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Showing posts with label Stocks. Show all posts
Showing posts with label Stocks. Show all posts
July 20, 2018

Asia stocks subdued as European trade fears flare, Trump comments hit dollar

Asia stocks subdued as European trade fears flare, Trump comments hit dollar
A man looks at an electronic board showing stock information at a brokerage house in Shanghai, China July 6, 2018. REUTERS/Aly Song

By Shinichi Saoshiro

TOKYO (Reuters) – Asian stocks eked out modest gains on Friday as investor caution prevailed amid concerns about the European Union imposing retaliatory tariffs on U.S. goods while U.S. President Donald Trump’s criticism of Federal Reserve policy knocked the dollar.

MSCI’s broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) inched up 0.1 percent.

Australian stocks (AXJO) added 0.5 percent and South Korea’s KOSPI (KS11) edged up 0.07 percent. Japan’s Nikkei (N225) reversed earlier modest losses to rise 0.2 percent, lifted as the dollar came off lows versus the yen.

Officials from the EU Trade Commission, due to arrive in Washington next week for trade talks, are said to be preparing a list of tit-for-tat actions in response to proposed U.S. tariffs on EU cars.

“The latest trade headlines have drawn attention as they come from Europe,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo. “So any action by the EU will not come into effect right away, and negative responses by the equities could peter out after one or two days with the markets regaining calm.”

Wall Street shares declined overnight amid the latest flare up in trade tensions, with the Dow (DJI) shedding 0.53 percent and the S&P 500 declining 0.39 percent (SPX). (N)

But the Dow has gained about 0.2 percent this week during which it touched a one-month high thanks to strong corporate earnings.

U.S. equities were also supported this week after Federal Reserve Chairman Jerome Powell expressed confidence in the U.S. economy and affirmed expectations that the central bank was on track to keep hiking interest rates gradually.

However, comments from President Trump criticizing Fed policy and expressing concern about the potential impact of rising rates and a stronger dollar on the U.S. economy and American corporate competitiveness hosed down the greenback’s recent rally.

The dollar pulled back from a recent one-year high against most of its peers earlier on Thursday after the comments.

Later, the White House said in a statement that Trump respects the Fed’s independence and was not interfering with its policy decisions.

The dollar index against a basket of six major currencies stood little changed at 95.151 (DXY) after being knocked down from 95.652, its highest level since July 2017.

The euro edged up 0.1 percent to $1.1655 (EUR=), lifted from a three-week trough of $1.1575 set overnight. The single currency has lost about 0.2 percent this week.

The greenback was, however, up 0.1 percent at 112.57 yen after going as low as 112.35 earlier in the session. It has been knocked away from one-year peak of 113.18 scaled on Thursday. It was still up 1.7 percent on the week, boosted earlier after Fed’s Powell reinforced expectations for gradual, steady rate increases.

Brent crude futures (LCOc1) rose 0.3 percent to $72.80 a barrel as the dollar flagged, trimming some of their overnight losses. [O/R]

A weaker dollar makes greenback-denominated commodities like oil less expensive for holders of other currencies.
July 19, 2018

Asian shares rise on U.S. earnings but trade worries rattle yuan

Asian shares rise on U.S. earnings but trade worries rattle yuan
Asian shares rise on U.S. earnings but trade worries rattle yuan

By Tomo Uetake

TOKYO (Reuters) - Asian shares extended early gains on Thursday as upbeat Wall Street earnings buoyed global investor sentiment, although trade war jitters pushed China's yuan to fresh one-year lows in both the onshore and offshore markets.

The dollar retreated from a three-week high as investors cashed in on gains the currency made after U.S. Federal Reserve Chairman Jerome Powell's two-day testimony reinforced a strong economic outlook.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.32 percent, while Japan's Nikkei and the Australian benchmark advanced 0.30 percent and 0.40 percent, respectively.

Bucking the regional rally, the Shanghai Composite index declined 0.13 percent and the technology-heavy Shenzhen Composite shed 0.43 percent.

"While strong U.S. corporate earnings certainly helped boost sentiments, but that's not enough to push the stocks meaningfully higher from here," said Yasuo Sakuma, chief investment officer at Libra Investments.

On Wall Street, the Dow Jones Industrial Average rose 0.32 percent and the S&P 500 gained 0.22 percent to hit a more than five-month high, while the Nasdaq Composite declined marginally by 0.01 percent.

Stock markets were also supported by the Powell reiterating that the U.S. economy was healthy, even though he warned that rising world protectionism would over time pose a risk to the global economic expansion.

In the foreign exchange market, worries about the trade war between the United States and China kept the offshore yuan at 6.7695 per dollar and its onshore counterpart at 6.7408, both hitting their lowest levels since July 2017.

"Market players are looking at both the onshore and offshore exchange rate to determine whether or not the People's Bank of China is intentionally allowing a weaker yuan," said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank.

"If the difference between the two markets becomes too big, that could mean the PBOC is intervening in the market."

She noted that although the current spread between offshore and onshore yuan had widened recently, it was still far from the levels it hit during the Chinese financial market shock in 2015 when the central bank was seen intervening heavily.

The dollar index against a basket of six major currencies, rose to a three-week high of 95.4 and against the yen, the dollar hit a 6-1/2 month high of 113.140 yen on Wednesday.

In his two-day congressional testimony, the Fed's Powell said he believed the United States was on course for years more of steady growth, and played down the risks to the U.S. economy of an escalating trade conflict.

However, in the Fed's Beige book released on Wednesday, manufacturers in every one of the central bank's 12 districts expressed concern about the impact of tariffs, even as the U.S. economy continued to expand at a moderate to modest pace.

"Trade war fears are something that won't go away overnight. Investors need to be prepared for various possibilities, such as the United States versus China and the United States versus European Union," said Libra's Sakuma.

