Business

By Hari Kishan and Jonathan Cable

BENGALURU (Reuters) – It will be a chilly winter for global stocks, according to analysts in a Reuters poll who cut year-end predictions for most major indices from three months ago and warned the risks to that already-dull outlook were skewed to the downside.

Equities had a dream run for the better part of the last decade but are struggling to shake off deep losses from the first half of this year on worries about the global economy, suggesting a fundamental shift may be afoot.

Most indices hit their year lows in Q2 and have made some headway since then, but they are still some distance from recouping year-to-date losses. The MSCI global stock index is still down 16% for the year.

“As enticing as this rally has been … it is still no more than a bear-market rally. We caution investors about getting drawn into harm’s way,” said Lisa Shalett, Chief Investment Officer at Morgan Stanley Wealth Management.

“Inflation is far from tamed, earnings estimates need to be adjusted and stock market enthusiasm just isn’t supported by other market dynamics.”

The Aug. 9-23 Reuters polls of over 150 equity market analysts showed nearly all of the 17 indices surveyed marking only single digit gains for the remainder of the year.

If realised, those would all fall short of covering the double-digit losses they’ve racked up so far this year.

GRAPHIC – Reuters Poll – Equity market outlook

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There is also plenty of uncertainty over whether bourses would even reach those median estimates, which were already lowered from previous polls.

Over a 60% majority of strategists who answered a separate question, 58 of 95, said the risks to their end-2022 forecasts were skewed to the downside. The remaining 37 said they were to the upside.

Slowing global growth, coupled with central banks across the world hiking interest rates to achieve price stability, were likely to keep stock prices from scaling previous peaks or touching new ones.

“We expect a continued fade in growth momentum, implying equity market downside. While a number of recent macro data points have been favourable, we believe this does not change the underlying narrative,” said Sebastian Raedler, head of European equity strategy at BofA.

Raedler highlighted aggressive tightening from the U.S. Federal Reserve, potential European gas supply shortages and China’s property debt crisis as major risks for equity markets.

While those factors were expected to keep volatility high for the year there was a near-split among strategists over an outright sell-off in their local markets for the same period.

An over three-quarters majority, 83 of 108, of analysts who answered an additional question expected volatility in their local market to rise over the next three months.

Just over half, 57 of 108, said there was a low chance of another major sell-off in the final quarter.

While global equities were largely expected to end the year in the red, European markets, facing a deepening economic crisis, will fare the worst.

A recent recovery in European shares looks set to stall and not reclaim end-2021 levels for well over a year, capped by fears of an energy supply crunch, slowing growth and sky-high inflation, a Reuters poll found.

Even the benchmark U.S. S&P 500 index was expected to end 2022 nearly 10% lower from where it started.

Only emerging market stocks such as India, Brazil and Mexico were forecast to post any meaningful gains across 2022. Britain’s FTSE was expected to rise around 1% over this year.

(Other stories from the Reuters global stock markets poll package:)

(Reporting by Hari Kishan and Indradip Ghosh; Additional reporting and polling by correspondents in Bengaluru, Buenos Aires, London, Mexico City, Milan, New York, San Francisco, Sao Paulo, Tokyo and Toronto; Editing by Ross Finley and Catherine Evans)

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SYDNEY (Reuters) – Qantas Airways Ltd plans to run a competition between aircraft manufacturers to replace its ageing fleet of 28 Airbus SE A330 planes in the next 12 to 18 months, its chief financial officer said on Thursday.

“We will be looking at the market in the coming 12 months,” Chief Financial Officer Vanessa Hudson told reporters. “That aircraft is heading to the end of its useful life. We will run a competition as we have done for the narrowbody fleet in the coming 12 to 18 months.”

She did not say what models would be considered as a replacement, though most airlines have looked at the A330neo and A350 models from Airbus and rival Boeing Co 787 and any deal would be worth multiple billions of dollars based on list prices.

Qantas has three 787s already manufactured by Boeing that are in storage in the United States because of the planemaker’s delivery issues and are expected to arrive in May and June 2023, the airline’s chief executive Alan Joyce said.

The airline also in May placed an order for 12 A350s capable of the world’s longest commercial flights from Sydney to London.

(Reporting by Jamie Freed; Editing by Muralikumar Anantharaman)

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By Laura Sanicola

WASHINGTON (Reuters) – Oil prices rose in early Asian trade on Wednesday after Saudi Arabia suggested the Organization of the Petroleum Exporting Countries could consider cutting output, though bearish economic signals from central bankers and falling equities weighed.

U.S. crude futures rose 34 cents to $95.23 a barrel by 0016 GMT, while Brent crude futures rose 51 cents, or $101.73 a barrel.

