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Global business activity starts 2016 on weak note

LONDON Global economic growth began 2016 on a weak note, surveys of business activity suggested on Wednesday, and with inflation remaining low central banks are seen under pressure to keep monetary policies easy.

U.S. and European stocks were lower on Wednesday in the wake the business surveys, though weak oil prices continue to be a major factor in stock and bond markets.


U.S. service sector activity slowed in January, suggesting economic growth weakened at the start of the first quarter even though the labor market remained resilient.

The U.S. service sector purchasing managers’ index (PMI) from data vendor Markit for Jan fell to 53.2, the lowest since October 2013, from 54.3 in Dec. An index reading above 50 indicates expansion in the sector.

Markit’s U.S. composite PMI for both the service and manufacturing sectors fell to 53.2 from 54.0 in Dec.

An alternative reading from the U.S. Institute of Supply Management (ISM) showed the service sector PMI fell to 53.5 in January, the lowest since February 2014, from 55.8 in December.

ISM’s U.S. manufacturing sector PMI for January, published Monday, showed activity contracted.

“Going back a half year or so, it had seemed that the weakness in the economy was fairly isolated in the manufacturing sector as well as a few other areas, mainly energy and exports,” said Daniel Silver, an economist at JPMorgan in New York.

“But we now have these surveys showing that the service sector has weakened as well over the past few months.”


Euro zone business activity started 2016 at its weakest in a year, adding to pressure on the ECB to ease monetary policy again.

Markit’s euro zone service sector PMI fell to 53.6 in January from 54.2 in December. Markit’s euro zone composite PMI, seen as a good guide to economic growth, fell to 53.6 from December’s 54.3.

Markit said the euro zone PMIs point to growth of 0.4 percent at the start of the year, in line with a January Reuters poll.

The European Central Bank is expected to cut its deposit rate further into negative territory in March and may increase the 60 billion euros a month it currently spends buying bonds, a Reuters poll found.

“Deflationary pressures intensified, as lower oil prices impacted both input and output costs, consistent with our view that the moderate euro area recovery will continue to take place in a ‘missingflation environment'”, said economist Apolline Menut at Barclays Capital.

In one bright spot, retail sales across the 19 countries using the euro increased in December as sales of food, drinks and tobacco rose over the Christmas period, according to official data released on Wednesday.

However, Britain’s service sector growth was unscathed despite firms’ concerns about the risk of a referendum on European Union membership likely in June.

The UK Markit/CIPS services PMI edged up to 55.6 in January, from 55.5 in Dec, to a level it has surpassed only once since July last year.

Britain’s economy looks set to expand by 0.6 percent in the first quarter of 2016, picking up from estimated growth of 0.5 percent in the last three months of last year, Markit said.

A reading on Britain’s manufacturing sector published on Monday showed the factory sector also grew, while research group NIESR said earlier it expects Britain’s economy to grow 2.3 percent this year, a slight improvement on 2015.

The Bank of England is expected on Thursday to keep interest rates at their record low of 0.5 percent, where they have been kept since 2009.


Activity in China’s services sector expanded at its fastest pace in six months in January, helping to offset the weakness in its manufacturing sector.

The Caixin/Markit service sector PMI rose to 52.4 in January from a 17-month low reading of 50.2 in December. The increase was the largest since August 2014.

On Monday the Caixin/Markit China manufacturing survey had shown the factory sector shrank for an 11th consecutive month in January.

A composite Caixin output index covering both manufacturing and services rose to just above 50 in January.

In 2015, the contribution from the services sector to China’s GDP climbed to 50.5 percent.

China’s official manufacturing PMI showed manufacturing activity contracted at its fastest pace since August 2012, while the official service sector PMI also suggested service sector growth slowed from December.

China’s economy grew 6.9 percent in 2015, the weakest pace of growth in a quarter of a century.

“The government should continue to deepen reform, relax administrative controls and reduce restrictions on market entry for service providers,” said He Fan, chief economist at Caixin Inight Group.

Japan also saw better news with activity in its service sector in January growing at the fastest pace in five months.

The Markit/Nikkei Japan service sector PMI rose to 52.4 in January from 51.5 in December, remaining above the 50 threshold for the 10th consecutive month.

