Business

LONDON — Stock markets mostly rose on Wednesday, recovering further from recent sharp losses on easing concerns over Chinese property giant Evergrande ahead of a key update from the Federal Reserve.

The dollar also gained against most of its biggest rivals, while oil prices won solid support.

Nerves were settled by news that Evergrande had agreed a plan to repay interest on one of its key bonds, avoiding a default that many fear could hammer the domestic and global economy.

However, confidence remains at a premium as traders awaited the outcome of the meeting of the Federal Reserve (Fed), which was expected to announce a timetable to start tapering its vast monetary easing programme.

"Having seen some very bad days for equities in recent sessions, Europe and parts of Asia were more upbeat on Wednesday," noted AJ Bell investment director Russ Mould, who suggested the Fed outcome "could give further support to markets".

More hawkish Fed? 

But Fawad Razaqzada, market analyst at ThinkMarkets, warned "volatility" could return to the markets in the event of "a hawkish tilt from the Fed, which may trigger some risk aversion".

"The later tapering starts, the better it will likely be for risk assets — and gold," said Razaqzada, who added that, "overall, there is greater risk that the Fed will come across as being more hawkish than in June."

The US central bank's meeting comes against the ever-present backdrop of spiking coronavirus infections and slowing global growth.

But despite those concerns, Wall Street was 0.6 per cent up shortly after the opening bell while Frankfurt, London and Paris also showed similar gains. 

Fed officials have signalled that by the end of the year they will begin winding down the ultra-loose monetary policies put in place at the start of the pandemic which have been key to driving a global economic and equity-prices recovery.

The growing consensus is that the first announcement will be in November and the first reduction the next month. But Fed boss Jerome Powell could still provide details on the timetable.

The decision comes as the Fed tries to keep a lid on surging inflation and prevent the recovering economy from overheating.

On the corporate front, shares in Entain gained 6 per cent after the UK gambling giant revealed that it had received a takeover bid from US rival DraftKings worth $22.5 billion.

PARIS — The International Energy Agency (IEA) on Tuesday urged Russia to step up gas deliveries to Europe in anticipation of higher winter demand, as tight global supply pushes prices skywards.

"Russia could do more to increase gas availability to Europe and ensure storage is filled to adequate levels in preparation for the coming winter," the IEA said in a statement.

Opening the tap would be "an opportunity for Russia to underscore its credentials as a reliable supplier to the European market", it added.

Higher demand, including from extremes of hot and cold weather this year, and squeezes on supply due to "a series of unplanned outages and delays across the globe and delayed maintenance from 2020" have boosted gas prices, the IEA said.

Prices for electricity in Germany and Spain "have been around three or four times the averages seen in 2019 and 2020" in recent weeks, in part down to higher gas prices, it added.

But Moscow has made clear that it is waiting for its divisive Nord Stream 2 pipeline to Germany to come online before delivering more gas.

"There's no doubt that the quickest possible entry into service of Nord Stream 2 will largely balance out the price parameters of natural gas in Europe," Kremlin spokesman Dmitry Peskov said this week.

The pipeline was completed this month in the face of objections from Germany's eastern EU and NATO allies like Poland, the Baltic states and the US, which say it gives Moscow too much control over Europe's energy supply.

Washington's State Department has called Nord Stream 2 "a Russian geopolitical project that's a bad deal for Europe".

And Ukraine — in conflict with Russia since Moscow's 2014 annexation of Crimea — has warned Europe that the pipeline could be used by Moscow as "a dangerous geopolitical weapon".

Earlier this year the US nevertheless waived sanctions on the project imposed by former president Donald Trump, as the Biden administration looked to shore up transatlantic relations.

But the pipeline still needs approval from Germany's regulator — including a potentially months-long analysis by the European Commission — before entering service.

"Nord Stream 2 is not a project in Europe's common interest," a Commission spokesman told AFP.

Brussels' "objective is to make sure Nord Stream 2 works in a transparent and non-discriminatory way... in line with international and European energy law", he added.

By James Edgar
Agence France-Presse

HERAT, Afghanistan — Quiffs, mohawks, and crew cuts were hairstyles Nader Shah was accustomed to styling for image-conscious young men in Afghanistan's third-biggest city of Herat.

But since the Taliban swept to power in mid-August, Afghans have little cash to spare and fear being punished for sporting short or fashionable cuts.

"Before, people came and asked for different hairstyles, but it's simply not like that anymore," 24-year-old Shah said at his barber's shop, with mirrors covering every wall. "Now they are heartbroken."

During the Taliban's first stint in power from 1996 to 2001, the hardliners banned flamboyant hairstyles and insisted men grow beards.

After they were ousted, being clean-shaven was often considered a sign of modernity, including in the relatively cosmopolitan western city of Herat.

"Now people come here and they only ask for simple cuts," Shah said. "They also don't shave their beards, so it's a problem now."

The barber, who has been in the business for 15 years after starting as a young apprentice, said the downturn has caused his daily earnings to plummet from $15 to between $5 and $7.

