate was 3.5% last month, matching a half-century low.

    But hiring has been decelerating. In September, the economy added 263,000 jobs — solid but the lowest total since April 2021.

    International events are causing further concerns. Russia’s invasion of Ukraine has disrupted trade and raised prices of energy and food, creating a crisis for poor countries. The International Monetary Fund, citing the war, this month downgraded its outlook for the world economy in 2023.

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  • Hong Kong stocks plunge 6% as fears about Xi’s third term trump China GDP data | CNN Business

    Hong Kong stocks plunge 6% as fears about Xi’s third term trump China GDP data | CNN Business

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    Hong Kong
    CNN Business
     — 

    Hong Kong stocks had their worst day since the 2008 global financial crisis, just a day after Chinese leader Xi Jinping secured his iron grip on power at a major political gathering.

    Foreign investors spooked by the outcome of the Communist Party’s leadership reshuffle dumped Chinese equities and the yuan despite the release of stronger-than-expected GDP data. They’re worried that Xi’s tightening grip on power will lead to the continuation of Beijing’s existing policies and further dent the economy.

    Hong Kong’s benchmark Hang Seng

    (HSI)
    Index plunged 6.4% on Monday, marking its biggest daily drop since November 2008. The index closed at its lowest level since April 2009.

    The Chinese yuan weakened sharply, hitting a fresh 14-year low against the US dollar on the onshore market. On the offshore market, where it can trade more freely, the currency tumbled 0.8%, hovering near its weakest level on record, even as the Chinese economy grew 3.9% in the third quarter from a year ago, according to the National Bureau of Statistics. Economists polled by Reuters had expected growth of 3.4%.

    The sharp sell-off came one day after the ruling Communist Party unveiled its new leadership for the next five years. In addition to securing an unprecedented third term as party chief, Xi packed his new leadership team with staunch loyalists.

    A number of senior officials who have backed market reforms and opening up the economy were missing from the new top team, stirring concerns about the future direction of the country and its relations with the United States. Those pushed aside included Premier Li Keqiang, Vice Premier Liu He, and central bank governor Yi Gang.

    “It appears that the leadership reshuffle spooked foreign investors to offload their Chinese investment, sparking heavy sell-offs in Hong Kong-listed Chinese equities,” said Ken Cheung, chief Asian forex strategist at Mizuho bank.

    The GDP data marked a pick-up from the 0.4% increase in the second quarter, when China’s economy was battered by widespread Covid lockdowns. Shanghai, the nation’s financial center and a key global trade hub, was shut down for two months in April and May. But the growth rate was still below the annual official target that the government set earlier this year.

    “The outlook remains gloomy,” said Julian Evans-Pritchard, senior China economist for Capital Economics, in a research report on Monday.

    “There is no prospect of China lifting its zero-Covid policy in the near future, and we don’t expect any meaningful relaxation before 2024,” he added.

    Coupled with a further weakening in the global economy and a persistent slump in China’s real estate, all the headwinds will continue to pressure the Chinese economy, he said.

    Evans-Pritchard expected China’s official GDP to grow by only 2.5% this year and by 3.5% in 2023.

    Monday’s GDP data were initially scheduled for release on October 18 during the Chinese Communist Party’s congress, but were postponed without explanation.

    The possibility that policies such as zero-Covid, which has resulted in sweeping lockdowns to contain the virus, and “Common Prosperity” — Xi’s bid to redistribute wealth — could be escalated was causing concern, Cheung said.

    “With the Politburo Standing Committee composed of President Xi’s close allies, market participants read the implications as President Xi’s power consolidation and the policy continuation,” he added.

    Mitul Kotecha, head of emerging markets strategy at TD Securities, also pointed out that the disappearance of pro-reform officials from the new leadership bodes ill for the future of China’s private sector.

    “The departure of perceived pro-stimulus officials and reformers from the Politburo Standing Committee and replacement with allies of Xi, suggests that ‘Common Prosperity’ will be the overriding push of officials,” Kotecha said.

    Under the banner of the “Common Prosperity” campaign, Beijing launched a sweeping crackdown on the country’s private enterprise, which shook almost every industry to its core.

    “The [market] reaction in our view is consistent with the reduced prospects of significant stimulus or changes to zero-Covid policy. Overall, prospects of a re-acceleration of growth are limited,” Kotecha said.

    On the tightly controlled domestic market in China, the benchmark Shanghai Composite Index dropped 2%. The tech-heavy Shenzhen Component Index lost 2.1%.

    The Hang Seng Tech Index, which tracks the 30 largest technology firms listed in Hong Kong, plunged 9.7%.

