News Archive

Dollar, U.S. yields slide on Fed official rate talk

NEW YORK (Reuters) – The U.S. dollar weakened and Treasury yields slid on Friday after a top Federal Reserve official said U.S. interest rates were near a neutral rate, while the SP 500 ended positive after a seesaw session helped by optimism over U.S.-China trade ties.

Oil prices steadied but still posted their sixth straight week of losses. Uncertainty over Britain’s exit from the European Union clouded currency and other markets.

Markets were shaken by comments made by Richard Clarida, newly appointed Fed vice chair, in a CNBC interview that U.S. interest rates were nearing Fed estimates of a neutral rate, and being at neutral “makes sense.”

He also said there was “some evidence of global slowing.”

While the Fed is widely expected to raise rates in December, the number of hikes next year is a matter of debate.

“The big driver right now is Fed speech,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia. “Clarida indicated a modestly dovish bent on Fed policy, and not a particularly aggressive stance.”

On Wall Street, the Dow Jones Industrial Average rose 123.95 points, or 0.49 percent, to 25,413.22, the SP 500 gained 5.94 points, or 0.22 percent, to 2,736.14 and the Nasdaq Composite dropped 11.16 points, or 0.15 percent, to 7,247.87.

Clarida’s comments helped support stocks, which were also boosted by comments from President Donald Trump on trade.

Trump said he may not impose more tariffs on Chinese goods after Beijing sent the United States a list of measures it was willing to take to resolve trade tensions.

“The market is paying attention very closely to anything surrounding trade,” said Veronica Willis, investment strategy analyst at Wells Fargo Investment Institute in St. Louis. “(A trade deal) would boost expectations for global growth, which would ultimately be good for stocks.”

Investors are pointing toward the G20 meeting later this month, when leaders from the United States and China are expected to meet, and the Fed’s meeting in December as key events for markets.

Weighing on equity sentiment and the Nasdaq was a disappointing forecast by chip company Nvidia Corp. Nvidia shares tumbled 18.8 percent while the Philadelphia semiconductor index fell 1.2 percent.

MSCI’s gauge of stocks across the globe gained 0.35 percent.

The pan-European STOXX 600 index lost 0.20 percent as traders waited on more clarity involving Britain’s exit from the EU, known as Brexit.

British Prime Minister Theresa May won the backing of the most prominent Brexiteer in her government as she fought to save a draft EU divorce deal that has stirred up a plot to force her out of her job.

After tumbling a day earlier, sterling was last trading at $1.2825, up 0.40 percent, while the euro was up 0.78 percent to $1.1414.

“Sterling volatility has woken up from its 100-year slumber and is likely to remain reactive,” said Ulrich Leuchtmannan, FX strategist at Commerzbank.

The dollar index, which measures the greenback against a basket of currencies, fell 0.49 percent.

Benchmark 10-year notes last rose 12/32 in price to yield 3.0738 percent, from 3.118 percent late on Thursday.

U.S. crude settled unchanged at $56.46 a barrel, and Brent settled at $66.76 a barrel, up 0.21 percent.

Additional reporting by Richard Leong, April Joyner and Gertrude Chavez-Dreyfuss in New York, Tom Finn and Tommy Wilkes in London; Editing by Phil Berlowitz, Bernadette Baum and Sonya Hepinstall

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S&P, Dow advance on trade optimism; Nvidia sinks Nasdaq

NEW YORK (Reuters) – The SP 500 and Dow Industrials rose on Friday after President Donald Trump said the United States may not have to impose further tariffs on Chinese goods, but falling shares of Nvidia Corp (NVDA.O) dragged down the Nasdaq.

All three indexes had been lower in early trade as an underwhelming outlook from Nvidia weighed on the tech sector.

U.S. stocks moved higher after Trump said China seemed willing to make a deal on trade.

“The market is paying attention very closely to anything surrounding trade,” said Veronica Willis, investment strategy analyst at Wells Fargo Investment Institute in St. Louis. “(A trade deal) would boost expectations for global growth, which would ultimately be good for stocks.”

