Business

BANGKOK (AP) — Economies in the Asia-Pacific are forecast to hit the doldrums this year as decades-high inflation and the war in Ukraine compound geopolitical uncertainties and the aftereffects of the pandemic.

A report on Pacific Rim economies by the Asia Pacific Economic Cooperation forum said Friday that growth in the region will likely fall by more than half this year to 2.5% from 5.9% last year, when many countries were recovering from the worst of their COVID-19 outbreaks.

Weaker growth in the U.S. and China is a big factor behind the regional malaise, though other economies are also slowing. Russia’s economy is expected to contract due to the implications of its war in Ukraine, and the three economies account for nearly 70% of the APEC region’s GDP, the report said.

The report forecast that regional growth would only pick up slightly in 2023, to 2.6%.

Most economies in the region are just beginning to fully emerge from border closures and other pandemic-related precautions. Tourists have reappeared on the streets of Bangkok, but many businesses remain shuttered, casualties of the many months when travel was virtually paralyzed.

In China, where authorities are still imposing lockdowns to wipe out COVID-19 outbreaks, the economy contracted 2.6% in the three months ending in June compared with the previous quarter after Shanghai and other cities were shut down to fight coronavirus outbreaks.

The U.S. economy contracted by 0.9% in April-June, while Russia’s economy shrank 0.5% in January-June compared with a year before, according to its Ministry of Economic Development.

Japan’s economy shrank at a 0.5% annual rate i n January-March and is forecast to expand only 2% in the fiscal year ending in March 2023.

Some economies are doing better.

Indonesia reported Friday that its economy grew at a better-than-expected 5.4% annual rate in the April-June quarter as it bounced back from a wave of omicron variant coronavirus infections.

An exporter of raw materials such as coal and palm oil, the country saw its exports jump nearly 20% in the last quarter as prices for many materials soared. But that windfall is likely to dissipate as price increases ease or reverse, analysts said.

“We expect slowing growth in the rest of the world to take its toll … as commodity prices continue to recede. On the domestic front, headwinds from high inflation, which reached a seven-year high and is set to rise further in the coming months, are growing,” Alex Holmes of Oxford Economics said in a commentary.

India is also growing faster than much of the rest of the region.

Reserve Bank of India Governor Shaktikanta Das projected that growth would remain robust, at 7.2% in the financial year ending in March 2023. But to counter inflation that hit 6.7% in June, the central bank raised its key interest rate on Friday by a half percentage point to 5.4%.

More than half of the 21 APEC members have raised rates or otherwise tightened monetary policy to counter inflation, which now averages 5.4% for the region, the APEC report said.

It pointed to a 23% overall increase in the food price index of the U.N. Food and Agricultural Organization, noting that inflation is likely to remain elevated for at least the rest of the year as central banks adjust their policies to try to bring it under control.

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By Ruhi Soni

(Reuters) – Corteva Inc on Thursday reported a 14% jump in second-quarter operating earnings and raised its full-year sales and profit forecasts, benefiting from demand for crop protection products.

U.S. farmers have been encouraged to maximize crop yields after prices of essential grains and oilseeds have surged since the Ukraine war.

Ukraine, long considered the “breadbasket of the Black Sea”, was a major exporter of corn, soybean, and sunflower oil.

Corteva said it recorded a $45 million charge related to exiting its Russian operations.

The Wilmington, Delaware-based agricultural chemicals company, a spin-off of DowDuPont’s historic split in 2019, said its net seed sales grew 4.4% to $3.95 billion as a 7% increase in prices offset lower volumes.

The company’s adjusted operating profits grew 14% to $1.20 billion, or $1.64 per share.

It raised its 2022 net sales forecast to $17.2 billion-$17.5 billion, from its previous guidance of $16.7 billion-$17.0 billion. Full-year operating earnings forecast was raised to $2.45-$2.60 per share from $2.35 to $2.55.

In July, Corteva announced a quarterly dividend of 15 cents per share, up by 1 cent from the previous quarter.

(Reporting by Ruhi Soni in Bengaluru; Editing by Maju Samuel)

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(Reuters) – Warner Bros. Discovery Inc said on Thursday it would merge the HBO Max streaming service with Discovery+ as a single offering, combining WarnerMedia’s dramas, comedies and movies with Discovery’s reality shows.

“With respect to streaming, our main priority right now is launching an integrated SVOD service,” said Chief Executive Officer David Zaslav.

