Economy

The company posted an adjusted profit of $2.13 per share in the July-September quarter, compared with estimates of $2.15, according to data compiled by LSEG.WHY IT’S IMPORTANTU.S. new vehicle sales fell during the third quarter due to fewer selling days, weaker consumer spending and higher interest rates, which impacted demand for automotive coatings.Production at factories in the United States held steady at weaker levels in September, although new orders improved. CONTEXTThe Pittsburgh, Pennsylvania-based firm is a global supplier of paints, coatings and specialty materials. It is the largest coatings company in the world, followed by Sherwin-Williams (NYSE:SHW).At PPG’s automotive OEM coatings unit, which sells paints, coatings and adhesives to the auto industry, organic sales declined by double-digit percentage.However, performance coatings sales during the third-quarter rose compared to last year led by aerospace coatings. BY THE NUMBERSNet sales at PPG’s performance coatings segment rose to $2.92 billion in the third quarter, compared with $2.88 billion a year earlier.Meanwhile, sales at its industrial coatings segment fell 6% to $1.65 billion from the same quarter a year ago.KEY QUOTE”Automotive OEM coatings organic sales decreased more than initially forecasted…due to lower U.S. and European industry build rates, which deteriorated notably late in the quarter, partly offset by PPG growth in China and Mexico,” PPG said. More

The company recorded net interest income of $3.66 billion in the quarter, 10% higher than the year-ago quarter.Credit card firms’ interest incomes have benefited as the Federal Reserve raised its benchmark rates multiple times over the last four years to tame sticky inflation.The U.S. central bank cut its key interest rate last month and is expected to continue with its monetary easing policy.Meanwhile, Discover said it was working with the Securities and Exchange Commission to resolve its accounting approach to a card misclassification issue. In July 2023, Discover said it had overcharged merchants and their banks due to misclassifying some cards. It increased its liability to $1.2 billion to refund affected merchants.A resolution is not expected to impact historical earnings, it said on Wednesday. Meanwhile, the company’s proposed $35 billion acquisition by Capital One announced in February is facing lawsuits from consumers and tough scrutiny by some lawmakers. Riverwoods, Illinois-based Discover’s net income rose to $928 million, or $3.69 per share, from $647 million, or $2.59 per share, a year earlier.Discover’s provision for credit losses fell to $1.47 billion in the three months ended Sept. 30 from about $1.70 billion. More

FRANKFURT (Reuters) – The European Central Bank is likely to lower interest rates again on Thursday, arguing inflation in the euro zone is now increasingly under control and the economy is stagnating.The first back-to-back rate cut in 13 years would mark a shift in focus for the euro zone’s central bank from bringing down inflation to protecting economic growth, which has lagged far behind that of the United States for two years straight. The latest economic data is likely to have tilted the balance within the ECB in favour of a rate cut, with business activity and sentiment surveys as well as the inflation reading for September all coming in slightly lower than expected.In the wake of the releases, a number of ECB speakers including President Christine Lagarde have flagged that a fresh cut in borrowing costs is likely this month, leading investors to fully discount the move. “The trends in the real economy and inflation support the case for lower rates,” Holger Schmieding, an economist at Berenberg, said.A quarter-point cut on Thursday would lower the rate that the ECB pays on banks’ deposits to 3.25% and money markets almost fully price in three further reductions through March 2025.Lagarde and colleagues are unlikely to drop clear hints about future moves on Thursday, repeating their mantra that decisions will be made “meeting by meeting” based on incoming data.But most ECB watchers think the die is cast for cuts at every meeting.”The implicit signal is likely to be that another cut is very likely in December unless the data improve,” Paul Hollingsworth, an economist at BNP-Paribas, said. INFLATION AND GROWTHThe ECB can finally claim it has all but tamed the worst bout of inflation in a generation. Prices grew by just 1.8% last month. While inflation may edge above the ECB’s 2% target by the end of this year, it is expected to hover around that level or even slightly lower for the foreseeable future. Yet the economy has had to pay a high price for that.High interest rates have sapped investment and economic growth, which has struggled for nearly two years. The most recent data, including about industrial output and bank lending, is pointing to more of the same in the coming months. An exceptionally resilient labour market is also now starting to show some cracks, with the vacancy rate – or the proportion of vacant jobs as a share of the total – falling from record highs.This has fuelled calls inside the ECB for easing policy before it is too late.”Now we face a new risk: undershooting target inflation, which could stifle economic growth,” Portuguese central banker Mario Centeno said recently. “Fewer jobs and reduced investment would add to the sacrifice ratio already endured.”The issue is that some of that weakness is due to structural problems, such as the high energy costs and low competitiveness hobbling Europe’s industrial powerhouse, Germany. These cannot be fixed through lower interest rates alone although they can help at the margin by making capital cheaper.”We cannot ignore the headwinds to growth,” ECB board member Isabel Schnabel said. “At the same time, monetary policy cannot resolve structural issues.” More

