Business review from the Economist
Pummeled in October, stocks find a floor
Stock markets 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 $5 trillion 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 percent during October.
The U.S. economy grew at an annualized rate of 3.5 percent 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 percent, which makes this the economy's best six-month performance since mid-2014.
Economic growth in the eurozone slowed sharply in the third quarter, to 1.7 percent year over year, compared with 2.2 percent in the previous three months. Inflation rose to 2.2 percent, 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 tries to interfere with its independence.
The yuan hit its weakest point since the financial crisis, coming close to breaking the symbolic mark of seven yuan to the dollar. China's central bank sets a daily peg around which the currency can trade. A weaker Chinese currency makes Chinese exports cheaper, a boon to Beijing in its battle to offset the Trump administration's punitive tariffs.
The main grievance behind those tariffs is America's accusation that China is stealing technology secrets. Last week, the Commerce Department slapped a ban on U.S. companies from supplying components to Fujian Jinhua, a Chinese chipmaker that is accused by Micron, an American rival, of intellectual property theft. Similar U.S. restrictions on ZTE brought that Chinese company to its knees earlier this year.
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 stock market value. Facebook made a net profit of $5.1 billion in the third quarter on revenue of $13.7 billion. Both figures were up from the comparable period last year, though the pace of growth was the slowest in several 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 $34 billion. 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.
Global politics from the Economist
Merkel enters twilight of German reign
Following a poor result for her party at a state election in Hesse, Angela Merkel announced that she will stand down as leader of her Christian Democratic Union in December, when the post is up for biennial election. She said she was willing to remain as Germany's chancellor until 2021, when elections are scheduled to be called. But she may well not last until then. Her coalition partners, the Social Democrats, also suffered embarrassing losses in Hesse.
An Indonesian airliner crashed into the sea shortly after taking off from Jakarta. All 189 people on board are thought to have died in what is the worst commercial airline disaster this year.
Turkey's government announced a series of tax cuts, prompting more concern that it is not serious about fiscal discipline.
The U.S. urged the warring parties in Yemen to stop fighting. The U.S. is losing patience with Saudi Arabia, an important ally, over its reckless and brutal handling of the war in Yemen.
A Turkish prosecutor said that Jamal Khashoggi, a journalist, was strangled to death moments after he entered Saudi Arabia's consulate in Istanbul in a planned killing. The allegation contradicts claims made by Saudi Arabia that Khashoggi was accidentally killed in a struggle.
Another Saudi prince, Ahmed bin Abdulaziz, returned to the country from exile in London. Some speculate that he plans to challenge the authority of the crown prince, others that he hopes to reinforce it. As is usual with the cryptic kingdom, no one really has a clue.
