This week, focus among traders was mostly on Boeing. This is after a major accident in Ethiopia led to the death of 157 people who were travelling to Kenya. The accident involved a relatively new model of the plane called Boeing 737-Max. The plane was delivered to Ethiopian Airlines in November last year. While plane accidents are not frequent, what surprised many is that the same model of the plane was involved in another accident five months ago. The accident led to the grounding of the plane by almost all countries. Donald Trump asked the FAA to ground the plane on Wednesday. A number of airlines such as Kenya Airways have said they will cancel the order and move to Airbus. In response, Boeing paused all deliveries for the plane. The company’s stock lost more than 10% of the value.
Brexit was another major issue this week. On Tuesday, the British parliament rejected the deal that was presented by Theresa May. This is despite the fact that the prime minister had received a commitment from the European Union that the country will be able to leave the customs union without a permission from the union. This commitment was rebutted by the Attorney General, who said that the country would still need permission from the EU. The following, day, the members voted against having a no-deal Brexit and yesterday, they voted to extend the exiting period by three months if a deal is not reached on March 29. This means that investors will be sure of uncertainty for the next three months. As such, companies will not be able to make informed decisions and foreign direct investment is likely to fall.
Another issue was on central banks. Today, the BOJ met and decided to leave rates unchanged. This was expected. The bank also agreed to leave the ten-year government bonds near zero per cent level. The bank’s main challenge is that the country’s export sector is declining and that the 2% inflation target remains quiet far.
On corporate news, Spotify announced that it was suing Apple in the European Union. The company alleges that Apple is engaged in discriminatory practices, which makes it impossible for the company to compete. It alleges that Apple has prevented it to make changes or upgrades to its app, it has blocked Spotify in the smart speakers, and it limits how customers can pay for services in the Appstore. Apple also charges the company a 30% fee for all payments made within the app. This lawsuit comes at a time when developers are having a problem with the huge fees charged by platform owners. It also comes at a time when there are calls to break up large companies like Apple that provide a marketplace. Another corporate news was that General Electric lowered their forecast for this year’s earnings. This is a continuation of the low growth that the company has been having. The new forecast shows that the adjusted earnings could fall by 23%.