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US stocks flat as Fed’s Powell urges more federal virus aid

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Wall Street’s main indexes were treading water on Tuesday as the Fed chief called for more fiscal stimulus.

Wall Street’s main indexes were hovering near unchanged on Tuesday after Federal Reserve Chairman Jerome Powell warned again that the United States economic recovery could falter without more federal fiscal stimulus from Congress.

The Dow Jones Industrial Average was up 0.12 percent at 28,183.69 in early afternoon trading on Wall Street.

The S&P 500 – a gauge for the health of US retirement and college savings reports – was down 0.10 percent while the tech-heavy Nasdaq Composite Index was down 0.4 percent.

Speaking to the National Association for Business Economics, Powell laid out the case for more fiscal stimulus, arguing:  “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses.”

Powell said that the roughly $3 trillion in coronavirus-relief aid Congress passed in March and April had given “vital support to households”, which combined with the federal lifeline to businesses – “have so far partly forestalled an expected wave of bankruptcies and lessened permanent layoffs”.

But the economy still has a lot of lost ground to make up for.  Roughly half of the 22 million jobs lost in March and April have been recovered. And as Powell noted, while the unemployment rate fell to 7.9 percent last month, a broader measure that better captures the jobs market landscape is running near 11 percent.

“The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods,” he said.

So far, though, a bipartisan deal on a new round of virus relief aid remains elusive, with the White House and Republicans failing to find common ground with Democrats in Congress.

Meanwhile, Trump arrived back at the White House on Monday evening local time after leaving Walter Reed hospital following several days of treatment for coronavirus.

“Don’t let it dominate you. Don’t be afraid of it,” Trump said about COVID-19 in a video shared on Twitter.  “We have the greatest country in the world. We’re going back. We’re going back to work.”

People take pictures of a Marine One helicopter with US President Donald Trump aboard as it flies to the White House after the president underwent treatment for the coronavirus in Washington, DC, the US [File: Carlos Barria/Reuters]

With only 28 days until the November presidential election, investors are weighing the possibility of a Democratic sweep and what that could mean for jobs, taxes, consumer confidence and the stock market.

Workers stand next to pallets of mail-in election ballots at the Orange County Registrar of Voters before the ballots are shipped to the US Postal Service for delivery to voters in Santa Ana, California, the US [File: Mike Blake/Reuters]

Trials and tribulations: Vaccines and big tech

Among the stocks making headlines on Tuesday:

Shares of Boeing were down 3 percent in early afternoon trading in New York after the company cut its rolling forecast for airplane demand for the next 20 years by two percent.

Shares of Pfizer were down 0.13 percent despite news that a European health regulator has launched a real-time review of a COVID-19 vaccine candidate that the US drug giant is developing with Germany’s BioNTech.

Shares of Moderna were off 0.14 percent. The drugmaker said its vaccine testing was slightly delayed after it failed to enroll enough African-American, Latino and Native American participants in its trial to determine how well its COVID-19 vaccine works in these populations, Reuters news agency reported.

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China says India returns soldier who strayed across Ladakh border

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India detained the Chinese soldier after he strayed across a contested de facto border in the western Himalayas.

China’s official military newspaper has said that India has returned a Chinese soldier who had strayed across a contested de facto border in the western Himalayan region where both sides have been locked in a tense standoff.

The soldier was handed over early on Wednesday morning, according to the PLA Daily report, a state-owned media outlet.

Hu Xijin, the editor-in-chief of the state-backed Global Times, also confirmed the soldier’s return, saying the move “brings an optimistic message to the tense China-India border”.

He added: “It is hoped the cooperation can grow into more mutual trust between the two.”

India and China have amassed thousands of troops in the region after a deadly clash in June.

The nuclear-armed neighbours have been locked in a months-long border confrontation in the Ladakh region, with troops killing each other in hand-to-hand combat and firing shots in the air. Twenty Indian soliders died in the fierce brawl.

China is believed to also have had casualties but has not given any details. It also detained at least 10 Indian soldiers, including four officers, following the deadly brawl. They were returned three days later after intense military and diplomatic negotiations.

In a statement on Monday, the Indian side said it had “apprehended” a Chinese solider it identified as Wang Ya Long and said he would be released after “completion of formalities”.

The Chinese defence ministry late on Monday said the missing soldier had been helping herders round up yaks when he lost his way on Sunday evening. The statement also called for the soldier’s release as soon as possible to “maintain peace and tranquility” on the border.

India and China have each stationed tens of thousands of troops – backed by artillery, tanks and fighter jets – in the region since the June battle, despite several rounds of talks.

