Thursday <strong>17</strong> <strong>Aug</strong>ust 20<strong>17</strong> C002D5556 BUSINESS DAY 29
Thursday <strong>17</strong> <strong>Aug</strong>ust 20<strong>17</strong> 30 BUSINESS DAY C002D5556 Read Ambitiously Eurozone growth spreads, helped by Dutch, Italian economies PAUL HANNON The eurozone’s recovery was more rapid than first estimated in the three months to June as a pickup that started in Germany and Spain has spread to other parts of the currency area, aiding a comeback that is proving vital to the world economy. The European Union’s statistics agency Wednesday raised its measure of eurozone economic growth during the second quarter to 2.5% annualized from its first estimate of 2.3%, bringing it closer to the 2.6% recorded by the U.S., which it outpaced in the first quarter. That upgrade comes at an opportune moment, since the U.S. is growing more weakly than expected and there are signs China may be set for a slowdown. Separate figures showed the Dutch economy surged during the period as exports jumped, while Italy recorded its strongest six months since the second half of 2010. “The eurozone recovery continues, and seems to be broadening out,” said Fabio Balboni, an economist at HSBC . The bloc’s strength during the first half of 20<strong>17</strong> has come as a surprise to most economists, who had expected growth to slow in response to rising energy prices and heightened political uncertainty as voters in the Netherlands, France and Germany chose new governments. However, the rise in energy prices didn’t last long and elections in the Netherlands and France—in March and May respectively—produced wins for pro-euro centrists and reduced the threat of a breakup of the currency area. German Chancellor Angela Merkel has a large lead in opinion polls ahead of September’s elections. As Dutch Prime Minister Mark Rutte worked to form a new government, the country’s economy surged in the second quarter, recording its fastest expansion since the final three months of 2007. According to the Dutch statistics agency, gross domestic product—the broadest measure of the goods and services produced by an economy—was 1.5% higher than in the three months through March and 3.8% up on the comparable period a year earlier. That was largely the result of a jump in exports, with overseas sales 11% higher in June than a year earlier. Stocks advance ahead of Fed minutes JUSTIN YANG & KENAN MACHADO Global equities continued to rebound Wednesday after last week’s declines. The Stoxx Europe 600 rose 0.8% Wednesday, while futures pointed toward the S&P 500 opening 0.2% higher. Investors were on watch for the release later Wednesday of the Federal Reserve’s minutes from its last meeting for indications on where interest rates are headed. Federal Reserve Bank of New York President William Dudley said another rate rise is still likely in 20<strong>17</strong>. “I’m interested to see what the Fed has to say about the inflation landscape,” said David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates Inc. Weak inflation in the U.S. had Fed officials debating whether it was a temporary phenomenon or a sign of an underlying economic weakness in the last round of meeting minutes. Shares of Fiat Chrysler Automobiles NV were up 2.5% after the company announced Wednesday it was joining a BMW-led selfdriving car technology alliance. Apple readies $1 billion war chest for Hollywood programming TRIPP MICKLE Apple Inc. has set a budget of roughly $1 billion to procure and produce original content over the next year, according to people familiar with the matter a sign of how serious the iPhone maker is about making a splash in Hollywood. Combined with the company’s marketing clout and global reach, that immediately makes Apple a considerable competitor in a crowded market where new media players and traditional media companies are vying to acquire original shows. The figure is about half what Time Warner Inc.’s HBO spent on content last year and on par with estimates of what Amazon.com Inc. spent in 2013, the year after it announced its move into original programming. Apple could acquire and produce as many as 10 television shows, according to the people familiar with Chemical company Akzo Nobel NV climbed 1% after it reached a truce with activist investor firm Elliot Management. In the U.S., retail giant Target Corp. rose 5.3% in premarket trade after its second-quarter earnings report beat analyst expectations. Equities were broadly higher in Asia, as short positions over tensions in the Korean Peninsula unwound. However, caution remains ahead of joint U.S.