  • Investors eye holiday sales for market salve
  • SP 500 buybacks set another quarterly record: SP Dow Jones

But lagging Nvidia shares kept the Nasdaq in negative territory.

Nvidia’s shares tumbled 18.8 percent after the chipmaker pointed to the decline in cryptocurrency mining as the cause of its declining sales. The chipmaker’s shares also weighed on the Philadelphia SE Semiconductor index .SOX, which declined 1.2 percent.

Facebook shares also dropped 3.0 percent upon renewed concerns that the company could face regulatory scrutiny following a New York Times report on Wednesday about the company’s attempts to deflect criticism of its handling of Russian propaganda.

The Dow Jones Industrial Average .DJI rose 123.95 points, or 0.49 percent, to 25,413.22, the SP 500 .SPX gained 6.07 points, or 0.22 percent, to 2,736.27 and the Nasdaq Composite .IXIC dropped 11.16 points, or 0.15 percent, to 7,247.87.

Comments from Richard Clarida, newly appointed Federal Reserve vice chair, that U.S. interest rates were nearing the central bank’s estimates of a neutral rate also lent support to stocks, investors said.

For the week, however, all three indexes posted losses. The SP 500 fell 1.61 percent, the Dow lost 2.22 percent, and the Nasdaq shed 2.15 percent.

SP 500 energy .SPNY stocks rose 1.1 percent as oil prices recovered from sharp losses this week on expectations that OPEC and its allies would agree to cut output next month.

SP 500 utility stocks also jumped, advancing 1.3 percent, as PGE Corp (PCG.N) shares surged 37.5 percent. Statements from the California Public Utilities Commission raised hopes that the embattled company could be spared from bankruptcy if it were found liable for the state’s deadliest-ever wildfire.

Consumer discretionary stocks fell 0.5 percent. Continuing a gloomy week for retailers, shares of department store operator Nordstrom Inc (JWN.N) tumbled 13.7 percent after quarterly same-store sales missed estimates and the company reported charges from a credit card problem.

Advancing issues outnumbered declining ones on the NYSE by a 1.20-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favored advancers.

The SP 500 posted 27 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 26 new highs and 109 new lows.

Volume on U.S. exchanges was 8.18 billion shares, compared to the 8.61 billion average over the last 20 trading days.

Reporting by April Joyner; Additional reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta, Nick Zieminski and David Gregorio

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S&P 500 buybacks set another quarterly record: S&P Dow Jones

NEW YORK (Reuters) – SP 500 companies have set another record in share repurchases in the third quarter and look on track to break above $200 billion in buybacks for the quarter, according to an SP Dow Jones Indices analysis.

Even with more earnings reports to come for the third quarter, buybacks by SP 500 companies in the period are now at $194.1 billion, topping the record set in the second quarter of $190.62 billion, SP Dow Jones senior index analyst Howard Silverblatt wrote on Friday.

The current pace “could put us at the $200 billion quarterly mark,” he wrote.

The big jump in corporate share repurchases this year is largely due to the tax overhaul approved by Congress late last year that resulted in hefty cuts to tax rates. SP 500 dividend and capital expenditures have also increased from last year.

Investors are closely watching buyback increases, which help to support stock prices, with the market on shaky ground in recent weeks amid lingering trade tensions and worries about a slowdown in profit growth next year.

Reporting by Caroline Valetkevitch; Editing by Leslie Adler

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Burke to replace Dungey as ABC Entertainment chief

(Reuters) – Karey Burke will replace Channing Dungey as president of Walt Disney’s (DIS.N) ABC Entertainment, the company said on Friday.

Burke is currently head of original programming for Disney’s cable channel Freeform.

Dungey, the first African-American to lead a U.S. broadcast network, will stay through a transition period as Burke assumes her new role.

“I’m excited to tackle new challenges,” Dungey said.

Disney is trying to transform itself into a broad-based digital entertainment company as audiences move to Netflix Inc (NFLX.O), Alphabet Inc’s (GOOGL.O) YouTube and other digital options.