    Shares of Alibaba

    (BABA)
    and Tencent

    (TCEHY)
    — the crown jewels of China’s technology sector — both plummeted more than 11%, wiping a combined $54 billion off their stock market value.

    The sell-off spilled over into the United States as well. Shares of Alibaba and several other leading Chinese stocks trading in New York, such as EV companies Nio

    (NIO)
    and Xpeng, Alibaba rivals JD.com

    (JD)
    and Pinduoduo

    (PDD)
    and search engine Baidu

    (BIDU)
    , were all down sharply Thursday afternoon.

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  • China’s economic growth accelerates but weak amid shutdowns

    China’s economic growth accelerates but weak amid shutdowns

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    BEIJING — China’s economic growth picked up in the latest quarter but still was among the weakest in decades as the ruling Communist Party tries to reverse a slump while enforcing anti-virus controls and a crackdown on debt in its vast real estate industry.

    The world’s second-largest economy grew by 3.9% over a year earlier in the three months ending in September, up from the previous quarter’s 0.4%, official data showed Monday.

    The announcement was planned for last week but postponed while the ruling Communist Party met to award President Xi Jinping a new term as leader.

    Xi, the most powerful leader in decades, wants a bigger party role in business and technology development. That has prompted warnings tighter control of entrepreneurs who generate jobs and wealth will depress growth that already was in long-term decline.

    The party gave Xi a free hand by installing a seven-member ruling Standing Committee made up of his allies. Supporters of free enterprise including Premier Li Keqiang, the party’s No. 2 until last week, were dropped from the leadership.

    Chinese stock markets closed lower Monday despite the unexpectedly strong data, suggesting investors still are uneasy about the country’s growth prospects.

    The country’s market benchmark, the Shanghai Composite Index, lost more than 2%. The Hang Seng index in Hong Kong plunged by an unusually wide daily margin of 6.4%. Tokyo and other Asian markets gained.

    The International Monetary Fund and private sector forecasters say the economy will expand by as little as 3% this year. That would be the second weakest since the 1980s after 2020, when growth plunged to 2.4% at the start of the coronavirus pandemic.

    Investors and the public watched the congress for initiatives to stimulate the economy or reduce the impact of “Zero COVID” controls that shut down cities and disrupt business, but none were announced.

    The latest slide in growth that began in mid-2021 hurts China’s trading partners by depressing demand for imported oil, food and consumer goods.

    The improvement is “mainly a result of more flexible” anti-virus controls that isolate individual buildings or neighborhoods instead of cities, said Iris Pang of ING in a report. But she said more lockdowns are “still a big uncertainty.”

    “This uncertainty means the effectiveness of pro-growth policy would be undermined,” Pang said.

    Growth slid after controls on debt that regulators worry is dangerously high caused a slump in real estate sales and construction, one of China’s biggest economic engines. Economic growth fell to 4% over a year earlier in the final quarter.

    Beijing has eased mortgage lending and local governments have taken over some unfinished projects to make sure buyers get apartments. But regulators are sticking to debt limits have forced small developers into bankruptcy and caused some bigger competitors to miss payments to bondholders.

    The ruling party is enforcing “Zero COVID” despite rising costs and public frustration after Shanghai and other industrial centers were temporarily shut down. That has boiled over into protests in some areas at a time when other countries are easing anti-virus controls.

    For the first nine months of 2022, growth was 3% over a year earlier, up from 2.5% in the first six months but barely half the ruling party’s official 5.5% target. Leaders have stopped talking about that goal but promised easier lending and other measures to boost growth.

    Growth is “highly uneven” and supported by government spending on building roads and other public works while consumer spending is weakening, said Larry Hu and Yuxiao Zhang of Macquarie in a report.

    In September, retail sales growth fell to 2.5% over a year earlier from the previous month’s 5.4%. Growth in factory output accelerated to 6.3% from 4.2%.

    Also Monday, trade data showed export growth declined to 5.7% compared with a year earlier in September from the previous month’s 7%. Imports crept up 0.3%.

    “Most of the economy lost momentum last month,” said Julian Evans-Pritchard of Capital Economics in a report. “The situation looks to have worsened in October.”

    Investment in infrastructure, mostly government money, rose 16% in September compared with the previous month’s 15%.

    Repeated shutdowns and uncertainty about business conditions have devastated entrepreneurs. Small retailers and restaurants have closed. Others say they are struggling to stay afloat.

    Beijing is using cautious, targeted stimulus instead of across-the-board spending, a strategy that will take longer to show results, economists say. Chinese leaders worry too much spending might push up politically sensitive housing costs or corporate debt.

    ———

    National Bureau of Statistics (in Chinese): www.stats.gov.cn

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