News Archive

Third time’s a charm for UPS at Christmas, but FedEx stumbles

CHICAGO After two consecutive years of problems during its holiday peak package season, UPS delivered on time at Christmas this year while its main rival FedEx had a last-minute stumble that left some gifts undelivered until after the holiday.

“It seems like the third time’s a charm for UPS,” said Kent Winegar, portfolio manager at Austin, Texas-based Terry McDaniel Co, which manages assets of around $900 million and holds nearly $15 million in UPS stock. “But if e-commerce keeps growing at such a rapid rate we’ll see how they do next year.”

A late surge in e-commerce orders and bad weather in 2013 left an estimated 2 million packages undelivered on Christmas Eve, mostly stranded in Atlanta-based United Parcel Service Inc’s (UPS.N) package network. Arch rival FedEx Corp (FDX.N) experienced problems on a smaller scale. Last year, UPS spent $500 million, boosted seasonal hiring and worked with retailers to forecast package volumes that failed to materialize and overspending hurt fourth-quarter earnings. FedEx did not experience problems that year.

This year UPS focused on what spokesman Steve Gaut described as a “disciplined approach” to peak season, that included pulling delivery dates forward on days when it had excess capacity in its network and informing retailers of hard cutoff dates for packages to make it by Christmas using UPS’ cheaper ground delivery service.

As a result, many retailers informed customers free shipping would end the week before Christmas – as shipping by air would be too expensive.

Noelle Sadler, chief marketing officer at online clothing retailer LuLu’s, said the firm stopped free shipping over a week before the holidays because it was “hamstrung by UPS and have to follow their rules.” 

UPS network was snarled up for about a week after Black Friday particularly in California, Texas and the Northeast, but focused its resources to catch up, spokesman Gaut said.

In the week running up to Dec. 24, UPS had an on-time delivery rate of between 97 percent and 98 percent, he said. The company’s on-time rate on a normal day, when daily package volumes are around half those during peak, is between 98 percent and 99 percent.

FedEx, on the other hand, struggled and said in a statement this was because of a “surge of last-minute e-commerce shipments.”

The company said late packages were delivered Dec. 26, but did not provide any details on the number of packages that were late or in what parts of the United States.

(Additional reporting by Nandita Bose; Editing by Tom Brown)

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KaloBios submits request to appeal Nasdaq delisting

KaloBios Pharmaceuticals Inc, which fired its controversial Chief Executive Martin Shkreli earlier this month, said it had requested an appeal of Nasdaq’s decision to delist its shares.

The embattled drugmaker said last week it had been notified by Nasdaq that its stock would be delisted using the exchange operator’s “discretionary” authority.

A hearing on the appeal has been scheduled for Feb. 25, the company said on Tuesday.

KaloBios on Monday said two directors – Tom Fernandez and Marek Biestekhad – had resigned in the wake of Shkreli’s arrest for alleged securities fraud.

Shkreli gained notoriety after dramatically raising the price of a drug used to treat a dangerous parasitic infection when he was the CEO of privately held Turing Pharmaceuticals Inc. He stepped down as Turing CEO on Dec. 18.

KaloBios named Shkreli as its CEO on Nov. 20, after Shkreli and a consortium of investors bought a 70 percent stake in the company.

Shares of San Francisco, California-based KaloBios have not traded since last Thursday.

(Reporting by Natalie Grover in Bengaluru; Editing by Anil D’Silva)

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S&P 500 turns positive for year; tech stocks rally

U.S. stock indexes were higher on Tuesday, with the SP 500 logging a small gain for the year, as tech stocks rallied and energy stocks reflected a recovery in crude prices.

The SP 500 was up 0.8 percent for the year, while the Nasdaq Composite extended gains and was up 7.59 percent. The Dow Jones industrial average, however, was down about 0.66 percent.

“I think equities on average are destined to end 2015 in uneventful fashion,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

“Investors on average are at the crossroads of concern and optimism,” he said. Lower oil prices put the pace of global growth in question and could translate to lackluster earnings, he added.