Disney is also on the verge of gaining new film and television properties from its purchase of assets from Twenty-First Century Fox Inc (FOXA.O) for $71.3 billion.

After the completion of the Fox deal, Burke will report to Dana Walden, chairman of Disney Television Studios and ABC Entertainment, the company said.

Reporting by Munsif Vengattil and Lisa Richwine; Editing by Maju Samuel

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Trump says U.S. may not impose more tariffs on China

WASHINGTON (Reuters) – U.S. President Donald Trump said on Friday that he may not impose more tariffs on Chinese goods after Beijing sent the United States a list of measures it was willing to take to resolve trade tensions, although he added it was unacceptable that some major items were omitted from the list.

Trump has imposed tariffs on $250 billion of Chinese imports to force concessions from Beijing on the list of demands that would change the terms of trade between the two countries. China has responded with import tariffs on U.S. goods.

Washington is demanding Beijing improve market access and intellectual property protections for U.S. companies, cut industrial subsidies and slash a $375 billion trade gap.

The relationship between the two countries has deteriorated in recent months, and U.S. Vice President Mike Pence on Tuesday said China needed to change its behavior to avoid a new cold war with the United States.

The U.S. tariff rate on $200 billion in Chinese goods is set to increase to 25 percent from 10 percent on Jan. 1. Trump has threatened to impose tariffs on all remaining Chinese imports – about $267 billion more in goods – if Beijing fails to address U.S. demands.

“We may not have to do that,” Trump told reporters at the White House. “China would like to make a deal.

But Trump added that there were “four or five big things left off” the list of 142 items sent by China.

“They sent a list of things that they’re willing to do, which is a large list, and it’s just not acceptable to me yet.” he said. He did not detail the omitted items.

Trump said, however, he was confident the missing items would be addressed in any deal struck with China.

“I think we’ll probably get them too,” he said.

Trump’s softening line on tariffs gave a modest lift to stocks.

Trump is expected to meet Chinese President Xi Jinping on the sidelines of a G20 summit in Argentina later this month.

Officials have played down the probability that the two will make a deal to end their trade war at the meeting. One source briefed on the offer said it was just a “rehash” of previous offers China had made.

But if Trump holds fire on further tariffs, the Chinese offer may have contained enough for Washington to engage fully in negotiations for a deal.

The United States had said it would not restart negotiations on a trade deal until it saw a concrete response to China on its demands, although informal talks between the two on trade restarted earlier this month after Trump and Xi talked via telephone.

Reuters reported this week that China sent the written response to U.S. demands on Monday, ending a months-long wait.

The Chinese document included 142 items divided into three categories: issues China was willing to negotiate for further action, issues it was already working on and issues considered off limits, a U.S. official told Reuters on Thursday.

Trump’s team of economic advisers have voiced conflicting views on doing a deal with China. Some, such trade adviser as Peter Navarro, advocate taking a hard line on trade until China makes deep economic forms.

Others, such as economic adviser Larry Kudlow, want to see reforms but have pressed for a deal to avoid further disruption to trade between the world’s two largest economies.

Reporting by Jeff Mason; Writing by Makini Brice; and Simon Webb,; Editing by Chizu Nomiyama and Tom Brown

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Regulator ‘stunned and terrified’ after causing PG&E stock surge

(Reuters) – The chief of California’s top utilities regulator said on Friday he was shocked to learn that reassurances he made to investors about PGE (PCG.N) caused the embattled power utility’s stock to surge over 40 percent in a matter of minutes.

PGE’s stock had slumped over 60 percent since the state’s deadliest-ever wildfire broke out last week on fears that without help from California’s government, the utility could go bankrupt should it eventually be found responsible. The fire destroyed the town of Paradise and has killed at least 63 people.

California Public Utilities Commission President Michael Picker told Reuters on Friday that utilities must be able to borrow money cheaply in order to properly serve ratepayers. That echoed comments he made on an investor conference call organized by Bank of America on Thursday, when he said he could not imagine allowing the state’s largest utility to go into bankruptcy.