Benchmark U.S. 10-year notes fell in price to yield 2.875 percent, from 2.862 percent on Tuesday. The U.S. yield curve remained near its flattest in nearly 11 years.

Oil prices rose 1.0 percent overnight after U.S. government data indicated bullish demand for gasoline and distillates, which overshadowed a surprise build in U.S. crude inventories and U.S. crude oil production's hitting 11 million barrels per day for the first time.

U.S. crude last traded at $68.86 per barrel, up 0.15 percent on the day, and Brent was at $72.80, down 0.14 percent, in Asian trade.

Spot gold dropped 0.24 percent in Asian trade, after falling to a one-year intra-day low of $1221.50 per ounce on Wednesday.
July 18, 2018

Dollar's advance puts squeeze on gold, commodities

Dollar's advance puts squeeze on gold, commodities
Dollar's advance puts squeeze on gold, commodities

By Wayne Cole

SYDNEY (Reuters) - Asian share markets were mostly firmer on Wednesday as a bullish outlook from the head of the U.S. central bank buoyed the dollar, lifted Tokyo shares to a one-month top and sent gold to a one-year trough.

Japan's Nikkei (N225) rose 0.43 percent as a weakening yen promised to fatten exporters' profits. Spreadbetters and futures (FFIc1) also pointed to opening gains for European bourses.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) added 0.1 percent and Australia (AXJO) 0.6 percent. Shanghai blue chips (CSI300) started firm only to flag as China's yuan lost ground to the advancing dollar.

Federal Reserve Chairman Jerome Powell stuck with an upbeat assessment on the U.S. economy while downplaying the impact of global trade risks on the outlook for rate rises.

"The outlook is consistent with two further quarter point rate increases this year, likely in September and December," said Barclays (LON:BARC) economist Michael Gaspen.

"The main risk is that individuals, business, and financial markets have underestimated the desire of Trump to re-orient trade flows and that further steps to implement tariffs will lead to a reduction in confidence, a slowdown in hiring, and a correction in equity markets," he added.

BofA Merrill Lynch's latest fund manager survey showed a trade war remained the biggest threat cited by no less than 60 percent of respondents.

For now, U.S. companies seem to be profiting mightily from tax cuts as the earnings season shifts into high gear. Analysts now see second-quarter S&P 500 earnings growth of 21.2 percent, up from 20.7 percent on July 1.

Of the 39 companies in the index that have reported so far, 84.6 percent have come in ahead of street expectations. The Dow (DJI) ended Tuesday up 0.22 percent, while the S&P 500 (SPX) gained 0.40 percent and the Nasdaq (IXIC) 0.63 percent.

"The S&P has finally broken to the upside through 2,800 out of the range that has confined it for most of this year, and this could now be the start of a grind higher in global equities over the next few weeks," wrote analysts at JPMorgan (NYSE:JPM) in a note.

Next stop is the all-time top of 2,872 from January.

POUND IN PERIL

Powell's support for more rate hikes sent two-year Treasury yields (US2YT=RR) to the highest in nearly a decade and lifted the dollar broadly.

Against a basket of currencies, the dollar was up at 95.210 (DXY), after jumping 0.46 percent overnight. It also climbed to its highest since January against the yen at 113.07 .

The euro slipped further to $1.1634 (EUR=), after weakening 0.4 percent on Tuesday.

The pound suffered another bout of Brexit blues after British Prime Minister Theresa May only just cleared the latest parliamentary hurdle to her leaving plans.

Wednesday's edition of the Times reported May threatened rebel lawmakers in her own party with a general election they defeated the bill.

Bank of England Governor Mark Carney warned a no-deal Brexit would have "big" economic consequences and force a review of plans to raise interest rates.

Sterling was last huddled at $1.3090 , after sliding 0.9 percent on Tuesday.

The rising U.S. dollar coupled with the prospect of higher U.S. interest rates spelt trouble for gold, which crashed through major chart support to hit a one-year low.

Spot gold was hovering at $1,224.92 per ounce, having cratered at $1,223.78. The steadily less-precious metal is down more than 5 percent for the year.

Oil prices also eased after an industry group reported an unexpected increase in U.S. crude inventories. Brent (LCOc1) fell 35 cents to $71.81 a barrel, while U.S. crude (CLc1) was quoted down 50 cents at $67.58 a barrel. [O/R]

Exclusive: Philippines' San Miguel to invest $1 billion for 10 new breweries

Exclusive: Philippines' San Miguel to invest $1 billion for 10 new breweries
© Reuters. Exclusive: Philippines' San Miguel to invest $1 billion for 10 new breweries

MANILA (Reuters) - Philippines conglomerate San Miguel Corp (PS:SMC) is planning to invest at least $1 billion (£764.18 million) in the next two years to build 10 breweries in and outside the country, senior company executives said on Wednesday.

Banking on strong consumer demand in one of Asia's fastest growing economies, the maker of San Miguel Pale Pilsen and Red Horse beer is setting up eight breweries around the country, San Miguel President Ramon Ang told Reuters in an interview.

San Miguel is also looking to open its first production facility in the United States and build a second plant in Vietnam, Ang said. The conglomerate is Philippines' biggest brewer and its brewery business is partly owned by Japan's Kirin Holdings Co Ltd (T:2503).

Each new brewery would have an annual capacity of 1-2 million hectoliters and would cost at least $100 million, San Miguel Chief Finance Officer Ferdinand Constantino said in the same interview.

The conglomerate has pursued an aggressive expansion since 2008 to bolster revenues, adding infrastructure, mining, petroleum and power assets to its core food and beverage businesses.