In 2014, services accounted for 65 percent of Japan’s gross domestic product, while manufacturing had a 21 percent share.

The Bank of Japan stunned investors last week by introducing negative interest rates to prevent concerns about a weakening global economy from derailing inflation expectations.

Activity in India’s services sector increased at its fastest pace in more than 18 months in January, with the Nikkei/Markit PMI at 54.3 in January from the 53.6 in December, the seventh straight month above the 50-level.

India’s manufacturing activity unexpectedly returned to growth in January according to a similar survey published earlier this week.

The Reserve Bank of India held its benchmark interest rate at 6.75 percent on Tuesday. Asia’s third-largest economy is expected to grow at a steady rate and outpace China over the coming year.

(Additional reporting by Winni Zhou and Nicholas Heath in Beijing; Stanley White in Tokyo, Aaradhana Ramesh in India, William Schomberg in London, Lucia Mutikani and Dan Burns in New York; Editing by Hugh Lawson and Clive McKeef)

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GM posts record profit in fourth quarter and 2015, but shares skid

DETROIT General Motors Co (GM.N) reported record quarterly and annual profits on Wednesday and promised 2016 will be even better, but unimpressed investors dumped the automaker’s shares.

The disconnect highlights the challenges facing GM, Ford (F.N) and Fiat Chrysler (FCHA.MI)(FCAU.N).

U.S. sales and profits are strong, the Chinese auto market has not fallen off a cliff, and European vehicle demand is recovering. Yet shares in the Detroit automakers aren’t getting any respect, increasing pressure on executives to boost dividends and share buybacks even as the costs of new technology and emissions regulations rise.

GM shares fell as much as 5 percent, even as Chief Executive Officer Mary Barra and Chief Financial Officer Chuck Stevens told investors on a conference call that any downturn in U.S. auto sales is still several years away.

“The bears argue the U.S. auto industry has peaked and is ready to roll over,” Stevens said on the call. GM is positioned to stay profitable even if U.S. car and truck sales fall to 10 million to 11 million vehicles from the current rate of over 17 million vehicles a year, he said.

Efraim Levy, an SP Capital equity analyst, said while he did not agree, he understood the bears who fear U.S. auto sales will peak in 2016 and that “people are afraid that we’re going to have a recession or some other drop-off in sales, and that that’s going to hurt margins.”

Levy sees any drop-off as limited and rated the stock a “strong buy.”

Detroit automakers have a long record of losing money when the economy slumps. GM and the former Chrysler Group survived the last recession with the help of federally funded bankruptcies.

Barra and Stevens said GM is a different company now. The automaker expects to cut operating costs by $5.5 billion by 2018, and return $16 billion to shareholders in dividends and share buybacks over that span.

At the same time, GM is investing to fend off challenges from would-be disruptors. Barra outlined how GM plans to use its recently acquired stake in ride hailing service Lyft to pave the way for the introduction of self-driving vehicles.

“We will continue to invest in game changers,” Barra said.

GM earlier Wednesday reported record net income of $9.7 billion for 2015.

Profit before interest, taxes and one-time items was $2.8 billion, a fourth-quarter record and ahead of analysts’ expectations.

GM affirmed a forecast to increase 2016 earnings per share, excluding one-time items, to $5.25 to $5.75 from $5.02 a share in 2015.

GM generated nearly all of its fourth-quarter profits in North America.

Shares dropped 3.2 percent to $28.69 after falling as low as $28.18.

(Reporting by Joe White and Bernie Woodall in Detroit; Editing by Jeffrey Benkoe)

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U.S. services sector cooling; jobs market resilient

NEW YORK Activity in the vast U.S. services sector slowed to a near two-year low in January, suggesting that economic growth weakened further at the start of the first quarter even as the labor market remains resilient.

The economy has been undermined by a strong dollar, softening global demand and an inventory destocking, which have pressured manufacturing and export industries. Spending cuts by energy firms, reeling from a collapse in oil prices, have also dragged on growth.

Until recently, services sector strength had offered hope that the economy would weather both the domestic and global headwinds, which held gross domestic product growth to a 0.7 percent annual rate in the fourth quarter.

