NEW YORK,. Wall Street fell yesterday as negative headlines about Johnson & Johnson and Boeing, along with bleak economic data from China, soured investor risk appetite and offset generally positive corporate earnings.

All three major US stock averages ended the session in the red, but the S&P 500 and the Nasdaq posted weekly gains. The blue-chip Dow was nominally lower than last week’s close.

Boeing Co and Johnson & Johnson shares led both the S&P 500’s and the Dow’s declines.

Boeing dropped 6.8 per cent after Reuters reported that text messages between two employees suggested the planemaker misled the Federal Aviation Administration about the safety of the grounded 737 MAX aircraft.

Johnson & Johnson announced it would recall baby powder in the United States after regulators found trace amounts of asbestos in a sample, sending its shares falling 6.2 per cent.

Growth of China’s gross domestic product slowed to its weakest pace in nearly 30 years as the bruising trade war with the United States took its toll, stoking fears of slowdown contagion.

The International Monetary Fund has lowered its forecast for global growth this year to 3 per cent, which would mark the slowest expansion since the financial crisis.

“There’s no question that there’s signs out there that the economy is weakening,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

Today’s market weakness “has to do with (GDP) news out of China, Boeing and Johnson & Johnson,” Cardillo added, saying “market sentiment in terms of earnings is positive.”

Third-quarter earnings season has hit full stride, with 73 companies in the S&P 500 having reported. Of those, 83.6 per cent have come in above average estimates, according to Refinitiv data.

Still, analysts currently see S&P 500 earnings dropping by 3.1 per cent compared with last year, which would mark the first contraction since the earnings recession that ended mid-2016.

Schlumberger NV gained 1.3 per cent after the oilfield services company posted its largest quarterly loss ever as a result of a US$12 billion (RM50.3 billion) charge as Chief Executive Olivier Le Peuch moved to shift focus toward software and services.

American Express Co reported better-than-expected third-quarter profit as consumers boosted their spending. Still, the credit card issuer’s shares dipped 2.0 per cent.

Coca-Cola Co’s revenue beat expectations and an upbeat forecast gave its shares a 1.8 per cent boost.

Kansas City Southern jumped 7.3 per cent after the railroad operator also beat profit expectations, on increased petroleum shipments to Mexico.

Next week, market participants look forward to high profile results from Procter & Gamble Co, United Parcel Service Inc Caterpillar Inc, Boeing, Microsoft Corp , Ford Motor Co, 3M Co, Twitter Inc , Amazon.com, and others.

The Dow Jones Industrial Average fell 255.68 points, or 0.95 per cent, to 26,770.2, the S&P 500 lost 11.75 points, or 0.39 per cent, to 2,986.2 and the Nasdaq Composite dropped 67.31 points, or 0.83 per cent, to 8,089.54.

Of the 11 major sectors in the S&P 500, seven closed in the red, with tech, communications services and industrials suffering the biggest percentage declines.

Declining issues outnumbered advancing ones on the NYSE by a 1.03-to-1 ratio; on Nasdaq, a 1.41-to-1 ratio favoured decliners.

The S&P 500 posted 29 new 52-week highs and two new lows; the Nasdaq Composite recorded 51 new highs and 59 new lows.

Volume on US exchanges was 6.24 billion shares, compared with the 6.55 billion average over the last 20 trading days. — Reuters

WASHINGTON,. G20 finance ministers today are expected to give the green light to an OECD proposal that aims to find an agreement on taxing global tech giants by June.

The deal aims to solve the puzzle on how to tax technology firms, which shift the bulk of their earnings to low-tax jurisdictions, a major challenge with the increasing digitisation of the economy, while heading off a myriad of new tax laws from individual governments.

The Organisation for Economic Cooperation and Development (OECD) will present its “unified approach” to a digital tax at a G20 gathering on the sidelines of annual meetings of the International Monetary Fund and World Bank.

Public outrage has grown over the practice of profit shifting, which critics say deprives governments of their fair share of tax revenue, since tech giants can often pay next to nothing in countries where they rake in huge earnings since they are based in low-tax nations.

The negotiations, which started in January after several years of delay, were deadlocked over three divergent and competing proposals by Britain, the United States and India.

The OECD has sought a compromise by presenting its own “unified approach” last week.

After a green light from the G20, the 134 countries involved in the negotiations will have to reach a political agreement to move forward.

They were looking at a “June 2020 timeframe,” said Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration, at a press conference in Washington.