San Miguel is also on track to sell up to $3 billion worth of shares in its food unit in the fourth quarter despite recent market volatility, the executives said.
July 17, 2018

Boeing to seek supplier cost reductions after Embraer deal: CEO

 
Boeing to seek supplier cost reductions after Embraer deal: CEO
© Reuters. Boeing to seek supplier cost reductions after Embraer deal: CEO


FARNBOROUGH, England (Reuters) - Boeing (N:BA) will press for deeper price cuts from suppliers with overlapping operations once it completes its planned acquisition of the regional jet business of Brazil's Embraer,Chief Executive Dennis Muilenburg told Reuters on Tuesday.

"The key thing you are going to see is that through the combination between Boeing and Embraer, we will be able to increase volume for our supply chain, which is generally going to be beneficial. And that beneficial volume should also turn into more affordability and competitiveness," he said.

Asked if he would expect further price cuts over and above those baked into Boeing's Partnering for Success cost-cutting drive, he said: "Yes. Because you'll see additional increases in volume. And a very typical discussion we'll have with our supply chain is if there's an opportunity for them to increase volume or access to additional platforms, if we can gain a cost advantage in the marketplace, that's a mutual benefit."

Boeing, meanwhile, continues to "keep a very close eye" on consolidation trends among its major suppliers and will continue to expand where it sees it necessary to support its business.

"In some cases, consolidation can be beneficial where it allows the supply chain to take costs out. If we get to a point where consolidation is reducing our sources to a level where we can't stand, we've had the opportunity to build new sources of supply. We always have that flexibility," Muilenburg said.

Exclusive: Lloyds Bank plans three EU subsidiaries after Brexit: sources

Exclusive: Lloyds Bank plans three EU subsidiaries after Brexit: sources
© Reuters. A pedestrian passes the head office of the Lloyds Banking Group in London

By Sinead Cruise and Lawrence White

LONDON (Reuters) - Lloyds Banking Group plans to operate three subsidiaries in continental Europe after Britain leaves the EU, according to a source familiar with the matter, in a sign of how Brexit is fragmenting a banking industry long concentrated in London.

Lloyds (L:LLOY), Britain's biggest mortgage lender, was widely expected to manage its continental business from one new subsidiary in Berlin. But executives now plan two further hubs to service customers across the European Union, the source told Reuters. One is likely to be in Frankfurt and the location of the second is yet to be confirmed, the person said.

The plans by Lloyds - an institution more than 250 years old that has always concentrated its operations in Britain - shows how Brexit is forcing banks to upend history and business models to guarantee they can continue selling their products in Europe.

They are part of a wider trend that is seeing lenders distribute their post-Brexit resources among a number of cities on the continent rather than basing the bulk of operations in one place as they have for decades in London.

Swiss bank UBS (S:UBSG) said in March it would pursue a "decentralized" model, in line with moves by Goldman Sachs (N:GS), Bank of America (N:BAC) and JPMorgan (N:JPM).

Such plans will incur greater costs and complexity, as each subsidiary needs to be capitalized and licensed by regulators. They run counter to the expectations among many executives and analysts, following Britain's 2016 vote to leave the EU, that banks would each choose one main continental hub to replace London, with Frankfurt, Paris and Dublin the frontrunners.

A spokesman for Lloyds declined to comment.

Earlier this year, separate sources told Reuters that Lloyds would house its main European subsidiary in Berlin, after converting an existing Bank of Scotland branch that Lloyds inherited following the HBOS takeover a decade ago.

SINGLE MARKET

The plan to run three continental units has partly been prompted by new British regulations that have already forced UK banks to carve up balance sheets into individually capitalized "ringfenced" and "non-ringfenced" entities ahead of a January 2019 deadline.

The rules are aimed at insulating bank depositors from riskier trading activities and protecting taxpayers from having to backstop troubled banks once deemed "too big to fail".

To comply with the rules following Brexit, Lloyds needs a second subsidiary to support its non-ringfenced euro bond trading business, the source said.

That subsidiary is likely to be set up in Frankfurt, the source said, which is home to Europe's biggest euro bond trading market outside London and offers the bank the best chance of running a smooth service to clients following Britain's expected exit from the EU single market on March 29 next year.

The Frankfurt subsidiary will not need a full banking license but Lloyds has applied to Germany's financial markets regulator for the requisite investment firm license, the source added.

Lloyds is also seeking to establish a third subsidiary in an as yet unconfirmed location to support its Scottish Widows "closed-book" insurance business, which include premium-paying policies from customers based across the European Union.

All three subsidiaries will need to be capitalized individually, the source said, but the total pool of capital needed is not expected to be large compared with the size of the group's overall balance sheet.

Earlier this year, Reuters reported the ultimate size of the pool of capital carved out to capitalize the Berlin subsidiary was expected to run to the "low hundreds of millions of pounds", representing less than 1 percent of the bank's overall capital.

Lloyds already employs around 300 people in Berlin, including a full management team, finance, risk and human resources staff. It expects to shift no more than a handful of staff from Britain to complement the existing workforce, the source said.

Ford agrees to $299.1 million U.S. Takata air bag settlement

Ford agrees to $299.1 million U.S. Takata air bag settlement
© Reuters. The 88th Geneva International Motor Show

By David Shepardson

WASHINGTON (Reuters) - Ford Motor (NYSE:F) Co agreed to a so-called economic loss settlement of $299.1 million covering at least 6 million U.S. vehicles with potentially faulty Takata air bag inflators, court documents filed in a federal court in Miami on Monday show.

The settlement covers several forms of economic damages linked to the inflators, including claims that vehicles were inaccurately represented to be safe, buyers had overpaid for cars with defective or substandard air bags and faced out of pocket costs to deal with recalls.

Six automakers have previously agreed to similar settlements worth over $1.2 billion combined, including: Honda Motor Co; Toyota Motor Corp; Nissan Motor Co; Mazda Motor Corp; Subaru Corp and BMW AG.