“The slowdown in the services sector indicators may go a long way in fanning fears of a more pronounced slowdown to U.S. growth momentum heading into 2016,” said Gennadiy Goldberg, an economist at TD Securities in New York.

The Institute for Supply Management (ISM) said its index of non-manufacturing activity fell to 53.5 last month, the lowest level since February 2014, from 55.8 in December.

A reading above 50 indicates expansion in the service sector, which accounts for more than two-thirds of the U.S. economy. Service industries reported growth in new orders continued to slow, with export orders contracting last month.

The ISM noted that while the majority of the respondents’ comments were positive about business conditions, there were concerns about the global environment, stock market volatility and their impact on commercial and consumer confidence.

Food industries complained about the dollar’s strength and wholesalers said the plunge in oil prices was putting “extreme pressure” on exchange rates in key export markets. As a result, companies were forced to cut prices to beat competition, which was compressing margins.

Oil prices have plunged about 70 percent in the last 18 months, hit by a growing glut and cooling economic growth in China and other emerging markets. The dollar has gained 22.2 percent against the currencies of the United States’ main trading partners since June 2014.


A separate survey from data firm Markit also showed moderating services sector activity last month. Markit’s U.S. services business activity index fell to 53.2, the lowest level since October 2013, from 54.3 in December. Though still above the key 50 mark, January’s reading was also below the average recorded since the survey began in October 2009.

The reports join a raft a weak data ranging from inflation to manufacturing and consumer spending in suggesting the Federal Reserve will probably not hike interest rates in March. The U.S. central bank raised its benchmark overnight lending rate in December for the first time in nearly a decade.

The dollar fell to a more than seven-week low against a basket of currencies and U.S. stocks were trading lower. Prices for U.S. government debt fell marginally.

“There are more uncertainties out there and that is likely to cause the Fed to be cautious in their drive to normalize,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

With business activity cooling, the ISM survey’s employment index fell to a one-year low in January. While this raises the possibility that employment growth slowed in January after non-farm payrolls surged 292,000 in December, there are signs that the labor market remains fairly strong.

In a separate report, payrolls processor ADP said private employment increased 205,000 in January. December’s private payroll gains were revised up to 267,000 from 257,000.

The ADP National Employment Report, which is jointly developed with Moody’s Analytics, came ahead of the U.S. Labor Department’s more comprehensive employment report on Friday, which includes both public and private-sector employment.

Economists polled by Reuters are looking for total non-farm payrolls to increase by 190,000 in January and the unemployment rate to remain at a 7-1/2-year low of 5 percent.

Private hiring fell below December’s brisk pace because of a slowdown at the largest companies, which more sensitive to current economic conditions than small and mid-sized firms, ADP said.

(Reporting by Dan Burns and David Gaffen, writing by Lucia Mutikani; Editing by Meredith Mazzilli and Chizu Nomiyama)

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Toyota looks to Daihatsu to crack Indian small car market