Crude prices edged up as colder weather entered Europe and North America, raising hopes of a short-term uptick in the tepid demand that has plagued the commodity this year.

Exxon shares were up 0.6 percent at $79.22, while Chevron was up 1 percent at $91.28.

At 11:09 a.m. ET (1609 GMT), the Dow Jones industrial average was up 173.77 points, or 0.99 percent, at 17,702.04, the SP 500 was up 18.73 points, or 0.91 percent, at 2,075.23 and the Nasdaq Composite index was up 56.09 points, or 1.11 percent, at 5,097.08.

All 10 major SP sectors were higher, led by a 1.16 percent rise in the tech sector.

Apple was up 0.9 percent at $107.78, the biggest influence on the SP. Amazon was up 1.9 percent at $688 and gave the biggest boost to the Nasdaq.

Data on Tuesday indicated higher consumer sentiment, with the Conference Board’s index of consumer confidence for December rising to 96.5, above the 93.8 expected.

Still, the slide in oil prices appear to have dashed hopes of a strong year-end rally, traditionally known as the Santa Claus rally.

Trading volumes are expected to remain thin this week as the year winds down.

Pep Boys was up 8 percent at $18.80 after the auto parts retailer’s board found Carl Icahn’s latest offer superior to the deal it accepted from Japan’s Bridgestone.

Advancing issues outnumbered decliners on the NYSE by 2,062 to 863. On the Nasdaq, 1,883 issues rose and 763 fell.

The SP 500 index showed 23 new 52-week highs and no new lows, while the Nasdaq recorded 56 new highs and 16 new lows.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Don Sebastian)

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U.S. home prices rise slightly in October, top forecast

NEW YORK Annualized U.S. single-family home prices rose in October at a slightly faster pace than in September and above market expectations, a closely watched survey showed on Tuesday.

The SP/Case Shiller composite index of 20 metropolitan areas gained 5.5 percent in October on a year-over-year basis compared with 5.4 percent in the year to September. It was just above the 5.4 percent estimate from a Reuters poll of economists.

“Generally good economic conditions continue to support gains in home prices,” said David M. Blitzer, managing director and chairman of the index committee at SP Dow Jones Indices.

“Among the positive factors are consumers’ expectations of low inflation and further economic growth as well as recent increases in residential construction including single family housing starts. Inventories of existing homes have averaged around a five month supply for the past year, a level that suggests a fairly tight market with limited supplies.”

(Reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama)

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Oil up over 2 percent on cold; glut worry persists longer-term

NEW YORK/LONDON Oil prices jumped about $1 a barrel on Tuesday, as prospects of colder weather in coming weeks inspired buying a day after prices slid 3 percent, but slowing global demand and abundant supplies from OPEC members kept energy markets bearish.

Global oil benchmark Brent and U.S. crude’s West Texas Intermediate (WTI) futures rose more than 2 percent each.

The two benchmarks have generally been in an uptrend over the past week as weather forecasts indicated the United States may get some cold winter temperatures following an unusually balmy autumn.

Expectations of a drawdown last week in U.S. crude inventories fed the rally. A Reuters poll suggested that stockpiles fell 2.5 million barrels last week ahead of inventory reports from the American Petroleum Institute on Tuesday and the government-run Energy Information Administration on Wednesday.

Brent was up $1.02 at $37.64 a barrel by 10:58 a.m. EST (1558 GMT). WTI was up 96 cents at $37.77, after reaching as high as $37.88.

U.S. heating oil, also known as Ultra Light Sulfur Diesel (ULSD), rose nearly 4 percent to above $1.13 a gallon, leading the energy complex higher and rising with natural gas, another heating fuel.

“I would suspect today’s activity is further furled by the short-covering in ULSD from the smattering of cold weather,” said David Thompson at Powerhouse, an energy-focused commodities broker in Washington D.C.

But on a global level, traders and analysts said the global oil glut would persist into 2016.

