Boeing’s CEO ousted; China slashes tariffs – business live

 

Powered by Guardian.co.ukThis article titled “Boeing’s CEO ousted; China slashes tariffs – as it happened” was written by Graeme Wearden, for theguardian.com on Monday 23rd December 2019 17.37 UTC

5.36pm GMT

Back in London, the stock market has enjoyed something of a Santa Rally.

The FTSE 100 ended the day 41 points higher, or 0.5%, at 7623, a five-month high. Nearly every sector rose, led by consumer stocks, energy companies, tech companies and industrial firms.

China’s easing of tariffs helped the mood, as investors look for a breakthrough in the trade war.

The smaller FTSE 250 jumped 0.8%, amid signs of rising business confidence for 2020:

But sterling had a weaker day, dropping 0.75 of a cent to a three-week low around .293. Brexit anxiety still seems to be bubbling away, although liquidity was also thin in the City so we shouldn’t get too worried/excited.

Here’s our latest on the Boeing shake-up:

On that note, goodnight, and see you tomorrow for the Christmas Eve session… GW

Updated at 5.37pm GMT

5.03pm GMT

Dennis Muilenburg’s position at Boeing was clearly at risk, once regulators refused to allow the 737 Max to resume flights early next year.

As Sky News puts it:

Last Tuesday, the US aircraft maker announced that it would temporarily halt production of the grounded 737 MAX aircraft in January.

The decision was widely seen as a humiliating admission that the fleet’s fate lies in the hands of regulators after its own timetable to return the planes to service dragged by months.

4.50pm GMT

Traders on the floor of the New York Stock Exchange (NYSE) today
Traders on the floor of the New York Stock Exchange (NYSE) today Photograph: Spencer Platt/Getty Images

Boeing’s stock is leading the Dow Jones risers in New York, up 2.5% right now.

That, and China’s plan to cut some tariffs, has lifted the Dow by 118 point or 0.4% to 28,572 — on track for a new record close.

4.43pm GMT

And here’s economics editor, Larry Elliott, on China’s decision to cut tariffs on hundreds of products — the day’s big news, apart from Boeing.

China is to cut tariffs on more than 850 goods from 1 January in order to boost growth in the world’s second biggest economy.

In a move designed to draw a contrast with Donald Trump’s protectionist approach to trade, Beijing said there would be a temporary cut in duties on products ranging from frozen pork to semiconductors.

An outbreak of swine flu prompted the reduction in tariffs on imported pork but China’s willingness to cut the cost of other goods coming into the country reflected concern at the slowest growth rate in 30 years.

4.41pm GMT

Here’s the Financial Times’s take:

The news came days after the largest US exporter sent shockwaves through its supply chain by announcing that it would halt production at its 12,000-strong Renton pant near Seattle. With regulators still reviewing Boeing’s fixes to the Max airlines have been pushing back their estimates for when they will be able to fly it again, with United saying it will not return to service until June.

Mr Muilenburg, who spent his entire career with Boeing, was widely criticised for a faltering response to the crashes which killed 346 people and the board indicated that it was aware of the need to improve communication, not least with the Federal Aviation Authority, its domestic regulator.

More here: Boeing CEO Muilenburg out after 737 failure

3.14pm GMT

Boeing’s new CEO, David Calhoun, says:

I strongly believe in the future of Boeing and the 737 MAX.

I am honored to lead this great company and the 150,000 dedicated employees who are working hard to create the future of aviation.”

3.12pm GMT

Muilenburg’s replacement, chairman David Calhoun, faces a massive task.

He need to win regulatory approval to get the 737 Max flying again, and persuade customers that the aircraft is genuinely safe to travel on.

Reuters says that Muilenburg’s days have been numbered for some times, but is Calhoun the right person to turn Boeing around?

Speculation that Muilenburg would be fired had been circulating in the industry for months, intensifying in October when the board stripped him of his chairman title.

A Boeing official said the board deliberated over the weekend and they made the decision to fire Muilenburg in a phone call on Sunday.