(Reporting by Chavi Mehta in Bengaluru)

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By Kevin Buckland

OTTAWA (Reuters) – Crude oil sank with Treasury yields and the dollar on Thursday as recession worries intensified following the Bank of England’s warning of a drawn-out downturn and ahead of key a hotly anticipated U.S. employment report on Friday.

Wall Street stocks ended mixed, with gains for high-growth stocks offset by the drag from energy shares, as a key U.S. jobs report loomed on Friday.

The S&P 500 edged slightly lower to 4,151.94, retreating from a two-month closing high in the previous session.

The Dow dropped 0.26% to 32,726.82, from near an almost three-month high on Wednesday.

The Nasdaq, though, swung to a 0.44% gain to 13,311.041 from steep early losses, extending a three-month peak.

The two-year Treasury yield eased 7.1 basis points to 3.0366%, while the 10-year yield slipped 6.3 basis points to 2.6846%.

The gap between them went as wide as negative 39.2 basis points earlier in the day, the deepest inversion since 2000. An inverted curve is often viewed as portending a recession.

Crude oil prices dropped to levels last seen before Russia’s invasion of Ukraine. Brent crude futures settled down $2.66 at $94.12, the lowest close since Feb. 18. West Texas Intermediate (WTI) crude futures settled down $2.34 at $88.54, the lowest close since Feb. 2.

Traders fretted that any recession could torpedo energy demand, while an unexpected surge in U.S. crude inventories also weighed on prices, which had surged to over $120 a barrel this year.

Cleveland Federal Reserve Bank President Loretta Mester said on Thursday that the economy is not currently in recession, but the risks of one have risen, while reiterating the central bank’s resolve to continue with aggressive tightening until there is compelling evidence of a let up in inflation.

The monthly U.S. non-farm payrolls report will be closely watched on Friday for clues on whether the tight labor market will continue to push up wages. Data early Thursday showed a tick up in jobless claims.

“Expectations that we’re headed for a recession are clear, and the clearest signal is coming from the Treasury market,” said Edward Moya, senior market analyst at OANDA in New York.

“Things are looking worse abroad, and there’s an expectation that we’re going to see more economic weakness going into year-end, and it’s hard to be optimistic on equities.”

The Bank of England delivered a bigger, half-point rate rise earlier in the day, joining the Federal Reserve and other central banks in an accelerated race to catch inflation. But the hike was widely expected, and investors were more focused on the central bank’s warning that a lengthy recession is on the way.

“The main surprise seems to be the somewhat downbeat economic forecasts that we have also been given,” said Stuart Cole, head macro economist at Equiti Capital.

“That is somewhat worse than what we had seen in May, where the outlook was for one or two difficult quarters of low or negative growth, and then a recovery.”

Britain’s FTSE 100 stock index was little changed, compared to small gains for the pan-European STOXX 600 index following some solid corporate earnings.

The euro added 0.59% to 0.84205 against the British pound, and rose as high as 0.8438 at one point for the first time since July 26.

Sterling recovered though to be up 0.12% at $1.2163 after earlier dipping to $1.2065 for the first time since July 29.

The greenback accelerated declines amid lower U.S. yields, with the dollar index – which measures the currency against six major counterparts including sterling, the euro and the yen – sliding 0.68% to 105.76.

The dollar dropped 0.66% to 132.94 yen, with the currency pair particularly sensitive to long-term Treasury yields.

Spot gold jumped 1.5% to a one-month high of $1,794.79 an ounce, helped by lower U.S. yields and a weaker dollar.

Cryptocurrency bitcoin eased 1.3% to $22,536, as it continued its slow retreat from the 1 1/2-month high at $24,676 reached on Saturday.

It failed to get a lift from Coinbase’s announcement of a tie-up with BlackRock to provide the money manager’s institutional clients with access to crypto trading and custody services.

(Reporting by Kevin Buckland; Additional reporting by Huw Jones; Editing by Alden Bentley, Kim Coghill, Mark Potter and Susan Fenton)

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By Laura Sanicola and Emily Chow

(Reuters) -Oil prices rose on Thursday as supply concerns triggered a rebound from multi-month lows plumbed in the previous session after U.S. data signalled weak fuel demand.

Brent crude futures rose 10 cents, or 0.1%, at $96.88 a barrel at 0653 GMT, while West Texas Intermediate (WTI) crude futures was last up 21 cents, a 0.2% gain, at $90.87.

