News Archive


Stock futures up with Apple, Boeing; Fed eyed


NEW YORK (Reuters) – U.S. stock index futures rose on Wednesday, boosted by earnings including from Apple and Boeing, while focus could shift later in the day to the Federal Reserve’s first two-day policy meeting of the year.

* The Fed is expected to signal it remains on track to begin raising interest rates later this year, as it shows confidence that low inflation and rising risks from abroad have yet to derail the U.S. economic recovery.

* Nasdaq futures rallied more than 1 percent powered by a 9 percent advance in Apple shares (AAPL.O). Apple’s quarterly results smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season, which helped the company post the largest profit in corporate history.

* Yahoo (YHOO.O) gained 6.7 percent after it unveiled plans to spin off its 15 percent stake in Alibaba Group Holding (BABA.N), responding to pressure to hand over to shareholders its e-commerce investment valued at roughly $40 billion.

* Boeing (BA.N) added 4.1 percent premarket after posting its earnings results and outlook.

* U.S. Steel Corp’s shares (X.N) added 8.4 percent the day after its profit beat expectations. Though the company warned that low oil prices and the strong U.S. dollar could negatively impact its business in 2015, it said the potential for higher consumer spending could help lift demand.

Futures snapshot at 7:37 a.m. EST (1237 GMT):

* SP 500 e-minis ESc1 were up 8.75 points, or 0.43 percent, with 155,107 contracts changing hands.

* Nasdaq 100 e-minis NQc1 were up 51 points, or 1.22 percent, in volume of 33,892 contracts.

* Dow e-minis 1YMc1 were up 36 points, or 0.21 percent, with 29,381 contracts changing hands.

(Reporting by Rodrigo Campos; Editing by Chizu Nomiyama)

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Boeing’s profit gets boost from higher deliveries


(Reuters) – Boeing Co (BA.N), the world’s biggest planemaker, reported a 19 percent rise in quarterly profit, helped by booming demand for commercial aircraft.

The company forecast operating cash flow, a metric closely watched by investors, of more than $9 billion for 2015, up from $8.86 billion reported for 2014.

Boeing’s shares rose about 4 percent in premarket trading.

The company’s jetliner deliveries rose to 723 in 2014 from 648 the previous year, topping those by rival Airbus Group (AIR.PA).

Commercial aircraft deliveries rose 13 percent to 195 in the fourth quarter ended Dec. 31.

Boeing’s net profit rose to $1.47 billion, or $2.02 per share, in the quarter from $1.23 billion, or $1.61 per share, a year earlier.

Core earnings, which exclude pension and other costs, rose to $2.31 per share from $1.88.

Revenue increased by 3 percent to $24.47 billion.

Boeing forecast core earnings of $8.20-8.40 per share for 2015.

Shares of the Dow-30 component were trading at $137.79 before the bell.

Up to Tuesday’s close, the stock had fallen 3.4 percent in the past 52 weeks, while the Dow Jones Industrial Average .DJI has risen 9.2 percent.

(Reporting by Sweta Singh in Bengaluru; Editing by Sriraj Kalluvila and Kirti Pandey)

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Dollar steadies before Fed, Europe slips on Greece


LONDON (Reuters) – Stocks and the dollar retrenched on Wednesday amid speculation the Federal Reserve will take a dovish turn in its post-meeting statement later as signs emerge that the greenback’s strength is hurting company profits.

Worries that Greece’s new government is heading for clashes with the rest of the euro zone over its debts saw European shares .FTEU3 stumble for a second day as Greek bonds also took another dive. [GVD/EUR]

Gadget giant Apple .AAPL.O had grabbed headlines overnight after it reported the biggest quarterly profits in corporate history, but focus was now squarely on what message the Fed sends when it wraps up its first meeting of the year later.

Wall Street ESc1 was expected to see a steady start. The dollar slipped against the euro EUR=, the yen JPY= and a number of other key currencies .DXY in early European trading before stabilising.

Scepticism is growing that the Fed will raise rates by mid-year, as had been expected. Other major central banks are easing aggressively and the strong dollar and slumping oil prices are driving down inflation.

Big U.S. firms that sell abroad are also grumbling, with a slew multinationals from Microsoft (MSFT.O) to Procter Gamble (PG.N) having warned their situation will get worse if the greenback holds its strength.