At least 23 deaths worldwide are linked to the rupturing of faulty Takata air bag inflators. The issue has sparked the largest auto industry safety recall in history, involving about 100 million inflators among 19 major automakers.

More than 290 injuries worldwide are also linked to Takata inflators that can explode, unleashing metal shrapnel inside cars and trucks.

To date, 21 deaths have been reported in Honda vehicles and two in Ford vehicles.

Ford said in a statement it remains "focused on working with our customers to get their vehicles repaired."

The settlement also covers out-of-pocket costs, including lost wages and child care costs, Ford owners may face, or already incurred, to get vehicles repaired. Under the settlement, Ford will also provide free rental or loaner vehicles to owners of recalled vehicles who are awaiting repairs when parts are not available.

In total, nearly 30 million U.S. vehicles remain unrepaired in the recall.

Takata last year pleaded guilty to a felony charge of wire fraud to resolve a U.S. Justice Department investigation and agreed to a $1 billion settlement.

The defect led Takata to file for bankruptcy protection in June 2017. In April, auto components maker Key Safety Systems completed a $1.6 billion deal to acquire Takata. The merged company is now known as Joyson Safety Systems and is a subsidiary of Ningbo Joyson Electronic Corp.

Heidi King, the deputy administrator of the U.S. National Highway Traffic Safety Administration on Friday urged automakers to make their Takata air bag recall plans for replacing all defective parts.

"It is imperative that manufacturers take every available step to reach each and every owner of a vehicle with deadly air bags, and take action to ensure that those dangerous air bags are replaced as soon as is safely possible," King said.

The Ford-Takata settlement must still be approved by a federal judge.

Tesla shares fall after CEO Musk abuses British caver

Tesla shares fall after CEO Musk abuses British caver
Tesla shares fall after CEO Musk abuses British caver

Shares of Tesla (NASDAQ:TSLA) Inc fell over 3.5 percent on Monday after Chief Executive Elon Musk directed abuse on Twitter at one of the British cavers involved in the rescue of 12 Thai children last week.

A number of analysts and investors, requesting anonymity, told Reuters that Musk's comments were adding to their concerns that his public statements were distracting him from Tesla's main business of producing electric cars. The stock sell-off knocked almost $2 billion off the company's market value.

Tesla shares were at $307.20 in after-hours trading on Monday from Friday's close of $318.87.

James Anderson, a partner at Tesla's fourth-largest shareholder, asset manager Baillie Gifford, called the weekend's events "a regrettable instance" and said he had reiterated to the company the need for "peace and execution" of its core business.

The billionaire entrepreneur's spat with British caver Vernon Unsworth started last week, after rescue teams rejected Musk's offer of a mini-submarine created by his rocket company SpaceX to help rescue a 12-member soccer team and their coach trapped inside a flooded cave in the northern province of Chiang Rai.

"He can stick his submarine where it hurts," CNN quoted Unsworth as saying last week. "It just has absolutely no chance of working."

Musk shot back on Sunday on Twitter: "We will make one (video) of the mini-sub/pod going all the way to Cave 5 no problemo. Sorry pedo guy, you really did ask for it." The tweet was later deleted.

Tesla spokespeople and lawyers did not respond to emails and phone calls from Reuters requesting comment on Musk's comments on Twitter.

Musk gave no evidence for alleging Unsworth was a pedophile. Unsworth said he would consider taking legal action against Musk over the remarks, in comments filmed in Chiang Rai on Monday by Australia's 9News.

"It’s not finished. No justification. At the end of the day we were here to rescue 12 young boys. I don't really understand the guy. Obviously it's a bruised ego. I'll take advice when I get back to London," Unsworth told 9News.

Reuters could not immediately reach Unsworth for comment.

His wife, Voranan Rattawipakhun, told Reuters on Monday that her husband would return to Britain on July 19, where he will speak to lawyers.

A police officer in the Chiang Rai district where Unsworth has lived for seven years, who declined to be named because he was not authorized to speak to the media, said that no charges or complaints had ever been filed against Unsworth.

In a Tweet, Musk had proposed "a tiny kid sized submarine" for the rescue. He showed a test of the submarine in a Los Angeles swimming pool on July 9.

Last week, Narongsak Osottanakorn, the leader of the rescue operation in Thailand, rejected Musk's mini-submarine as not suitable for the task. Musk responded on Twitter on July 10, calling Osottanakorn "not the subject matter expert."

Musk also regularly uses Twitter to criticize media reports on Tesla, which has struggled to meet its own production targets for its Model 3 sedan, which is seen as key to the company's profitability.

Hong Kong regulator, banks launch blockchain-based trade finance platform

Hong Kong regulator, banks launch blockchain-based trade finance platform
Hong Kong regulator, banks launch blockchain-based trade finance platform

HONG KONG (Reuters) - Hong Kong's banking regulator and seven banks, including HSBC Holdings PLC (L:HSBA) (HK:0005) and Standard Chartered PLC (L:STAN) (HK:2888), on Tuesday said they will jointly launch a trade finance platform in September using blockchain technology.

The platform will be one of the largest examples globally of a government-led, cross-bank effort to reform the multi-billion dollar trade finance sector using the distributed ledger technology that underpins digital currencies such as bitcoin.

The sector is often described as one of the most manual and paper-orientated parts of the financial services industry.

The blockchain project is aimed at digitizing documents and automating processes to reduce risk and increase the financing capability of the banking industry, said Howard Lee, deputy chief executive of the Hong Kong Monetary Authority (HKMA), the territory's de facto central bank and banking regulator

"The next major milestone ... is to link up with other trade platforms in other jurisdictions to further facilitate cross-border trades," Lee said in a joint statement with the participating firms.

A 2017 survey by the Asian Development Bank found the global trade finance gap - the amount of unmet demand for trade finance - was $1.5 trillion, 40 percent of which originated from the Asia-Pacific region.

