News Archive

Asian stock erase gains as crude oil rebound fizzles

TOKYO Asian shares unwound early gains on Wednesday, as investors turned cautious following renewed selling in recently battered crude oil futures.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS erased a positive start to edge down 0.1 percent, on track for a flat monthly performance and down 12 percent for the year.

U.S. crude futures CLc1 skidded 1.8 percent to $37.19 a barrel, while Brent LCOc1 shed 1.2 percent to $37.32. Both had jumped 3 percent overnight, taking back ground lost in the previous session as colder weather forecasts raised expectations of more demand.

But weekly data from industry group the American Petroleum Institute (API) showed a rise of almost 3 million barrels in U.S. crude inventories, defying expectations of no change and rekindling fears of a supply glut.

On Wall Street, major U.S. indexes each gained more than 1 percent. All 10 major SP sectors ended with gains, led by a 1.34 percent rise in the technology sector .SPLRCT, which lifted the SP 500 .SPX to a modest increase for the year.

Japan’s Nikkei .N225 was up 0.3 percent, off session highs but still poised to gain over 9 percent for the year, though down more than 3 percent for December.

“We’re seeing thin volumes at year-end as the number of active participants has decreased due to the holidays,” said Martin King, co-managing director at Tyton Capital Advisors.

Australian shares outperformed, up 0.9 percent and on track for their ninth consecutive day of gains.

Higher U.S. Treasury yields underpinned the dollar overnight, although yields were off highs in Asia.

The yield on benchmark 10-year U.S. Treasury notes US10YT=RR stood at 2.292 percent, compared with its U.S. close of 2.307 percent on Tuesday.

The yield on the U.S. two-year note US2YT=RR closed at 1.095 percent on Tuesday after earlier touching its highest level since April 2010.

The dollar index .DXY, which tracks the greenback against a basket of six rival currencies, was up 0.1 percent at 98.207.

The index rose to nearly a one-week high of 98.413 on Tuesday, from a nearly two-week low earlier in the session. It is up 8.8 percent for the year, though down nearly 2 percent for the month as investors pare their dollar-long positions after the U.S. Federal Reserve’s widely anticipated interest rate increase earlier in December.

The dollar was steady at 120.47 yen JPY=, while the euro edged up 0.1 percent to $1.0928 EUR=.

The Australian dollar, meanwhile, slipped about 0.2 percent to $0.7280 AUD=D4 as the renewed selling in crude prices prompted investors to lock it gains on its rise to $0.7303 overnight, its highest since Dec. 10.

The New Zealand dollar was down 0.3 percent at $0.6855 NZD=D4, after it scaled a 10-week peak of $0.6881 in the previous session.

Spot gold XAU= edged up about 0.2 percent to $1,070.61 an ounce, but remained poised to drop more than 9 percent for 2015 to log its third year of losses.

(Additional reporting by Joshua Hunt; Editing by Sam Holmes and Richard Pullin)

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China central bank temporarily suspends some FX business of several foreign banks: sources

SHANGHAI China’s central bank has suspended at least three foreign banks from conducting some foreign exchange business until the end of March, three sources who had seen the suspension notices told Reuters on Wednesday.

Included among the suspended services are liquidation of spot positions for clients and some other services related to cross-border, onshore and offshore businesses, the sources said.

The sources, speaking on condition that the banks were not named, said the notices sent to the affected foreign banks by the People’s Bank of China (PBOC) gave no reason for the suspension.

The sources said the banks might have been targeted due to the large scale of their cross-border forex businesses.

“This is part of the PBOC’s expedient means to stabilize the yuan’s exchange rate,” said an executive at a foreign bank contacted separately.

China has taken a slew of steps to keep the yuan stable since it devalued the currency in August.

The PBOC had no immediate comment.

The latest move comes just three months since the PBOC ordered banks to closely scrutinize clients’ foreign exchange transactions to prevent illicit cross-border currency arbitrage, which takes advantage of the different exchange rates the yuan fetches in offshore and onshore markets.

The spread has been growing since the August devaluation, which makes it increasingly difficult for the bank to manage its currency and stem an outflow of capital from its slowing economy.

The yuan has come under renewed pressure since late November amid speculation that Beijing would permit more depreciation after the International Monetary Fund announced the currency’s admission into the fund’s basket of reserve currencies.

The onshore yuan CNH=CFXS traded in Shanghai has lost 1.44 percent of its value since the end of November, and has repeatedly hit 4-1/2 year lows.

The offshore market has traced a similar pattern. The Hong Kong-traded offshore yuan CNH=D3 hit an intraday low of 6.5965 on Wednesday morning, its weakest since late September 2011.