Aerospace analyst Richard Aboulafia said the appointment of Calhoun, who previously served as head of Blackstone Group’s private equity portfolio operation, will provide needed short-term stability, but not the long-term “emphasis on engineering” the company needs.

“Calhoun is respected in the industry,” Aboulafia said on Monday. “But long-term, does he bring the right tool kit? Private equity leans companies out. That’s not Boeing’s problem right now.”

2.56pm GMT

Here’s David Madden of CMC Markets:

Boeing confirmed that Dennis Muilenburg has resigned from the company amid the 737 Max crisis. David Calhoun has been named as CEO as well as president.

The industrial giant is trying to put the 737 Max catastrophes behind it, and the removal of Muilenburg is a part of that strategy, but the group will find it tough to shake off the reputation of the two disasters. The stock is higher on account of the news.

2.45pm GMT

Boeing’s shares have jumped by over 3% in early trading in New York, as traders welcome Muilenburg’s exit.

2.38pm GMT

Boeing CEO axed: instant reaction

Alistair Osborne of The Times argues that Boeing’s board should have acted months ago:

Aviation analyst Alex Macheras points to the growing backlast against Boeing, and its chief.

2.32pm GMT

Full story: Boeing ousts chief executive Dennis Muilenburg

Here’s our news story on the sudden departure of Boeing’s CEO:

Boeing on Monday fired its chief executive Dennis Muilenburg as the company battles to regain the trust of regulators, customers and the public after two fatal crashes of its best-selling plane, the 737 Max, that claimed 346 lives.

The Seattle-based company said its chairman David Calhoun will take over as CEO in January….

2.23pm GMT

Muilenburg’s departure comes a week after Boeing finally suspended production of the 737 Max, having failed to persuade regulators to allow the plane to resume flying.

2.20pm GMT

Wall Street has given its verdict — Boeing’s shares are up 2% in pre-market trading following news of Muilenburg’s resignation.

2.19pm GMT

Boeing CEO resigns over 737 Max

NEWSFLASH: Boeing’s chief executive has resigned.

Dennis Muilenburg is leaving the aircraft maker following heavy criticism of the 737 Max crisis, in which two fatal crashes killed hundreds of passengers.

In a statement, Boeing says its board decided a new CEO was needed, saying:

“The Board of Directors decided that a change in leadership was necessary to restore confidence in the Company moving forward as it works to repair relationships with regulators, customers, and all other stakeholder.

More to follow….

1.51pm GMT

Roubini: Trump will make China great again

US President Donald Trump and Chinese President Xi Jinping, who might actually sign their phase one trad deal eventually....
US President Donald Trump and Chinese President Xi Jinping, who might actually sign their phase one trad deal eventually…. Photograph: Jim Watson/AFP via Getty Images

Economics professor Nouriel Roubini reckons that Donald Trump’s trade war with China will rebound on the US.

He suspects that the US president’s habit of clashing with America’s allies will undermine efforts to rein in China’s expansionist instincts, and to reform Western capitalism.

He writes:

The west may not like China’s authoritarian state capitalism, but it must get its own house in order. Western countries need to enact economic reforms to reduce inequality and prevent damaging financial crises, as well as political reforms to contain the populist backlash against globalisation, while still upholding the rule of law.

Unfortunately, the current US administration lacks any such strategic vision. The protectionist, unilateralist, illiberal Trump apparently prefers to antagonise US friends and allies, leaving the west divided and ill-equipped to defend and reform the liberal world order that it created. The Chinese probably prefer that Trump be re-elected in 2020. He may be a nuisance in the short run, but, given enough time in office, he will destroy the strategic alliances that form the foundation of American soft and hard power. Like a real-life “Manchurian Candidate,” Trump will “make China great again.”

1.26pm GMT

China hints at interest rate cuts

China’s vice-premier Li Keqiang has hinted that Beijing could cut its benchmark interest rate.

