Sweden’s Riksbank launched a 100 basis point hike to interest rates on Tuesday as it looks to rein in inflation.
Mikael Sjoberg/Bloomberg via Getty Images
Sweden’s Riksbank on Tuesday launched a 100 basis point hike to interest rates, taking its main policy rate to 1.75%, as it warned that “inflation is too high.”
In a statement, the central bank said soaring inflation was “undermining households’ purchasing power and making it more difficult for both companies and households to plan their finances.”
The sharp hike comes as the U.S. Federal Reserve begins its two-day monetary policy meeting, with markets broadly expecting a 75 basis point increase as policymakers strive to get soaring prices under control.
The Riksbank said monetary policy will need to be tightened further to bring inflation back to its 2% target, and forecast further rises to interest rates over the next six months.
“The development of inflation going forward is still difficult to assess and the Riksbank will adapt monetary policy as necessary to ensure that inflation is brought back to the target,” it said.
Although global factors such as residual imbalances after the Covid-19 pandemic and soaring energy prices due to Russia’s war in Ukraine have driven prices skyward, the Riksbank executive board said strong economic activity in Sweden has also contributed.
Swedish consumer price inflation rose to 9% annually in August, its highest level since 1991 and exceeding the Riksbank’s previous forecast in June.
“Rising prices and higher interest costs are being felt by households and companies, and many households will have significantly higher living costs,” the Riksbank said.
“However, it would be even more painful for households and the Swedish economy in general if inflation remained at the current high levels.”
The comments echoed the recent line taken by Fed Chairman Jerome Powell, who said the U.S. economy will need to face “some pain” in order to prevent inflation inflicting greater long-term damage.
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Porsche shares rise in landmark Frankfurt debut
Porsche shares rose in their stock market debut Thursday, in one of the biggest public offerings in Europe ever.
Shares of the iconic sports car brand initially traded at 84 euros ($81) on Thursday morning after they had been priced at the top end of their range late Wednesday, at 82.50 euros. It values the company at roughly 75 billion euros.
By 9:30 a.m. London time Thursday shares had steadied at 84.50 euros. Parent company Volkswagen is offering 911 million shares, a reference to Porsche’s famous 911 model.
“Today is a great day for Porsche and a great day for Volkswagen,” Arno Antlitz, Volkswagen’s chief financial officer told CNBC’s “Squawk Box Europe” Thursday.
The organization knew the IPO would be successful, according to Antlitz, citing “strong financials” and “a very convincing strategy for the future.”
“We were convinced despite the challenging environment this IPO would prove successful, and we were right,” he told CNBC’s Annette Weisbach.
Before trading started reactions were positive, with cornerstone investors having already claimed around 40% of the shares on offer, according to Reuters. Until now the sole owner of Porsche AG, Volkswagen is reducing its stake in the sports car firm, with a 12.5% slice being listed.
Listing shares should give Porsche a financial boost of 19.5 billion euros, giving the company more financial flexibility in terms of electric vehicles, according to Volkswagen.
The landmark listing comes at a time of market choppiness as the auto industry continues to feel the effects of the war in Ukraine, and valuations of other luxury carmakers including Aston Martin, Ferrari, BMW and Mercedes-Benz have all dropped in recent months.
“The Porsche AG has completely decoupled itself from the negative market trends,” one investor told Reuters, translated by CNBC. Companies are thought to be delaying going public because of current market conditions.
The IPO isn’t set to be a trailblazer for other companies to follow suit however, as Porsche remains a particularly strong brand with a unique market position. Volkswagen initially announced its plans for Porsche to go public on Sept. 5.
Antlitz also addressed the ongoing semiconductor shortages, which will continue to be an issue this year.
“We expect a better supply in 2023, but we expect an easing of the shortage to kick in in 2024,” Antlitz told CNBC.
Amazon hikes pay for warehouse and delivery workers
A worker sorts out parcels in the outbound dock at Amazon fulfillment center in Eastvale, California on Tuesday, Aug. 31, 2021.
Watchara Phomicinda | MediaNews Group | The Riverside Press-Enterprise via Getty Images
Beginning in October, Amazon’s average starting pay for front-line employees in the U.S. will be bumped up to more than $19 per hour from $18 per hour, the company said.
Warehouse and delivery workers will earn between $16 and $26 per hour depending on their position, Amazon added. Amazon’s minimum wage for employees in the U.S. remains $15 an hour.
Amazon is spending roughly $1 billion on the pay hikes over the next year as it looks to attract and retain employees in a historically tight labor market. It’s also preparing to enter what’s known as “peak” season, the especially busy shopping period tied to the holidays.
Tensions have been growing between Amazon and its front-line workforce, particularly during the Covid-19 pandemic. Employees have called for wage increases, more paid time off and adjustments to productivity expectations.
Workers at several Amazon facilities have taken steps to organize, and earlier this year, workers at Amazon’s warehouse in Staten Island, New York, successfully voted to form the company’s first U.S. union. Amazon faces another union election at a site near Albany, New York, next month.
The company said earlier this month it planned to raise pay and benefits for drivers employed by members of its contracted delivery network, which handles a growing share of its last-mile deliveries to customers doorsteps.
Alongside the pay increase, Amazon said it’s also expanding a payday advance program for its employees that allows them to access up to 70% of their eligible earned pay whenever they choose and without fees, not just on a schedule, such as a biweekly basis.
DocuSign to cut workforce by 9% as part of restructuring plan
The Docusign Inc. website on a laptop computer arranged in Dobbs Ferry, New York, U.S., on Thursday, April 1, 2021.
Tiffany Hagler-Geard | Bloomberg | Getty Images
DocuSign will lay off 9% of its workforce as part of a major restructuring plan, the company announced Wednesday.
The plan is designed to support the company’s growth and profitability objectives and improve its operating margin. As of January, DocuSign had 7,461 employees, and it said the restructuring plan will largely be complete by the end of fiscal year 2023.
Shares of DocuSign were up 5% as of 10:35 a.m. ET.
It expects to incur charges between $30 million and $40 million, largely in the third and fourth quarter of fiscal 2023, as part of the changes.
The electronic signature software maker enjoyed a wave of greater interest among investors during the Covid pandemic as consumers and corporate workers became more reliant on digital ways to sign documents. But the interest has died down, and shares have fallen 65% so far this year.
Several firms downgraded the company’s stock in June after first-quarter earnings fell short of analyst estimates. Dan Springer, the former CEO, stepped down later that month. DocuSign announced earlier this month that it hired an Alphabet executive, Allan Thygesen, as its next CEO.
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