GERMANY
GDP contracted 0.2% in Q4
Germany’s economy contracted by 0.2 percent in the fourth quarter on sagging exports and private consumption, data showed yesterday, but analysts said they expected Europe’s growth engine to pick up steam again this year. Investments, particularly in construction, were a bright spot. The seasonally adjusted data from the Statistics Office confirmed an earlier flash estimate and showed trade and private consumption subtracting 0.3 and 0.1 percentage points respectively from GDP. Exports in particular dropped 0.8 percent in the fourth quarter after growing 2.6 percent in the previous quarter. Economists put this down to weaker demand from the eurozone, which is mired in a sovereign debt crisis. “The economy was driven into the red by the decline in exports, but this was weaker than expected,” Berenberg Bank’s Christian Schulz said.
INSURANCE
AIG has record Q4 earnings
American International Group Inc (AIG), the bailed-out insurer, cited a return to “sustainable operating profit” as it booked a tax benefit that fueled record fourth-quarter earnings. AIG’s biggest unit, property-casualty insurer Chartis, and its plane-leasing business swung to operating profits in the period, the New York-based company said in a statement yesterday as it posted a net income of US$19.8 billion. The insurer is projecting that it will generate enough profit to use tax assets, tied to prior losses, that can limit future payments to the government. Shares rose above US$30 in extended trading yesterday, surpassing the average price at which the government would need to sell a majority stake to recoup its investment. The stock has closed below the break-even price on the New York Stock Exchange every day since late July. AIG’s after-tax operating income was US$1.56 billion in the fourth quarter, compared with a loss of US$2.21 billion a year earlier, according to the statement.
COMMODITIES
Oil rises on economy, Iran
Oil prices were higher in Asian trade yesterday, supported by buoyant economic data from the US and Germany, as well as concerns over Iran’s nuclear program, analysts said. New York’s main contract, West Texas Intermediate light sweet crude for April delivery, rose US$0.72 to US$108.55, while Brent North Sea crude for April gained US$0.37 to US$123.99 in the afternoon. “The level oil prices have risen to this week is quite unexpected,” said Ken Hasegawa, energy desk manager at Newedge brokerage in Japan. Positive economic news from the US and Germany, as well as “the continuing tension in Iran, are factors supporting oil prices,” he said.
EMPLOYMENT
US unemployment steady
New US claims for unemployment benefits were unchanged last week, holding at the lowest level since the early days of the 2007-2009 recession and giving a fresh sign the battered labor market was healing. Workers filed 351,000 initial claims for state unemployment benefits, the US Department of Labor said on Thursday. “It’s broadly in line with recent US data showing a gradually improving economic backdrop,” said Omer Esiner, a market analyst at Commonwealth Foreign Exchange in Washington. The last two weekly readings have been the lowest since March 2008. With weekly claims nearing levels last seen before the recession that began in December 2007, economists said employers might be close to ending a long cycle of heavy layoffs, laying the ground for more hiring.
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LIMITED MEASURES: The proposed restrictions on Chinese chip exports are weaker than previously considered, following lobbying by major US firms, sources said US President Joe Biden’s administration is weighing additional curbs on sales of semiconductor equipment and artificial intelligence (AI) memory chips to China that would escalate the US crackdown on Beijing’s tech ambitions, but stop short of some stricter measures previously considered, said sources familiar with the matter. The restrictions could be unveiled as soon as next week, said the sources, who emphasized that the timing and contours of the rules have changed several times, and that nothing is final until they are published. The measures follow months of deliberations by US officials, negotiations with allies in Japan and the Netherlands, and
Foxconn Technology Group (富士康科技集團) yesterday said it expects any impact of new tariffs from US president-elect Donald Trump to hit the company less than its rivals, citing its global manufacturing footprint. Young Liu (劉揚偉), chairman of the contract manufacturer and key Apple Inc supplier, told reporters after a forum in Taipei that it saw the primary impact of any fresh tariffs falling on its clients because its business model is based on contract manufacturing. “Clients may decide to shift production locations, but looking at Foxconn’s global footprint, we are ahead. As a result, the impact on us is likely smaller compared to
TECH COMPETITION: The US restricted sales of two dozen types of manufacturing equipment and three software tools, and blacklisted 140 more Chinese entities US President Joe Biden’s administration unveiled new restrictions on China’s access to vital components for chips and artificial intelligence (AI), escalating a campaign to contain Beijing’s technological ambitions. The US Department of Commerce slapped additional curbs on the sale of high-bandwidth memory (HBM) and chipmaking gear, including that produced by US firms at foreign facilities. It also blacklisted 140 more Chinese entities that it accused of acting on Beijing’s behalf, although it did not name them in an initial statement. Full details on the new sanctions and Entity List additions were to be published later yesterday, a US official said. The US “will
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