“Fundamentals remain very bearish,” said ING Bank analyst Hamza Khan, noting that Tuesday’s rebound came amid low trading volumes.

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 Louise Heavens, Jason Neely and David Gregorio)

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Barclays in $13.75 million U.S. settlement over mutual funds

Barclays Plc will pay more than $13.75 million to settle U.S. regulatory charges that it let retail brokerage customers make unsuitable mutual fund transactions, including more than 6,100 fund switches, over a five-year period.

The Financial Industry Regulatory Authority on Tuesday said the London-based bank’s Barclays Capital Inc unit will pay more than $10 million in restitution, including interest, to affected customers, and was fined $3.75 million.

Barclays did not admit or deny wrongdoing in agreeing to the settlement, which includes a censure. A spokesman had no immediate comment.

FINRA said that from January 2010 to June 2015, Barclays’ inadequate supervisory procedures failed to stop many customers from swapping one mutual fund for another when the benefits of switching might be undermined by the transaction costs.

This caused $8.63 million of harm to customers, most of whom were not warned of such costs, the regulator said.

FINRA also said that from March to August 2014, Barclays processed 1,723 fund transactions, or 39 percent of those it reviewed, that were inconsistent with its customers’ goals, risk tolerance or other investments. It said 343 of these transactions caused more than $818,000 of customer harm.

During the same period, Barclays also failed to provide “breakpoint” discounts to reduce front-end sales charges on 98 large purchases of Class A fund shares, FINRA said.

“The proper supervision of mutual fund switching and breakpoint discounts is essential to the protection of retail mutual fund investors,” FINRA enforcement chief Brad Bennett said in a statement.

(Reporting by Jonathan Stempel in New York; Editing by Bernadette Baum and Meredith Mazzilli)

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Stabilizing oil lifts European 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 94 cents to $37.75 per barrel, rebounding from a more than 3 percent fall on Monday. Brent, the international benchmark, was at $37.66 per barrel, up $1.02 but only 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 0.88 percent to 2074.33, led by a bounce in energy names, while the pan-European FTSEurofirst 300 index rose 1.2 percent and the euro zone’s blue-chip Euro STOXX 50 index advanced 1.4 percent. [.EU]

“Brent crude is slightly higher, and if it can drag itself across the $37 per barrel mark it is struggling with, then European stock markets may be able to hold on to some gains,” said Spreadex analyst Connor Campbell.

Britain’s blue-chip FTSE 100 index, opening for the first time since the Christmas break, rose 0.6 percent.

The U.S. 10-year Treasury yield rose 4.5 basis points to 2.27 percent, while German 10-year Bund yields, the benchmark for euro zone borrowing costs, rose 2 basis points to 0.58 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 6.5750.

The euro dipped 0.5 percent to $1.0906.

(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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Deutsche Bank to sell stake in China lender for up to $4 billion

FRANKFURT/HONG KONG Deutsche Bank (DBKGn.DE) has agreed to sell its entire 20 percent stake in Beijing-based Hua Xia Bank (600015.SS) to Chinese insurer PICC Property and Casualty Co (2328.HK) – a deal worth up to $4 billion that will help lift its capital ratios.

Deutsche Bank, which has embarked on drastic restructuring under new CEO John Cryan, becomes the latest Western financial institution to scale back in China where caps on foreign ownership have made it difficult to attain the strategic growth many firms first envisioned.

Reducing stakes in Chinese lenders has, however, often resulted in multi-billion profits for European and U.S. banks. Deutsche too is likely to make a tidy profit, with shares in Hua Xia trading at 11.44 yuan as of Monday’s close, compared with below 4 yuan per share in 2006 when it first invested.

Deutsche will gain between 23.0 billion and 25.7 billion yuan, or 3.2 billion to 3.7 billion euros from the stake sale at current exchange rates, depending on Hua Xia’s share price ahead of the sale’s completion.