Analysts say both sides are digging in for a long, hard northern winter showdown.

Tensions have also spilled into civilian life, with some Indian nationalists demanding a boycott of Chinese goods and the government banning a slew of social media apps from its major rival.

India is also seeking closer security ties with other countries wary of China’s growing military power.

Australia announced on Tuesday that it would take part, for the first time, in naval exercises with India, Japan and the United States in the Indian Ocean.

Meanwhile the Indian army’s Vice Chief of Staff Lieutenant General S K Saini is in the US for talks and to seek other equipment for use in the China border showdown, government sources said.

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Hong Kong’s Cathay Pacific Airways slashes jobs, kills Dragon

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Hong Kong’s Cathay Pacific Airways Ltd said on Wednesday it would slash 5,900 jobs and end its regional Cathay Dragon brand, joining peers in cutting costs as it grapples with a plunge in demand due to the coronavirus pandemic.

The airline would also seek changes in conditions in its contracts with cabin crew and pilots as part of a restructuring that would cost 2.2 billion Hong Kong dollars ($283.9m), it told the stock exchange.

Overall, it will cut 8,500 positions or 24 percent of its normal headcount, but that includes 2,600 roles currently unfilled due to cost reduction initiatives, Cathay said.

“The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the group to survive,” Cathay Chief Executive Officer Augustus Tang said in a statement.

“The future remains highly uncertain and it is clear that recovery is slow,” Cathay said in Wednesday’s statement. “The management team has concluded that the most optimistic scenario it can responsibly adopt is one in which, for the year 2021, the company will be operating at well under 50 percent of the passenger capacity it operated in 2019.”

Cathay’s announcement came a day after Hong Kong said its unemployment rate rose to 6.4 percent for the July-September period, its highest level in almost 16 years, from 6.1 percent from June to August.

Devastating fallout

The coronavirus has had a devastating effect on aviation. As many as 46 million jobs are at risk, and airlines alone face about $420bn in lost revenue this year.

Singapore Airlines Ltd and Australia’s Qantas Airways Ltd have also announced large payroll cuts, as the International Air Transport Association forecasts passenger traffic will not recover until 2024.

Cathay was struggling with losses before the pandemic as anti-government protests in Hong Kong led to a sharp reduction in traffic last year and a change in management. The pandemic pushed the carrier into survival mode, forcing it to cut capacity and offer its staff voluntary no-pay leave.

The airline, which has stored about 40 percent of its fleet outside Hong Kong, said on Monday it planned to operate less than 50 percent of its pre-pandemic capacity in 2021.

Cathay Pacific has stored about 40 percent of its aircraft outside Hong Kong [File: Tyrone Siu/Reuters]

After receiving a $5bn rescue package led by the Hong Kong government in June, it had been conducting a strategic review that analysts expected would result in significant job losses.

The airline said it was bleeding between 1.5 billion Hong Kong dollars ($193.6m) to 2 billion Hong Kong dollars ($258m) of cash a month and the restructuring would stem the outflow by 500 million Hong Kong dollars ($64m) a month in 2021, with executive pay cuts continuing throughout next year.

BOCOM International analyst Luya You said she had expected a more strategic insight from the airline on its fleet plans and route network as part of the restructuring.

“Had they revealed more on fleet planning for 2021-22, we would get a much better sense of their outlook,” she said.

The decision to end regional brand Cathay Dragon is in line with rival Singapore Airlines’ pre-pandemic move to fold regional brand Silkair into its main brand.

Dragon’s end

Cathay Dragon, once known as Dragonair, operated most of the group’s flights to and from mainland China and had been hit by falling demand before the pandemic due to widespread anti-government protests in Hong Kong that deterred mainland travellers.

Low-cost regional carrier Cathay Dragon will cease operating immediately under Cathay Pacific’s cost-cutting plan [File: Paul Yeung/Bloomberg]

Plans to end the brand earlier this year hit roadblocks from China’s aviation regulator because of infractions during last year’s pro-democracy protests, two sources told the Reuters news agency in May.

Cathay said the airline would cease operating immediately and it would seek regulatory approval to fold the majority of Cathay Dragon’s routes into Cathay Pacific and low-cost arm HK Express.

“Now that Cathay has decided on staff count and the elimination of the Dragon brand it knows the size of the airline and the structure going forward and can complete its new fleet and network plan,” said Brendan Sobie, an independent aviation analyst.

Like Singapore Airlines, Cathay lacks a domestic market to cushion it from the fall in international travel due to border closures.