Picker was surprised hours later on Thursday to learn that PGE’s stock had surged over 40 percent in extended trading in reaction to his comments.

“I was stunned and terrified,” Picker said. “I left the call yesterday and I went back to a workshop I was in, so I didn’t find out about it until several hours later.”

Picker’s market-moving remarks to a private group were unusual, in part because public companies and their executives must follow federal rules aimed at avoiding selective disclosure of material news, but a government official or other outside parties sharing an outlook on a public company does not face the same obligations, experts say.

PGE shares on Friday closed up 37.54 percent at $24.40 on the New York Stock Exchange. The stock is still down about 50 percent from before the fire started, erasing nearly $13 billion in market capitalization.

The cause of the Camp Fire that destroyed the town of Paradise remains under investigation.

With PGE potentially facing mounting costs from wildfires, the regulator would also consider potential options to restructure the company, including separating its electricity and gas units, Picker told Reuters.

Keeping Wall Street interested in investing in PGE and other California utilities is key to reducing the state’s carbon emissions and making the power system more efficient, he said.

“I don’t think we over-reward people. … But we want to make sure that we can continue to keep the lights on, and be cleaner and cleaner, and ideally more reliable.”

GRAPHIC: PGE shares surge after Thursday’s close on utility regulator’s comments –

California state Senator Bill Dodd told Reuters it was “too soon” to speculate about future legislation that might provide relief to PGE in case it is found liable for the Camp Fire.

Dodd sponsored legislation passed this year that lets utilities pass some of the costs related to liability from wildfires on to ratepayers, but the bill did not specifically provide for 2018.

GRAPHIC: Fire Fear –

Citigroup on Friday upgraded PGE’s stock to “buy” from “neutral.”

“Given the reaction in the stock market, we think there was an appropriate level of urgency that something needed to be done,” Citigroup analysts wrote, referring to the regulator’s statement.

The price for PGE’s more than $18 billion of bonds also rose. The price of the March 2034 694308GE1= bond was up about 5 points in afternoon trading after earlier trading as much as 11 points higher.

PGE’s debt was pressured earlier this week after the utility borrowed $3.3 billion under its credit lines and warned it could face liabilities in excess of its insurance coverage should its equipment be found to have caused the fire.

The gains in bond prices came even after both Moody’s Investors Service and Standard Poor’s cut their credit ratings on PGE late Thursday to just one notch above junk bond territory and said the outlook remained negative.

Fitch Ratings on Friday also downgraded the utility’s long-term issuer default ratings.

With the collapse in its bond prices this week, most of PGE’s bonds were trading as though they were already speculative-grade securities, although Friday’s recovery brought many of them back in line with comparably low-investment-grade-rated corporate bonds.

PGE has about $500 million of floating rate notes maturing in two weeks and does not face another maturing security until October 2020.

That October 2020 $800 million bond, with a 3.5 percent coupon 694308GT8=RRPS, yielded more than 10 percent at one point in trading on Thursday, the first of PGE’s securities to have breached that threshold. On Friday, the October 2020 note was up more than 4 points to 95.25 cents on the dollar, with the yield dropping to 6.24 percent.

Shares of Edison International (EIX.N), whose Southern California Edison subsidiary provides power in Southern California, jumped 15 percent. While investors view it as at less risk than PGE to massive liabilities from wildfires, its stock has been volatile over the past week as a second fire burned in that region.

The Woolsey Fire in Southern California also remains under investigation.

The volatility in PGE shares has drawn a rush of trading in options. Traders are betting the stock will remain prone to wild gyrations in the near term.

Reporting by Nichola Groom in Los Angeles and Noel Randewich in San Francisco; additional reporting by John Benny in Bengaluru and Dan Burns in New York; editing by Leslie Adler

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Bombardier CEO meets investors as stock dives 20 percent

MONTREAL, TORONTO (Reuters) – Bombardier Inc’s (BBDb.TO) top executives met with investors in Montreal on Friday after a disappointing free cash flow forecast and regulatory action, which sent the plane and train maker’s shares down 20 percent, sources familiar with the matter said.

