Weak oil hits Exxon Mobil, Chevron; Emergency measures fail to halt China stock slide; Volkswagen beats Toyota in top automaker race

1 Weak oil hits Exxon Mobil and Chevron (BBC) Plunging crude oil prices weighed on quarterly earnings at the world’s biggest oil company. Exxon Mobil reported it earned $4.2bn in the second quarter, which marked a drop of more than 50% from last year. Since last year, Brent crude oil prices have fallen more than 40%.

“Our quarterly results reflect the disparate impacts of the current commodity price environment, but also demonstrate the strength of our sound operations, superior project execution capabilities, as well as continued discipline in capital and expense management,” said Rex Tillerson, Exxon Mobil’s chairman and CEO.

The massive drop in crude oil prices also weighed on results at oil producer, Chevron. Second quarter profit fell 90% from last year, to $571m. “Second quarter financial results were weak, reflecting a crude price decline of nearly 50% from a year ago,” Chevron chief executive officer, John Watson, said.

Oil giant Royal Dutch Shell announced this week it has shed 6,500 jobs as part of cost-cutting plans as it seeks to counter falling oil prices.


2 Emergency measures fail to halt China stock slide (Katie Allen in The Guardian) On the Chinese stock market, on one side there are the individual investors, who are in the midst of what may be the greatest wave of panic-driven selling we’ve witnessed since Black Tuesday, when billions of dollars were lost in a single day of trading on the New York stock exchange. On the other side: the Chinese government. Worryingly, there’s some evidence that the rest of us are stuck in the middle.

The average Chinese investor had been all too eager to participate in the speculative frenzy that sent the Shanghai Composite Index from only 2,000 points in July 2014 to a peak of 5,200 a little more than a month ago. Nearly 6% of new investors’ households weren’t literate by any measure, according to one survey.

As happens with all bubbles – something happened to make someone pause and say “Wait a second, this is absurd” and start to sell, the fallout was equally violent: a decline of 8%, of 14%; a string of losses that so far has caused some $4tn in market value to simply evaporate in less than a month.

Now that an estimated 90 million Chinese citizens probably are sitting on outsize portfolio losses, the selloff presents a direct challenge to the leadership of China, President Xi Jinping and his colleagues. Unsurprisingly, they have combatted the selloff ferociously. Short selling? Limited, as the state press hints that it’s unpatriotic. The government has launched a $120bn market stabilization fund, suspended IPOs, and has banned insiders like CEOs and board members from selling stock in their companies for at least the next six months.

There are many ways in which what’s happening in China today could affect our financial futures for years to come, given the importance of the country in the global economy. Consider, for a moment, that events in China have already sent investors fleeing to bonds as a safe haven once more. Then there is the commodities market, where China has long reigned supreme. It is already weighing on the economic outlook for resource-rich nations like Australia.


3 Volkswagen beats Toyota in top automaker race (Johannesburg Times) Toyota has fallen behind Volkswagen in the race for the world’s biggest automaker title, as the German giant outsold its Japanese rival in the first half of the year. Toyota said it sold 5.02 million vehicles worldwide between January and June, falling below earlier figures from Volkswagen of 5.04 million units shifted in the same period.

US-based General Motors was sitting in third spot with 4.86 million in sales. Camry and Prius maker Toyota broke GM’s decades-long reign as the world’s top automaker in 2008 but lost the crown three years later as Japan’s 2011 earthquake-tsunami disaster hammered production and disrupted the supply chains of the country’s automakers.

In 2012, Toyota again overtook its Detroit rival, which sells the Chevrolet and luxury Cadillac brands, to grab the top spot globally. But the Japanese automaker is expecting sales this year to slip to 10.15 million from a record 10.23 million vehicles in 2014, owing to a shaky outlook for Japan and as it beefs up its focus on quality after a string of safety scandals.

Volkswagen is now in pole position as the German automaker rides momentum in emerging economies that will likely see it take the top spot in annual global auto sales for the first time in 2015. Toyota, among other major automakers, has also been struggling to recover a reputation for safety after the recall of millions of cars around the world for various problems.



About joesnewspicks

This blog captures interesting news items from around the world for those strained by information overload and yet need to stay updated on global events of significance. The news items displayed are not in order of merit. (The blog takes a weekly off — normally on Sundays — and does not appear when I am on vacation or busy.) I am a journalist for nearly three decades.
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