NOIDA, India Toyota Motor Corp (7203.T) will start talks this week with its affiliate Daihatsu Motor (7262.T) to build and sell small cars in India, where it has so far struggled to crack the cheaper end of the market. The Japanese carmaker aims to double its share of India’s passenger vehicle market to 10 percent by 2025 and Daihatsu’s small cars will be key to achieving this goal, a company executive said. The launch of Daihatsu cars in India could help Toyota increase its share of the entry-level, no-frills car sector, that accounts for about two-thirds of total sales in the country and is dominated by rivals such as Maruti Suzuki (MRTI.NS), Hyundai (005380.KS) and Honda (7267.T). “To fight in the small car market we need more support from Daihatsu … Toyota by ourselves cannot develop it,” Kyoichi Tanada, Toyota’s CEO of Asia, the Middle East and North Africa told Reuters in an interview. The comments by the world’s biggest carmaker are a tacit admission that it has failed to win over India’s cost-conscious car buyers more than two decades after it started selling cars in Asia’s third-largest economy. A decision on when Daihatsu cars will be brought to India will likely to be taken before the end of this year, Tanada said in an interview at India’s biggest motoring event on the outskirts of the capital New Delhi. Toyota is to buy its remaining stake in Daihatsu as part of its push into compact cars for emerging markets such as India, which is expected to expand to become the world’s third-largest car market by 2020 from fifth place now. “In a market like India there is still need for small cars. As soon as possible I would like to introduce that small car,” Tanada said. He said Toyota would also need to consider the Indian government’s policy on safety and environmental issues before deciding which models to launch and when. Toyota launched its first no-frills car, the Etios sedan, in 2010 and, a year later, the Liva hatchback. In trying to control costs and keep the price low, the company was criticized for compromising on quality and finish. Sales did not take off as expected, hurting plant utilization levels. Toyota will propose to Daihatsu to use part of the carmakers plant in southern India to build vehicles rather than setting up its own facility, Tanada said, adding that Toyota can spare about half, or 100,000 units a year, of manufacturing capacity. Another challenge for Toyota will be low awareness about the Daihatsu brand in India. To save spending on creating brand awareness and setting up a separate sales network, Tanada says it could consider selling Daihatsu cars under the Toyota brand. To avoid diluting its premium brand image in India, Toyota could look at a sales and dealership strategy similar to rival Maruti Suzuki, which sells its premium models through a separate network of dealerships called Nexa. Suzuki Motor Corp (7269.T), that controls Maruti Suzuki, said its position in India and other markets is under serious threat from Toyota’s buyout of Daihatsu.

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Merck gives cautious 2016 outlook as sales of top medicines lag

Merck Co Inc (MRK.N) on Wednesday issued a cautious 2016 outlook and reported disappointing fourth-quarter sales of its Januvia diabetes treatment and its Remicade arthritis drug, sending its shares down nearly 3 percent.

Sales of Januvia and a related drug called Janumet, the company’s biggest franchise, fell 12 percent to $1.45 billion. Merck said wholesalers had stocked up in the prior quarter, and the products face growing competition from other oral diabetes treatments.

But Adam Schechter, the company’s head of global human health, said Januvia sales should increase this year, excluding the effects of a stronger dollar, which reduces the value of revenue from overseas.

Januvia sales did not suffer after recent data showed Eli Lilly Co’s (LLY.N) rival Jardiance drug sharply reduced deaths among diabetics at risk of heart attack, Schechter said.

Sales of Remicade, which is facing competition outside the United States from cheaper biosimilars, dropped 29 percent to $396 million. In a conference call with analysts, Schechter said the drug’s market share was shrinking, and the trend would accelerate.

“Our initial read on the earnings and guidance reaffirms our neutral stance on (Merck) as pressure on key products such as Januvia and Remicade will likely limit near-term growth,” Credit Suisse analyst Vamil Divan said.

Merck is counting on Keytruda, a recently approved treatment for melanoma and lung cancer, to boost its earnings for years to come. The medicine, which takes the brakes off the immune system, is competing with Bristol-Myers Squibb Co’s (BMY.N) similar Opdivo treatment, which is picking up sales faster.

Keytruda sales rose to $214 million in the fourth quarter, about half Opdivo’s $475 million in revenue in that period.

Merck, the second-largest U.S. drugmaker behind Pfizer Inc (PFE.N), forecast full-year earnings of $3.60 to $3.75 per share, excluding special items. The analysts’ average estimate was $3.72, according to Thomson Reuters I/B/E/S.

Merck said it expected 2016 revenue of $38.7 billion to $40.2 billion. Wall Street had forecast $40.25 billion.

Fourth-quarter revenue fell 3 percent to $10.22 billion, below analysts’ expectations of $10.35 billion. Sales would have risen 4 percent if not for the stronger dollar.

Net income fell to $976 million from $7.32 billion.

Excluding costs from last year’s acquisition of Cubist Pharmaceuticals and other special items, earnings of 93 cents per share topped Wall Street’s forecast of 91 cents. Analysts largely attributed the profit beat to a lower tax rate.

(Additional reporting by Amrutha Penumudi in Bengaluru; Editing by Lisa Von Ahn)

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Wall St. pares losses as oil rally boosts energy stocks

U.S. stocks pared some of their losses in early afternoon trading on Wednesday as energy and materials stocks rose, driven by a 6 percent rally in crude oil prices.