HONG KONG (Reuters) -Hong Kong’s leader pledged on Wednesday to reform and revive the economy and financial markets including slashing liquor duties, while seeking to improve dire living conditions for the city’s poorest.John Lee, in his third annual policy address, highlighted the need to “deepen our reforms and explore new growth areas,” in line with China’s national priorities and recent calls from Beijing for all sectors to unite to promote development and economic growth. Hong Kong’s small and open economy has felt the ripple effects of a slowdown in the Chinese economy and political tensions including a years-long national security crackdown.It grew by 3.3% in the second quarter from a year earlier, and is forecast to grow 2.5%-3.5% for the year.Although tourism has rebounded since COVID, with 46 million visitors expected this year, consumption and retail spending remain sluggish, while stock listings have dried up and capital flight remains a challenge.Lee told Hong Kong’s legislature that duties on liquor would be slashed to 10% from 100% for drinks with more than 30% alcohol content, in a bid to stimulate the trade in spirits. The lower duties apply only to spirits priced over HK$200 ($26), and for the portion above that amount. The move would “promote liquor trade and boost development of high value added industries including logistics and storage, tourism as well as high end food and beverage consumption,” Lee said.He hoped the move would benefit Hong Kong in the way that it became an Asian wine trading hub after wine duties were abolished in 2008. China’s recent decision to provisionally impose sharp tariffs on French brandy in a tit-for-tat move to European Union tariffs on Chinese electric vehicles, might also benefit the city. Lee said procedures for companies seeking to list in Hong Kong would be streamlined, in a bid to lure more international company listings on its stock exchange. The value of Hong Kong IPOs in 2024 is the lowest in 21 years, according to Dealogic data, not taking into account China Resources Beverage and Horizon Robotics which this week launched deals to raise up to $1.34 billion. China’s Midea raised $4 billion in a secondary listing in the city in September.The government said it would try to develop Hong Kong into a gold trading hub with “world-class” gold storage facilities, create a commodity trading ecosystem and fuel bunkering centre, and try to tap opportunities in green shipping, aviation and tourism. “Amidst the increasingly complicated geopolitics, our city’s security and stability gives us a clear edge as an attractive place for physical gold storage … and potentially propelling Hong Kong into a gold trading centre,” he said.PIVOT TO ECONOMY FROM SECURITYLee’s speech was less focused on national security than the year before, though he also stressed a need to “stay vigilant” towards potential national security threats.There were also signs of further integration between Hong Kong and China with the launch of a new civil servant “exchange programme” with a number of Chinese cities. A “Northern Metropolis” project on the border with China would also see 60,000 housing units in a cluster of public housing estates be completed in the next five years.In a bid to revive the city’s ailing property sector, Lee said the ratio of mortgages would be eased to 70% of the value of a property for all buyers.Hong Kong’s benchmark stock index was up 0.3%, while the property sub-index rose more than 2%. On the livelihood front, the government proposed new laws to regulate the leasing of so-called “sub-divided flats”, tiny cubicles sometimes called “cage homes” which have been criticised as below acceptable living standards.The new system would ensure basic safety standards for the 110,000 households currently living in such units. ($1 = 7.7684 Hong Kong dollars) More