That’s another sign that the administration wants to stimulate its economy, on top of today’s move to cut tariffs in January.

According to state television channel CCTV, Li said the government will consider more measures to lower financing costs for smaller companies.

That could include broad-based and “targeted” cuts in the reserve requirement ratio (RRR), relending and rediscounting.

Li was speaking during a visit to Sichuan province.

1.07pm GMT

Retail misery continues as shopper numbers fall

There’s little cheer in the UK’s retail sector today.

Shop visitor numbers were down 8% last Saturday, compared to a year ago, dashing hopes of a last rush to the tills. That’s a blow to the high street, and out of town malls, who have already suffered weak trading this year.

My colleague Sarah Butler explains:

Saturday was not so super for retailers last weekend, as numbers visiting high streets and shopping centres fell by nearly 8% on the previous year.

With some retailers accepting online orders as late as Christmas Eve, shoppers now have many more choices about the way they shop and have learned to hang on for last-minute bargains.

More than a third (36%) of Brits have left gift-buying until the last few days before Christmas, according to Argos. It said that 10% more men than women leave gift-buying until very late, with the most popular gift bought in its stores on Christmas Eve last year being an electric toothbrush.

Don’t spoil the surprise, Sarah! More here…..

12.59pm GMT

Here’s our news story on the Vimto profits warning:

12.49pm GMT

Hopes of a trade war breakthrough mean Wall Street should post its best year since 2013, with the S&P 500 index up around 28% this year.

Fears of a recession have eased, as Reuters explains:

U.S. stock index futures touched new record highs on Monday, as President Donald Trump said over the weekend that the United States and China would “very shortly” sign their so-called Phase One trade pact.

The Phase One deal, announced earlier this month, helped fuel a rally on Wall Street, with its three main indexes hitting record closing highs on Friday. Last week, the S&P 500 also registered its biggest weekly percentage gain since early September.

China said it will lower tariffs on products ranging from frozen pork and avocado to some types of semiconductors next year.

As the year draws to a close the benchmark index has risen 28.5% in 2019, putting it on track for its best annual performance since 2013.

On Friday, markets also cheered data which showed a rise in consumer spending, adding to a slew of encouraging data that has helped put a damper on recession fears, which plagued markets earlier this year.

12.16pm GMT

The US stock market could hit a record high of its own today.

The main indices are up 0.1% in the futures market, as traders take heart from China’s plan to cut tariffs.

12.05pm GMT

Switzerland’s stock index, the SMI, just hit a record high.

It’s up 34 points, or 0.3%, in a pre-Christmas rally.

11.44am GMT

FTSE 100 at highest level since July

Trade war optimism, and the weaker pound, has driven the FTSE 100 index to a five-month high.

The Footsie index just struck 7617 points for the first time sine July.

As this chart shows, the FTSE 100 is up 400 points, or over 5%, since the general election.

The FTSE 100 this year
The FTSE 100 this year Photograph: Refinitiv

Dean Turner, UK Economist at UBS Global Wealth Management, suspects the optimism will face in 2020.

It’s possible that there will be some bounce in activity given the clarity on Brexit, but any improvement in sentiment is likely to fade as the next Brexit deadline draws closer”.

UBS predicts the UK will only grow by 0.9% in 2020, a very weak performance, following 1.2% this year.

11.19am GMT

Spying on one senior executive is unfortunate. Two looks incredibly suspicious.

So there are red faces at Credit Suisse today, which has admitted that its HR boss was tracked by private detectives earlier this year.

My colleague Kayleena Makortoff explains:

The bank has confirmed that its former head of human resources Peter Goerke was followed for “several days” in February this year by private detectives hired on behalf of the bank. This follows the revelation that Iqbal Khan, the former head of the bank’s wealth management division, had been chased by investigators through the streets of Zurich in September.

Credit Suisse insisted at the time that the Khan incident was a one-off and that its chief executive, Tidjane Thiam, had no knowledge of it. However, on Monday it confirmed the second case involving Goerke and once again cleared Thiam of any responsibility.

