World Street | Powell hints at smaller cuts ahead, Aston Martin's profit warning, PepsiCo's new venture and more

World Street offers a sneak peek into the world of business and economy.

US Federal Reserve Chair Jerome Powell remarked that the recent half a percentage rate cut should not spark expectations of similar big-sized cuts in the future. British luxury brand Aston Martin has sounded alarms on profits attributing to industry-wide challenges, especially in China, the world's largest auto market. US drugmaker Pfizer plans to sell about $3.25 billion stake in Haleon, the company behind the toothpaste brand Sensodyne. PepsiCo in reportedly talks to acquire tortilla-chip maker Siete Foods for over $1 billion. All this and more in the October 1 edition of World Street.

Hold your horses

Federal Reserve Chair Jerome Powell clarified on Monday that the recent half-point interest rate cut shouldn’t be seen as a sign of continued aggressive action, while adding that rate cuts will be much smaller in quantum going ahead. “If the economy evolves as expected, policy will gradually shift toward a more neutral stance. However, we’re not on a predetermined path,” Powell said to the National Association for Business Economics. “There are risks on both sides, and we’ll make decisions on a meeting-by-meeting basis.” Powell also hinted that, if the data holds, two additional rate cuts are expected this year, but in smaller, quarter-point increments, taking a step away from market expectations of more aggressive easing.

I see RED!

British luxury carmaker Aston Martin, popular for its iconic models featured in James Bond films, has issued a profit warning, citing industry-wide challenges and ongoing difficulties in China's auto market. The company also slashed its profit margin and production targets for the year, lowering it by roughly 1,000 units due to supply chain disruptions and China's persistent macroeconomic weakness. Aston Martin also expects its 2024 EBITDA to fall below last year’s mark, while the company no longer anticipates achieving positive free cash flow in the second half of the year. Additionally, its full-year gross margin is now projected to fall below 40 percent, down from its previous target.

Minting Money

Pfizer’s stake sale in British consumer healthcare company and maker of Sensodyne, Haleon has been upsized to 640 million shares, worth approximately $3.25 billion, due to strong investor demand, Reuters reported on Monday. Last year, Pfizer, the largest shareholder in Haleon, hinted at plans to gradually reduce its stake in a “slow and methodical” manner over the coming months. Earlier on Monday, it was announced that Pfizer originally aimed to sell around 540 million shares, which would lower its stake in the Sensodyne maker from 22.6 percent to 16.2 percent.

New beginnings

PepsiCo is in advanced discussions to acquire Texas-based tortilla-chip maker Siete Foods for over $1 billion, according to a report by the Wall Street Journal. Siete Foods, owned and operated by the Garza family, has garnered significant attention during the sale process, attracting interest from private-equity firms and other food companies. While the deal could be announced soon, there’s still a chance the talks could fall through. The acquisition highlights the competitive landscape for Siete Foods, which has drawn strong interest from various potential buyers.

Easing landscape

Beijing became the fourth major Chinese city to ease home-buying restrictions, joining Shanghai and Shenzhen in efforts to stimulate demand and support the struggling property market. The city will lower the minimum down payment ratio to 15 percent for first-time buyers, while second-home buyers will see their minimum down payment reduced to 20 percent, according to a statement by the city's Commission of Housing and Urban-Rural Development. Additionally, restrictions for non-local buyers will be relaxed, with the requirement for continuous social insurance or income tax payments in central areas reduced to three years, down from the previous five-year threshold.