(Reuters) -Morgan Stanley’s profit surpassed estimates on a bumper third quarter for investment banking that had also buoyed rivals, sending its shares up more than 3.5% before the market open. A revival in corporate debt issuance, initial public offerings (IPOs) and mergers has bolstered profits for Wall Street banks this year. As markets hover near record highs and the U.S. Federal Reserve begins its policy-easing cycle, bankers expressed optimism that mergers and acquisitions will continue to recover after a two-year drought. Morgan Stanley benefited from a “constructive environment”, CEO Ted Pick said in a statement. “Institutional securities saw momentum in the markets and underwriting businesses on solid client engagement.” Its investment banking revenue jumped 56% in the third quarter. Competitors Goldman Sachs had posted a 20% surge in fees, while JPMorgan Chase (NYSE:JPM) saw a 31% gain. Morgan Stanley’s profit jumped to $1.88 per share, exceeding analyst views of $1.58, according to estimates compiled by LSEG. Across the industry, global investment banking revenue rose 21% in the first nine months of the year, led by a 31% surge in North America, according to data from Dealogic. Morgan Stanley earned the fourth highest fees globally over the same period, the data showed. It was a lead underwriter on big initial public offerings in the quarter, including by cold storage giant Lineage and airplane engine maintenance services provider StandardAero.”We are seeing a rise in equity capital markets activity led by financial sponsors, not only for IPOs in the U.S. but also in Europe”, Morgan Stanley CFO Sharon Yeshaya said in a phone interview. The institutional securities business, which houses investment banking and trading, generated revenue of $6.82 billion, compared with $5.67 billion a year ago. Equity trading revenue was another bright spot, jumping 21% as stocks rallied. Fixed-income revenue rose 3%. The investment bank’s profit climbed to $3.19 billion from $2.41 billion a year earlier. “The company is executing very well across all the segments… Ted Pick has quickly built a leadership presence and confidence from investors,” said Macrae Sykes, portfolio manager at Gabelli Funds.WEALTH BOOST Under former CEO James Gorman, who will serve as executive chairman until year-end, Morgan Stanley expanded into wealth management to generate stable revenue and even out volatility from trading and investment banking. “The company has been a leader in wealth technology implementation, which should lead to better advisor productivity and share gains in asset gathering,” said Sykes said.Wealth management revenue – a key area of focus – increased to $7.27 billion, compared with $6.40 billion, a year ago.The business added $64 billion in net new assets and total client assets reached $6 trillion. Considering the investment management division assets of $1.6 trillion, Morgan Stanley is closer to its goal of managing $10 trillion in client assets. “Total client assets have surpassed $7.5 trillion across wealth and investment management supported by buoyant equity markets and net asset inflows,” Pick said.Investment management revenue climbed to $1.5 billion compared with $1.3 billion a year ago, helped by higher asset management and related fees. More

Import prices slipped 0.4% last month, the biggest drop since December 2023, after a revised 0.2% decrease in August, the Labor Department’s Bureau of Labor Statistics said on Wednesday.Economists polled by Reuters had forecast import prices, which exclude tariffs, would fall 0.4% after a previously reported 0.3% decrease. In the 12 months through September, import prices dipped 0.1% after increasing 0.8% in August. Government data last week showed slightly firmer consumer prices in September. While producer prices were unchanged last month, some components showed strength, which was expected to translate into a higher monthly readings in the key inflation measures tracked by the Federal Reserve for its 2% target.The U.S. central bank is expected to cut interest rates again next month, but by a smaller 25 basis points against the backdrop of a resilient economy. The Fed launched its easing cycle with an unusually large half-percentage-point reduction in its policy rate to the 4.75%-5.00% range in September amid growing concerns about the labor market. It hiked rates by 525 basis points in 2022 and 2023 to combat a surge in inflation. More