Both benchmarks fell to their weakest levels since February in the previous session after U.S. data showed crude and gasoline stockpiles unexpectedly surged last week and as OPEC+ agreed to raise its oil output target by 100,000 barrels per day (bpd), equal to about 0.1% of global oil demand.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, have been previously increasing production but have struggled to meet targets as most members have already exhausted their output potential.

“OPEC+ agreed to increase production by 100,000 barrels per day in September, far lower than previous months’ production. The global energy market still faces supply shortages,” said Leon Li, an analyst at CMC Markets.

He added that WTI oil prices are “likely to oscillate” between $90 and $100 a barrel.

While the United States has asked the group to boost output, spare capacity is limited and Saudi Arabia may be reluctant to beef up production at the expense of Russia, hit by sanctions over the Ukraine invasion that Moscow calls “a special operation”.

Ahead of the meeting, OPEC+ had trimmed its forecast for the oil market surplus this year by 200,000 barrels per day (bpd) to 800,000 bpd, three delegates told Reuters.

“It looks like OPEC+ is resisting calls to boost output because the crude demand outlook continues to get slashed. The world is battling the ongoing global energy crisis and it won’t be getting any help from OPEC+,” Edward Moya, senior analyst with OANDA, said in a note.

“The oil market will remain tight over the short term and that means we should still have limited downside here. Crude prices should find strong support around the $90 level and eventually will rebound towards the $100 barrel level even as the global economic slowdown accelerates.”

Oil’s demand outlook remains clouded by rising fears of an economic slump in the United States and Europe, debt distress in emerging market economies, and a strict zero COVID-19 policy in China, the world’s largest oil importer.

U.S. crude oil inventories had also rose unexpectedly last week as exports fell and refiners lowered runs, while gasoline stocks also posted a surprise build as demand slowed, the Energy Information Administration said.

Supporting prices on Thursday, however, the Caspian Pipeline Consortium (CPC), which connects Kazakh oil fields with the Russian Black Sea port of Novorossiisk, said that supplies were significantly down, without providing figures.

(Reporting by Laura Sanicola and Emily Chow; Editing by Kenneth Maxwell)

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FRANKFURT (Reuters) – Consumers in the euro zone are bracing for the economy to shrink and for high inflation to continue eating into their income in the next year, a European Central Bank survey showed on Thursday.

The Consumer Expectations Survey, used by policymakers for input in their deliberations and published on Thursday for the first time, showed households were beginning to lose faith in the ECB’s ability to bring inflation back down to its 2% goal.

The poll, carried out in June, showed the median consumer expected prices to grow by 5% over the following year and saw inflation at 2.8% in three years’ time.

This compares to expectations for nominal income to grow by 0.9% and spending by 3.9%, implying a large dent in households’ ability to save.

Consumers also expected the economy to contract by 1.3% in the coming 12 months.

By comparison, the ECB expects inflation to average 6.8% in 2022 before falling to 3.5% in 2023 and 2.1% in 2024. It sees growth at 3.7% this year, 2.8% next year and 1.6% in 2024.

The ECB raised interest rate by 50 basis points last month and guided for more hikes in the months ahead to fight record-high euro zone inflation, which hit 8.9% last month.

It cited “anchoring…inflation expectations” as one of the reasons for the move.

For the survey, the ECB interviews around 14,000 adults each month from Belgium, Germany, Spain, France, Italy and the Netherlands. These countries represent 85% of the euro area’s GDP and 83.8% of its population.

(Reporting By Francesco Canepa; Editing by Bernadette Baum)

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By Anshuman Daga

SINGAPORE (Reuters) -Singapore’s DBS Group warned inflation and geopolitical uncertainty may impact second-half performance too, after the wealth business of the bank suffered in the latest quarter, though profit beat estimates on rising interest rates.

The quarterly earnings from DBS, Southeast Asia’s largest lender, rounded off a strong reporting season for Singapore banks after local peers OCBC beat estimates and United Overseas Bank flagged further improvement in net interest margins, a key profitability gauge.

“There’s just too much geopolitical uncertainty right now and that’s hard to translate into what does it do to the macro economy,” DBS CEO Piyush Gupta told reporters on Thursday, citing the Russia-Ukraine war and its impact on gas and oil prices, among other factors.

“The big underlying uncertainty is inflation and what will the central banks do to control it, so that’s the second order impact of that. Right now, the market is split on whether you get a deep recession or you get high inflation,” Gupta said.

