Every week we round up all the biggest business stories. This week; the changing online news landscape, Russia’s trouble spills into Europe, shifts in the shale gas industry, eurozone growth, China cuts its interest rate again, inflation in Canada is low and the UK’s growth will fail to meet expectations.
Verizon and Facebook
Tech giant verizon will pay an estimated $4 billion for AOL. The once cutting edge internet service also owns the Huffington Post, Techcrunch and other major online media outlets. Facebook meanwhile has introduced a new feature which publishes news articles directly onto its site. Verizon’s acquisition and Facebook’s innovation indicate that online news media is a constantly evolving industry.
Carlsberg in Russia
Russia’s economic trouble and the decline in value of the ruble are beginning to affect Europe. Danish brewer Carlsberg has noted a 30% decline in sales from Eastern Europe. The beer maker is planning long term, however, and will weather the storm, remain in Russia and eastern Europe, and wait for economic and political normalisation.
The shale-oil industry, hit hard by the collapse of oil prices, has seen its first major move in months. Noble Energy doled out 3.9 billion to acquire Rosetta Resources. Expect more consolidation and shake ups as the industry fights against the tumultuous business climate.
China drops interest rate
China’s central bank dropped its interest rate for the third time in 6 months. Although only a drop of a quarter of a percent, the move signals that China may be steadying itself for choppy waters ahead. Fixed-asset investment rose by just 12% in the first quarter of this year – the slowest pace this millennium.
The eurozone continues to grind out growth of 0.4% – the highest rate in almost 2 years. Germany suffered a slowdown but France and Italy both exceeded expectations while Spain enjoyed the most growth (0.9%) it has experienced in almost a decade. Quantitative easing by the ECB has devalued the euro but also encouraged investment. Will cheap money, low interest and a weak euro persist if the recovery continues?
Lower growth in the UK
The Bank of England dropped its growth prediction from 2.9% to 2.5% . inflation in the UK will continue to hover around 0% and, unless growth far exceeds expectations, rates will remain low well into 2016. High interest rates increase the exchange rate of a currency so don’t expect the pound to rally any time soon.
Low inflation in Canada
Inflation in Canada is at its lowest point since 2013. Prices rose just 0.8% between March 2014 and 2015. Much of the low inflation rate can be attributed to the price of oil. Without the decline in oil prices inflation would likely be closer to the 2.2% mark. Low oil prices will save Canadians an average of $600 a year but the faltering loonie means that imports (including groceries) will be a bit more expensive. All told, the low price of oil and higher price of imports will even out to about a 0% increase in average household expenditure.
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