Market participants hope emerging technology, including blockchain, will allow them to serve more clients while also serving existing clients more effectively.

To that end, banks, governments and technology firms have been investing in technology for trade finance.

In May, HSBC and ING Groep NV (AS:INGA) said they performed the world's first trade finance transaction using a single blockchain platform. The platform, Corda, was developed by New York-based blockchain consortium R3..

The other banks involved in the Hong Kong initiative are BOC Hong Kong Holdings Ltd (HK:2388), Hang Seng Bank Ltd (HK:0011), Bank of East Asia Ltd (HK:0023), Australia and New Zealand Banking Group Ltd (AX:ANZ) and Singapore's DBS Group Holdings Ltd (SI:DBSM).

The technology will be provided by Ping An Insurance Group Co of China Ltd (SS:601318) (HK:2318).
July 16, 2018

Boeing, United Airlines announce order for four 787 dreamliners

Boeing, United Airlines announce order for four 787 dreamliners
Boeing, United Airlines announce order for four 787 dreamliners

FARNBOROUGH, England (Reuters) - United Airlines (N:UAL) said on Monday it would buy four new Boeing Co (N:BA) 787-9 widebody aircraft, a deal valued at about $1.1 billion at current list prices.

The United deal was finalised earlier this year and listed as unidentified on Boeing's orders backlog, United said, adding that it expects to take delivery of its 787-9 aircraft in 2020.

Malaysia's Najib drops lawsuits against top 1MDB investigators

Malaysia's Najib drops lawsuits against top 1MDB investigators
© Reuters. Malaysia's former Prime Minister Najib greets his supporters as he leaves a court in Kuala Lumpur

KUALA LUMPUR (Reuters) - Malaysia's former premier Najib Razak on Monday dropped three civil suits against investigators of a multi-billion dollar scandal at state fund 1MDB, two weeks after he filed the applications.

Najib and his family have faced intense scrutiny since a shock defeat in a May election by his former mentor-turned-foe, Mahathir Mohamad, who reopened an investigation into 1Malaysia Development Berhad (1MDB) after becoming prime minister.

Najib's applications came days before he was arrested and charged over suspicious transactions at SRC International, a former unit of 1MDB. Najib, who has consistently denied any wrongdoing regarding 1MDB and SRC, pleaded not guilty.

The three suits were withdrawn after pretrial hearings to allow Najib to file fresh suits, state news agency Bernama on Monday quoted lawyer Alice Loke Yee Ching, who was acting for the government, as saying.

A spokesman for the law firm representing Najib, Badrul Samad Faik and Co, told Reuters it needed to make changes reflecting recent developments regarding its client's criminal charges before filing new applications.

In the three civil filings, Najib's lawyers accused anti-graft chief Mohd Shukri Abdull, police commercial crimes head Amar Singh and Attorney General Tommy Thomas of prejudice against the former prime minister.

Najib's law firm had earlier told Reuters it was seeking a court decision whether there was "an element of conflict of interest" among those handling the case.

Shukri and Amar did not immediately respond to telephone calls or messages from Reuters to seek comment. The attorney general's office did not immediately respond to an emailed request for comment from Thomas.

Last week, media reported Shukri as saying he would face any civil suit filed by Najib, while Amar told reporters the police would "respond accordingly" if there was a need.

Asian shares edge lower as investors await China data

Asian shares edge lower as investors await China data
FILE PHOTO: An investor holds onto prayer beads as he watches a board showing stock prices at a brokerage office in Beijing

By Andrew Galbraith

SHANGHAI (Reuters) - Asian shares were lower on Monday, brushing off the firmer Wall Street lead as investor caution dominated ahead of the release of key Chinese economic data, which is expected to show signs of a slowdown.

But while broader concerns about the U.S.-China trade war continue to temper risk appetite, the absence of any escalation of rhetoric out of Beijing or Washington over the past few days is helping support sentiment, as are strong earnings from industrial firms on Wall Street.

China is set to release second-quarter gross domestic product (GDP) figures on Monday at 0200 GMT, which, along with June industrial output, are expected to show a modest slowdown in economic growth.

A government effort to rein in financial risk and an escalating trade war with the United States are expected to dent China's economic growth prospects.

In early Asian trade, MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) was down 0.1 percent.

On Friday, the Dow Jones Industrial Average (DJI) rose 0.38 percent to 25,019.41 and the Nasdaq Composite (IXIC) added 0.03 percent, to 7,825.98. The S&P 500 (SPX) touched a five month high before ending up 0.11 percent to 2,801.31.

U.S. stock futures touched a fresh five-month high on Monday. S&P500 e-mini futures (ESc1), the world's most liquid equity index futures, rose 0.2 percent in early Asian trade to hit their highest level since Feb. 2.

U.S. stocks had been lifted by gains in industrial counters and energy companies, offsetting a drop in financials after mixed earnings from big Wall Street banks. Investors have also taken succor from a lack of new escalation of trade war rhetoric.

Australian shares (AXJO) were flat, and Seoul's Kospi was down 0.1 percent. Japan's markets are closed for a holiday Monday.

The dollar rose 0.05 percent against the yen to 112.42 .

The euro (EUR=) was down 0.1 percent on the day at $1.1677, while the dollar index (DXY), which tracks the greenback against a basket of six major rivals, was flat at 94.768.

The yield on benchmark 10-year Treasury notes (US10YT=RR) rose to 2.8289 percent compared with its U.S. close of 2.831 percent on Friday.

Treasury prices have fallen after the U.S. Federal Reserve reiterated on Friday in its semi-annual Monetary Policy Report to the U.S. Congress that it expected "further gradual increases" in interest rates due to "solid" economic growth.

The two-year yield (US2YT=RR), which rises with traders' expectations of higher Fed fund rates, was at 2.582 percent, unchanged from the U.S. close.

