Focus: US GDP & Federal Reserve

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Updated 30 April 2020
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Focus: US GDP & Federal Reserve

What happened:

US GDP numbers for the first quarter came in at minus 4.8 percent, breaking over a decade of uninterrupted growth. The first quarter only reflects the beginning of the outbreak and the number will deteriorate significantly in the upcoming quarter.

The Federal Reserve’s (Fed) Open Market Committee met and decided to leave interest rates unchanged between 0 and 0.25 bps. The Fed did not announce new measures on top of its current nine programmes. Fed Chairman Jerome Powell made clear that the institution was committed to use its full range of tools.

Spanish and French GDP fell by 5.8 and 3.8 percent respectively.

Earning’s season continued:
In the US it was a tale of two universes: Companies heavily impacted by the pandemic and lockdown on one hand; enterprises in a good position to benefit from new models of work on the other.

Boeing posted a first quarter loss of $641 million down 70 percent compared to Q1 2019. The planemaker burned through around $4 billion of cash during Q1 and will reduce its workforce by 15,000 or 10 percent. GE’s net industrial profit tumbled by 46 percent to $1.1 billion, with the health care division showing gains and aviation a radical decline.

Boeing’s woes reflect the contraction in the wider aviation sector as air travel has drastically dropped since the outbreak of the pandemic. Boeing is also a major part of US exports and its supply chain is global. Its 17,000 contractors will be hit hard by the company’s downturn with ripple effects in the US and beyond — particularly in Japan.

Microsoft revenue increased by $4 billion or 14 percent. Net income stood at $11.6 billion. Owing the success in part to shared cloud storage, which addresses key aspects of a large part of the workforce operating from home. Facebook doubled its net income to $4.9 billion.

Stock markets seemingly shrugged off the bad news and rallied on tech sector results and early positive results in clinical trials of Gilead’s antiviral coronavirus drug remdesivir.

On the other side of the Atlantic, Shell posted a net loss of $24 million down 100 percent compared to Q1 2019. The picture will turn bleaker in Q2 due to the deterioration in oil prices. The company slashed dividends by 75 percent, which represents the first cut of dividends since the Second World War and is in stark contrast with BP’s decision to leave dividend payments in place.

Société Générale posted a surprise loss of €326 million ($354 million) and Swiss Re’s profits fell to $426 million.

US President Donald Trump announced Operation Warp Speed, a program pulling together private pharmaceutical companies, government agencies and the military. Its aim is to develop a vaccine by January of next year.

Background:

It was widely expected that the Fed would leave interest rates unchanged until the economy has recovered and is on track to achieve maximum employment, while achieving price stability goals.

In a press conference, Powell voiced concerns that the current downturn would leave permanent scars. He stressed that “the ongoing public health crisis will weigh heavily on economic activity, employment and inflation in the near-term, and poses considerable risks to the economic outlook over the medium-term.”

Powell made clear that the Fed’s mission was to ensure the flow of credit and liquidity in the system and that the institution would deploy its full range of tools to this end. He stressed that providing liquidity is about more than just lending, but also creating confidence in the functioning of markets.

He reiterated the limitations to what the Fed could do, emphasizing the need for fiscal stimulus. He urged Congress to use its “great fiscal power,” pointing out that he would have preferred for the US to be in a stronger fiscal position going into the crisis, but that this was not the time for discussion but action.

The Fed’s chairman was particularly concerned about the unemployment rate having surged from a record low of 3.5 percent in February to double digits within the span of two months. This is relevant because consumption contributes 70 percent to US GDP and unemployment of this scale could have a permanent psychological impact on the US workforce and economic confidence.

Powell painted a bleak picture for the world’s largest economy, particularly citing the unpredictability of the pandemic until a vaccine or effective medicine was found.

Where we go from here:

Early afternoon CET, the European Central Bank will announce the outcome of its governing and general councils’ meetings and first time US jobless claims for the week ending April 24 will be released.

