International News 08/05
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Starbucks, Pizza Hut & KFC TW 1 2024 Sales down, boycott impact felt?
In the first quarter of 2024, major beverage and fast food companies such as Starbucks, Pizza Hut and KFC experienced a decline in sales. Speculation arose as to whether the decline was due to boycotts of American companies following Israeli attacks in Gaza, Palestine. Boycotts of US companies have been on the rise because of the atrocities committed in Gaza, where more than 30,000 Gazans, mostly women and children, have been killed by Israeli bombs and rockets. The Indonesian Ulema Council (MUI) even issued a fatwa declaring products from US companies that allegedly support Israel as haram. Starbucks, Pizza Hut and KFC have all seen sales fall, with Starbucks shares down 17% in the US. However, economists argue that this decline cannot be attributed solely to the boycotts, as various factors such as rising prices, interest rates and adverse weather conditions also played a role. Yum Brands, the parent company of Pizza Hut, KFC and Taco Bell, pointed to a snowstorm in January 2024 and tough comparisons with a strong first quarter in 2023 as explanations for the decline.
US job growth slows, unemployment rate rises to 3.9%
US employment growth was slower than expected in April, with non-farm payrolls rising by 175,000, the fewest in six months. Moreover, annual wage growth fell below 4.0% for the first time in almost three years. Nevertheless, it may be too early to expect the Federal Reserve to cut interest rates before September as the labour market remains tight. The unemployment rate rose to 3.9% from 3.8% in March, but has remained below 4% for 27 consecutive months. Financial markets have increased the odds of a rate cut in September, with expectations that the US central bank will cut borrowing costs twice this year. However, economists say the latest jobs report does not show significant weakness in the labour market that would prompt a rate cut. Slower employment and wage growth could help control inflation, which is a key factor in considering a rate cut.
Apple shares tumble as Warren Buffett's firm cuts stake
Warren Buffett's Berkshire Hathaway has cut its stake in Apple Inc. by 13% following the company's underwhelming first quarter results. Apple reported a 4% drop in quarterly revenue to $90.8 billion and its shares fell 11% during the period. As a result, Berkshire Hathaway's stake in Apple fell from $174.3 billion to $135.4 billion. This sale contributed to Berkshire Hathaway's cash hoard, which is expected to increase from $189 billion to $200 billion by the end of March 2024. Despite the reduction in stake, Buffett still sees Apple as a company with strong business performance when compared to other Berkshire Hathaway holdings such as American Express and Coca-Cola. Buffett praised the iPhone as one of the greatest products of all time.