ANZ analysts said in a note Monday that the Fed's report "yielded few surprises," but noted that trade tensions continue to weigh on commodity markets and U.S. consumer confidence.

U.S. crude (CLc1) dipped 0.5 percent at $70.67 a barrel, weighed by easing concerns about supply disruptions that had pushed prices higher. Brent crude (LCOc1) was 0.4 percent lower at $75.04 per barrel.

A rising dollar drove gold prices to seven-month lows on Friday, but spot gold was slightly higher on Monday, trading at $1241.16 per ounce. [GOL/]
July 15, 2018

Rolls-Royce plans for take-off in flying taxi market

Rolls-Royce plans for take-off in flying taxi market
Rolls-Royce plans for take-off in flying taxi market

FARNBOROUGH, England (Reuters) - British jet engine maker Rolls-Royce (LON:RR) has designed a propulsion system for a flying taxi and is starting a search for partners to help develop a project it hopes could take to the skies as soon as early next decade.

Rolls-Royce said on Sunday it had drawn up plans for an electric vertical take-off and landing (EVTOL) vehicle, or flying taxi, which could carry four to five people at speeds of up to 250 miles per hour for approximately 500 miles.

The company, which makes engines for planes, helicopters and ships, joins a variety of companies racing to develop flying taxis, which could revolutionize the way people travel.

Long the stuff of science fiction and futuristic cartoons such as "The Jetsons", aviation and technology leaders are working to make electric-powered flying taxis a reality, including Airbus, U.S. ride- sharing firm Uber and a range of start-ups including one backed by Google (NASDAQ:GOOGL) co-founder Larry Page, called Kitty Hawk.

Rolls-Royce's design will be showcased in digital form at the Farnborough Airshow, which starts on Monday. The company is looking for an airframer and a partner to provide aspects of the electrical system to help commercialize the project.

Rolls-Royce said in a statement it was well-placed to play a leading role in the "personal air mobility" market.

"The initial concept vehicle uses gas turbine technology to generate electricity to power six electric propulsors specially designed to have a low noise profile," the company said, adding the design used its existing M250 gas turbine.

Rolls's design would not require re-charging because the battery is charged by the gas turbine, it said, adding it could use existing infrastructure such as heliports and airports.

Planemakers plot course through trade, Brexit worries to air show deals

Planemakers plot course through trade, Brexit worries to air show deals
FILE PHOTO: An Airbus A350 aircraft flies in formation with Britain's Red Arrows flying display team at the Farnborough International Airshow in Farnborough

By Tim Hepher, Eric M. Johnson and Andrea Shalal

FARNBOROUGH, England (Reuters) - Aerospace firms are setting out wares from luxury jets to lethal drones at back-to-back British air shows this week, hoping trade tensions will not deter airlines from buying jetliners even as geopolitical uncertainty allows them to sell more weapons.

The quintessentially English atmosphere of the Royal International Air Tattoo, where straw-hatted VIPs watch fighters thunder over picturesque Cotswolds villages, gives way on Monday to the Farnborough Airshow, where the hard-nose business deals in the $800 billion aerospace and defense sector will be done.

Trade tensions between the United States and both China and Europe, disputes over the consequences of Britain's exit from the European Union and an increase in global protectionist rhetoric have barely dented a prolonged industry boom.

"The overall environment will reflect industry health, despite the dark clouds of Brexit and other global trade setbacks in the background," said analyst Richard Aboulafia of Teal Group.

"In short, we'll see more of what we've seen for years: aviation remaining a strangely protected and happy corner of a turbulent world."

Boeing (N:BA) is expected to confirm demand for air transport is rising after Airbus (PA:AIR) lifted forecasts last week, citing strong economic growth in emerging markets and the need to replace older planes in Western markets.

The bullish outlook was underscored ahead of the show by forecasters Flightglobal Ascend.

The two giants will add to record orders for benchmark narrowbody jets, whose waiting lists underpin their near-record share prices, while seeking a recovery in sales of bigger jets.

After a lull, Boeing will be looking for a boost to its largest twinjet, the future 777X. Sources said recently it is in talks for an eye-catching deal with Saudi Arabia.Airbus will hope to end uncertainty over AirAsia's support for its A330neo jet after a showdown on prices. That could also involve a deal for smaller planes, though doubts have been expressed over financial commitments to Airbus.

Farnborough is the first such event since Airbus and Boeing shook up the industry by agreeing to absorb key commercial programs of smaller rivals Canada's Bombardier and Brazil's Embraer as they prepare for future competition from China.

The result should be a fierce contest for sales in the 100-150-seat sector even before Boeing closes its Embraer deal.

A new airline, Moxy, is expected to confirm a large order for the rebranded Airbus A220, the former Bombardier CSeries.

Airbus, Boeing and S&P500 in 2018: https://reut.rs/2LlnTyG

INDUSTRIAL POKER

The event is also expected to provide new evidence of strong demand for freight planes as e-commerce drives up shippers' profits despite global trade tensions.

Analyst predictions for total commercial orders and commitments vary from last year's 900 to about half that.

While high fuel prices make efficient new planes attractive, they hurt the bottom line of buyers, delaying some decisions.

"We are not blind: there are things that need to remain on watch," the head of major engine-maker CFM said on Saturday.

Farnborough will also be an opportunity for aerospace firms to plot next moves on civil and defense for decades to come.

The July 16-22 show is not only about order headlines but also about sending signals to investors, keeping competitors guessing and keeping potential buyers interested.

Boeing will want to maintain interest in a potential new mid-market plane, while giving itself until next year to decide whether to launch the new 220-270-seat jet.

While it is further ahead in pre-development than at the same stage on earlier programs, it must convince airlines it can be ready in 2025, the deadline for many fleet overhauls.