It is understood that the surveillance of Goerke was conducted after he was told he was being bumped off the executive team and demoted to a senior adviser role, which he still holds.

Here’s the full story:

10.58am GMT

Stocks move higher as pound dips

Shares in London are turning higher, on the final full trading day before Christmas.

The FTSE 250 index of medium-sized firms, many focused on the UK, is up 1% today at 21,900. The blue-chip FTSE 100 is now up 33 points, or 0.45%.

China’s tariff-reduction plan is cheering investors (those who haven’t departed for festive fun).

But there’s another factor – the pound is now dipping, back below .30 (-0.25% today).

10.57am GMT

Bloomberg points out that medical products, orange juice and logs will also benefit from China’s lower tariffs:

10.08am GMT

There’s not much drama in the foreign exchange market.

Sterling inched up to .303, up 0.2%, having fallen steadily last week as Brexit fears reappeared.

Kit Juckes of Société Générale says traders are more interested in Christmas than currencies today:

We’ve made it past the shortest day, but markets are still struggling to wake up and the morning’s FX range could be covered by a handkerchief. Sterling’s bounced a bit, the won is weaker, the market’s got mince pies on the mind.

9.50am GMT

EIU: Trade conflict will persist in 2020

Here’s Agathe Demarais, Global Forecasting Director at The Economist Intelligence Unit, on China’s tariff cuts:

  • China’s decision to lower import tariffs on 850 goods from January 1st represents a positive sign of de-escalation amid global trade tensions. It also represents a positive signal ahead of the expected conclusion of a first-phase trade deal between the US and China.
  • By slashing tariffs, China seeks to boost slowing economic growth through a reduction in business and consumers costs. It also seeks to boost pork imports as African Swine Fever has decimated local production. Finally, China also re-affirms its free-trade stance, in sharp contrast with US protectionist rhetoric.
  • Despite this positive sign, we continue to expect that the US-China conflict will persist in 2020 as it spills over into other areas than trade, such as the financial and tech spheres.

9.41am GMT

Vimto-makers profits warning

Bottles of Vimto, produced by Nichols Plc., are seen on a supermarket shelf in London

A new sweeteners tax has dealt a bitter blow to Nichols, the maker of Vimto.

Nichols has issued a profits warning this morning, saying 2020 profits could be materially lower than hoped.

It blamed a new 50% tax on all sugary or artificially sweetened drinks, imposed in Saudi Arabia and the UAE at the start of December.

Vimto, the fruit and herb-flavoured drink, is a popular drink in the region during Radaman — when Nichols makes 80% of its sales.

Nichols says it will invest more in promoting Vimto, to combat the price hike.

It told shareholders:

The Saudi Arabian and UAE tax authorities have recently implemented an excise tax of 50%, to be levied on the retail price of non-carbonated sweetened drinks.

This tax will be applied to all non-carbonated drinks containing either natural or artificial sweeteners, including sales of Vimto products. Therefore, unlike the UK soft drinks levy, product reformulation is not an option.

Shares in Nichols are down 17% this morning.

9.16am GMT

Craig Erlam, senior market analyst at OANDA Europe, says investors are optimistic that the trade wars will cool down in 2020.

He writes:

It’s been a strong run up to Christmas for the stock markets and it seems traders are taking a little breather in this shortened trading week.

European stocks are trading slightly in negative territory at the start of the week, although there’s very little we can read into this, given the lower festive volumes and news flow. It’s been a good few week’s for investors, spurred primarily by the de-escalation in the trade war, with Trump only this weekend claiming it will be signed very shortly.

9.06am GMT

Trump: China trade deal will be signed ‘very shortly’

U.S. President Donald Trump at the Turning Point USA Student Action Summit at the Palm Beach County Convention Center in West Palm Beach, Florida on December 21, 2019.

Donald Trump continues to tantalise us with the prospect of a trade deal with China.