Oil rose after investors took advantage of an earlier weakness in prices and a drop in the U.S. dollar.

DuPont’s (DD.N) was up 3 percent and was the biggest boost to the SP materials index .SPLRCM, while Exxon’s (XOM.N) 2.4 percent rise lifted the energy index .SPNY.

Earlier in the day, stocks fell after U.S. data showed that the economy’s service sector expanded at a slower-than-expected rate, raising concerns that weakness in manufacturing was spreading to other areas of the economy.

But, ADP data showed private employers added more jobs than expected in January. The data comes ahead of the government’s more comprehensive employment report on Friday.

Tepid U.S. growth, falling oil prices, and fears regarding a China-led global slowdown have been major factors for a torrid start to the year for stocks. The SP 500 is down 6.9 percent this year.

But, more than most, the ebb and flow of crude oil prices has affected the stock market the most, even as investors wait for central banks around the world to step in to boost the economy.

Fed fund futures are pricing in the Federal Reserve to now hike rates only once this year, down for the four increases projected earlier. The Fed next policy meeting is in March.

“I think the next couple of quarters could be really volatile,” said Bryce Doty, portfolio manager at Sit Investment Associates.

“You need the markets to settle into a new equilibrium without this manipulated support from the Fed, which means a correction. The problem with corrections is that markets tend to over correct before they rebound.”

At 12:30 p.m. ET, the Dow Jones industrial average .DJI was down 8.53 points, or 0.05 percent, at 16,145.01.

The SP 500 .SPX was down 11.12 points, or 0.58 percent, at 1,891.91 and the Nasdaq Composite index .IXIC was down 48.64 points, or 1.08 percent, at 4,468.31.

Five of the 10 major SP sectors were lower with the financial index’s .SPSY 1.5 percent loss leading the decliners.

The index fell to a more than two-year low, with Wells Fargo’s (WFC.N) 3.2 percent fall weighing the most.

Microsoft (MSFT.O) was down 2.2 percent at $51.83, making its the biggest drag on the SP and the Nasdaq. UnitedHealth’ (UNH.N) 2.2 percent fall weighed the most on the Dow.

Weak quarterly earnings by U.S. corporations are adding to worries. Fourth-quarter SP 500 earnings are expected to have fallen 4.4 percent from a year earlier, according to Thomson Reuters data.

Comcast (CMCSA.O) rose 4.3 percent to $56.91 after the company posted better-than-expected revenue.

National Oilwell (NOV.N) fell 11.3 percent to $27.20 after the largest U.S. oilfield equipment provider reported a quarterly loss.

Advancing issues outnumbered decliners on the NYSE by 1,533 to 1,415. On the Nasdaq, 1,602 issues fell and 1,057 advanced.

The SP 500 index showed 17 new 52-week highs and 56 new lows, while the Nasdaq recorded 13 new highs and 203 new lows.

(Reporting by Tanya Agrawal; Additional reporting by Abhiram Nandakumar; Editing by Don Sebastian and Savio D’Souza)

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Comcast revenues beat Street; records big boost in video customers

NEW YORK Comcast Corp posted better-than-expected fourth-quarter revenue and added the most video customers in any quarter in eight years, even as viewers gravitate toward online offerings.

The largest U.S. cable operator and the No. 1 U.S. high-speed Internet provider said on Wednesday it also raised its annual dividend by 10 percent to $1.10 per share and earmarked $5 billion in stock buybacks for 2016 as part of a $10 billion program.

Shares of Comcast rose 4.5 percent to $57.04 in mid-day trading.

Total revenue at Philadelphia-based Comcast rose 8.5 percent to $19.25 billion in the fourth quarter, surpassing analysts’ expectations of $18.76 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to the company rose 2.4 percent to $2 billion, or 79 cents per share, from a year earlier. Excluding items such as gains on sales and acquisition-related items, profit rose 5.2 percent to 81 cents per share, a penny below estimates.

The company added 89,000 video subscribers, the most in any quarter in eight years. A year earlier it picked up about 6,000 new subscribers.

