The Economist - UK (2022-05-07)

10 TheEconomistMay7th 2022
The world this week Business

America’sFederalReserve

raiseditsbenchmarkinterest

ratebyhalfa percentagepoint,

liftingit toa targetrangeof

0.75%to1%.Itwasthebiggest

increasesince2000.TheFed

alsounveileda plantostart

reducingitsnearly$9trnbal­

ance­sheetfromJune,and

acceleratethepaceofsalesin

September,intensifyingits

battleagainstinflation.More

half­pointraterisesareexpect­

edthisyear.

TheReserveBankofAustralia

increaseditsbenchmarkrate

forthefirsttimein11 years,to

0.35%,amidhighinflation.

India’scentralbankalsoun­

expectedlyraiseditsmainrate,

to4.4%,inanefforttotame

prices,especiallyforfood.

Thegreattechslide

With many tech share prices

shedding their gains from the

pandemic, the Nasdaq stock-

marketfell by 13.3% in April,

its worst monthly perform­

ance since the financial crisis

in 2008. Amazon’sstock strug­

gled to recover from the ham­

mering it took after the compa­

ny reported a slowdown in

quarterly revenue from online

sales. It recorded a net loss of

$3.8bn, in part because it wrote

down the value of its invest­

ment in Rivian, which makes

electric vehicles. Amazon’s

cloud­computing division,

which provides the backbone

of its profits, did well. 

The momentum that labour

activistswere hoping for from

the recent decision by workers

at an Amazon warehouse to

join a union stalled, after staff

at a smaller facility voted

against unionisation. Sep­

arately, Amazon joined a grow­

ing list of companies that are

reimbursing costs for employ­

ees in America who will have

to travel to get an abortion. 

Lyftlost 30% of its stockmark­

et value, after the ride­hailing

company forecast a weak

outlook. Uber’sshare price

also fell, though not as sharp­

ly; its business rebounded in

the first quarter because of

“strong mobility demand”, but

it neverthelessmadea $5.9bn

lossbecauseofitssinking

investmentsintechfirms.

Underlininga reversalin

fortunes compared with the

tech sector over the course of

the pandemic, the oil industry

reported bumper quarterly

profits, helped by surging oil

prices. Despite a $24bn write­

down from leaving Russia, bp’s

headline profit came in at

$6.2bn, the best since 2008. It

expanded its share buy­back

programme. Shell’s adjusted

profit of $9.1bn was its best

ever. ExxonMobil tripled its

stock buy­backs and Chevron

recorded its most profitable

three months since 2012. 

Intercontinental Exchange

(ice), the owner of the New

York Stock Exchange, agreed to

buy Black Knight, a provider

of mortgage data and software,

for $13.1bn. Like other stock­

market operators, icehas been

expandingintofintechand

otherareasoutsideequities.

ItsacquisitionofBlackKnight

comesamida boominAmer­

icanhouseprices.

Biogendecidedtowinddown

thecommercialoperations

supportingAduhelm,itstreat­

mentforAlzheimer’sdisease,

afterMedicare,America’s

health­insuranceprogramme

fortheelderly,refusedtopay

forit.Thedrugwasmiredin

controversyfromthestart.The

FoodandDrugAdministration

approvedit,althougha panel

of experts advised against this.

Doctors argued about its effec­

tiveness and health insurers

said it was too costly. Biogen

will continue to provide

Aduhelm free for patients on a

programme who have started

to take it. Its chief executive is

stepping down. 

Elon Musk hinted that busi­

nesses and governments may

have to pay a small fee to stay

on Twitteronce he takes it

over, but that it would remain

free to “casual users”. Mr Musk

also said he was not planning

to dispose of any more Tesla

stock, after selling $8.5bn­

worth of his stake to help fund

his buy­out. He may return

Twitter to public markets in a

few years after the deal is done,

according to reports. 

Executivesfromhsbcand

PingAnarereportedlytomeet

soontodiscussthelatter’s

proposaltobreakupthebank.

PingAn,a Chineseinsurance

giant,ishsbc’s biggestshare­

holderandwantsit tosplitits

businessinAsia,whereit is

mostprofitable,fromitsWest­

ernassets.hsbcisunderstood

tobecooltotheidea.

It’sallgoingdownhill

JustEatTakeaway’schairman

steppeddown.Investorsare

peevedthat,despiteitssloping

share price, the food­delivery

company went ahead with its

Snow Fest staff jamboree at a

ski resort in April. Last year’s

acquisition of Grubhub has

gone off­piste and it might be

sold. jetis also investigating a

complaint of misconduct at a

company event made against

its chief operating officer. 

Qantas confirmed orders for 

Airbus a350-1000s that will fly

non­stop from Australia to

New York and London starting

in late 2025. With very­long

haul 20­hour flights the planes

will have just 238 seats to make

space for first­class suites and

a “well­being zone”. The air­

line’s boss, Alan Joyce, said the

aircraft would overcome “the

tyranny of distance” that has

always bedevilled Australia. 

Share prices

January 3rd 2022=100, $ terms

Source: Refinitiv Datastream

150

125

100

75

50

Jan Feb Mar Apr May

Meta

Chevron

BP

Amazon