On Saturday, the US president claimed that he will sign off a preliminary deal very soon.

He told a Turning Point USA event in Florida that:

“We just achieved a breakthrough on the trade deal and we will be signing it very shortly.”

But what’s the hold up? Back in October, Trump announced that a Phase One deal was agreed. Over a week ago,US and China officials both announced that the details were pretty much finalised.

But still, no signing ceremony, and no firm details of the agreement. This is worst than waiting for Santa!

8.58am GMT

Shares in NMC Healthcare, the UAE’s largest healthcare provider, have surged nearly 25% after it responded to an attack from short-seller Muddy Waters.

NMC has launched an ‘independent review’ of its books, days after Muddy Waters claimed that its asset values, cash balance, reported profits and debt levels could be inaccurate.

That sent NMC’s share slumping last week, from £26 to £13 in a few days. They’re now back at £16.14 this morning, at the top of the FTSE 100.

8.40am GMT

With two days until Christmas, European stock markets are notably quiet.

Britain’s FTSE 100 is down 18 points, or 0.25%; technology, consumer non-cyclicals and industrials are the only sectors rising today.

The EU-wide Stoxx 600 is also a little weaker, down 0.1%. Many traders will have squared their books ahead of the festive break, banking profits (or swallowing losses) for the year.

8.26am GMT

An investor checks stock prices through his smartphone at a brokerage house in Beijing
An investor checks stock prices through his smartphone at a brokerage house in Beijing Photograph: Andy Wong/AP

Beijing’s tariff-reduction plan wasn’t enough to stop Chinese stocks falling today.

The CSI 300 index has shed 1.3%, its biggest fall in six weeks, led by a slump in tech shares.

That’s because a major state-controlled fund announced plans to cut its stakes in certain technology companies.

Updated at 8.47am GMT

8.13am GMT

Gary Ng, an economist at Natixis in Hong Kong, says Beijing is sending a message….and also trying to support its economy.

“The move in lowering import tariffs reflects that the government wants to reaffirm its stance to the world on freer trade amid the trade war.

Domestically, lowering import tariffs are helpful in reducing business and consumer costs.

8.12am GMT

Bloomberg has calculated that China imported 9bn of the products whose tariffs are being lowered.

That’s a significant amount – China imported around trillion of goods, according to customs data.

8.00am GMT

Analysts are welcoming China’s plan to cut tariffs.

It is “another positive step in the US-China trade story”, says David Madden of CMC Markets (who gets a bonus point for not signing off for Christmas yet).

7.31am GMT

Introduction: China cuts tariffs on hundreds of goods

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Christmas has come early, for those looking for a reduction in the trade tensions that have hurt the world economy this year.

Overnight, Beijing has announced it is lowering the tariffs on more than 850 imports, making it cheaper for Chinese firms to buy products from abroad.

Items on the list range from frozen pork (where domestic supplies have suffered from African swine fever) to high-tech parts and industrial products. The move kicks in on 1 January.

The goal is to lower trade barriers to support China’s economy, where growth has recently slowed to a 20-year low.

China’s finance ministry says lower tariffs should “increase imports of products facing a relative domestic shortage, or foreign speciality goods for everyday consumption.”

These new temporary import tariffs are significantly lower than China’s “most-favoured-nation duty” tariffs – the lowest permanent levy.

For example, the tariffs on frozen pork will be cut to 8% from 12%, frozen avocado will drop from 30 % to 7%, and semiconductors will not incur any tariff at all, Reuters reports.

After more 18 months of watching tariffs going up, as the US and China traded blows, it’s encouraging to see them being lowered.

It may bolster hopes that presidents Donald Trump and Xi Jinping will finally sign their Phase One trade deal soon (perhaps at Davos next month?!).

But…. it could also indicate that China’s economy is continuing to slow, needing a boost.

The move comes as the financial markets wind down for Christmas. Stocks have dipped in Asia overnight, and we’re expecting a subdued day in Europe too.

Updated at 7.49am GMT

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