(Reporting by Shanghai Newsroom; Writing by Lu Jianxin and Nathaniel Taplin; Editing by Will Waterman)

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Crude oil prices drop more than 1 percent as weak outlook prevails

SINGAPORE Crude oil futures fell around half a dollar early on Wednesday as the market remained under pressure from slowing demand and high supplies, while forecasts that a cold snap in Europe and the United States would be short-lived also hurt prices.

Crude prices have plunged by two-thirds since mid-2014 as soaring output from the Organization of the Petroleum Exporting Countries, Russia and the United States led to a global surplus of between half a million and 2 million barrels per day.

More recently, a slowing demand outlook, especially in Asia but also Europe, has started dragging on prices.

Front-month U.S. West Texas Intermediate crude futures CLc1 were trading at $37.18 per barrel at 0140 GMT, down 69 cents or 1.82 percent from their last settlement. Brent futures LCOc1 were down 47 cents, or 1.24 percent, to $37.32 a barrel.

Traders said the price falls were largely a result of a weak outlook for next year and the closing of 2015 trade books.

“The 2016 outlook is for lower prices, especially early next year. Many are closing their last long positions for the year today as nobody wants to come back in January and be surprised badly. Better start with a clean sheet,” a trader said.

Forecasts that an upcoming cold weather in Europe will only be short-lived could also hurt crude prices.

U.S. crude and Brent had both rallied about 3 percent in the previous session on hopes that a drop in temperatures would buoy demand for oil for heating purposes.

But weather data in Thomson Reuters Eikon shows that average continental European temperatures are expected to drop from around 5 degrees Celsius currently toward and slightly below the seasonal norm of 2.4 degrees by Jan. 3 before rising to as high as 6-8 degrees by Jan. 7.

For most of the United States, a brief cold period is also not expected to last for much more than a week.

(Editing by Himani Sarkar)

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Bridgestone pulls out of bidding war for Pep Boys

Japanese tire maker Bridgestone Corp (5108.T) said it would not counter Carl Icahn’s raised offer to buy Pep Boys – Manny Moe Jack (PBY.N), ending a bidding war for the U.S. auto parts retailer.

Icahn sweetened his offer for Pep Boys for the second time to $18.50 per share on Monday, after Bridgestone raised its bid by $1.50 to $17 per share on Dec. 24.

Pep Boys said on Monday Icahn’s latest offer was superior to the deal it accepted from Bridgestone, and moved to terminate its agreement with the Japanese company.

Icahn, whose latest bid values Pep Boys at about $1 billion, had reported a 12.12 percent stake in Pep Boys earlier in December and said the company’s retail automotive parts business would be a perfect fit for Auto Plus, a competitor he owns.

The auto parts retailer has been on the block since June, when it said it was considering selling itself as part of a strategic review.

Bridgestone had said on Oct 26 that it would buy Pep Boys to boost its retail network by more than a third in the United States.

(This story corrects RIC for Bridgestone in the first paragraph.)

(Reporting by Ramkumar Iyer in Bengaluru; Editing by Anil D’Silva)

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Oil ends up 3 percent on cold weather but glut worry persists

NEW YORK/LONDON Oil prices jumped 3 percent on Tuesday, recouping the previous day’s loss as colder weather encouraged buyers, but traders said prices remained under pressure due to slowing global demand and abundant supplies from OPEC members.

After settlement, industry group the American Petroleum Institute (API) reported a weekly rise of almost 3 million barrels in U.S. crude inventories, not the draw expected by many analysts and traders. [API/S]

Global oil benchmark Brent and U.S. crude’s West Texas Intermediate (WTI) futures settled up more than $1 a barrel, after weather forecasts showed the United States may get some cold winter temperatures following an unusually balmy autumn.

Oil prices gave much of the day’s gains after the API report.

Brent LCOc1 finished up $1.17, or 3.2 percent, at $37.79 a barrel. About 40 minutes after the API numbers, Brent was up only 76 cents at $37.38

WTI closed up $1.06, or 2.9 percent, at $37.87. After the API numbers, WTI was up only 52 cents, at $37.33.

Analysts polled by Reuters poll had forecast that U.S. crude stockpiles fell 2.5 million barrels last week. The U.S. government’s Energy Information Administration will issue official inventory numbers on Wednesday. [EIA/S]

U.S. heating oil HOc1, also known as Ultra Light Sulfur Diesel (ULSD), partly fed Tuesday’s gains in crude, rising nearly 4 percent to above $1.13 a gallon. ULSD and natural gas, another heating fuel, have rallied this week on cold weather expectations. [NGA/]

Many traders and analysts expected prices to remain under pressure, noting that global oversupply was expected to grow in 2016.

“Fundamentals remain very bearish,” ING Bank analyst Hamza Khan said.

Brent and WTI remain more than two-thirds below their mid-2014 prices, depressed by abundant U.S. shale oil supplies and the decision by the Organization of the Petroleum Exporting Countries to pump near record volumes of crude to safeguard their market share.