The Montreal meeting with Bombardier Chief Executive Alain Bellemare and Chief Financial Officer John Di Bert was previously scheduled but “the (high) participation and level of interest was driven by recent events,” said one of the two sources.

Bellemare had already met with investors following the free cash flow forecast on Nov. 8, which sent its shares down more than 23 percent on that day.

The Canadian company said it would only be able to meet its 2018 free cash flow estimate by using $635 million in proceeds from the sale of a Toronto plant earlier this year. Analysts had expected Montreal-based Bombardier to achieve its target of roughly breaking even on cash without relying on those proceeds.

Bellemare, credited with improving Bombardier’s finances after a crippling 2015 cash crunch, sought to reassure investors that the company would still achieve the company’s five-year turnaround plan designed to boost revenues and margins by 2020, said the source who could not provide further details on the meeting.

The sources declined to be identified as the information is not public. A Bombardier spokesman declined to comment when asked about the meeting.

On Thursday, the province of Quebec’s securities watchdog asked Bombardier to halt stock trades under a plan set up to facilitate share sales by certain senior company executives.

The Autorité des marchés financiers (AMF) said it was “reviewing” transactions and “various announcements” related to Bombardier’s creation of an Automatic Securities Disposition Plan on Aug. 15.

Bombardier stock closed down 20 percent at C$1.67, adding to last week’s 31 percent slide.

The sell-off in the stock also spread to bonds. Bombardier has about C$12.3 billion ($9.35 billion) of bonds outstanding, much of which has been issued in U.S. dollars, according to Refinitiv Eikon data.

The yield on Bombardier’s 7.5 percent U.S. dollar bond maturing in March 2025 has jumped by nearly 300 basis points over the last two weeks to 9.87 percent, its highest since July 2016.

Jamie Koutaoukis, Moody’s lead Bombardier analyst, said by email that she downgraded the company’s senior unsecured debt in 2017 “highlighting at that time that we expected continued negative free cash flow in 2018, in contrast to guidance.”

Reporting By Allison Lampert in Montreal and Fergal Smith in Toronto; Editing by Susan Thomas and Tom Brown

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Gubitosi seen as favorite to become Telecom Italia CEO: sources

MILAN (Reuters) – Veteran Italian manager Luigi Gubitosi is seen ahead in the race to become the new chief executive of Italy’s biggest telecoms group Telecom Italia (TIM) (TLIT.MI), two sources familiar with the matter said.

Telecom Italia on Tuesday lost its third boss in the span of two years when CEO Amos Genish was sacked while he was away on business in Asia.

Genish had been appointed last year to run the underperforming former monopoly by TIM’s then controlling shareholder, French media group Vivendi (VIV.PA).

Since then however directors backed by activist U.S. fund Elliott have wrested control of the board.

TIM’s board meets on Sunday to appoint Genish’s successor.

One of the sources said Gubitosi had the full backing of Elliott and state lender CDP, which earlier this year took a stake in TIM, siding with Elliott in the boardroom coup against Vivendi.

A second source said Gubitosi could count on a majority of board votes at present but added the situation could still change before Sunday.

Telecom Italia was not immediately available for a comment.

Gubitosi is currently one the commissioners managing loss-making state carrier Alitalia.

The chief financial officer of car maker Fiat until 2005, Gubitosi is pitted against Alfredo Altavilla, who until recently was also a top manager at Fiat Chrysler Automobiles (FCHA.MI).

Both Gubitosi – who also headed telecoms group Wind – and Altavilla sit on TIM’s board as independent directors proposed by Elliott.

The first source said the name of Rocco Sabelli, a former head of Alitalia, was also “drifting around.”

Telecom Italia has given no reason for Genish’s abrupt exit.

Genish had been pursuing a three-year turnaround plan, focusing on a digital transformation and fixing TIM’s finances, but sources say some Elliott directors wanted him to put higher priority on a possible spin-off of its fixed-line networks.