OECD Secretary-General Angel Gurria last week said officials were making “real progress” to address the tax challenges arising from the digital economy but warned time was running out.

‘Unified approach’

“Failure to reach agreement by 2020 would greatly increase the risk that countries will act unilaterally, with negative consequences on an already fragile global economy. We must not allow that to happen,” Gurria said.

France moved ahead over the summer to impose a digital tax — amid outcry from Google, Amazon, Facebook and Apple — but has vowed to scrap it once a new international levy is in place.

EU Commissioner Pierre Moscovici has already said the bloc “will welcome this approach in a positive manner” while expressing some reservations, hoping their ambitions would not be diluted.

The “unified approach” gathers common elements from the three competing proposals.

The OECD proposal would mean reallocating some profits and corresponding taxation rights to countries and jurisdictions where digital giants have their market, regardless of where the firms are registered.

The new rules would mean that such companies would be taxed in places where they conduct significant business even if they do not have a physical presence there — an issue that has little significance in the increasingly digital age.

According to the OECD, so-called market countries and developing nations would be the winners in this tax reform, and the losers would be the tax havens that host the headquarters of multinationals.

“Investment hubs are not winners and are significantly affected,” said Saint-Amans.

But he denied the proposal favoured rich countries, such as members of the OECD.

“Developing countries are involved and very active,” he said.

The global tech giants have also signaled their approval.

Amazon, whose European headquarters are in Luxembourg, a low-tax jurisdiction, called it “an important step forward” while Facebook said it supported “multilateral approaches such as the one adopted by the OECD.” — AFP

WASHINGTON,. Hours after the United States imposed tariffs on a record US$7.5-billion (RM31.3 billion) worth of European Union goods yesterday in a dispute over Airbus, there were signs the combatants might be ready to negotiate a settlement.

French Economy Minister Bruno Le Maire lambasted the US move, calling it a “hostile act” from an ally but later said Washington had “opened the door” to talks to pull back the tariffs on French wines, Scottish whiskies and Spanish olive oil.

The scope of the talks should be “as broad as possible,” Le Maire told reporters on the sidelines of the annual meetings of the World Bank and International Monetary Fund.

And as for the timing, “the sooner the better,” he said following a meeting with US Trade Representative Robert Lighthizer.

Le Maire, who has said the EU would have no choice but to retaliate should the tariffs remain in place, also met Thursday with US Treasury Secretary Steven Mnuchin.

The US tariff onslaught caps a nearly 15-year dispute over government support for Airbus, which the WTO found violates global trade rules.

But the latest round of tariffs also come as Washington is mired in a trade war with China and is threatening to put duties on European cars, risking further destabilising the global economy further.

Le Maire warned that a US-EU trade dispute would only aid China.

“We don’t want to negotiate with a gun (to) our head. Because when you have a gun to your head, you don’t have any other choice but to retaliate,” he added.

In the line of fire are civilian aircraft from Britain, France, Germany and Spain — the countries that formed Airbus — which face an additional 10 per cent tax when imported to the US.

But the tariffs also target consumer products, including goods such as French wine, which Trump had vowed to attack in recent months, wine from Spain and Germany and cheese from Britain.

The tariffs kicked in after the World Trade Organisation gave formal approval earlier this month.

The Europeans advocate negotiation over conflict and expect the WTO next year will authorise the EU to retaliate against the United States in a parallel case over subsidies for Airbus’ American competitor Boeing.

Brussels in July offered to call a truce on subsidies for the aviation companies, in which both sides would admit fault and agree to curtail state aid — to no avail.

As recently as Wednesday, Trump singled out the Europeans for being unfair with the United States on trade but said his door was open for talks.

The US Trade Representative’s office did not respond to a request for comment but White House trade advisor Peter Navarro laid the blame on the EU.

“The Airbus tariffs was a result of more than a decade-long suit that President Trump brought to fruition in Trump time,” Navarro said on Fox Business.

“It’s important to get Airbus to stop subsidising so we can have our own air industry here,” Navarro said on Fox Business.

And, he cautioned, “they can’t retaliate under the rules of the World Trade Organisation.”

Le Maire was clear that the EU would not retaliate in the Boeing case until the WTO makes a final ruling next year.

‘Very hard’

The Europeans fear above all that Trump will impose heavy duties on imports of European cars around mid-November.

This would be a serious blow for the German automotive sector in particular, even if giants such as Volkswagen or BMW also manufacture in the United States.