Airbus may talk up its possible new A321XLR, designed to address a shortfall in transatlantic performance of its longest-range single-aisle jet and targeted at U.S. majors.

The aircraft, with an improved take-off weight of 100 tonnes and 4,500 nautical miles range, has already had an unannounced commercial launch in a bid to head off Boeing's proposed new jet from 2021, industry sources said.

U.S. sources doubt it will do everything Airbus claims.

Both planemakers are likely to deepen a push into high-margin services, announcing maintenance and operational deals in competition with airlines and parts providers. It's part of a tug of war for profits between planemakers and their partners.

Suppliers will be trying to gauge how far the jetmakers are prepared to go in buying up parts of their supply chain. And many in Europe will be discussing how to prepare for a possible 'hard Brexit' or a disorderly UK exit form the European Union.

Sensitive UK choices over international partnerships are also expected to loom large in the defense side of the show.

The UK government will set out a combat air strategy with potential repercussions for defense suppliers around the world.

It could ignite efforts to develop a successor to the four-nation Eurofighter but is expected to leave open whether Britain would seek to enter a project already underway between France and Germany, or risk a repeat of costly procurement splits.

For now, Sweden is shaping up as the most likely partner and South Korea, Japan and Turkey or Gulf arms-buying countries like Saudi Arabia could be drawn in, arms analyst Francis Tusa said.

"It is a game of industrial poker," he told Reuters.

(Additional reoporting by Victoria Bryan, Sarah Young, Mike Stone; Editing by Mark Potter)

AirAsia mulls dual Airbus jet order but how much will it pay?

AirAsia mulls dual Airbus jet order but how much will it pay?
FILE PHOTO: Tony Fernandes, CEO of AirAsia, holds a media event in Bangkok

By Tim Hepher

FARNBOROUGH, England (Reuters) - AirAsia (KL:AIRA) is discussing the possible purchase of another 100 Airbus A321neo jets as the company's chief executive officer, Malaysian entrepreneur Tony Fernandes, and Airbus go down to the wire in parallel negotiations for an expanded order for larger A330neo jets, industry sources said.

Fernandes may attend this week's Farnborough Airshow where the two sides will attempt to end a rough patch in their relations and agree all or part of a complex package of wide-body and narrow-body jetliner orders, two sources said.

However, it remained unclear just how much fresh money the deal, if completed, would put in Airbus' coffers as the low-cost carrier juggles existing orders and drives a tough bargain on prices and the size of deposits, one of the sources said.

Another said any deal could involve a significant number of conversions or "churn" between existing orders. AirAsia has ordered 600 jets, two thirds of which remain to be delivered.

Airbus declined comment. AirAsia could not be reached.

Two sources said AirAsia could place an order for up to 100 single-aisle A321neo jets worth $13 billion at list prices, as reported by Bloomberg News.

A third source suggested it could involve an upgrade from smaller models, which may trigger other orders. None of the sources, who are familiar with the matter, agreed to be quoted on confidential talks.

The range of options underscores the complexity of AirAsia's portfolio as it expands. But despite the lure of a 100-plane order, all eyes are on whether AirAsia will confirm the A330neo, since there is no problem selling the smaller single-aisles.

AirAsia, Asia's largest budget carrier, has been sending mixed signals for months about whether it will confirm its earlier deal for 66 of the upgraded A330neo - watched from afar by Boeing Co (N:BA), which hopes to replace the order with its 787 Dreamliner.

Delegates say Airbus needs a marketing lift for its A330neo and would relish bringing Fernandes to the widely publicized Farnborough Airshow to reconfirm and expand his order.

That's because losing the A330neo's biggest buyer could make bankers tighten their terms for financing the same plane for other airlines, and therefore hurt sales even more.

However, sources have said relations between the companies cooled following recent Airbus management changes.

An AirAsia order would signal that ties between Airbus and its biggest Asian customer have improved, though Airbus has signaled a drive to protect profit margins.

Financiers speculate AirAsia will push for discounts as high as 60 percent for the A321neo and two thirds for the A330neo. Standard industry discounts are closer to 50 percent.

Depending on negotiations, the amount of money handed over on day one alongside any new AirAsia order could be small.

"This deal is worthless in terms of (upfront) financial commitment," the first source told Reuters.
July 14, 2018

University of Maine pension fund fires Guggenheim over regulatory probe

University of Maine pension fund fires Guggenheim over regulatory probe
© Reuters. University of Maine pension fund fires Guggenheim over regulatory probe

By Trevor Hunnicutt

A university pension and endowment fund fired a Guggenheim Partners LLC subsidiary because of its ongoing investigation by the U.S. Securities and Exchange Commission (SEC), records showed, as the closely watched U.S. asset manager faces pressure to address clients' concerns.

The University of Maine's investment committee, which oversees $640 million, jettisoned Guggenheim Investments as a manager of more than $17 million in assets in June after getting a warning about the investigation from a top investment consultant, NEPC LLC, according to official meeting records posted online.

Those records said that the committee "elected to terminate Guggenheim given the risks associated with the SEC investigation."

Guggenheim, the university and NEPC on Friday declined to comment on the termination, which was first reported by FundFire, an industry publication.

Guggenheim has not been accused of wrongdoing and said in April it was cooperating with the SEC investigation. The agency declined to comment when Reuters asked about the investigation at that time. It did not immediately respond to a request for comment on Friday.

The SEC is investigating Guggenheim and has sought details on a real-estate transaction and other deals involving a company owned by two former Guggenheim managers, according to a person who was not authorized to discuss the matter publicly, and asked not to be identified.

That company, ABS Capital Co LLC, purchased several properties in Southern California, including a $13 million mansion where a former Guggenheim executive, Alexandra Court, lives.