“The question at the top of every market participant’s mind is whether the world’s largest central bank will follow its global counterparts into a more dovish policy lean,” said John Kicklighter, chief currency strategist at DailyFX.

Two-year U.S. Treasury yields — the most sensitive to U.S. rate hike expectations — held above 0.50 percent US2YT=RR in Europe, having dipped on Tuesday following some weaker-than-expected durable goods data and lacklustre corporate earnings.

European government bonds, with the exception of safe-haven Germany, saw their yields rise again as uncertainty about Greece persists. [GVD/EUR]

Greek Prime Minister Alexis Tsipras named a cabinet of anti-austerity veterans on Tuesday and promptly halted the privatisation of Greece’s biggest port, signalling he intentions to stick to his party’s election pledges.

Shares in Greece’s main banks (BOPr.AT)(NBGr.AT) plunged over 20 percent. Greek five-year bond yields GR5YT=TWEB hit their highest since the country’s 2012 debt restructuring and 10-year yields GR10YT=TWEB shot back above 10 percent. [GVD/EUR]

SINGAPORE SLING

It had all seemed brighter in Asia. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ticked up 0.2 percent to a four-month high and Japan’s Nikkei .N225 also reached a one-month high.

As well as the sentiment boost of Apple’s world record profits, Singapore’s central bank eased monetary policy unexpectedly, its first unscheduled change in over a decade, jumping in ahead of a planned meeting in April.

Singapore’s central bank joins a growing list of counterparts — from Denmark and Canada to Turkey and India — that have made surprise moves in what is looking increasingly like a global currency war.

The Singapore dollar skidded to its weakest in nearly 4-1/2 years. Other emerging Asian currencies also weakened, including Malaysia’s ringgit MYR=MY and Thailand’s baht THB=, despite their central banks keeping their rates on hold.

Rising bets that the U.S. Fed will push back a rate hike saw emerging market shares consolidate their recent gains. Fed funds rates 0#FF: are now pricing in only a slim chance rates will rise before the end of the year.

“The market now thinks a rate hike around June is unlikely. So if the Fed does not change its tone, the market will take it as a bit more hawkish than expected,” said Tomoaki Shishido, fixed income analyst at Nomura Securities.

In commodity markets, oil prices were pressured by news U.S. oil stockpiles surged by nearly 13 million barrels last week. Brent crude oil LCOc1 dipped to $49.40 a barrel and U.S. crude oil futures CLc1 slipped to $45.57. [API/S][O/R]

Safe-haven gold XAU= hovered at 1,290 an ounce while copper CMCU3, which has lost 25 percent in the last six months, climbed 1 percent. [MET/L]

(Editing by Catherine Evans)

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Shake Shack now expects IPO to be priced higher at $17-$19 a share


(Reuters) – Burger chain Shake Shack Inc (SHAK.N) now expects its initial public offering to be priced at $17-$19 per share, up from $14-$16 expected earlier, valuing the company at up to $674.5 million.

The offering of 5 million Class A shares is expected to raise about $95 million, Shake Shack said in a regulatory filing on Wednesday. (1.usa.gov/1uAgThX)

The company, which grew out of a hot dog stand in New York’s Madison Square Park, is known for its Shackburgers, flat-top hot dogs and eponymous milkshakes and has developed a cult following since it was founded by restaurateur Daniel Meyer in 2001.

Private equity firm Leonard Green Partners LP is Shake Shack’s largest shareholder with 26 percent of its common stock.

Meyer’s Union Square Hospitality Group LLC owns 21 percent of Shake Shack, while employee-owned hedge fund sponsor Select Equity Group LP holds 12.3 percent.

The New York-based burger chain has 63 outlets, including 36 in the United States. The company’s international outlets include those in Dubai, Istanbul, London and Kuwait.

Shake Shack’s offering follows a string of successful IPOs by casual dining chains last year, including Habit Restaurants Inc (HABT.O), El Pollo Loco Holdings Inc (LOCO.O) and Zoe’s Kitchen Inc (ZOES.N).

U.S. IPOs, which have been on a tear since 2013, raised more than $93 billion last year, the most since 2000.

Shake Shack’s shares, which are scheduled to be priced on Thursday after the market closes, are expected to start trading on Friday on the New York Stock Exchange under the symbol “SHAK”.

J.P. Morgan and Morgan Stanley are among the lead underwriters for the offering.