Both crude oil benchmark contracts touched three-week highs on Wednesday after the Saudi energy minister flagged the possibility of cutting production.

OPEC sources later told Reuters that any cuts by the producer group and its allies, known collectively as OPEC+, are likely to coincide with a return of Iranian oil to the market should Tehran secure a nuclear deal with world powers.

Iran said it had received a response from the United States to the EU’s “final” text for revival of Tehran’s 2015 nuclear deal with major powers.

Trade has been volatile this week as speculators try to divine ahead of Friday’s U.S. Federal Reserve meeting whether the central bank is more likely to slow rate hikes or stay aggressive until it brings inflation down to its target of 2%.

U.S. government data showed lackluster demand for gasoline on Wednesday, which augurs for a notable slowdown in economic activity.

(Editing by Sam Holmes)

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By Dietrich Knauth

(Reuters) – A U.S. bankruptcy judge on Wednesday declined to appoint an equity committee in Revlon Inc’s bankruptcy, rejecting a minority shareholder demand for a greater say in the cosmetics company’s restructuring.

U.S. Bankruptcy Judge David Jones in Manhattan said shareholder interests were already represented in the bankruptcy by Revlon, majority shareholder MacAndrews & Forbes, and the minority shareholder group led by investment advisor Mittleman Brothers LLC, which is free to continue advocating for shareholders on an unofficial basis.

Equity committees are only rarely appointed in bankruptcy cases, and Jones ruled that the cost of appointing a committee outweighed its likely value. If an official equity committee were appointed, Revlon would have to pay its attorneys and professionals at a time when its resources are already stretched, Jones said.

The minority shareholders’ attorney, Gregory Pesce, argued on Wednesday that an equity committee was the best way to give a voice to the “little guys,” retail stockholders who had invested in Revlon’s future.

“There’s real value here, and that value needs to be protected,” Pesce said in court.

The minority shareholders group pointed to increases in Revlon’s share price after the company filed for Chapter 11, saying Revlon was more than a so-called meme stock fueled by irrational retail investors and social media buzz.

Revlon had opposed the appointment of an equity committee. It said the company’s $3.5 billion debt load meant that shareholders would likely receive nothing from the company’s bankruptcy. A committee’s costs would “greatly outweigh any speculative benefit,” Revlon argued in court filings.

Revlon’s lenders also opposed the minority shareholder request, saying that recent stock price fluctuations were “untethered from market realities.”

Revlon filed for Chapter 11 in June, saying its debt load left it too cash-poor to make timely payments to critical vendors in its cosmetics supply chain.

Revlon’s stock was down more than 12% at $6.73 on Wednesday.

(Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and Bill Berkrot)

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By Sheila Dang and Nivedita Balu

(Reuters) -Twitter Inc is facing more employee departures, company executives told staff on Wednesday, as leaders sought to address multiple challenges, including whistleblower https://www.reuters.com/markets/deals/twitter-whistleblower-could-help-musk-by-adding-volatility-legal-battle-2022-08-23/ allegations and a legal battle with billionaire Elon Musk.

Employee attrition is currently 18.3%, Twitter executives told staff during a company-wide meeting, audio of which was heard by Reuters. Before Musk made his $44-billion offer https://www.reuters.com/legal/musk-seeks-documents-jack-dorsey-fight-over-twitter-deal-2022-08-22/ to buy the company, attrition hovered between 14% to 16%, which was consistent with competitors, executives had previously said.

The months-long chaos related to the Musk takeover has caused some staff to flee, current employees had told Reuters.

The staff meeting was held a day after Twitter’s former security chief Peiter “Mudge” Zatko said in a whistleblower complaint https://www.reuters.com/markets/deals/twitters-former-security-head-alleges-company-misled-regulators-about-security-2022-08-23/ that the social media company misled federal regulators about its defenses against hackers and spam accounts.

The San Francisco-based company is also heading to an October trial after suing Musk for attempting to walk away from the buyout agreement.

Twitter Chief Executive Parag Agrawal moved to reassure employees on Wednesday that Zatko’s accusations were “foundationally, technically and historically inaccurate.”

Before the news broke, Twitter reached out to “various agencies” globally, said General Counsel Sean Edgett.

“We have never made a material misrepresentation to a regulator, to our board, to all of you,” he said.

Also on Wednesday, lawyers for Twitter and Musk attended a hearing in Wilmington, Delaware, to decide if Twitter had to provide documents and data sought by Musk to challenge the company’s estimates of spam accounts on its platform. Musk’s attorneys briefly mentioned the allegations by Zatko.

