The world this week Business

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The Federal Reserve decided to keep its benchmark interest rate unchanged at a range of 5.25% to 5.5%. This decision was made due to concerns over the sell-off in the bond market, oil prices, and the tight labor market. However, the central bank left the possibility of a rate hike open at its next meeting in December.

In October, all of America’s stock markets experienced declines for the third consecutive month, which marks the longest losing streak since the start of the COVID-19 pandemic in 2020. The S&P 500 decreased by 2.2%, the NASDAQ composite by 2.8%, and the Dow Jones industrial average by 1.4%. These declines are attributed to investors adapting to a world of higher interest rates, which reduce the present value of future earnings.

The Bank of Japan relaxed its policy of capping long-term interest rates for the second time in three months. It will now allow the yield on ten-year Japanese government bonds to rise above 1% but treats this level as a reference rather than a strict ceiling. The decision was influenced by the sharp rise in American Treasury yields. The Bank of Japan remains the only central bank in the world with a negative policy interest rate of -0.1%.

The euro area’s GDP grew by only 0.1% in the third quarter compared to the previous year. In the previous three months, it shrank by 0.1%, primarily due to reduced household spending and subdued global demand for Germany’s industrial goods. On a positive note, annual inflation in the euro area decreased to 2.9% in October from 4.3% in September.

China’s manufacturing industry contracted again in October, with the official purchasing-managers’ index showing that manufacturing has shrunk in six of the past seven months.

The United Auto Workers union ended its six-week strike after reaching pay deals with Ford, General Motors, and Stellantis (the parent company of Fiat-Chrysler). All three Detroit carmakers agreed to increase workers’ pay by 25% over a four-year contract.

GM’s self-driving car business, Cruise, decided to halt all its robotaxi operations after California suspended the service in the state due to safety concerns. Cruise operates in other markets, including Dallas, Houston, Miami, and Phoenix.

Panasonic reduced the profit outlook for its electric-car battery business, citing a slowdown in demand for some Tesla models. Tesla’s share price has also fallen recently, causing concerns among investors about its future car sales.

There are reports that WeWork, the office-sharing company, is preparing to file for bankruptcy protection. The company is burdened with debt and is now valued at just tens of millions of dollars, a significant decrease from its valuation of $47 billion in January 2019.

Big oil companies, such as BP, Chevron, ExxonMobil, and Shell, reported higher quarterly earnings. These earnings were primarily driven by rising oil prices from July to September.

Orsted, the world’s largest developer of offshore wind power, announced its withdrawal from two projects off the coast of New Jersey due to adverse impacts related to supply chains and increased interest rates. The company is writing down $4 billion in impairments. The offshore wind industry has faced various challenges, with General Electric expecting its wind division to incur losses of $2 billion over two years.

Britain hosted the first global artificial intelligence summit at Bletchley Park, the base for Alan Turing’s codebreakers during World War II. The conference aimed to establish international rules for the safe and responsible development of AI and was attended by notable figures such as Kamala Harris, Wu Zhaohui, and Elon Musk.

X, formerly known as Twitter, is now valued at $19 billion according to internal memos. Elon Musk acquired the company for $44 billion last year but has faced challenges in transforming it into an “everything app.”

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