 

— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources.
Twitter: @MeyerResources


Chaabani believes debutants Berkane can win CAF Champions League

Updated 13 sec ago
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Chaabani believes debutants Berkane can win CAF Champions League

  • Chaabani, a 43-year-old Tunisian, acknowledges that competing in the Champions League will be more challenging than the Confederation Cup
  • “The Champions League is a tougher competition, with high-level opponents,” he said

JOHANNESBURG: Renaissance Berkane coach Mouin Chaabani believes the Moroccan club could go one better than CAF Champions League title-holders Pyramids and win the competition at the first attempt.

Cairo outfit Pyramids won the premier African club competition last Sunday in only their second appearance by beating South African rivals Mamelodi Sundowns 3-2 on aggregate.

Berkane last month became Moroccan champions for the first time, finishing 13 points ahead of runners-up FAR Rabat.

Called the Orange Boys as they are based in the citrus-growing northeast of Morocco, Renaissance will debut in the Champions League this year.


It is a milestone for a club formed in 1938 and overshadowed for decades by Casablanca giants Raja and Wydad, both three-time African champions.

Berkane finally conquered Morocco by winning 21 of 30 matches, drawing seven, losing just two, scoring 49 goals and conceding only 14 in a championship ranked the second toughest in Africa.

While Berkane are Champions League debutants, they are no strangers to Africa having
competed in the past eight editions of the second-tier CAF Confederation Cup, winning three
finals.

They were also runners-up twice to Egyptian opponents Zamalek, losing one title decider after a penalty shootout and another on away goals.

Chaabani, a 43-year-old Tunisian, acknowledges that competing in the Champions League will be more challenging than the Confederation Cup.

“The Champions League is a tougher competition, with high-level opponents,” the coach who won back-to-back titles in the most prized African club competition with Tunis outfit Esperance told reporters.

“Thanks to repeated appearances in the Confederation Cup, I think Berkane have acquired continental experience. We have an ambitious squad capable of competing at the highest level.

“We will approach the Champions League campaign with great respect for opponents, but also with a desire to go far. Why not aim for the title?

“Our supporters can play a key role. Their unwavering backing, at home and away, has carried us through difficult times as well as joyful moments.”

The Municipal Stadium in Berkane accommodates just 15,000 spectators, and their closeness to the pitch creates what many visiting coaches have called “an intimidating atmosphere.”

Berkane won 43 of 49 home Confederation Cup matches since debuting in 2015, drew the other six, scored 113 goals and conceded only 18.

En route to the latest Confederation Cup triumph, they excelled at home, firing five goals past
Dadje of Benin and Stellenbosch of South Africa and four past CS Constantine of Algeria in the semifinals.

The Champions League is becoming increasingly competitive and unpredictable with the success of Pyramids not foreseen when the competition kicked off last August.

The Cairo club boast a prolific scorer in Congolese Fiston Mayele, whose nine goals won him the Champions League Golden Boot.

Pyramids, fellow Egyptian challengers and record 12-time African champions Al Ahly, Sundowns and Esperance of Tunisia will hope to claim the $4 million (EUR3.5 million) first prize.

Mouloudia Alger of Algeria, who are poised to qualify, and FAR were quarter-finalists last season and capable of going further this time.

Apart from the regular campaigners, there will be newcomers like Wiliete of Angola, Colombe of Cameroon and possibly Police, who need one point from two matches to become Kenyan champions.

Originally due to kick off in August, the Champions League will be delayed as the African Nations Championship (CHAN) has been rescheduled for that month.


Pakistani man accused of killing young TikTok influencer appears in court

Updated 16 min 12 sec ago
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Pakistani man accused of killing young TikTok influencer appears in court

  • Umar Hayat is accused of killing TikTok influencer Sana Yousaf for rejecting friendship offers 
  • Pakistani judge orders Hayat to be presented again on June 18 for pretrial proceedings

ISLAMABAD: A Pakistani man accused of killing a 17-year-old TikTok influencer after she rejected his offer of friendship made his first court appearance Wednesday, officials and police said.

Suspect Umar Hayat, 22, who also creates content on TikTok, was arrested Tuesday by Islamabad police in Faisalabad, an industrial city in eastern Punjab province.

He is accused of shooting Sana Yousuf, who had more than one million followers on social media. The killing earlier this week in Islamabad drew widespread condemnation.