“Mr. Zatko said management had no appetite to measure bots,” Alex Spiro, Musk’s lawyer, told the judge.

(Reporting by Sheila Dang in Dallas, Nivedita Balu in Bengaluru and Tom Hals in Wilmington, DelawareEditing by Chizu Nomiyama, Matthew Lewis and Nick Zieminski)

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Soon after the Russian invasion, the hoaxes began. Ukrainian refugees were taking jobs, committing crimes and abusing handouts. The misinformation spread rapidly online throughout Eastern Europe, sometimes pushed by Moscow in an effort to destabilize its neighbors.

It’s the kind of swift spread of falsehood that has been blamed in manycountries for increased polarization and an erosion of trust in democratic institutions, journalism and science.

But countering or stopping misinformation has proven elusive.

New findings from university researchers and Google, however, reveal that one of the most promising responses to misinformation may also be one of the simplest.

In a paper published Wednesday in the journal Science Advances, the researchers detail how short online videos that teach basic critical thinking skills can make people better able to resist misinformation.

The researchers created a series of videos similar to a public service announcement that focused on specific misinformation techniques — characteristics seen in many common false claims that include emotionally charged language, personal attacks or false comparisons between two unrelated items.

Researchers then gave people a series of claims and found that those who watched the videos were significantly better at distinguishing false information from accurate information.

It’s an approach called “pre-bunking” and it builds on years of research into an idea known as inoculation theory that suggests exposing people to how misinformation works, using harmless, fictional examples, can boost their defenses to false claims.

With the findings in hand, Google plans to roll out a series of pre-bunking videos soon in Eastern Europe focused on scapegoating, which can be seen in much of the misinformation about Ukrainian refugees. That focus was chosen by Jigsaw, a division of Google that works to find new ways to address misinformation and extremism.

“We have spent quite a bit of time and energy studying the problem,” said Beth Goldberg, Jigsaw’s head of research and one of the authors of the paper. “We started thinking: How can we make the users, the people online, more resilient to misinformation?”

The two-minute clips then demonstrate how these tactics can show up in headlines, or social media posts, to make a person believe something that isn’t true.

They’re surprisingly effective. Subjects who viewed the videos were found to be significantly better at distinguishing false claims from accurate information when tested by the researchers. The same positive results occurred when the experiment was replicated on YouTube, where nearly 1 million people viewed the videos.

Researchers are now investigating how long the effects last, and whether “booster” videos can help sustain the benefits.

Earlier findings have suggested that online games or tutorials that teach critical thinking skills can also improve resiliency to misinformation. But videos, which could be played alongside online advertisements, are likely to reach many more people, said Jon Roozenbeek, a Cambridge University professor and one of the authors of the study.

Other authors included researchers at the University of Bristol in the U.K. and the University of Western Australia.

Google’s effort will be one of the largest real-world tests of pre-bunking so far. The videos will be released on YouTube, Facebook and TikTok, in Poland, the Czech Republic and Slovakia. All three countries have accepted large numbers of Ukrainian refugees and their citizens could be vulnerable to misinformation about refugees.

Jigsaw CEO Yasmin Green said the work on prebunking is intended to complement Google’s other efforts to reduce the spread of misinformation: “As the scourge of misinformation grows, there’s a lot more we can do to provide people with prompts and features that help them stay safe and informed online.”

While journalistic fact checks can be effective in debunking a particular piece of misinformation, they’re time and labor intensive. By focusing on characteristics of misinformation in general instead of specific claims, pre-bunking videos can help a person spot false claims on a wider variety of topics.

Another method, content moderation by social media companies, can often be inconsistent. While platforms like Facebook and Twitter often remove misinformation that violates their rules, they’re also criticized for failing to do more. Other platforms like Telegram or Gab boast a largely hands-off approach to misinformation.

Social media content moderation and journalistic fact checks can also run the risk of alienating those who believe the misinformation. They might also be ignored by people who already distrust legitimate news outlets.

“The word fact checking itself has become politicized,” Roozenbeek said.

Pre-bunking videos, however, don’t target specific claims, and they make no assertions about what is true or not. Instead, they teach the viewer how false claims work in general — whether it’s a claim about elections or NASA’s moon landings, or the latest outbreak of the avian flu.

That transferability makes pre-bunking a particularly effective way of confronting misinformation, according to John Cook, a research professor at Australia’s Monash University who has created online games that teach ways to spot misinformation.

“We’ve done enough research to know this can be effective,” Cook said. “What we need now is the resources to deploy this at scale.”

