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Globescan: Fresh Uptick
The economic outlook was further bolstered by another report showing construction spending scaling a more than eight-year high in January
Photo Credit : Shutterstock
US manufacturing appeared to stabilise in February, with production accelerating and new orders holding steady at higher levels, in another dose of good news for the economy after growth slowed in the fourth quarter. The economic outlook was further bolstered by another report showing construction spending scaling a more than eight-year high in January. Though automobile sales slowed a bit, they remained at levels consistent with strong consumer spending. The reports added to upbeat data on consumer spending, the labour market, industrial production and durable goods orders in suggesting that economic growth picked up at the start of the first quarter, which should further ease fears of a recession.
The Federal Reserve’s leaders predicted in December that they would raise rates about four times this year. But the Fed is now thinking twice after stocks and oil prices were rocked by volatility in January and February. “I have marked down my growth outlook very modestly,” New York Federal Reserve President Bill Dudley said. If the volatility continues, “it could potentially lead to a more significant downgrade to my outlook.” Expectations for March were already low and Dudley’s comments all but confirmed them with his comments. The Fed’s committee meets in two weeks. The key now seems to be how much it revises down its rate hike plans, if at all. The Fed raised rates in December for the first time in nearly a decade.
A federal magistrate judge denied the US government’s request that Apple extract data from an iPhone in a drug case in New York, giving the company’s pro-privacy stance a boost as it battles law enforcement officials over opening up the device in other cases. The ruling, from Judge James Orenstein in New York’s Eastern District, is the first time that the government’s legal argument for opening up devices like the iPhone has been put to the test. The denial could set a precedent for other cases where law enforcement officials are trying to compel Apple to help unlock iPhones, including the standoff between Apple and the FBI over the iPhone used by one of the attackers in a mass shooting in San Bernardino, California, last year. Orenstein, in his 50-page ruling, took particular aim at a 1789 statute called the All Writs Act that underlies many government requests for extracting data from tech companies.
US crude prices closed higher after a choppy trading session as data showing record US crude stocks was offset by evidence that production in an oversupplied market continues to decline.The Energy Information Administration reported crude inventories rose by 10.4 million barrels to a total of 518 million barrels. The build was almost three times more than the 3.6 million-barrel increase expected by analysts. The American Petroleum Institute said US crude inventories jumped by 9.9 million barrels last week, much more than the 3.6-million-barrel increase analysts had forecast. But the drop in production to levels not seen since late 2014 gave bulls hope, Dow Jones reported.
British factories had their weakest month in nearly three years in February as demand at home slowed and export orders fell, a survey showed. The Markit/CIPS manufacturing Purchasing Managers’ Index fell sharply to 50.8, below all the forecasts in a Reuters poll of economists, from 52.9 in January. The reading — the weakest since April 2013, when Britain was finally starting to recover strongly from the financial crisis and outperform most other rich economies — underscored why the Bank of England has said it is ready to pump more stimulus into the economy if needed.
Out Of Africa
Barclays will sell its Africa business as part of a plan by new CEO Jes Staley to simplify the bank’s structure and seek higher shareholder returns, it said after reporting a 2 per cent profit drop and slashing its dividend. The British lender plans to sell its 62 per cent stake in Barclays Africa Group over the next two to three years, ending its presence on the continent after more than a century and becoming a “transatlantic” bank focused on the US and Britain. It would then concentrate on two divisions, Barclays UK and Barclays Corporate and International.
China aims to lay off five-six million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two reliable sources said, Beijing’s boldest retrenchment programme in almost two decades. China’s leadership, obsessed with maintaining stability and making sure redundancies do not lead to unrest, will spend nearly $23 billion to cover layoffs in the coal and steel sectors in the next two-three years. The overall figure might rise as closures spread to other industries and even more funding will be required to handle the debt left behind by “zombie” state firms.
Japan’s government may not launch a stimulus package to support its struggling economy without raising concerns about the size of its spending, ratings agency S&P said. Faced with a flagging economy, it is laying the groundwork for new government spending to pre-empt any weakness in household consumption, which would add to its already heavy debt burden. S&P cut its rating on Japan from AA- to A+ in September, which is four notches below its top rating of AAA, because it doubts the government can reverse its economic deterioration.
China Resources Beer agreed to buy out the remaining stake in Snow Breweries, its Chinese joint venture with SABMiller, for $1.6 billion, smoothing the way for a takeover of its partner by Anheuser-Busch InBev. The transaction was approved by the board and is subject to regulatory approval, China Resources said in a statement. Sale of the stake may help AB InBev secure Chinese antitrust approval for its acquisition of SABMiller. AB InBev said it was making progress with Chinese regulators on gaining approval for the beer industry’s biggest-ever deal. Analysts at Nomura Holdings and Sanford C. Bernstein have previously estimated the stake’s value at about $5 billion.