-South Korean military exercises next week, analysts say. Stock benchmarks in China, Australia, South Korea and Hong Kong were up so far this week, as investors found value the plan, helping fulfill Apple Senior Vice President Eddy Cue’s vision of offering high-quality videosimilar to shows such as HBO’s “Game of Thrones”—on the company’s streaming-music service or a new, video-focused service. Apple’s co-heads of video programming, Zack Van Amburg and Jamie Erlicht, then with Sony, flanking their new hire Matt Cherniss, then with WGN America, and singer John Legend in March of 2016 in Los Angeles. The budget will be in the hands of Hollywood veterans Jamie Erlicht and Zack Van Amburg, poached in June from Sony Corp. to oversee content acquisition and video strategy. They exited their Sony contracts a month early and started working this month from Apple’s Los Angeles offices, where they are taking over programming responsibilities from the Apple Music team, according to the people familiar with the matter. in high-growth stocks following last week’s pullback, which many analysts believed was overdue. The Shanghai Composite Index pared early losses to trade 0.2% lower, with large caps succumbing to selling pressure after recent gains. Stocks were higher in Hong Kong, with the Hang Seng Index up 0.9%. “We have had an uncharacteristic bull market in the past few months,” said Michael Parker, Asia-Pacific equity strategist at Bernstein. “During a bull market, the sharper the one-day selloff, the better the buying opportunity.” Gold continued to come under pressure as the geopolitical environment relaxed, falling 0.3%. A bull statue outside the Frankfurt Stock Exchange in Germany. Global equities continued to rebound after last week’s declines. A bull statue outside the Frankfurt Stock Exchange in Germany. Global equities continued to rebound after last week’s declines. Photo: Krisztian Bocsi/Bloomberg News On Tuesday, South Korea’s president called for renewed talks with the North, saying the U.S. would need Seoul’s consent for any military action on the Korean Peninsula, which helped to ease tensions. The South Korean Kospi outperformed as traders returned from a public holiday to catch up with the region’s earlier gains. The benchmark index was up 0.6% after opening about 1% higher. In Hong Kong, improved risktaking appetite prompted strong buying among Chinese banking and casino gambling stocks. In Japan, the Nikkei Stock Average edged down 0.1%, even as the U.S. dollar was up 0.1% against the yen. The WSJ Dollar Index, which measures the greenback against a basket of currencies, edged up 0.1%. Broad gains in the dollar came after data from the U.S. Commerce Department showed retail sales rising 0.6% from a month earlier, the biggest jump since December, with much of that coming from internet sales. Frankfurters aren’t rolling out the welcome mat for Brexit bankers WILLIAM WILKES & PATRICIA KOWSMANN A bigger tax base, greater clout and a boost for the local economy: The city that hosts the European Central Bank has several reasons to welcome London bankers looking for a new post-Brexit home. Residents, however, aren’t happy. Many longtime Frankfurt locals see a potential wave of deep-pocketed bankers driving up housing costs and even driving them out of a city that is already struggling to meet its housing needs. The U.K.’s 2016 decision to leave the European Union sparked a race among the bloc’s capitals to lure banks and its employees who want to keep the ability to sell their services across the EU if Britain leaves the single market. Frankfurt’s charm offensive on the banks is working, and several have said they would shift operations to the city. But as Germany’s financial hub steps up its campaign to attract bankers from London, residents—already faced with rising property prices and many construction projects around the city—are starting to say “nein.” “The city shouldn’t be spending my taxes to get bankers from London,” said Almuth Mayer, a nurse who lives in central Frankfurt and has joined one of several protest groups that have sprung up demanding city officials act to curb spiraling housing costs. Demonstrations are being planned outside luxury housing blocks to coincide with the national election campaign in September in which Angela Merkel’s Christian Democratic Union seeks reelection. Ms. Mayer said her landlord, property company Rohleder and Paz GbR, has refused to fix leaks and holes in the roof to encourage middle-class tenants to leave and make way for bankers. She also has criticized Frankfurt’s mayor, Peter Feldmann, for personally going to London to woo banks. “It’s close to criminal,” Ms. Mayer said. A spokesman for the mayor declined to comment. Edwin Rohleder, partner at Rohleder and Paz GbR declined to comment on the dispute with the company’s tenants. Development of middle-class housing is rising in Frankfurt, but the pace isn’t fast enough to meet booming demand.