The spin-off could pave the way for the creation of a single broadband infrastructure company combining TIM’s network with that of smaller fiber-optic rival Open Fiber.

The populist 5-Star Movement, which took office with ruling coalition partner the League in June, has placed the creation of a fast broadband network at the heart of its industrial policy.

A document seen by Reuters on Friday showed Italy was set to introduce measures to help create a single broadband infrastructure company.

Reporting by Steve Jewkes and Stefano Rebaudo; Writing by Valentina Za; Editing by Andrew Heavens

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Oil edges up in volatile session but falls for sixth straight week

NEW YORK (Reuters) – Oil ended slightly firmer after volatile trading on Friday, supported by expectations that the Organization of the Petroleum Exporting Countries would agree to cut output next month, though prices fell for the sixth straight week amid global oversupply concerns.

OPEC kingpin Saudi Arabia is keen for the major producers to cut output by about 1.4 million barrels per day, around 1.5 percent of global supply, to support the market, sources told Reuters this week. But other producers, including Russia, have been reluctant to agree to a cut.

Brent settled up 14 cents, or 0.2 percent, at $66.76 a barrel. The global benchmark fell 4.6 percent in the week, the sixth consecutive decline.

U.S. crude settled unchanged at $56.46 a barrel after trading between $55.89 and $57.96. The contract, which had its steepest one-day loss in more than three years on Tuesday, fell 5.6 percent in the week, also its sixth straight weekly decline.

After Tuesday’s sharp fall, the market was due for a slight correction, and was now stabilizing, said Tariq Zahir, managing member at Tyche Capital Advisors in New York.

“A relief rally was in the cards,” said Bob Yawger, director of energy futures at Mizuho in New York. OPEC is likely to be spurred to action as U.S. production continues to climb, he said.

Still, the day’s gains were likely to be limited as traders were cautious going into the weekend, he said. “It would take a brave soul to go home really long this weekend considering the slaughter we’ve had in the past eight weeks.”

OPEC ministers meet on Dec. 6 in Vienna to decide on production policy for the next six months amid a growing surplus in world markets.

U.S. crude production reached another record last week, at 11.7 million barrels per day, government data showed. The record output contributed to the biggest weekly build in U.S. crude stockpiles in nearly two years.

U.S. drillers added two oil rigs this week, bringing the total count to 888, still the highest level since March 2015, General Electric Co’s Baker Hughes energy services firm said in its closely followed report . The rig count is seen as an indicator of future production growth.

The United States imposed sanctions on Iranian oil exports this month and Iranian crude exports have fallen sharply in recent months, although Washington cushioned the blow by granting some temporary exemptions.

Other oil producers have more than compensated for the lost Iranian oil and most analysts now see a significant supply surplus with inventories building, putting pressure on prices.

Fearing a repeat of the 2014 price rout, OPEC is widely expected to start trimming output soon.

This could produce a swift price rebound, some analysts say, especially if production falls further in Venezuela and Libya.

“We are likely from December onwards to have at least 1 million barrels per day (bpd) less of (Iranian) crude exports,” Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas, told Reuters Global Oil Forum.

Tchilinguirian said he would not be surprised if Brent recovered to $80 this year.

Also supporting prices, Iraq resumed exporting oil from its northern Kirkuk oilfields on Friday, pumping 50,000-100,000 bpd, an oil ministry spokesman said. Some analysts had expected the volumes to be much higher, at closer to 300,000 bpd.

Hedge funds and other money managers cut their bullish wagers on U.S. crude futures and options in New York and London during the week ended Nov. 13 by 8,259 contracts to 165,121, the lowest since June 27, 2017, the U.S. Commodity Futures Trading Commission (CFTC) said.

Brent speculators on the Intercontinental Exchange (ICE) cut net longs by 45,216 contracts to 214,832 in the week, also the lowest since June 27, 2017.

GRAPHIC-U.S. crude oil output and storage levels –

Additional reporting by Henning Gloystein in Singapore and Christopher Johnson and Shadia Nasralla in London; Editing by Marguerita Choy and Dale Hudson

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