Headlines

The European Central Bank edged closer to gaining power over financial clearing, a lucrative business dominated by London and a flash point in the Brexit negotiations, Bloomberg News reported. Lawmakers on a European Parliament committee on Tuesday endorsed a bill that amends the ECB’s governing statute, explicitly granting it authority over clearinghouses for euro-denominated contracts. This matters to the U.K. because the vast majority of interest-rate swaps in euros are cleared at a London unit of the London Stock Exchange Group Plc.

In a stock market where investors are used to being disappointed, Tuesday’s plunge still shocked, Bloomberg News reported. China’s benchmark equity gauge sank almost 5 percent at one point and by the close, the escalating tensions with the U.S. had sent 1,023 stocks down by the daily 10 percent limit -- or more than one in four. Greasing the losses was the Shanghai Composite Index’s slide below 3,000, a level previously breached during market crashes in 2015 and 2016.

A 200 basis-point increase in interest rates could spark a sharp rise in the proportion of emerging market corporate debt issues at risk of default, with Brazilian and Indian firms most vulnerable, a report from McKinsey Global Institute showed. Following a decade of loose monetary policy and historically low interest rates aimed at boosting economic growth after the 2008-9 financial crisis, global central banks including the U.S. Federal Reserve and the European Central Bank are either raising interest rates or signalling an end to accommodative policies, Reuters reported.

Noble Group Ltd. suspended its shares in Singapore on Monday pending an announcement, as efforts to get shareholder agreement on its controversial $3.5 billion debt restructuring plan drag on longer than expected, Bloomberg News reported. The stock fell to a record low of 5 Singapore cents last week before closing at 5.4 cents on Thursday prior to a public holiday. Once Asia’s largest commodity trader, the company has seen its market value shrink to about $50 million from more than $10 billion in 2010.

Dubai-listed Air Arabia said on Monday it has an investment in Abraaj funds, without elaborating further on its exposure to the private equity group which last week filed an application for provisional liquidation, Reuters reported. Abraaj’s founder Arif Naqvi is a board director of the Middle East low-cost carrier, according to Air Arabia’s website.

Mozambique’s central bank reduced its benchmark lending rate for the sixth consecutive meeting as inflation lingered near a 2015 low and the regulator tries to spur an economy that’s forecast to expand at the slowest pace in 18 years, Bloomberg News reported. The Monetary Policy Committee cut the benchmark interbank rate, known by its Portuguese acronym MIMO and introduced in April 2017, by 75 basis points to 15.75 percent, Banco de Mocambique Governor Rogerio Zandamela told reporters Wednesday in Maputo, the capital. It held the permanent lending facility at 18 percent.

The UK “now faces another extended period of weak growth”, according to the British Chambers of Commerce (BCC). The business group has downgraded its 2018 growth GDP forecasts from 1.4% to 1.3%, which would be the worst performance since 2009 when the global economy was dealing with the credit crunch, Economia reported. It has also dropped its 2019 outlook form from 1.5% to 1.4%. The BCC cites uncertainties around Brexit, possible trade wars and rising oil prices and interest rates as factors set to drag on the economy.

A consortium led by top oil trader Vitol has entered exclusive talks to acquire stakes in Nigerian offshore fields that are held by Brazil’s Petrobras and its partners, industry sources said, Reuters reported. The assets are estimated to be worth up to $2.5 billion, the two banking sources and one industry source told Reuters. The buyers are talking to state-controlled Petroleo Brasileiro SA, known as Petrobras, which is leading the sale, the sources added.

Jeff Mueller has little time for many of the junk bonds investment banks are pitching to him these days. The Eaton Vance portfolio manager is so unimpressed by what he sees, he now turns away most of the new issues he’s offered, Bloomberg News reported. That’s a reality check for borrowers who have used a six-year bull run in Europe’s $400 billion high-yield bond market to slash pricing and water down investor protections known as covenants. Since March, seven companies have withdrawn new deals after investors balked at the pricing and terms they asked for.

On Aug. 20, Greece is due to graduate from its third international rescue program. The country is still saddled with a towering public debt — nearly 180 percent of national income — and Europe’s other governments are divided over how much more relief to grant, Bloomberg News reported. Without a sizable package of new concessions, Greece’s debt burden is unlikely to stabilize. Creditors are seeking assurances that the country won’t go back to the spending that brought the economy to the brink of collapse in 2009.