On Monday, leading OPEC producer Saudi Arabia announced plans for spending cuts and non-oil revenue raising methods to manage a record state budget deficit while state-owned oil firm Saudi Aramco pumps away.

World oil production this year has exceeded demand by 2 million barrels per day at times. In 2016, Iran is expected to add its exports to the mix after Western sanctions on its oil come off.

“Iran is gearing up to flood the market with 500,000 bpd within weeks of sanctions being lifted,” noted Ole Hansen, head of commodity strategy at Saxo Bank.

(Reporting by Barani Krishnan and Dmitry Zhdannikov; Editing by David Gregorio and Cynthia Osterman)

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Apple and Amazon deliver rally on Wall Street

Wall Street rose sharply on Tuesday, elevating the SP 500 to a modest gain for the year as Amazon and Apple led tech stocks higher.

All 10 major SP sectors ended with gains, led by a 1.34-percent rise in the technology sector .SPLRCT, its strongest performance since the start of the month.

Following a recent selloff over concerns about potentially soft iPhone sales, Apple (AAPL.O) jumped 1.80 percent and was the biggest influence on the SP 500 and Nasdaq.

Amazon (AMZN.O) climbed 2.78 percent and closed at a record high of $693.97. The online retailer recorded more than 3 million new Prime memberships in the third week of December, indicating strong holiday demand.

The health index .SPXHC jumped 1.22 percent, led by a 1.26 percent gain in Pfizer (PFE.N).

“Tech stocks, and some healthcare stocks, can deliver top-line growth in a situation where a lot of other companies have to generate earnings through cost-cutting or share buybacks. What you’re seeing there is a bid for growth,” said Bucky Hellwig, senior vice president at BBT Wealth Management in Birmingham, Alabama.

Chevron (CVX.N) rose 0.98 percent, helping push the SP energy sector .SPNY up 0.69 percent after oil prices edged up on the prospects of colder weather in Europe and North America, raising hopes of a short-term uptick in the tepid demand that has plagued the commodity this year.

Data on Tuesday indicated consumer sentiment was improving, with the Conference Board’s index of consumer confidence for December up at 96.5, beating the 93.8 expected.

The Dow Jones industrial average .DJI ended 1.1 percent higher at 17,720.98 points while the SP 500 .SPX gained 1.06 percent to 2,078.36.

The Nasdaq Composite .IXIC added 1.33 percent to 5,107.94.

Trading was thin with many investors off for the holidays.

Volume on U.S. exchanges was 5.0 billion shares, compared to a 7.5 billion average over the last 20 trading days, according to Thomson Reuters data.

The SP 500 has now rebounded 11 percent from a steep correction in August that was caused by turmoil in China’s stock market and fears about a slowdown in its economic growth.

With two trading sessions left in 2015, the SP 500 was up almost 1 percent for the year, while the Nasdaq Composite was up almost 8 percent. The Dow Jones industrial average, however, was down about 0.6 percent for the year.

Pep Boys (PBY.N) rose 8.79 percent after the auto parts retailer’s board found Carl Icahn’s latest offer superior to the deal it accepted from Japan’s Bridgestone (5108.T).

Advancing issues outnumbered decliners on the NYSE by 2,270 to 798. On the Nasdaq, 1,976 issues rose and 859 fell.

The SP 500 index showed 29 new 52-week highs and no new lows, while the Nasdaq recorded 82 new highs and 46 new lows.

(Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Nick Zieminski)

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DuPont cuts jobs in Delaware ahead of Dow merger

Chemical maker DuPont Co (DD.N) said it would cut 1,700 jobs in Delaware, as part of a previously announced plan to reduce its workforce before combining with Dow Chemical Co (DOW.N) in a $130 billion megamerger.

The job cuts in the state, which has been its home for more than 213 years, will take place in the beginning of 2016, DuPont Chief Executive Ed Breen said in a letter to the company’s employees on Tuesday. (

DuPont said earlier in the month that it was planning to slash about 10 percent of its workforce of about 63,000 and take a pretax charge of $780 million.

Breen said the company decided to announce the jobs cuts now as it was legally required to file a notice with the Delaware State government, detailing the expected local job reductions by Dec. 31.

“Especially given that we are in the middle of the holidays, we would have preferred to wait until individual notifications were complete before reporting the full local impact,” Breen said in the letter.

Delaware Governor Jack Markell said in a statement that the news of the job cuts was “deeply disappointing.” (

DuPont and Dow Chemical agreed to merge in an all-stock deal earlier this month in a first step towards breaking up into three separate businesses.

The three-way split into material sciences, specialty products, and seeds and agrichemicals, is likely to occur 18 to 24 months after the deal closes.