“As we execute on Deutsche Bank’s strategic agenda, now is the right time for us to sell this investment,” Cryan said in a statement on Monday.

While it is pulling out of Hua Xia, Deutsche continues to run a securities joint venture and an asset management business in China.

The sale will help boost the German bank’s common equity tier 1 capital ratio as of Sept. 30 by about 0.3 to 0.4 percentage points from 11.5 percent.

Seeking to bolster its finances, Deutsche Bank has also announced plans to slash 15,000 jobs, shed businesses employing some 20,000 staff and suspend dividends for two years..

Chinese insurers like PICC PC have been particularly acquisitive this year, spending a record $12.2 billion on property, banking and insurance businesses at home and abroad.

Hua Xia, a relatively small bank in China with around 80 branches and a market capitalization of $20 billion, offers PICC PC a new channel to distribute its insurance products, said Leon Qi, an analyst at Daiwa Capital Markets.

“The rationale for PICC’s acquisition of Hua Xia is to allocate its investment-growing portfolio,” he said, adding that the planned pricing was in line with market expectations.

PICC PC, which is partly owned by American International Group (AIG.N), said it expected relatively steady investment returns from its stake in Hua Xia, in addition to the benefits of strategic cooperation.

Shares in the Chinese insurer fell 1.5 percent on Tuesday, compared with a 0.3 percent rise for the wider market. Hua Xia shares rose 3.2 percent.

(Reporting by Maria Sheahan in FRANKFURT and Daria Hsu in HONG KONG; Additional reporting by Denny Thomas; Editing by Georgina Prodhan and Jason Neely)

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China December official PMI likely to show fifth month of contraction

BEIJING Activity in China’s manufacturing sector is expected to have contracted for a fifth straight month in December, a Reuters poll showed, likely consigning the world’s second-largest economy to its slowest annual growth in a quarter of a century.

The official manufacturing Purchasing Managers’ Index (PMI) is forecast to inch up to 49.7 from November’s 49.6, according to a median forecast of 27 economists in a Reuters poll.

A reading below 50 points suggests a contraction in activity, while a reading above indicates an expansion on a monthly basis.

The official PMI factory reading will be released on Friday along with the official services PMI.

Analysts expect only a marginal improvement in the vast manufacturing sector in December from November, when activity fell to a three-year low.

Chronic overcapacity, sluggish demand at home and abroad and deflationary pressures are expected to continue to weigh on the sector next year.

“There were some bright spots in the economy in December such as a continued recovery in the housing market and an improvement in auto sales,” said Nie Wen, an analyst at Hwabao Trust in Shanghai.

“But performances in these sectors do not necessarily boost the PMI above the 50-point level due to contractions in other industries.”

Vehicle sales in China have rebounded after the government cut taxes on smaller cars from Oct. 1.

Official data on Sunday showed Chinese industrial profits fell 1.4 percent in November from a year earlier, marking a sixth consecutive month of decline.

In a bid to prevent a sharper economic slowdown, Beijing has rolled out a series of stimulus measures and monetary policy easing over the past year and analysts expect further steps in 2016.

China’s economic growth is expected to cool from 7.3 percent in 2014 to 6.9 percent this year, the central bank said in a recent work paper, its slowest pace in a quarter of a century.

Growth could ease further to 6.8 percent next year.

Some China watchers, however, believe real growth levels are already much weaker than official data suggest.

Top leaders last week outlined the main economic targets for 2016, saying the government will push forward “supply-side reform” to help generate new growth engines.

The government also vowed that it will adopt a more flexible fiscal policy, including gradually increasing fiscal deficit ratio and expanding its budget deficit.

President Xi has said China must keep annual average growth at no less than 6.5 percent over the next five years to reach a goal of doubling gross domestic product and per capita income by 2020 from 2010.

China is set to release fourth quarter and full-year GDP data on Jan. 19.

(This version of the story was refiled to clarify headline)

(Reporting By Winni Zhou and Nicholas Heath; Editing by Kim Coghill)

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