In the next neighbourhood, Mohammad Yousefi, 32, said he has had to dramatically lower his prices — from $6 a cut to just $1 — to keep his shop running.

"Because of the Taliban situation, customers have less income and they pay us less," he said.

Yousefi said that after the Islamist hardliners took control of the country, "suddenly people like to make themselves look like the Taliban".

"It's not like the Taliban are fashionable, but people don't shave their beards because the Taliban will stop and ask them about it," he said. "They say it's not in Sharia law, and that men should have beards and long hair."

Fleeing clients 

At 36-year-old Ali Reza's barber shop, pink spotlights shone down on customers and shelves were crammed with hairspray cans, gels, mousses, cologne and face masks.

The barber deftly chopped his scissors over a customer's beard as waiting clients discussed Afghan politics.

His two apprentices — Reza's 11-year-old nephew Sobhan and Mohsan, 14 — watched his every move, tidying away brushes, combs and electric clippers, and helping unwrap razor blades.

Reza completed the experience with a flourish, drumming his fingers over the customer's head, massaging his temples and eyebrows, before scrunching the unsuspecting client's ears for several seconds.

"In the past, young people would come every one or two weeks to cut their hair or beards, and they were happy," Reza told AFP, adding many of his clients had fled.

"Those young people who are still here are not interested in cutting their hair or beards anymore because the economy is really poor," he said.

Since the Taliban takeover, Afghans say job opportunities have dried up.

"Before my income was excellent, and now it's not," he said.

LONDON — Britain's government does not expect a gas supply emergency during the winter as soaring prices threaten energy groups, Business Secretary Kwasi Kwarteng insisted on Monday.

"We have sufficient capacity, and more than sufficient capacity, to meet demand and we do not expect supply emergencies to occur this winter," Kwarteng told parliament after holding an emergency meeting with gas and electricity suppliers and consumer groups.

Kwarteng said protecting consumers was the government's "primary focus", adding that it would not bail out any energy company.

"There is absolutely no question... of the lights going out or people being unable to heat their homes," he added.

Prime Minister Boris Johnson earlier sought to reassure consumers fearing surging winter fuel bills and the possibility of small British energy firms collapsing from higher costs.

It comes as wholesale gas prices in Britain soared by a further 15 per cent on Monday.

"The government will not be bailing out failed companies," Kwarteng told lawmakers.

"The taxpayer should not be expected to prop up companies which have poor business models and are not resilient to fluctuations in price," he added.

'Bleak outlook' 

A lack of atmospheric wind for turbine sites, coupled with ongoing nuclear outages and the winding down of coal mines by climate-conscious governments, has left parts of Europe grappling with an energy crisis.

Russia says its newly completed Nord Stream 2 gas pipeline to Germany will alleviate any winter shortages.

But the US government and EU ally Ukraine are deeply opposed to the Kremlin-backed project.

Downing Street insisted that Britain was not dependent on Russian gas supplies.

"We meet half of our annual supply through domestic production and the vast majority of imports come from supplies such as Norway," a spokesman said.

Prices of natural gas in Britain have hit record highs, also after a fire recently knocked out a vital point connecting the country's power grid to France.

Wholesale prices for gas have rocketed 79 per cent since August, adding to already strong inflation that has been stoked by staff shortages as economies reopen after pandemic lockdowns.

Meanwhile market prices for the fuel have soared by 233 per cent since January and 517 per cent in one year.

Many small energy providers have emerged in the UK market over recent years, grabbing large numbers of customers from established players such as British Gas, whose parent group Centrica attended the meeting with Kwarteng.

But on Monday, Peter McGirr, chief executive of small energy firm Green and whose company was not part of the gathering, said "the outlook is looking bleak".

"We just don't have as deep pockets to keep going through this crisis. I think that all suppliers are feeling the pinch of this but some of them just have a lot deeper pockets to try and ride out the storm."

McGirr called for government support or "it's unlikely we will see the winter through".

Kwarteng said losing some suppliers should not cause alarm, arguing that the UK sector has seen a "regular entry and exit" of firms over the past decade.

Carbon dioxide shortage 

Owing to the price hikes, Britain is grappling also with a shortage of captured carbon dioxide (CO2) gas, triggering warnings of further pressure on food supplies, which are already hit by a shortage of lorry drivers.

Fertiliser production at two UK plants providing up to 60 per cent of Britain's CO2 output has been halted since last week.

Kwarteng on Monday said discussions were taking place to protect carbon dioxide supplies to help key sectors, including also health and nuclear.

OTTAWA — Canada spent hundreds of billions of dollars to aid workers and keep businesses afloat during the pandemic, causing its national debt to soar. But the usually frugal Canadians do not seem to mind.

Monday's snap election is expected to herald an era of more big spending, with both Liberals and the usually thrifty Tories, running neck and neck, promising more government aid, a monumental shift for Canada after decades of belt-tightening. 

"It's not that I don't care about the debt, I just don't think about it as much as my parents and previous generations who thought it was a huge issue," Meg Sweeney, 23, a recent university graduate, said.