“Our products are very hard to bring in (to Europe)” when Europeans easily import their cars into the United States, Trump said.

The Airbus-Boeing disputes is just one of several issues stoking transatlantic tensions that quickly descended into acrimony when Trump took office in 2017.

Trump embraced a protectionist agenda, slapping import duties on steel and aluminium from the EU and other allies, while also threatening tariffs on cars.

The US leader and European Commission President Jean-Claude Juncker agreed in July 2018 to a ceasefire in the conflict to hold trade talks that have so far led nowhere.

The epic legal battle between Airbus and Boeing at the World Trade Organization began in 2004 when Washington accused Britain, France, Germany and Spain of providing illegal subsidies and grants to support the production of a range of Airbus products.

A year later, the EU alleged that Boeing had received US$19.1 billion worth of prohibited subsidies from 1989 to 2006 from various branches of the US government.

The two cases were then tangled up in a legal quagmire, with each side being given partial vindication after a long series of appeals and counter appeals. — AFP

BERLIN,. Alitalia’s rescue hopes received a boost yesterday with signs that Lufthansa could take a stake in the Italian carrier, while Rome agreed to a €350 million (RM1.62 billion) bridging loan to ease immediate cash worries.

Loss-making Alitalia has been run by special administrators since May 2017 and talks led by state-owned railway group Ferrovie dello Stato to put together a consortium of rescuers have been going on for a year without coming close to a deal.

Until now Ferrovie has been negotiating with US carrier Delta Air Lines and infrastructure group Atlantia , but the three potential partners have been divided on key aspects of the rescue plan including the size of their respective investments.

Yesterday, two people with knowledge of the matter said Germany’s Lufthansa was now offering not only a commercial partnership, but could also take a stake in the rival.

Lufthansa would be open to making the investment if conditions, mainly regarding restructuring measures it deems necessary at its Italian rival, were met, one of the sources said. Lufthansa declined to comment.

With Alitalia burning through its cash reserves and down to just €310 million by the end of September, the carrier urgently needs new investors and a fresh business plan that will enable it to prepare for next year’s peak summer season.

To give Alitalia more time to negotiate a rescue deal, Rome could grant a postponement of up to six weeks to an October 15 deadline for Ferrovie to present a binding bid for the carrier, two sources said.

Rome will also give the carrier a new bridge loan of €350 million, a draft decree seen by Reuters showed.

Restructuring

Lufthansa has said many times in recent years that the Italian market was an interesting one for the company, but so far it had demanded shrinking Alitalia in terms of staff and fleet, making it an unpalatable option for Rome.

The German carrier still insists on restructuring but it is now willing to talk and might be more flexible, one of the sources said yesterday.

A government source said Rome would welcome the German carrier taking a stake in Alitalia.

The Italian airline, which went through two previous rescues in 2008 and 2014, has a workforce of 11,600 people.

An involvement of Lufthansa would likely close the door to Delta, which has expressed commitment to contributing only around €100 million to the rescue of Alitalia, angering Rome.

Alitalia is currently part of the Skyteam alliance with Delta, Air France-KLM and other carriers while Lufthansa is a member of rival Star Alliance.

According to a source close to the matter, an exit of Alitalia from Skyteam to join Star Alliance would involve costs of around €80 million, not hundreds of millions of euros as some Italian media have reported.

Italy’s Il Messaggero newspaper earlier reported that a senior Lufthansa executive said the company was ready to acquire a stake in the Italian airline. — Reuters

KUALA LUMPUR,. The ringgit slipped at the opening today, amid the lower crude oil price despite a commitment by the Organisation of the Petroleum Exporting Countries and its allies to cut their oil production by 1.2 million barrel-per-day until March next year, a dealer said.

At 9am, the local note was at 4.1810/1840 versus the greenback from 4.1780/1830 recorded at yesterday’s closing.

The crude oil price currently trading at US$59.74 (RM250.38) per barrel, down by 0.28 per cent.

The dealer, however, said the US dollar was also weakened after the British government and the European Union agreed on a long-awaited Brexit deal with investors’ interest shifted to the euro.

Against a basket of other currencies, the local note was traded mostly lower except with the yen, which rose to 3.8467/8505 from 3.8525/8572.

It depreciated against the Singapore dollar to 3.0628/0659 from 3.0576/0607, weakened against the British pound to 5.3772/3819 from 5.3728/3783 and slipped to 4.6522/6560 from 4.6411/6460 when compared with the euro. — Bernama

KUALA LUMPUR,. Bursa Malaysia traded sideways at mid-morning today ahead of the weekend amid caution over the progress of the US-China trade talks and slowdown in trading momentum on small caps.