TV footage showed Hayat with his face covered as he was brought to court, where police requested additional time to complete their investigation and file formal murder charges.

The judge ordered that Hayat be presented again on June 18 for pretrial proceedings.

Yousuf, originally from the scenic northern region of Chitral, was known for promoting traditional Chitrali music and dress through her videos. She also advocated for girls’ education. TikTok has more than 60 million users in Pakistan, many of them young women and teenagers.

Hours before her murder, she had posted a photo celebrating her birthday with friends.


Closing Bell: Saudi main index closes in green before Eid holidays 

Updated 20 min 58 sec ago
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Closing Bell: Saudi main index closes in green before Eid holidays 

RIYADH: Saudi Arabia’s Tadawul All Share Index climbed on Wednesday, gaining 172.1 points, or 1.59 percent, to close at 11,004.53. 

The total trading turnover on the benchmark index was SR4.61 billion ($1.23 billion), with 191 listed stocks advancing and 50 declining.

The Kingdom’s parallel market Nomu surged by 257.9 points to close at 27,307.74. 

Meanwhile, the MSCI Tadawul Index edged up by 1.67 percent to 1,406.49.  

The best-performing stock on the main market was Saudi Industrial Investment Group, with its share price surging 7.03 percent to SR17.36. 

The share price of ACWA Power Co. also rose by 6.72 percent to SR269.80.  

Al-Babtain Power and Telecommunication Co. saw its stock price increase by 5.40 percent to SR5.40. 

Conversely, the share price of Saudi Steel Pipe Co. fell by 6.33 percent to SR56.20. 

Saudi Research and Media Group also saw a dip, with its share price easing 2.26 percent to SR127. 

On the announcements front, Saudi National Bank completed its offer of Saudi riyal-denominated Additional Tier 1 sukuk, with the settlement finalized on June 3. 

According to a statement on the Saudi Exchange dated May 11, the issuance was conducted through a private offer to eligible investors in the Kingdom. The total value of the sukuk offering amounted to SR1.73 billion. 

The bank issued 1,730 sukuk, each with a par value of SR1 million. The sukuk will offer an annual return of 6 percent from the issue date until June 3, 2030. 

The share price of Saudi National Bank increased by 0.88 percent to close at SR34.45. 

The announcement coincided with the implementation of the unified regulation for cross-border registration of investment funds among Gulf Cooperation Council countries, which came into effect in 2025, according to the Capital Market Authority. 

The regulation outlines requirements for registering and marketing investment funds across GCC countries and introduces a dedicated regulatory guide. 

It aims to clarify procedures for handling both local and Gulf-based funds, enhance financial market services, and reduce regulatory challenges. 

Additionally, the framework seeks to support mechanisms that attract international investments to the Saudi financial market and boost foreign ownership in investment funds. 

The broader goal is to improve liquidity in regional financial markets, enhance the competitiveness of GCC economies, and foster integration by unifying the policies and systems governing domestic, regional, and foreign investment activities. 

The regulation also aims to ensure a transparent and stable investment environment. 

Under the framework, the legislative committee in each host country will have the authority to set standards for approving fund registrations and supervising funds within its jurisdiction, including overseeing the appointed agent and their interactions with investors. 

Cross-border registration must be conducted through the capital market authorities of both the fund’s country of origin and the host country. 

The regulation allows investment funds established in any GCC member state to be promoted in other countries applying the framework. 

It also outlines the process for offering Saudi funds in Gulf markets, with a focus on aligning with regulatory review mechanisms and cross-border registration requirements to ensure full compliance with approved guidelines. 


Saudi Red Crescent conducts air evacuation in Arafat as part of Hajj preparedness efforts

Updated 23 min 56 sec ago
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Saudi Red Crescent conducts air evacuation in Arafat as part of Hajj preparedness efforts

  • Operation was launched after an emergency call was received by the SRCA’s central operations room

ARAFAT: The Saudi Red Crescent Authority carried out an emergency air medical evacuation in Arafat on Wednesday, as part of its broader efforts to enhance readiness during the Hajj season, the Saudi Press Agency reported.