Cable and satellite-TV operators are battling streaming video services like Netflix Inc and Hulu for subscribers, as viewers are increasingly moving away from pay-TV toward online video offerings.

Comcast has been investing in improving customer service, enhancing features on its set-top boxes and rolled out smaller bundles in a bid to retain and add subscribers.

Wall Street has been keeping an eye on whether Comcast may enter the wireless market.

The U.S. Federal Communications Commission will hold the broadcast TV spectrum incentive auction, an effort buy back wireless airwaves from broadcasters and sell them to the wireless industry and other players.

Comcast would participate in the auction, starting in late March said on an earnings conference call.

“We’re going to … evaluate, consider and may purchase, but only if we think the price is right, Chief Financial Officer Mike Cavanagh said.

The spectrum would be valuable in helping potentially build out infrastructure to offer wireless services to customers.

The company’s business services unit posted $1.3 billion in revenue, up 19 percent from a year ago. Revenue from Comcast’s high-speed Internet business grew about 10 percent to $3.2 billion, and Internet customer additions rose 23 percent to 460,000 – the highest in nine years.

At NBCUniversal, revenue jumped 13 percent to $7.5 billion, with film studio revenue climbing 26 percent to $1.63 billion.

(Editing by Jeffrey Benkoe)

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China seeks food security with $43 billion bid for Syngenta

BASEL, Switzerland China made its boldest overseas takeover move when state-owned ChemChina agreed a $43 billion bid for Swiss seeds and pesticides group Syngenta on Wednesday, aiming to improve domestic food production.

The largest ever foreign purchase by a Chinese firm, announced by both companies, will accelerate a shake-up in global agrochemicals and marks a setback for U.S. firm Monsanto, which failed to buy Syngenta last year.

China, the world’s largest agricultural market, is looking to secure food supply for its population. Syngenta’s portfolio of top-tier chemicals and patent-protected seeds will represent a major upgrade of its potential output.

“Only around 10 percent of Chinese farmland is efficient. This is more than just a company buying another. This is a government attempting to address a real problem,” a source close to the deal told Reuters.

Years of intensive farming combined with overuse of chemicals has degraded land and poisoned water supplies, leaving China vulnerable to crop shortages. The deal fits into Beijing’s plans to modernize agriculture over the next five years.

“I was sent to the countryside at the age of 15, so I’m very familiar with what farmers need when they work the land. The Chinese have relied mainly on traditional ways of farming. We want to spread Syngenta‚Äôs integrated solution among smallholder farmers,” ChemChina Chairman Ren Jianxin told a media briefing.

With growth slowing at home, Chinese companies are increasingly looking abroad for deals that can boost their business and help them diversify. If completed, ChemChina’s Syngenta purchase would be more than double CNOOC’s $17.7 billion buy of Canadian energy company Nexen in 2012.

ChemChina last year bought Italian tire maker Pirelli and last month said it would buy German industrial machinery maker KraussMaffei Group for some $1 billion.

Shares in Syngenta rose on news of the deal, but at around 412 Swiss francs, were some way below the agreed offer price of $465 per share, equivalent to 480 francs, reflecting market concerns that the deal could yet stumble over regulatory hurdles and limited expectations of a counter-offer.

“Syngenta has never been valued so highly. Over the last few years the company has failed to demonstrate it can generate reasonable earnings on its own,” Patrick Huber, a fund manager at Mirabaud Asset Management told Reuters.

“We will definitely tender our shares at the offered price. I can’t imagine another bidder making a higher offer,” Huber said, adding that although U.S. regulators may not block the deal, they could delay it.


Syngenta CEO John Ramsay, who described the ChemChina offer as “very appropriate and attractive”, said he saw no major barriers and noted that ChemChina — short for China National Chemical Corp — had secure financing in place.

A source with knowledge of the deal said the funding would come from a range of Chinese players, as well as HSBC and China CITIC Bank International.

“I think the overall regulatory approvals will not be very challenging,” Ramsay told Reuters, adding he expected antitrust regulators to acknowledge the limited overlap.

The Committee on Foreign Investment in the United States (CFIUS), whose mandate is U.S. national security, would not pose a major hurdle, Ramsay said.