Canadians aged 65 or older, who will soon make up one quarter of the population, are not concerned about having to repay the borrowed funds, while millennials on whom it will likely fall support higher social spending.

"In this election, I'm looking at issues such as climate change, relief from student loans, racial justice and tackling social issues — like others of my generation," Sweeney added.

Canada entered the pandemic in a strong fiscal position after a long era of frugality, allowing it to dole out hundreds of billions of dollars in COVID emergency aid.

That, however, cost it its AAA debt rating after Fitch downgraded the country a notch to AA+.

It also sent Ottawa's debt soaring to a forecasted Can$1.2 trillion ($960 billion) in the fiscal year 2021-2022, with a peak debt-to-GDP ratio of 51.2 per cent that would fall only marginally by 2025-2026, from an average 31 per cent prior to pandemic.

Justin Trudeau's Liberals are proposing Can$78 billion in new spending.

His main challenger, Conservative leader Erin O'Toole, also believes the government should spend more to steer the country out of recession. O'Toole is proposing Can$51 billion in new spending to "kick the economy into turbo drive" and use the ensuing uptick in revenues to balance the budget in 10 years.

"This election is about who you think can get us out of the recession and rebuild the economy," O'Toole said at the start of the election campaign.

When asked about the debt, Trudeau replied: "It matters to be fiscally responsible. It matters to live within our means. I think it also matters to be making the right investments so that future generations can prosper."

Trudeau noted that record low interest rates have made the cost of borrowing cheap.

But Kevin Page, head of the University of Ottawa's Institute of Fiscal Studies and Democracy, warned that there is always a risk that rates would go up.

Although economists agree the debt is sustainable, Page said: "There's a rightful concern that it's an open bar, people assuming with low interest rates that we can run up the debt and there will be no significant costs."

Pandemic exposed 

social inequities 

Jerry Dias, head of Canada's largest private sector union, argued the pandemic exposed social inequities that require heaps of new spending to mend. 

"It makes total sense to fix our social programmes to reflect reality," Dias said. He called for a universal prescription drug plan and affordable child care so women, who lost significant income while bearing the brunt of unpaid care work over the past 18 months, can return to the workforce.

Ian Lee, a professor at Carleton University's Sprott School of Business in Ottawa, said he is amazed by the change in people's mindset.

"I'm surprised that Canadians' attitudes toward debt has shifted so dramatically during the pandemic, how cavalier people have become about piling on debt."

Lee cautioned that soaring costs, including on healthcare may prompt the government to adopt "very profound changes in taxation".

Canada needs more immigration and better productivity but in this election, Lee laments, candidates have debated "how we're going to redistribute income, with little said about how we're going to generate wealth".

Growing up through the 2008 financial crisis, weather disasters, and now the pandemic, Sweeney, the university graduate says: "National debt is just so back of mind, and less important, with everything else going on."

"I'd rather focus my voting and community involvement on things where I can see a tangible impact now, and we can deal with the debt later," Sweeney said.

BAGHDAD — Iraq has launched a new project that aims to recover gas normally set alight during oil extraction at two oilfields in the country's south.

Flaring, or burning off excess gas during oil extraction, is a highly polluting practice but far less costly than processing it for sale.

According to the World Bank, Iraq is the second-biggest user of flaring worldwide after Russia.

The new project, signed in 2017 with oil services company Baker Hughes, will eventually allow 5.6 million cubic metres of gas a day that is usually torched on the Nasiriyah and Gharraf oilfields to be captured, according to a statement from the oil ministry sent to the media on Sunday.

It seeks to "exploit the gas that escapes from all oilfields across all Iraq, consolidate national gas production" and help preserve the environment, Oil Minister Ihsan Ismail was quoted as saying in the statement.

A ministry official said the implementation of the project and exploitation of the gas would have to wait 30 months for the completion of infrastructure works.

The World Bank said the amount of gas torched in Iraq annually reached 17.37 million cubic metres last year.

Earlier this month, French giant TotalEnergies signed a contract to invest in oil, gas and solar production in Iraq.

The French major plans initially to invest $10 billion in infrastructure, the proceeds of which will then allow a second round of investments of $17 billion, the officials said.

One of the projects will see the construction of a complex to exploit production from the sector's gas fields.

Rather than flaring or burning off the excess, the plan is to recover it for use in electricity generation.

The premier's office has said this will "reduce gas imports".

"Reducing flaring and increasing gas production is a priority for Iraq as well as for Total," TotalEnergies chief Patrick Pouyanne had tweeted earlier this year.

Decades of conflict, poor maintenance and rampant corruption have battered Iraq's energy sector.

Despite being the number two producer in the Organisation of the Petroleum Exporting Countries, Iraq is experiencing an acute energy crisis and chronic blackouts that fuel social discontent.

It is highly dependent on neighbouring Iran, which supplies a third of its gas and electricity needs.

Baghdad currently owes Tehran $6 billion for energy already supplied.