The combined specialty products business of the two companies will remain headquartered in Wilmington, Delaware after the merger, Breen said in the letter.

The deal, however, is expected to face intense regulatory scrutiny, especially over combining their agricultural businesses, which sell seeds and crop protection chemicals, including insecticides and pesticides.

(Reporting by Amrutha Gayathri and Narottam Medhora in Bengaluru; Editing by Anil D’Silva)

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Ferrari short sellers face higher costs; shares in short supply

SAN FRANCISCO Short sellers waiting for recently listed shares of Ferrari NV (RACE.N) to swerve off the road may soon face higher costs to maintain their bets on the luxury sportscar maker.

Nearly all of the Ferrari shares available for borrowing by short sellers have been lent out, pushing the cost of borrowing the few remaining shares sharply higher, according to Ihor Dusaniwsky, managing director of research at S3 Partners, which advises investors.

“No one can go and short a big block of stock right now. Right now, we’re literally talking about dribs and drabs and the end piece of the pot roast,” Dusaniwsky said.

Ferrari surged in its October trading debut in the United States after the Italian supercar maker priced its shares at the top of the range amid heavy investor demand.

But its stock has since fallen 8 percent from its IPO price, with some investors skeptical that the small-volume, capital-intensive carmaker will be able to sustain the high valuations of a luxury goods brand.

Short sellers borrow shares and then sell them, hoping to buy them back at a lower price and then return them to their owner. In the meantime, they must also pay interest to the owner.

Short sellers with existing bets against Ferrari have recently been paying an annual interest rate between 17 percent and 30 percent to borrow the carmaker’s shares, according to S3’s data.

But with so little supply, new borrowers are being charged as much as 90 percent, and current borrowers will eventually see the rates they are charged move toward that level, Dusaniwsky said.

Controlled by Fiat Chrysler Automobiles NV, Ferrari put just 9.1 percent of its shares on the market, limiting the supply of shares to potential short sellers.

Short interest in Ferrari rose from 1.3 percent of outstanding shares in mid-November to 2.1 percent in mid-December, according to Nasdaq data. But as a percentage of Ferrari’s shares available for trading, short interest in mid-December was 20.9 percent.

On Tuesday, Ferrari’s stock rose 3.19 percent to $47.91 after SP Dow Jones Indices said the company would be added to the SP Europe 350 and SP Euro indexes.

(This story corrects company name in the second paragraph to S3 Partners, not S3.)

(Reporting by Noel Randewich; Editing by Bernadette Baum)

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Stabilizing oil lifts shares and bond yields

NEW YORK Stocks rose around the world and bond yields edged up on Tuesday as oil rebounded from 11-year lows on prospects for lower temperatures on both sides of the Atlantic.

The fall in oil prices has been a major driver of financial markets this year, hammering energy companies, lowering inflation expectations and reinforcing bets on loose monetary policy in Europe and a slow tightening in the United States.

U.S. West Texas Intermediate (WTI) futures were up $1.06 to $37.86 per barrel, rebounding from a more than 3 percent fall on Monday. Brent, the international benchmark, was at $37.83 per barrel, up $1.21, putting it a bit less than two dollars away from an 11-year low hit earlier in December.

This lifted shares on Wall Street and in Europe. The SP 500 Index gained 1.1 percent to 2079.31, led by healthcare and financial shares, while the pan-European FTSEurofirst 300 index rose 1.5 percent and the euro zone’s blue-chip Euro STOXX 50 index advanced 1.8 percent. [.EU] The MSCI All-World Index gained 1 percent.

Britain’s blue-chip FTSE 100 index, opening for the first time since the Christmas break, rose 1 percent.

U.S. Treasuries sold off as equities improved and after a disappointing auction of five-year notes. The two-year Treasury yield rose to its highest since 2010, and was lately yielding 1.11 percent.

The U.S. 10-year Treasury yield rose 9 basis points to 2.31 percent, while German 10-year Bund yields, the benchmark for euro zone borrowing costs, rose 8 basis points to 0.64 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.2 percent. But it remained on track to mark a loss of around 12 percent for 2015, a year that saw it log a more than seven-year high in April.

China’s blue-chip CSI300 index added 0.9 percent, while the Shanghai Composite Index closed up by a similar amount, as the central bank vowed to maintain reasonable credit growth and keep the yuan stable.

China’s yuan fell to 6.5805 against the dollar in offshore trading, its weakest since a hefty devaluation in August, mirroring a fall in onshore rates, with traders citing strong year-end dollar demand. It later firmed a bit to 6.5774.

The euro dipped 0.3 percent to $1.0934.

(Additional reporting by Sudip Kar-Gupta and Marius Zaharia in London and Lisa Twaronite and Shinichi Saoshiro in Tokyo; Editing by Nick Zieminski)

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