Swiss regulators said their conditions were largely met by the terms of the deal, although they want Swiss retail investors to receive the ChemChina offer in Swiss francs and warnings to be given on foreign exchange risks.

Syngenta’s board would still have to consider any rival offers, Ramsay said, although there are tough financial penalty clauses for both parties if they fail to deliver on the deal.

In a hint of what may be in store for the enlarged group, Syngenta’s chairman said ChemChina will be on the lookout for more deals as China strives to improve its food supply.

“ChemChina has a very ambitious vision of the industry in the future. Obviously it is very interested in securing food supply for 1.5 billion people and as a result knows that only technology can get them there,” Michel Demare said.

Syngenta is already the largest supplier of crop chemicals, excluding seeds, in China with a 6 percent share of a fragmented market, the group’s chief operating officer Davor Pisk said.


Beijing is seeking to cut reliance on food imports amid limited farm land, a growing population and higher meat consumption. China’s combined consumption of pork, beef and poultry has grown by an average 1.7 million tonnes a year for the past decade, placing further stress on feed grain supplies.

Meanwhile, a global glut of corn and soybeans has depressed grain prices for the past three years, prompting U.S. farmers to reduce spending on everything from equipment to seeds and pesticides. The cutbacks, along with pressure from investors to bolster profits, have sent many of the world’s largest agricultural companies scrambling to cut deals.

DuPont and Dow Chemical Co agreed in December on an all-stock merger valued at $130 billion in a first step toward breaking up into three separate businesses, a move that was seen as a trigger for further consolidation.

Syngenta was advised by Dyalco, the one-man business of former Goldman Sachs MA head Gordon Dyal, alongside JP Morgan, Goldman Sachs and UBS while HSBC and China CITIC Bank International advised ChemChina.

(Additional reporting by Michael Shields, Freya Berry, Lisa Jucca, Lawrence White, Elzio Barreto, Aizhu Chen, Oliver Hirt and Gavin Maguire; Writing by Alexander Smith; Editing by Ian Geoghegan and Keith Weir)

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Oil bounces 5 percent after U.S. data sparks short-covering

NEW YORK Oil prices jumped 6 percent on Wednesday, snapping a two-day rout, after investors took advantage of a weaker U.S. dollar and shrugged off data showing a unexpected large surge in U.S. crude inventories to record highs.

Comments by Russia’s Foreign Minister reiterating the major producer’s willingness to meet if there was consensus among the OPEC and non-OPEC members, also reignited hopes of a deal to trim output and helped to boost prices as much as 7 percent.

The dollar index .DXY tumbled to an over seven-week low amid growing skepticism that the Federal Reserve would be able to hike U.S. interest rates again this year and after data showed the U.S. services industry grew more slowly than expected last month.

Brent futures LCOc1 rose $1.95, or 5.9 percent, to $34.67 a barrel by 1:12 p.m. EST (1812 GMT), after rising as high as $34.93. U.S. crude futures CLc1 rose $1.96, or 6.5 percent, to $31.84, after touching a high of $31.95.

“We’re getting the rally in crude oil from the pounding that the dollar is taking,” said Robert Yawger, senior vice president of energy futures at Mizuho Securities USA.

“There is a little bit of spec activity involved in that too. The market has a tendency as of late here to draw in spec position when we trade below $30,” he added.

In the last year, speculators had racked up the largest short, or bearish, position in crude oil in history and part of the current volatility in the price has come as a result of some of those positions being closed.

The markets shrugged off government data showing U.S. crude and gasoline inventories rose to record levels last week. Crude soared 7.8 million barrels higher, topping analysts’ expectations for a rise of 4.8 million barrels, as imports jumped and refiners trimmed throughput.

“People say ‘I think the market has bottomed, there’s no place else to go but up from here’ – I don’t agree with that premise. I think we will make new lows before we start moving up higher – there’s just so much oil out there you don’t know what to do with it,” Sal Umek of the Energy Management Institute in New York said.

“The bears are controlling the market, the bulls are only going to go in and try to get a little bit here and there.”

(Additional reporting by Amanda Cooper in London and Keith Wallis in Singapore; Editing by Marguerita Choy)

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