At 11am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) eased 2.45 points to 1,572.05, from yesterday’s close of 1,574.50.

The benchmark index opened 1.78 points easier at 1,572.72.

A dealer said the local bourse continued yesterday’s momentum, which saw range-bound trading on blue-chips, as uncertainty over a firm US-China trade and Brexit deals ahead of the deadline kept investors sidelined, while buying momentum on small caps wavered.

Among heavyweights, Maybank added two sen to RM8.54 and Petronas Chemicals gained one sen to RM7.35.

IHH lost eight sen to RM5.66 while TNB and Public Bank were flat at RM13.76 and RM19.28, respectively.

Of the most active, KNM and Bumi Armada added one sen each to 45.5 sen and 45 sen, respectively, and MyEG climbed three sen to RM1.28.

MNC Wireless and Sapura Energy were flat at 2.5 sen and 27.5 sen, respectively.

The FBM Emas Index decreased 11.109 points to 11,198.66, the FBMT 100 Index shed 13.39 points to 11,012.15 and the FBM 70 reduced 1.87 points to 14,135.3.

The FBM Emas Shariah Index was 17.479 points lower at 11,823.15 and the FBM Ace decreased 2.07 points to 4,792.59.

Sector-wise, the Financial Services Index rose 10.061 points to 15,231.57, while the Plantation Index fell 49.1 points to 6,671.05 and the Industrial Products & Services Index was 0.06 of-a-point easier at 152.32.

On the broader market, losers led gainers 306 to 284, with 321 counters unchanged, 1,092 untraded and 14 others suspended.

Turnover amounted to 1.15 billion shares worth RM599 million. ― Bernama

TOKYO,. The British pound traded near a five-month high against the US dollar and the euro after British Prime Minister Boris Johnson and European Union leaders agreed a new deal for Britain to exit the bloc.

Sterling’s gains on the US dollar helped push the greenback to a five-month low versus the euro and a three-week low against the Swiss franc.

The yuan held steady against the US dollar in offshore trade before the release of China’s GDP data. Economists have forecast the economy will grow at the weakest pace in more than 27 years in the third quarter due to a costly trade war with the United States.

The initial relief at securing the long-awaited Brexit deal could be brief, however, because the prime minister still needs to sell the agreement to sceptical lawmakers when parliament sits tomorrow.

Once Britain does leave the EU, its economic growth is expected to slow, which is likely to be a negative for sterling in the longer term, analysts warn.

“Assuming we clear the parliamentary hurdle, the pound has room to rise further because there are a lot of shorts to be unwound,” said Takuya Kanda, general manager of the research department at Gaitame.com Research Institute in Tokyo.

“But after that, people will start to question whether this is really good for Britain’s economy, and further gains in sterling could become difficult.”

The pound traded at US$1.2870 in Asia today, close to a five-month high of US$1.2988 reached yesterday after EU leaders unanimously backed the new Brexit deal with Britain.

Against the euro, sterling traded at 86.42 pence, near a five-month high of 85.77 pence.

For the week, the pound was on course for a 1.7 per cent gain versus the US dollar and a 0.9 per cent increase against the common currency.

Britain’s new Brexit deal has a “decent chance” of clearing parliament yesterday, finance minister Sajid Javid said, but some investors are wary because debate so far on Brexit has been fractious and difficult to predict.

Even if Johnson can win approval in parliament, Britain is still on course for more distant economic ties and increased trade barriers with the EU, which many economists say will slow growth in the UK.

For now, sterling’s gains and worries about weak US economic data are pushing the greenback lower against other currencies.

The US dollar traded at 0.9875 Swiss franc, close to the lowest since September 25 and on course for its biggest weekly decline since August 9.

The US dollar was quoted at 108.57 yen, headed for its second week of gains.

In offshore trade, the yuan traded at 7.0815 per US dollar.

China is expected to post its weakest economic growth in at least 27.5 years in the third quarter when Beijing releases gross domestic product data at 0200 GMT.

Downbeat data in recent months has highlighted weaker demand at home and abroad, fanning expectations that Beijing will need new measures to ward off a sharper slowdown due to a year-long trade war with the United States.

The world’s two-largest economies have imposed tariffs on each other’s goods in a dispute over China’s trade and industrial policies that has slammed the brakes on global economic growth. — Reuters