NEW DELHI (Reuters) – Rising prices of edible oils and vegetables like onions and tomatoes have driven up grocery spending for Indian households ahead of the festival season, prompting some consumers to limit more expensive purchases like electronic items, retailers said.India’s annual festival season, which runs from late September to early November, sees households scramble to buy food and other goods, encouraged by discounts offered by both online and brick-and-mortar retailers.But the start to the festive season this year has been slow.Sales of electronics and home appliances so far in October have risen just 5-7% from last year, against estimates for an 8-10% climb, said Nilesh Gupta, director at Vijay Sales, a retail chain with 143 stores. “We remain optimistic that sales will pick up,” he said.India’s economy is projected to grow by 7.2% in 2024-25, driven by increased rural demand, according to the central bank’s estimates.But high-frequency indicators such as auto sales and manufacturing purchasing managers index (PMI) have suggested weakness in the economy.Retail inflation, particularly for food, has remained high, eroding disposable income. In September, retail inflation was 5.49% and food inflation at 9.24%. Vegetable prices were 36% higher than a year ago.”The surge in onion prices, along with other food items, is having a ripple effect on the purchasing behaviour of small customers,” said B.C. Bhartia, national president of the Confederation of All India Traders (CAIT), representing 2 million retailers.Sanjay Kumar, 37, an office assistant who earns 22,000 rupees ($262) monthly, said: “I have cut my vegetable purchases by more than half to stay within my family budget, and I’m postponing the purchase of a microwave for Diwali.” CAIT had expected festival sales worth 4.25 trillion rupees, 13% higher than last year, driven by rural demand. A final tally of festival sales will only be available after the Hindu festival of Diwali in November, when purchases hit a peak.Online sales, which account for 15% of retail sales during the festive season, are also off to a slow start.Mobile phones, a key category that sells online, have seen weakness in sales of entry level models, indicating “continued income stress on low income groups,” though premium handsets were selling better, said Pushan Sharma, director of research at Crisil Market Intelligence and Analytics.Bangalore-based consultancy Redseer was more optimistic, estimating online festival sales of 1-1.2 trillion rupees, up 20% on the year, against 13% growth last year.Major retailers like Reliance Retail, Amazon (NASDAQ:AMZN), and Walmart (NYSE:WMT) owned Flipkart are offering discounts and easy credit deals to attract customers. Fashion, a key sales category during the festive season, saw weak demand in July-September, Dinesh Taluja, senior executive at Reliance Retail, told analysts this week.”But sales have picked up,” he said.$1 = 84.0040 Indian rupees) More

The document, sent to the European Commission for approval, estimates higher revenues amounting to 0.168% of GDP as a contribution to consolidating public finances.Economy Minister Giancarlo Giorgetti told reporters on Wednesday that banks and insurers would contribute to the state finances with “more than 3.5 billion euros” next year.”I think the affair has been interiorized by the markets, so it goes as it should. The fishermen and workers will be happy after this budget, a little less so the banks,” Giorgetti said.His deputy Maurizio Leo said the budget would be frozen for the next two years deductions related to banks’ tax credits stemming from past losses, known as deferred tax assets, in a move that would temporarily hike taxation on profits.The Treasury expects to collect 1 billion euros from insurers by changing the payment terms of stamp duties due for some insurance policies.Rome also changed taxation of stock options for managers. “We defer the deduction to the time when there is actual allocation of the shares,” Leo said. The DBP said revenues from banks, insurance products and gaming would fall by 0.073% of GDP in 2026 and by 0.096% the following year.Italy last year shocked markets by imposing a 40% tax on banks’ windfall profits, only to backtrack by limiting the scope of the levy and giving lenders an opt-out clause which meant that in the end it raised zero for state coffers.($1 = 0.9190 euros) More