With Israeli airstrikes marking the fifth day of escalating conflict between Israel and Hamas on Wednesday, experts are warning of rising oil prices and inflationary pressure as a potential consequence of the ongoing hostilities.
But he said the IMF was “monitoring the situation closely” and noted the rise in oil prices when the conflict first began.
“We’ve seen that in previous crises and previous conflicts. And of course, this reflects the potential risk that there could be disruption either in production or transport of oil in the region,” he said.
Meanwhile, World Bank President Ajay Banga said Tuesday that the Israel-Hamas conflict is an unnecessary global economic shock that will make it harder for central banks to achieve soft landings —a slowdown that avoids a recession —in many economies if it spreads.
“It’s a humanitarian tragedy and it’s an economic shock we don’t need,” Banga told Reuters on the sidelines of the World Bank International Monetary Fund annual meetings in Morocco.
Central banks were “beginning to feel a little more confident that there was an opportunity for a soft landing, and this kind of just makes it harder,” Banga said.
Rory Johnston, the founder of online oil research firm Commodity Context, noted the impact of the conflict on oil prices was immediate.
“This (conflict) is bullish for oil prices,” he told Global News Wednesday. “The immediate short-term reaction, as we saw, was about a $3 or $4 increase in the price of global crude oil coming out of the weekend.”
Israel-Hamas conflict: Joly confirms 2 Canadian deaths, 1 ‘presumed’
Though the area doesn’t produce much oil, the worry was that the violence could spill into the politics around the crude market and hurt the flow of petroleum.
After initial shocks due to the conflict, however, oil prices have pulled back in recent days, helping to take some heat off inflation and support Wall Street.
A barrel of U.S. crude oil dropped two per cent to US$84.27. Brent crude, the international standard, fell 1.4 per cent to US$86.42 per barrel in early afternoon trading Wednesday.
Prices settled slightly lower on Tuesday after Saudi Arabia said it was working with regional and international partners to prevent an escalation, and reaffirmed its efforts to stabilize oil markets.
Where oil prices could go from here
Johnston said that while the short-term, knee-jerk reaction of the markets to the crisis was to be expected, the medium-term trends depend on how some of the other players in this conflict react.
In particular, he said observers should look at to what degree Iran, which he said has recently ramped up its oil exports, gets involved in the conflict.
“One of the major trends that we’ve observed so far this year has been a dramatic increase, about 500,000 to 700,000 barrels a day, in Iranian production and export of crude oil. And this is notable because there has not been an official change in the stance of Washington sanctions against Iran,” he said.
If Iran plays a larger role in the ongoing conflict, Johnston said that Tehran stands the risk of the United States tightening sanctions, which could affect global oil supply.
Israel-Gaza conflict: Canadian evacuation flights arriving in Tel Aviv by end of week: Joly
If the Israeli bombardment of Gaza continues at the same pace, Johnston said Saudi Arabia could see itself as part of a coalition of Arab states that exerts some kind of pressure on Israel to end its assault on Gaza.
“The more the politics deteriorate there, the harder it’s going to be for Saudi Arabia to kind of continue supporting this deal,” he said.
Experts have also warned that the uncertainty around oil prices could lead to inflationary pressures and rising food prices, which have already been under stress due to the war in Ukraine and Russia’s withdrawal from the Black Sea grain agreement.
“Last year, those pre-existing inflationary concerns and supply chain bottlenecks were supercharged by Russia’s invasion of Ukraine and subsequent energy shock and food shock. I think that this feeds into that exact same concern,” Johnston said.
“We are already in a challenging political moment, both in terms of growth and inflationary pressures, and now the geopolitical crises continue to spiral.”
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
