Weekly Market Update - 9 September 2024

China’s Headwinds

China has been relying on its manufacturing might and export engines to offset the drag from a slumping property market and keep its growth target in sight. But growing headwinds on both fronts suggest the government will need to step up support if it’s to hit that goal of 5% expansion. Factory activity contracted for a fourth straight month in August, with sub indexes showing deepening deflationary pressures. Meantime, latest sales figures showed that the residential property slump deepened as expectations of a further drop in new-home prices hampered efforts to cushion the downturn. The property funk is weighing on China’s $17 trillion economy and recent government efforts have yet to turn things around.

Source: Bloomberg

Planes Grounded

Cathay Pacific shareholders will be bracing for fallout after the airline said it’s being forced to cancel some flights because of a “precautionary” inspection of its entire Airbus A350 fleet, following the discovery of some engine issues on the long-haul plane. The Hong Kong-based airline, among the biggest operators of the European planemaker’s marquee jet, said it identified an engine component failure on an A350 aircraft that was forced to return from its flight to Zurich on Monday. A subsequent check of the fleet uncovered “a number of the same engine components that need to be replaced,” Cathay said in a statement.

Source: Bloomberg

Steel Block

US President Joe Biden is preparing to block Nippon Steel’s $14.1 billion takeover of United States Steel, according to people familiar with the matter. The proposed deal has been subject to a review by the Committee on Foreign Investment in the United States, and Biden plans to kill it as soon as the CFIUS decision lands on his desk, the people said. A decision could be made as soon as this week, they added. Blocking the sale would cloud the outlook for US Steel, whose shares plunged 17% in New York.

Source: Bloomberg