DBS shares fell as much as 0.9% before paring losses to 0.3% in late afternoon trade in a strong broader market.

The bank’s first-half net interest margin improved to 1.52% from 1.47%, marking the first improvement in three years.

Singapore lenders were expected to report 10 basis points net interest margin expansion in April-June on a quarter-to-quarter basis, the highest over the last eight quarters, outperforming Asian peers, JPMorgan analysts said last month.

Net profit for DBS came in at S$1.82 billion ($1.30 billion) in April-June versus S$1.7 billion a year earlier and compared with an average estimate of S$1.69 billion from five analysts compiled by Refinitiv.

Singapore banks are also benefiting from a rebound in economic activity in the Asian financial hub after the government relaxed most of its COVID-19 restrictions in April.

However, a sharp pullback in global stock markets this year has battered investor sentiment, impacting the large wealth management businesses of banks such as DBS.

The bank said net fee income fell 12% in the second quarter due to lower contributions from wealth management and investment banking that more than offset increases in other fee activities.

DBS said its ongoing stress tests indicated that its asset quality continues to be robust. It maintained its full-year loan growth forecast at mid-single digit percent.

($1 = 1.3801 Singapore dollars)

(Reporting by Anshuman Daga; Editing by Sam Holmes and Muralikumar Anantharaman)

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BIRMINGHAM, Ala. (AP) — A federal oversight board ordered the United Mine Workers of America to pay more than $13 million in compensation to an Alabama coal company where members have been on strike for more than a year, a ruling the union said Wednesday it would challenge.

The National Labor Relations Board said Warrior Met Coal Mining was due some $13.3 million for costs including increased security, damage repair and lost revenues from unmined coal, and individuals were due almost $30,000, mostly for damage to vehicles. Both amounts included interest.

The union, with roughly 1,100 members who went on strike against the Alabama-based company on April 1, 2021, called the NLRB assessment an “outrageous” decision that it planned to fight.

“Is it now the policy of the federal government that unions be required to pay a company’s losses as a consequence of their members exercising their rights as working people? This is outrageous and effectively negates workers’ right to strike. It cannot stand,” international union president Cecil E. Roberts said in a statement.

A company representative did not immediately return an email seeking comment. The NLRB issued the order on July 22.

Both the union and Warrior Met have blamed each other for the prolonged strike, which centers on the company’s mining operations southwest of Birmingham. The two sides have talked as recently as last week, a union spokesman said.

The union is striking at Warrior Met’s No. 4 and No. 7 mines, a preparation plant and a central shop, all in Tuscaloosa County. The union and Warrior Met reached an agreement to end the walkout a few days after it began, but members rebuffed the settlement.

United Mine Workers has said union members gave up money to bring the company out of the Walter Energy bankruptcy six years ago, and workers have sought improved health benefits. Warrior Met contends it offered workers a competitive package that would protect jobs and the company’s future.

In May, Warrior Met reported net income of $146.2 million in the first quarter compared with a loss of $21.4 million for the same period last year. The company said the strike cost it $6.7 million for the quarter because of security and other expenses, and having the mines idle cost $3 million.

Warrior Met said it produced 1.5 million short tons of coal in the first quarter compared with 2.2 million short tons in the first quarter last year.

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Benchmark U.S. crude oil for September delivery fell $3.76 to $90.66 a barrel Wednesday. Brent crude for October delivery fell $3.76 to $96.78 a barrel.

Wholesale gasoline for September delivery fell 15 cents to $2.91 a gallon. September heating oil rose 3 cents to $3.41 a gallon. September natural gas rose 56 cents to $8.27 per 1,000 cubic feet.

Gold for December delivery fell $13.30 to $1,776.40 an ounce. Silver for September delivery fell 25 cents to $19.89 an ounce and September copper fell 5 cents to $3.47 a pound.

The dollar rose to 134.12 Japanese yen from 133 yen. The euro fell to $1.0154 from $1.0174.

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By Sabrina Valle

HOUSTON (Reuters) – Occidental Petroleum Corp is keeping its total 2022 production guidance at around 1.55 million barrels of oil equivalent per day (boed) despite target reductions in the U.S. Permian basin, Chief Executive Vicki Hollub said on Wednesday.

Occidental reduced its 2022 production outlook in the Permian basin to between 516,000 and 526,000 boed, from 527,000 to 537,000 boed projected in May.

(Reporting by Sabrina Valle; editing by Jonathan Oatis)

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