The daily business briefing: August 15, 2023

Russia's central bank hikes interest rates 3.5% after ruble crashes, Hawaii utility shares plunge on concerns of equipment link to wildfires, and more

Russian foreign exchange market as ruble crashes
(Image credit: Contributor / Getty Images)

1. Russia's central bank raises interest rates 3.5% after ruble crashes

The Russian central bank hiked interest rates by 3.5 percentage points on Tuesday in an emergency meeting after the ruble crashed. The policymakers raised their benchmark rate to 12% from 8.5% in a decision "aimed at limiting price stability risks," the central bank said. The move reflects concerns about the impact of President Vladimir Putin's invasion of Ukraine on Russia's economic stability. The ruble has lost a quarter of its value during the war and inflation has averaged an annual rate of 7.1% in recent months, far above the central bank's 4% target. Timothy Ash, senior emerging-market sovereign strategist at RBC Bluebay Asset Management, said the ruble will keep falling "unless the core problem, the war and sanctions, are resolved."

The New York Times Bloomberg

2. Hawaii utility shares dive on concerns about wildfire fallout

Hawaiian Electric Industries stock plunged 34% on Monday, adding to an earlier decline of 42%, as investors dumped the company's shares on concerns that its power lines could turn out to be linked to Maui's deadly wildfires. Hawaiian Electric operates the utility that serves Maui. It has faced criticism for deciding not to turn off power in vulnerable areas despite warnings from weather forecasters that dry, powerful winds could fuel dangerous fire conditions. Plaintiffs' attorneys are expected to file lawsuits later this week arguing that the utility's equipment started fires. Hawaii Attorney General Anne Lopez is investigating the official response to the fires. The death toll in Maui rose to 99 people on Monday.

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Honolulu Star-Advertiser

3. Japan's exports fuel growth, but the domestic economy struggles

Japan reported Tuesday that its economy grew at an annualized rate of 6% in the second quarter, its third straight quarter of growth. First-quarter growth was revised up to 3.7%. The figures provided strong evidence that Japan is roaring back after an extended slowdown from the coronavirus pandemic. Exports drove the expansion, which more than doubled the growth rate forecast by economists polled by Bloomberg. Sayuri Shirai, a professor of economics at Keio University and a former board member of the Bank of Japan, said there is still reason for concern, because strong exports were "the only reason" for the recovery to pre-pandemic gross domestic product. At home, consumption fell, she noted, in a sign "the domestic economy is not doing well."

The New York Times

4. Stock futures fall after China warning signs

U.S. stock futures slipped early Tuesday after China released downbeat industrial data and announced a surprise interest rate cut, fueling pessimism about the state of the world's No. 2 economy. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 0.6% at 6:30 a.m. ET. Nasdaq shares were down 0.7%. Shares of big banks, including JPMorgan Chase, Citigroup, Wells Fargo and Bank of America fell in pre-market trading after Fitch Ratings warned it might downgrade dozens of banks. Wall Street gained on Monday. The Dow and the S&P 500 rose 0.1% and 0.6%, respectively, while the tech-heavy Nasdaq surged by 1.1%.

CNBC

5. Conservative group sues Target over shareholder losses since Pride boycott started

A conservative legal group led by former Trump adviser Stephen Miller on Tuesday filed a lawsuit against Target that blames shareholder losses on conservative boycotts over the retailer's Pride Month displays. The lawsuit by Miller's America First Legal accuses Target of misleading investors by assuring them it was keeping on top of risks from its diversity and inclusion policies. Target has faced protests and threats over Pride displays since mid-May. The company's stock has fallen 20 percent since then. America First Legal argues the decline is a "direct and predictable result" of the decision to promote "sexualized" material, referring to LGBTQ Pride items. Legal experts said it would be difficult to pin Target's losses on the boycott, since the stock was already falling.

The Washington Post

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Harold Maass

Harold Maass is a contributing editor at TheWeek.com. He has been writing for The Week since the 2001 launch of the U.S. print edition. Harold has worked for a variety of news outlets, including The Miami Herald, Fox News, and ABC News. For several years, he wrote a daily round-up of financial news for The Week and Yahoo Finance. He lives in North Carolina with his wife and two sons.