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By Nichola Saminather

(Reuters) -Royal Bank of Canada (RBC) on Wednesday missed analyst estimates for third-quarter profit, while National Bank of Canada did slightly better than expected, as the former’s capital markets business weighed on earnings while the latter’s helped lift them.

Canadian banks, which have mostly outperformed market expectations in recent quarters, are starting to see some negative impacts from market challenges and economic uncertainties.

RBC, the country’s biggest bank, is forecasting a moderate recession in Canada and the United States in 2023, and sees a 12% decline in average Canadian home prices from their peak, executives said on an analyst call.

In contrast, a recession is not National Bank’s base case, executives said on its analyst call, and said the bank sees a “soft landing” of the Canadian economy.

RBC took provisions for credit losses (PCLs) of C$340 million to guard against potential loan impairments, compared with a recovery of C$540 million a year earlier. National Bank, the smallest of Canada’s Big Six banks, had PCL of C$57 million, versus a release of C$43 million a year earlier.

“Current conditions (including unemployment and economic growth) are so benign and yet, there’s so much uncertainty in the forward views,” said National Bank’s chief risk officer, William Bonnell. “That’s why you’ll see very low impaired (loans) and yet pretty significant build in performing (loan) provisions.”

Royal Bank’s reported pre-tax, pre-provision earnings fell 3% from a year earlier, while National Bank’s rose 7%.

Shares of RBC dropped 3.1% to C$122.59, compared with a 0.1% gain in the Toronto stock benchmark. National Bank shares rose 0.5%.

RBC reported adjusted earnings of C$2.55 per share, compared with analysts’ expectations of C$2.66.

RBC saw a 58% decline in its capital markets earnings, which overshadowed strong margin expansion and loan growth in its banking business. It expects margins to rise another 10 to 15 basis points over the next couple of quarters, executives said.

RBC does not see much risk in its mortgage book until 2025 or 2026, when fixed loans taken at record-low rates during the pandemic come up for renewal, executives said.

National Bank posted earnings of C$2.35 a share, beating estimates of C$2.34.

Its 12% increase in capital markets earnings, driven by strong performance in its trading business, helped offset deals weakness. National Bank also reported strong growth in both commercial and mortgage loans.

Businesses and consumers still have savings above pre-pandemic levels, helping shield them from rising interest rates and keep delinquencies low, National Bank executives said on the analyst call.

On Tuesday, Bank of Nova Scotia’s earnings disappointed markets on a decline in profit in its capital markets business and lower margins from its international business.

($1 = 1.2974 Canadian dollars)

(Reporting by Nichola Saminather in Toronto; Additional reporting by Mehnaz Yasmin and Manya Saini in Bengaluru; Editing by Maju Samuel, Chizu Nomiyama and Leslie Adler)

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By Supantha Mukherjee

STOCKHOLM (Reuters) – Google’s Jigsaw subsidiary will next week launch a campaign aimed at tackling disinformation about Ukrainian refugees in Poland, Slovakia, and the Czech Republic based on research by psychologists at two British universities.

Working with Jigsaw, the psychologists from the universities of Cambridge and Bristol have produced 90-second clips designed to “inoculate” people against harmful content on social media.

The clips, which will run in advertising slots on Google’s YouTube video platform, aim to help people identify emotional manipulation and scapegoating in a news headline.

“If you tell people what’s true and false, a lot of people will dispute … but what you can predict are the techniques that will be used in spreading misinformation, like with the Ukrainian crisis,” Jon Roozenbeek, lead author of a report on the research behind the campaign, said in an interview.

The research was spread over seven experiments, including with a group of Americans over 18 years old who watch political news on YouTube. Jigsaw exposed around 5.4 million U.S. YouTubers to an inoculation video, with almost a million watching for at least 30 seconds.

The campaign is designed to build resilience to anti-refugee narratives, in partnership with local non-government organisations, fact checkers, academics, and disinformation experts.

The spread of misleading and fake information in the United States and Europe through social media networks has led to various governments pushing for new laws to stem disinformation campaigns.

“We are thinking of this as a pilot experiment, so there’s absolutely no reason that this approach couldn’t be scaled to other countries,” Beth Goldberg, head of research at Jigsaw, said in an interview.

“Poland was chosen because it has the most Ukrainian refugees,” she said, adding the Czech Republic and Slovakia would be useful bellwethers for the rest of Europe.

The campaign will run for one month.

(Reporting by Supantha Mukherjee in Stockholm; Editing by Mark Potter)

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By Bansari Mayur Kamdar and Noel Randewich

(Reuters) – Wall Street rose modestly on Wednesday, supported by gains in Salesforce and Intuit while investors awaited the U.S. Federal Reserve’s Jackson Hole conference this week.