In September, Cathay’s passenger numbers fell by 98.1 percent compared with a year earlier, though cargo carriage was down by a smaller 36.6 percent.

Singapore and Hong Kong said on October 15 they planned to open their borders to one another for the first time in almost seven months, with quarantine replaced by coronavirus testing. The travel bubble could start with one flight per day according to Hong Kong Secretary for Commerce and Economic Development Edward Yau.

Cathay shares have fallen 43 percent since the start of January. In July, it reached an agreement with Airbus SE to delay the delivery of A350s and A321neos and said it was in advanced talks with Boeing Co about deferring its 777-9 orders.

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Thailand shuts down online TV channel, as protests continue

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Thai protesters raised three-finger salutes to the national anthem at public places across Bangkok on Tuesday as anti-government rallies continued and the government ordered an online TV channel to close over its coverage of the demonstrations.

The authorities imposed emergency measures banning gatherings of more than four people last Thursday amid growing protests against the government and monarchy.

But protests have only grown despite a crackdown in which dozens have been detained.

Two protest leaders – Parit “Penguin” Chiwarak and Panusaya “Rung” Sithijirawattanakul – were arrested on Tuesday on new charges as soon as a court freed them bail in relation to a previous set of charges.

“This is not a leaderless protest, but everybody is a leader,” Tattep “Ford” Ruangprapaikitseree told reporters at the Siam Paragon mall, where dozens of people gave the salute borrowed from The Hunger Games.

“It’s not anarchy. Everybody has judgement and will do what is reasonable,” said Ford, who has already been arrested twice since the protests began.

Prime Minister Prayuth Chan-ocha’s cabinet agreed to an emergency session of parliament next week because of the crisis, but he has said he will not quit – as the protesters have demanded. Prayuth’s supporters have a majority in parliament.

Protesters also want changes to the constitution and a reduction in the powers of the monarchy under King Maha Vajiralongkorn.

The emergency measures only appear to have stoked public anger, but Tuesday turned out to be the quietest day on the streets since the decree was imposed with only a few hundred gathering.

Thai Lawyers for Human Rights said they would be filing a suit with six students and other human rights groups on Wednesday to revoke the declaration and seek an injunction to prevent government crackdowns.

Voice TV silenced

Earlier, a court ordered the suspension of Voice TV, an online broadcaster critical of the government.

Voice TV had been found to have breached the Computer Crime Act by uploading “false information,” digital ministry spokesman Putchapong Nodthaisong said.

Editor-in-Chief of Voice TV Rittikorn Mahakhachabhorn said it would continue broadcasting until the court order arrived.

“We insist that we have been operating based on journalistic principles and we will continue our work presently,” he said.

Voice TV was one of four media organisations under investigation for their coverage of the continuing protest movement. Many have been reporting the protests live on Facebook and other social media platforms.

The channel is part-owned by the Shinawatra family of former Prime Minister Thaksin Shinawatra and his sister Yingluck, who was overthrown by Prayuth in a 2014 coup. Both fled Thailand to escape corruption cases they branded political.

The demonstrations have been largely led by students and young people in contrast with 10 years of street violence between supporters of Thaksin and conservative royalists before Prayuth seized power.

The prime minister on Tuesday accused media outlets of spreading false news.

“Media freedom is important but in some cases there are some media outlets disseminating distorted information that is inciting unrest,” he said after a court order following a complaint from the Ministry of Digital Economy and Society.

The court ruling comes a day after the same ministry said it had flagged more than 325,000 messages on social media platforms that violated the Computer Crimes Act, which critics say is used to muzzle dissent.

Amnesty International accused the authorities of “scare tactics” by ordering the closure of Voice TV.

“The harassment of media outlets is just one facet of the Thai authorities current assault on communications channels, alongside threats to block the messaging platform Telegram and use of the Computer Crimes Act, among other laws, against people for what they post and share online,” Amnesty’s Deputy Regional Director for Campaigns Ming Yu Hah said in a statement.

Human Rights Watch said the closure of Voice TV was a misuse of the emergency decree and noted that the channel had been a target of censorship more than any other TV station in the country.

“The crackdown is part of a bigger effort to bully and control the media into becoming a government mouthpiece,” the group’s Asia Director, Brad Adams, said in a statement.

The Foreign Correspondents Club of Thailand expressed deep concern that the Royal Thai Police was investigating Voice TV, along with online media outlets Prachatai, The Reporters and The Standard.

“A free media is an essential element in any democratic society and bona fide journalists should be allowed to report important developments without the threats of bans, suspensions, censorships or prosecution hanging over them,” the club said.

The court has yet to announce its decision on the other three media organisations.

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