Business this week

It was a dramatic week for global stockmarkets, as fears deepened about whether the Chinese economy was heading for a “hard landing”. Many share indices swung wildly. The main Shanghai index plunged by more than 8% in a single day, its biggest loss since early 2007, wiping out the gains it had made since the start of the year. The S&P 500, FTSE 100 and other markets in Europe and Asia were also rattled, with some recording their steepest falls since the financial crisis in 2008. By mid-week the markets had rebounded, chalking up huge gains in some places, but trading remained tense.

It’s make-or-break time

One source of worry for investors was data showing that Chinese manufacturing in August had shrunk the most for more than six years. The latest assessment of the smartphone market from IDC, a research firm, predicted that shipments in China will increase by just 1.2% this year, down from 19.7% in 2014. Concern about the world’s second-biggest economy weighed on the share prices of many technology companies, but Apple clawed back some of the market value it had lost after Tim Cook, its boss, gave assurances (in an e-mail to a TV show) that its business in China is robust. Alibaba’s stock slid below the $68 it was priced at when it floated on the New York stockmarket last September.
In an attempt to stop the market rout the People’s Bank of China reduced interest rates and rolled out other measures to boost liquidity. This week’s turmoil reduced the chances that the Federal Reserve will raise rates in September. William Dudley, a member of the Fed’s rate-setting committee, admitted that the conditions for tightening monetary policy in September were “less compelling” than a month ago, though he also warned that it was “important not to overreact to short-term market developments”.
Investor anxiety spread to other emerging markets. The Russian rouble fell sharply again, to below 70 to the dollar. The Russian government was said to have ordered state-owned and private companies to convert some of their dollar revenues to roubles in order to avoid an even steeper sell-off in the currency.
The rouble’s slide has been caused in part by cheaper oil prices amid a worldwide glut of the black stuff. Brent crude was hurtling down at one point this week to $42 a barrel, a price last seen during the financial crisis. Other commodity prices followed suit; copper and aluminium also dropped to six-year lows.
Meanwhile, BHP Billiton’s annual net profit (for the year ending June 30th) slumped to a 12-year low of $1.9 billion. But the Anglo-Australian mining giant stuck with its positive assessment of the Chinese market; its chief financial officer described recent events as being part of a “transition” to a Chinese economy that is “more balanced between consumption and investment”. BHP’s share price surged after it presented its earnings.

At long last

After months of often acrimonious negotiations, Ukraine agreed to a restructuring deal with its creditors. The deal includes a 20% write-down on the principal of roughly $18 billion-worth of international bonds. The agreement also pushes repayment dates back by four years. The IMF, which is providing financial support to the war-torn country, is likely to back the deal.
The volume of world trade contracted in the first half of the year at the fastest pace since 2009, according to the Dutch government’s independent World Trade Monitor, continuing the reversal of a trend where for decades the growth in global trade outstripped that of the world economy.
With lower oil prices prompting a round of consolidation in oilfield services, Schlumberger became the latest company in the industry to launch a bid for a smaller rival, offering $14.8 billion for Cameron, which specialises in preventing blowouts on rigs.
Paddy Power, which is based in Dublin, and Betfair, a rival listed in London, agreed to merge in an $8 billion deal that places a wager on worldwide growth in online gambling, despite regulatory obstacles in America and elsewhere. Placing online bets is illegal in America, for example.

The return of animal spirits

The demand for British “boutique” gin is soaring, leading to a tripling of applications for distillery licences over the past year, according to UHY Hacker Young, an accountancy firm. Many of the new distilleries cater to London’s hipster neighbourhoods and have revived gin production around the city’s East End. They might even follow the example of Scotch whisky when it comes to exports, the report reckons, adding an international twist to the latest gin craze.