(Reporting by Avik Das in Bengaluru; Editing by Joyjeet Das and Kirti Pandey)

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iPhone sales trample expectations as profit sets global record


(Reuters) – Apple Inc (AAPL.O) quarterly results smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season and a 70 percent rise in China sales, powering the company to the largest profit in corporate history.

The company sold 74.5 million iPhones in its fiscal first quarter ended Dec. 27, while many analysts had expected fewer than 70 million. Revenue rose to $74.6 billion from $57.6 billion a year earlier.

Profit of $18 billion was the biggest ever reported by a public company, worldwide, according to SP analyst Howard Silverblatt. Apple’s cash pile is now $178 billion, enough to buy IBM (IBM.N) or the equivalent to $556 for every American.

Apple Chief Executive Officer Tim Cook said the Cupertino, California-based company would release its next product, the Apple Watch, in April.

Shares rose about 5 percent to $114.90 in after-hours trade.

Daniel Morgan, senior portfolio manager at Apple-shareholder Synovus Trust Company in Atlanta, Georgia, said that the report was a good sign in a quarter where big tech companies such as IBM and Microsoft Corp (MSFT.O) have disappointed.

Apple Chief Financial Officer Luca Maestri told Reuters in an interview that the company did not sell more iPhones in China than the United States, despite some earlier predictions by research analysts.

But the big-screen iPhone 6 and 6 plus drove revenues in China were up 70 percent in the quarter from a year earlier. The company’s success in the competitive Chinese market can be attributed to its partnership with China Mobile Ltd (0941.HK), the largest global mobile carrier, and the appeal of the larger screen size of the iPhone 6 and 6 Plus.

Maestri said he does not expect Apple to struggle because of China’s slipping economic growth. “We haven’t seen a slowdown,” he added.

Maestri also said the company doubled iPhone sales in Singapore and Brazil.

Apple will reach 40 company stores in greater China by mid-2016, Maestri told analysts on a conference call.

Carolina Milanesi, an analyst with Kantar Worldpanel ComTech, also lauded a 14 percent rise in unit sales of Apple Macintosh computers and sales of older iPhone models.

Apple was well positioned for the current quarter in China, she added, which will include the Chinese New Year holiday and reflect Apple’s attempts to sell through new channels.

Apple reported net profit of $18.02 billion, or $3.06 per diluted share, compared with $13.07 billion, or $2.07 per share, a year earlier. That topped expectations of $2.60 per share, according to Thomson Reuters I/B/E/S. Analysts had expected revenue of $67.69 billion.

Maestri said that Apple faced “a clear headwind” from the strong dollar but that it had included the challenge in its forecasts. Apple predicted revenue of $52 billion to $55 billion in its fiscal second quarter, compared with Wall Street’s average target of $53.79 billion.

Cook said that the company’s new mobile payment service, Apple Pay, which lets customer buy products from select merchants with their phones, was in its “first inning” and the company would consider adding new features as it looked at expanding outside the United States.

(Reporting by Christina Farr in San Francisco; Additional reporting by Supantha Mukherjee in Bengaluru and Caroline Valetkevitch in New York; Editing by Peter Henderson, Ted Kerr and Lisa Shumaker)

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Qatari-led group wins $4 billion battle for London’s Canary Wharf


LONDON (Reuters) – A Qatari-led consortium looked set to win its long-running battle to buy Songbird Estates (SBDE.L) on Wednesday after the owner of London’s Canary Wharf business district dropped its opposition to the $4 billion offer.

Songbird said it still thought the price undervalued the estate but with no rival bid forthcoming and holders of 86 percent of the shares backing the deal, it said its minority investors should accept.

Qatar Investment Authority (QIA) and partner launched a 350 pence-a-share offer direct to Songbird shareholders in December, hoping to add a financial district rivaling the City of London to landmarks already in its portfolio such as the Shard skyscraper and Harrods department store.

Canary Wharf’s steel and glass skyscrapers, home to banks such as HSBC (HSBA.L), Citi (C.N) and JP Morgan (JPM.N), embody the change in London’s economy in the second half of the 20th century as industry dwindled and financial services grew.

The redevelopment of the former West India Docks, which traded in everything from tobacco to bananas, was championed by 1980s Prime Minister Margaret Thatcher, who saw the need for more space for a financial sector booming after her “big bang” reforms.

The QIA already owned 29 percent of Songbird, which in turn owns 70 percent of Canary Wharf Group. Its partner in the deal, U.S. investor Brookfield Property Partners (BPY.N), has 22 percent of Canary Wharf Group.