The operation was launched after an emergency call was received by the SRCA’s central operations room.

Ground and air ambulance teams were immediately dispatched to the scene in coordination with relevant health authorities, SPA added.

The patient was stabilized on-site and transported by medical evacuation aircraft to a designated hospital, following direct coordination with the hospital’s medical team and the provision of all necessary medical details.

SRCA spokesman Dr. Taimur Shukrullah Jan said the mission was part of a broader integrated system designed to improve emergency response across the holy sites.

He noted that medical evacuation aircraft are crucial in reducing response times, particularly in areas of high population density or restricted mobility.

“The authority is harnessing all its human and technical resources to serve pilgrims, in line with its humanitarian and national mission,” Jan said. “Our ground and air ambulance teams are operating around the clock to deliver urgent care where and when it’s needed.”

The SRCA’s air ambulance service for the Hajj season comprises 11 aircraft deployed across 13 strategic landing sites in Makkah and the holy sites.

More than 120 trained personnel are working to ensure rapid intervention and high-quality emergency services for pilgrims, SPA reported.


Pakistan’s Punjab issues solar panel installation guidelines following accidents 

Updated 27 min 26 sec ago
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Pakistan’s Punjab issues solar panel installation guidelines following accidents 

  • Over 70% of 124 accidents reported across Punjab during May 24 thunderstorms were related to solar panels, says disaster management authority
  • Guidelines include installation of solar panels by those certified by federal government, using wind-rated mounting systems that withstand pressure 

ISLAMABAD: The disaster management authority in Pakistan’s most populous Punjab province on Wednesday issued new guidelines for the installation of solar systems, citing that over 70 percent of accidents related to solar panels were reported during a thunderstorm last month. 

Thunderstorms killed at least 21 people and injured more than 100 others in Punjab late last month as moist currents penetrated upper parts of Pakistan, according to national and provincial disaster management authorities.

Earlier this week, the Punjab Disaster Management Authority (PDMA) issued a fresh alert for rain and strong, dusty winds across the province from June 2 to June 5. 

“During the thunderstorm on May 24, there were 124 small and large accidents in Punjab,” PDMA spokesperson Mazhar Hussain told Arab News. 

“When this was analyzed, it was revealed that over 70 percent of the accidents have been caused by solar panels or related structures,” he added. 

PDMA Director General Irfan Ali Kathia said new guidelines and a regulatory framework were prepared by stakeholders, including the province’s energy department and the local government department.

“These instructions are aligned with the national framework provided by the Alternative Energy Development Board (AEDB), and include essential safety protocols, installation standards and the responsibilities of certified installers,” Kathia explained. 

According to the guidelines seen by Arab News, the PDMA has directed users to procure the services of AEDB-certified installers to ensure a professional solar system design and so that the panels are properly mounted, sealed and structurally reinforced.

Along with other technical details, the PDMA stresses people to use wind-rated mounting systems attached to mountings by stainless steel nut bolts. The authority directs that these bolts be fastened using stainless steel spring washers. 

It also says people should consider windstorm-safe anchors or extra brackets in the province’s regions prone to storms. 

“The mountings itself should be properly secured with base/floor to ensure it can withstand windstorms and other climatic vagaries,” the document stated.

Kathia said only professionals approved by the AEDB will be authorized to install solar energy systems. He said this move was aimed at ensuring technical standards were maintained and risks associated with faulty or unregulated installations were reduced.

“In addition, all structures across Punjab that may be vulnerable to future damage are being surveyed by the respective deputy commissioners,” the PDMA official said.

He added strict compliance would be ensured in close coordination with district administrations to avoid such accidents in the future. 

Khalil Ahmed, owner of a solar installation company in Punjab’s provincial capital Lahore, supported the PDMA’s decision.

Ahmed said people often hire non-professional installers to save a small amount of money, putting both their systems and safety at risk.

“Ensuring that only AEDB-certified professionals handle solar installations is not just a matter of compliance, it’s a matter of public safety,” he told Arab News.

Proper mounting, structural reinforcement, and weatherproofing are essential to prevent accidents and protect both lives and property, he added.