Of the 11 S&P 500 sector indexes, eight rose, led by real estate, up 1.06%, followed by a 0.66% gain in consumer discretionary.

Boosting the tech-heavy Nasdaq, Tesla Inc gained almost 1% ahead of its stock split, while Intuit Inc <INTU.O> rallied 4.4% after the accounting software maker forecast upbeat fiscal 2023 revenue.

Salesforce Inc climbed 2.5% ahead of the business software seller’s quarterly report after the bell, with analysts expecting revenue to grow at its slowest pace in over a year.

The S&P 500 lost ground in the previous three sessions after a summer rally was halted by growing concerns of an aggressive stance by the Fed, an energy crisis in Europe and signs of economic slowdown in China.

Investor are now focused be on the Jackson Hole symposium that begins on Thursday, with remarks from Fed Chair Jerome Powell on Friday potentially providing clues about the pace of future rate hikes and whether the central bank can achieve a “soft landing” for the economy.

“The market is biding its time to get more information on the most important things, which are inflation and the Fed’s rate path,” said Tom Martin, senior portfolio manager at GLOBALT Investments in Atlanta.

Traders are divided between expecting a 50-basis point hike and a 75-basis point hike by the U.S. central bank. [FEDWATCH]

President Joe Biden said the U.S. government will forgive $10,000 in student loans for many debt-saddled college-goers, a move that could boost support for his fellow Democrats in the November congressional elections but also may fuel inflation.

Helped by corporate quarterly results that were not as bad as feared, the S&P 500 has recovered 14% from its mid-June lows. The benchmark index is set to end the year a little above its current level, according to strategists recently polled by Reuters.

In afternoon trading, the S&P 500 was up 0.15% at 4,135.02 points.

The Nasdaq gained 0.43% to 12,434.61 points, while the Dow Jones Industrial Average was up 0.03% at 32,920.86 points.

Nordstrom Inc tumbled about 19% after the retailer cut its annual revenue and profit forecasts, a sign that inflation is squeezing consumer spending on its high-end clothing and footwear.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.3-to-one ratio.

The S&P 500 posted one new high and 30 new lows; the Nasdaq recorded 31 new highs and 92 new lows.

(Reporting by Bansari Mayur Kamdar, Devik Jain and Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and Marguerita Choy)

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By Rae Wee

SINGAPORE (Reuters) – The U.S. dollar steadied just below recent peaks on Wednesday, as investors waited to hear from the Federal Reserve and pondered whether weak U.S. data may slow the pace of rate hikes.

Disappointing U.S. services and manufacturing surveys released overnight and a plunge in new home sales last month knocked the greenback from a 20-year high on the euro, though not particularly hard as growth concerns are deeper in Europe.

The euro briefly bought $1 in New York trade, but was back under pressure at $0.99485 in the Asia trade – barely above Tuesday’s low of $0.99005. The yen steadied at around 136.73 per dollar.

The U.S. S&P Global flash composite PMI for August dropped to 45 – the lowest since May 2020 and in contractionary territory for a second straight month, while new home sales hit a 6-1/2 year low.

Sterling found some support overnight after Britain’s composite Purchasing Managers Index number managed to stay in growth territory, though it hasn’t really pierced investors’ gloom over British or Europe’s outlook.

The pound stood at $1.1810, after hitting a 2-1/2 year low of $1.1718 on Tuesday.

“It really is just a matter of time before the hard data reflects the reality of the brutal energy price rises confronting U.K. households,” said Ray Attrill, head of FX strategy at National Australia Bank.

Meanwhile, the Australian and New Zealand dollars remained at the mercy of global recession fears.

The Aussie fell 0.38% to $0.6903, while the kiwi slumped 0.42% to $0.6187.

All eyes now turn to Jackson Hole, Wyoming, where the Federal Reserve holds its annual symposium and Fed Chair Jerome Powell is due to speak on Friday.

The U.S. dollar index, which measures the dollar against a basket of currencies, rose 0.12% to 108.68 on Wednesday, and July’s two-decade high of 109.29 beckons.

“The Jackson Hole symposium is not really going to give us a huge amount of reasons to want to sell dollars,” said Chris Weston, head of research at Pepperstone in Melbourne.

“I think Powell might keep his foot down, and that continues to make us want to buy dollars. Any kind of pullback in the dollar remains a buying opportunity.”

Minneapolis Fed Bank President Neel Kashkari repeated the need for more aggressive rate hikes to control inflation in a speech on Tuesday.

(Reporting by Rae Wee; Editing by Shri Navaratnam and Kim Coghill)

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