The complicated structure featuring a layer of shareholders in Songbird and another in Canary Wharf tended to leave Songbird trading at a discount to the value of its property and helped make it a takeover target, analysts say.

GROWTH POTENTIAL

Songbird said earlier this month the 350p offer was an 8 percent discount to its net asset value of 381p at the end of November, and put no value on its growth potential.

Shares in the group, which had been trading about 10 percent below the offer price due to scepticism it would go through, were up 6.5 percent at 342.5p by 1043 GMT.

Songbird had already said that if one or more of the other three large shareholders, New York-based investor Simon Glick, China Investment Corp and Morgan Stanley Investment Management, were to accept, the offer would become unconditional. Combined they own just over 50 percent.

Since the offer looked like a foregone conclusion after all three major investors indicated they would approve, minority shareholders could be left holding stock in a group no longer listed and therefore difficult to value, Songbird said.

Songbird, backed by Morgan Stanley, had won control of Canary Wharf in 2004 with a 1.7 billion pound cash offer.

Canary Wharf Group is led by 69-year-old George Iacobescu, who is in line for a 3.5 million pound windfall from the bid.

The company is preparing to start work on two major developments: a 60-storey tower with the first residential property on the estate and a 20-acre waterside site with 3,100 homes and office buildings.

Shareholders have until Thursday to accept the offer.

(Additional reporting by Andrew Winterbottom; Editing by Kate Holton and David Holmes)

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Exclusive: China plans to set 2015 growth target at ‘around 7 percent’


BEIJING (Reuters) – China plans to cut its growth target to around 7 percent in 2015, its lowest goal in 11 years, sources said, as policymakers try to manage slowing growth, job creation and pursuing reforms intended to make the economy more driven by market forces.

The growth target, which is set to be announced by Premier Li Keqiang at the annual parliament session in March, was endorsed by top party leaders and policymakers at a closed-door Central Economic Conference in December, said a number of people with knowledge of the outcome of meeting who spoke to Reuters.

The target, which is in line with market expectations, has not been previously reported.

“This year’s economic growth target will be around 7 percent, but the 7 percent should be the bottom line,” said one of the sources, an influential economist who advises the government.

“The government will have to balance economic growth, employment and structural reforms this year,” said the economist, who requested anonymity due to the sensitivity of the matter.

The use of “around” to qualify the growth forecast repeats terminology used last year by authorities to show they were not fixed on a hard target.

Although the target was endorsed in December, it is still possible for it to be adjusted before the parliament convenes.

The State Council Information Office, the public relations arm of the government, had no comment on the growth forecast when contacted by Reuters.

DEFLATION CONCERNS

Officials have said slowing growth reflects reforms to put the economy on a more sustainable path, but they are wary of a sharp slowdown that could cause job losses and debt defaults.

China’s pursuit of rapid growth in recent decades has helped fuel overinvestment in some sectors and a sharp build-up of debt by local governments. Almost $7 trillion was wasted on ineffective investment since 2009, a government official and economist said last year.

Central Bank Governor Zhou Xiaochuan has acknowledged a lower growth target was on the cards for 2015, saying it would be discussed by the parliament in March.

The government is also looking at lowering its forecast for consumer price inflation to around 3 percent, the sources said.

Consumer prices rose 2 percent in 2014, coming in well below a target of 3.5 percent as deflation fears intensified, while producer prices have been falling for almost three years.

“Fighting deflation could be the top priority in the near term, but that won’t contradict with structural adjustments,” said another source, who is a senior economist at a well-connected think-tank in Beijing.

QUARTER-CENTURY LOW

The last time China set its national growth target at 7 percent was in 2004, when the economy actually grew 10.1 percent. The growth target was 7.5 percent last year.

Data last week showed growth in the world’s second-largest economy plumbed a 24-year low of 7.4 percent in 2014, and a Reuters poll of more than 40 economists found growth was expected to slow to 7 percent this year and 6.8 percent in 2016.

Some local governments have already lowered their growth targets for this year, often after significantly undershooting their 2014 goals, and Shanghai said it would not even set a growth target because its focus was on reforms and developing a free-trade zone.

Fifteen of 17 regions, provinces and municipalities, including Beijing, that have released local growth plans for 2015 have cut their GDP targets by between half a percentage point to 2.5 percentage points from last year, local media reports and government websites showed.

