Business this week
《经济学人》2018年11月3日 刊
Stockmarkets ended October on a positive note. But that was not enough to stop the month from being one of the worst for equities since the financial crisis. Markets were weighed down by investors’ jitters over rising interest rates, the slowing Chinese economy and uncertainty about global trade tensions. Some $5trn was wiped off the value of shares globally. The sell-off in tech shares was particularly brutal. The tech-heavy NASDAQ index fell by 9% during October. See article.
Shoppers’ spree
America’s economy grew at an annualised rate of 3.5% in the third quarter, driven by a surge in consumer spending that compensated for weaker business investment. The second quarter chalked up growth of 4.2%, which makes this the economy’s best six-month performance since mid-2014.
Economic growth in the euro zone slowed sharply in the third quarter, to 1.7%, year on year, compared with 2.2% in the previous three months. Inflation rose to 2.2%, the highest since December 2012.
Tensions surfaced between the government of India and the country’s central bank. The finance ministry has been putting pressure on the Reserve Bank of India to ease monetary policy and lending restrictions. The bank’s deputy governor warned of “catastrophic” consequences if the government tried to interfere with its independence.
Investors breathed a sigh of relief after Facebook reported a solid quarter. Markets were keenly awaiting the social network’s earnings after a downbeat assessment it issued in July about its business wiped billions from its stockmarket value. Facebook made a net profit of $5.1bn in the third quarter on revenues of $13.7bn. Both figures were up from the comparable period last year, though the pace of growth was the slowest for some years.
In the biggest deal to date in the software industry, IBM said it was buying Red Hat, the world’s largest seller of open-source products, for $34bn. The takeover catapults IBM into the big league of cloud-computing services, a business in which it has struggled to make a mark.
Workers at Google staged walkouts at several offices around the world to protest against what they say is the company’s lax handling of sexual-harassment claims. It is the latest activist-led incident at Google, which, if conducted by unions, would be described as industrial action.
General Electric’s troubles deepened, as it revealed that the Justice Department had opened a criminal investigation into its accounting practices and the Securities and Exchange Commission had expanded the remit of its inquiries. Both probes focus on a write-down related to GE’s power business, which caused it to report a quarterly loss of $22.8bn, one of the biggest ever. GE slashed its dividend to just one cent a share.
General Motors steered its business to a 25% jump in operating profit for the latest quarter. It offset falling car sales in America and China by shifting pricier models. Volkswagen also had a good quarter, despite tougher car-emissions standards in Europe, with net profit rising to €2.7bn ($3.1bn).
A slump in demand for its vehicles, particularly in China, drove Jaguar Land Rover to its second quarterly loss of the year. The carmaker announced a cost-cutting plan that could lead to more job losses.
Way to go
Waymo, an autonomous-car project backed by Google’s parent company, Alphabet, was awarded the first permit in California to test fully driverless vehicles, without a standby driver sitting inside, on the state’s public roads. Waymo will conduct its trials on the streets and highways around Silicon Valley, assuring residents that its cars can “safely handle fog”. Meanwhile, Alphabet said that passengers were now paying for rides in Waymo’s experimental minivans in Phoenix, which means that Waymo’s autonomous cars are the first to introduce commercial charges.
Nov 3rd 2018
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