China COVID crisis prompts sharp falls in oil and stock markets

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1 year ago

November 28, 2022

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Stock markets in Asia have seen sharp falls while a recent easing in oil prices gained new momentum on Monday in reaction to growing COVID lockdowns and public protests against them in China.

Brent crude futures were 3% down on the day at $81 a barrel as investors fretted over demand in the world’s second-largest economy and the impact of growing lockdowns on economic growth.

Hong Kong’s Hang Seng Index dived by more than 4% at the open before settling about 2% lower.

Equity markets across Asia generally were down, with China‘s CSI300 Index also about 2% off despite central bank action on Friday aimed at shoring up market liquidity.

The yuan also retreated.

The negative sentiment spilled over to Europe at the open, with the commodities-heavy FTSE 100 falling back by 0.8%.

Market analysts cited fears that China’s zero-COVID policy – coupled with the protests – had the potential to inflict greater damage on the economy than already anticipated.

A report by the OECD earlier this month saw economic growth in China slowing to 3.3% in 2022 from a figure of 8.1% the previous year.

Beijing, at the start of 2022, had expected a 5.5% rate of expansion.

China announced a fifth consecutive day of record new local COVID-19 cases on Monday.

Hours earlier, demonstrators and police had clashed in Shanghai.

There were also protests in Wuhan, Chengdu and parts of the capital Beijing as fresh pandemic restrictions were put in place in an attempt to quell fresh outbreaks.

Robert Subbaraman, Nomura’s Asia ex-Japan chief economist, said there was a risk that a Chinese plan to live with coronavirus came too late.

“Things are very fluid,” he said. “Protests could also be the catalyst that leads to a positive outcome in leading the government to set a clearer game plan on how the country is going to learn to live with COVID, setting a more transparent timetable, and accelerating China’s move to living with COVID.”

Business

Fed holds US interest rates again after three months of disappointing inflation data

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2 hours ago

May 1, 2024

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Fed holds US interest rates again after three months of disappointing inflation data

The US central bank, known as the Fed, has again kept interest rates high – at 5.25% to 5.5%.

It comes despite the policymaker signaling in January that interest rate cuts were around the corner.

Progress in bringing down rates and making borrowing cheaper has been hampered by rising inflation in the US.

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It could now be that US rates are only cut once in 2024, less than had been expected, as high rates are deemed necessary to take money out of the economy and slow the pace of price rises.

Data released last week showed inflation grew 3.5% in March, up from 3.2% in February and 3.1% in January – above the Fed’s inflation target and higher than economists expected.

Inflation falls are not guaranteed Mr Powell said on Wednesday, “Further progress in bringing it down is not assured and the path forward is uncertain”.

More confidence that inflation is under control will be needed before policymakers move to cut due to recent inflation figures.

Gaining that confidence will take “longer than previously expected”, he added.

In addition to the typical statement from the Fed in recent months it highlighted this concern: “In recent months, there has been a lack of further progress toward the Committee’s 2% objective.”

It signals that interest rates will remain higher for longer but another hike was said to be “unlikely” by Mr Powell.

“The committee does not expect it will be appropriate to reduce the target range [of interest rates] until it has gained greater confidence that inflation is moving sustainably toward 2%,” the Fed said.

The Fed chair would not be drawn on if, and possibly when, rates would be cut this year. “There are paths to cutting, there are paths to not cutting”, he told reporters.

Central banks in the UK, US, and EU are all aiming to bring inflation down to 2%.

The Bank of England faces a similar decision next week when it will announce its own interest rate decision.

Markets had been expecting a cut in May, but are now not expecting one until August, according to data from Refinitv.

Unlike the UK, the US interest rate is a range rather than a single percentage – the Fed does not set a specific figure. Instead, the numbers are a target rate to guide lenders.

Business

Shellfish industry on a ‘knife edge’ as sewage dumped in designated waters for 192,000 hours last year

Published

14 hours ago

May 1, 2024

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Shellfish industry on a 'knife edge' as sewage dumped in designated waters for 192,000 hours last year

Untreated sewage was released into designated shellfish waters for 192,000 hours last year, new research has found.

The dirty water pouring into English seas was a 20% jump from 159,000 hours in 2022, according to the analysis of Environment Agency data by the Liberal Democrats, shared with Sky News.

The hours of sewage dumping were spread across 23,000 separate incidents – a slight fall from the previous year, but still an average of 64 times a day.

Some fishing waters in Cornwall were forced to close last year after high levels of e.coli were found in oysters and mussels, and norovirus can also be transported via human waste.

While the fishing industry can usually clean its catch before it reaches the plate, it has branded the situation a “stitch-up” because it foots the bill for the process.