(Additional reporting by Judy Hua and Koh Gui Qing; Editing by John Mair and Alex Richardson)

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Shares in Apple suppliers leap on record results


LONDON (Reuters) – Shares in European companies that supply parts to Apple Inc (AAPL.O) leapt on Wednesday after the tech giant reported the largest profit in corporate history, driven by record sales of iPhones and strong demand in China.

Shares in British chip designer ARM (ARM.L) and Imagination Technologies (IMG.L), which supplies graphics processing to the U.S. group, rose between 3 and 4 percent at the open as investors cheered the news overnight.

With ARM having the highest price to earnings valuation amongst its peers, traders said investors should look to buy into the stock on one of the days when it slips.

“You have to be a buyer of ARM on the dip. It not only provides Apple with chips but also Samsung, and they get all the royalties,” said Beaufort Securities sales trader Basil Petrides.

German chipmaker Dialog Semiconductor (DLGS.DE), which counts Apple as one of its customers, rose 1.5 percent by 0819 GMT.

Dialog makes chips that manage power consumption of consumer electronics such as smartphones and tablet computers. Apple and Samsung Electronics (005930.KS) are among its main customers and its shares are up almost a fifth this year.

Apple smashed its quarterly forecasts, selling 74.5 million iPhones in its fiscal first quarter ended Dec. 27, compared with a forecast of fewer than 70 million. Revenue rose to $74.6 billion from $57.6 billion a year earlier.

Profit of $18 billion was the biggest ever reported by a public company, worldwide, according to SP analyst Howard Silverblatt.

(Reporting by Kate Holton and Harro Ten Wolde in Frankfurt)

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China regulator blasts Alibaba for illegal business on its websites


SHANGHAI (Reuters) – A China regulator has accused Alibaba Group Holding Ltd (BABA.N) of failing to clean up what it called illegal business deals on the e-commerce titan’s platforms, in an unusually strong government criticism of one of the country’s biggest private firms.

The State Administration for Industry and Commerce (SAIC), in a report published on its website on Wednesday, said many products sold on Alibaba’s e-commerce websites and services infringed upon trademarks, were substandard or fake, were banned or endangered public security.

The report was later removed from the main page of the SAIC website. (www.saic.gov.cn)

Alibaba declined to comment on the report. SAIC said the report summarised a July 16, 2014, meeting between government business regulators and Alibaba, and that it had delayed releasing the report to avoid affecting the e-commerce firm’s initial public offering, which took place in September.

SAIC did not elaborate. Alibaba, which raised a record-setting $25 billion from its New York IPO, is due to release its quarterly results on Thursday.

“Alibaba Group has long paid insufficient attention to the illegal business activities on Alibaba platforms,” the SAIC report said. Alibaba “let that abscess fester until it became a danger”, it added.

The report said Alibaba officials, for their part, pledged during the July meeting to take the necessary steps to rectify the problems. The SAIC has a broad supervisory role over online trading platforms and business in China.

Alibaba, which until a few years ago was on a U.S. list of “notorious markets” for intellectual property infringement, has fought hard to tackle counterfeit products to keep its reputation from being tarnished in the run-up to, and after, the IPO, the world’s biggest ever listing.

Earlier this month, it agreed with the U.S. Consumer Product Safety Commission to stop the sale of up to 15 illegal or dangerous toys in the United States.

Online fakes, however, remain a big problem in China.

Joe Simone, director of Hong-Kong based intellectual property consultancy SIPS, said the regulator’s comments about counterfeit goods were no surprise. “The frankness of the report and its condemning tone are unprecedented and speak volumes about what the SAIC found in its inspection,” he added.

In the report, the regulator said Alibaba had misled consumers during sales events, including its popular Nov. 11 annual “Singles Day” shopping extravaganza.

At last year’s event, Alibaba reported a surge in sales transactions to a record high of $9 billion, but merchants told Reuters in they felt pressure from Alibaba’s Tmall to boost their figures on the day with heavy discounts and delayed recognition of earlier sales.

On Wednesday, Alibaba’s consumer-to-consumer shopping website Taobao said it would lodge a complaint with the SAIC over a separate investigation by the regulator that allegedly uncovered a range of counterfeit products on the site.

($1 = 6.2465 yuan)

(Additional reporting by Paul Carsten in BEIJING; Editing by Miral Fahmy)

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