Liberal Democrat environment spokesperson Tim Farron MP said: “This environmental scandal is putting wildlife at risk of unimaginable levels of pollution.

“The food we eat, and the British fisheries industry, must be protected from raw sewage.”

The Lib Dems are calling for an investigation into shellfish water quality – which should be protected from deterioration under the Water Framework Directive – and a government clampdown on polluting companies.

“It is getting worse on their watch and there will be real concerns for the fishing industry if this trend continues,” added Mr Farron, whose party is targeting many rural seats in the upcoming general election.

The worst offender was South West Water, responsible for 13,000 sewage discharges, totalling 98,000 hours, followed by Southern Water, which released sewage 7,000 times for 73,000 hours.

Southern Water pointed to the fact 2023 fell in the wettest 18-month period on record, while South West Water said it has a high proportion of shellfish waters across its vast West Country coastline.

Just 9% of shellfish waters in England reach the top “class A” status – clean enough that shellfish harvested from them can be sold without being purified first.

Anything caught from lower quality waters must be cleaned first in depuration tanks, where the molluscs purge themselves with sterile water, or cannot be sold at all.

Fishing industry on a ‘knife edge’

Martin Laity, of Sailors Creek Shellfish, has been catching native oysters from the waters of Cornwall for 34 years.

He tracks alerts on the latest sewage discharges, so he can avoid fishing in those waters, and sometimes soaks the oysters in purification tanks for days longer than mandated just to be safe.

He calls the situation a “stitch-up” because it pushes up producers’ electricity and labour costs, and reduces the value of their catch, for which they receive no compensation.

Joe Redfern from the Shellfish Association Of Great Britain said producers “live on a knife edge”.

“Just one bad result can shut down their business overnight, leading to huge impacts to their business. It is a desperate situation and one that seems to be getting worse, with some businesses shutting for good,” he said.

It wants compensation for producers from the fines the government imposed on water companies for excessive sewage releases.

A spokesperson for industry body Water UK said: “Water companies understand and sympathise with the issues these businesses and coastal communities are facing, which is why we are proposing to spend £11bn to reduce spills as quickly as possible, halving spills into shellfish water by 2030.”

An environment department (Defra) spokesperson said: “We’re already taking action to clean up shellfish sites by driving the water industry to deliver the largest infrastructure programme in history – £60bn over 25 years – to cut spills by hundreds of thousands each year.

“Shellfish sites will be prioritised alongside bathing waters and sites of ecological importance.”

Defra is also increasing inspections and regulator funding, and considering banning some water company bonuses, they added.

South West Water said its plans will ensure all shellfish sites in its area meet the government’s target of less than 10 spills per year by 2030, and Southern Water said shellfish can also be infected by farming, run off from roads, boats, marine life and pesticides.

Business

Wait for interest rate cut leads to surprise dip in house price growth

Published

14 hours ago

May 1, 2024

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Wait for interest rate cut leads to surprise dip in house price growth

Shifting expectations for UK interest rate cuts have contributed to a dip in house price growth, according to a closely watched measure.

Nationwide reported a 0.4% fall in average property costs last month compared with March, taking the annual rate of growth to 0.6% from 1.6%.

Economists polled by the Reuters news agency had expected month-on-month growth of 0.2%.

The lender’s report said the easing reflected “ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year”.

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The cost of fixed rate mortgage deals has risen due to market expectations that a Bank of England interest rate cut is looking further away than had been anticipated at the start of the year.

According to the latest data from the financial information service Moneyfacts, the average two-year fixed residential mortgage rate is still creeping back up towards the 6% mark last seen since December.

It charted a figure of 5.9% on Monday – up from 5.87% seen last Friday.

The average five-year rate is nearing 5.5%.

The increases reflect rising borrowing costs for lenders themselves.

It is all based on market expectations that a UK interest rate cut will now not take place until August.

Earlier bets had been on May but the Bank has recently signalled no let up in its concerns about the outlook for inflation, with those including the pace of wage growth remaining too high.

Nationwide said wider cost of living pressures continued to weigh on buyers during April, despite the pace of wage growth standing at almost double that for price growth.

Robert Gardner, Nationwide’s chief economist, said: “Recent research carried out by Censuswide on behalf of Nationwide found that nearly half (49%) of prospective first-time buyers (those looking to buy in the next five years) have delayed their plans over the past year.

“Among this group, the most commonly cited reason for delaying their purchase is that house prices are too high (53%), but it is also notable that 41% said that higher mortgage costs were preventing them from buying.

“Coupled with this, 84% of prospective first-time buyers said that the cost of living has affected their plans to buy, for example through having less money each month to save for a deposit.”