It was not clear why the company had purchased the property, but the transaction drew attention from media and people who watch the company closely because Court's relationship with Guggenheim Chief Executive and co-founder Mark Walter had already been a subject of staff and client concern. Court left the company earlier this year after a long sabbatical.

Walter is also the part-chairman and controlling owner of the Los Angeles Dodgers Major League Baseball team.

While the $17 million is just a sliver of the $246 billion managed by Guggenheim's investment division, the university's decision to replace Guggenheim with Bain Capital Credit LP as manager for a portfolio of bank loans turns a spotlight on a company that has faced months of publicity over regulatory inquiries and internal rifts.

Reuters reported last December that Guggenheim clients and other industry observers were concerned that the company's work culture had deteriorated, and that a number of executives from the company were working to address those concerns.

Beginning in April, NEPC started cautioning clients to review their investments with Guggenheim, according to the Maine university's records. NEPC guides not just the University of Maine but also hundreds of investors with over $1 trillion in assets, according to its website, and these advisers' views on fund managers can be influential.

A Guggenheim spokesman, Gerard Carney, told Reuters in December that public pension assets represent about 1.4 percent of Guggenheim's overall assets under management.

Mike Sitrick, a spokesman for Guggenheim, told Reuters in September that Court and Walter "only have a business relationship," but that any personal relationship would have been disclosed to the company.

A spokesman for ABS Capital, George Haj, told Reuters in April that the company did not borrow money from Guggenheim or funds they manage to finance the homes.
July 13, 2018

Stock futures flat as Wall Street banks report mixed results

Stock futures flat as Wall Street banks report mixed results
© Reuters. Traders work on the floor of the NYSE in New York

By Amy Caren Daniel

U.S. stock index futures were flat on Friday after a mixed bag of results from the three big Wall Street banks kicked off what is expected to be a strong corporate earnings season.

JPMorgan's shares rose 0.2 percent premarket after the lender's quarterly profit topped expectations due to strong trading revenue and as demand for loans increased on the back of a strengthening U.S. economy.

Wells Fargo (NYSE:WFC) shares slid 2.9 percent, having reversed course after reporting a bigger-than-expected drop in quarterly profit as lending activity slowed and it recorded higher expenses.

Citigroup (NYSE:C) shares fell 1.5 percent despite a profit beat on consumer banking strength.

The results from the banks kick off earnings season in earnest, with profits of S&P 500 companies expected to have surged around 21 percent in the second quarter, according to Thomson Reuters I/B/E/S.

"The set-up to go higher is in place, and the optimism around bank results and earnings is what is floating the markets right now," said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.

However, investors and analysts will also keep an eye out for company forecasts and management commentary to gauge the impact of the U.S.-China trade war on results in the coming quarters.

Earlier in the day, data showed China's trade surplus with the United States swelled to a record in June as its overall exports grew at a solid pace, a result that could further inflame the bitter trade dispute with Washington.

At 8:58 a.m. ET, Dow e-minis were up 4 points, or 0.02 percent. S&P 500 e-minis were down 1.25 points, or 0.04 percent and Nasdaq 100 e-minis were down 0.5 points, or 0.01 percent.

"The optimism of Thursday's strong close was bound to get tested overnight, and when you have that big of a move you tend to have a some sort of a pullback going into the next session," said Antonelli.

Also weighing was Johnson & Johnson (NYSE:JNJ), which fell 2.2 percent after a jury ordered the Dow component to pay a record $4.69 billion to 22 women who alleged its talc-based products, contain asbestos and caused them to develop ovarian cancer.

AT&T (NYSE:T) Inc's shares fell 1.5 percent after the U.S. Justice Department said it would appeal a federal judge's approval of the telecom company's $85.4 billion acquisition of Time Warner, which has already closed.

Build-A-Bear CEO apologizes after 'heartbreaking' sale crowds

Build-A-Bear CEO apologizes after 'heartbreaking' sale crowds
© Reuters. Sample bear at the new Build-A-Bear store on 5th Avenue in New York.

WASHINGTON (Reuters) - Build-A-Bear Workshop Inc's (N:BBW) chief executive apologized to disappointed customers and offered an extended discount on Friday, a day after its one-day pay-your-age event prompted massive crowds and shortages at some stores.

Sharon Price John, in an interview on NBC's "Today" program, called the overcrowded sale event, which had to be limited on Thursday, "heartbreaking" and said the global stuffed-animal retailer would extend a sale through the summer.

"I am sorry that we were not able to provide the service that we wanted," Price John said. "We are doing our very best and we are staying very focused on making sure that we do the best we can to make it right for people."

She added that the company wanted to "make kids happy" and that she was sorry some families could not be served.

Customers in the United States, Canada and the United Kingdom seeking to buy a furry friend on Thursday could buy a stuffed animal at stores for a price equaling their age, with minimum of $1 and maximum of $29, sending flocks of children and others to its outlets. Teddy bears were priced from $6 to $75 on the store's website on Thursday.

The big crowds at stores created safety concerns that led Build-A-Bear to close some stores or limit customers.

"It was beyond anything we could have ever imagined," Price John told NBC. "There was really no way for us to have estimated those crowds. We were fully stocked, fully staffed."

The company will offer U.S., UK and Canadian customers a $15 voucher through Aug. 31 and will still honor its pay-your-age promotion in stores for children during the child's birthday month, she said.

St. Louis-based Build-A-Bear has some 400 stores worldwide.

Citigroup profit beats on consumer banking strength

Citigroup profit beats on consumer banking strength
© Reuters. The Citigroup Inc logo is seen at the SIBOS banking and financial conference in Toronto

Citigroup Inc's (N:C) quarterly profit topped Wall Street estimates on Friday, helped by strength in its consumer banking business in Mexico, North America and Asia.

The third-largest U.S. bank by assets, like its peers, also benefited from a cut in income tax rates and an expanding U.S. economy that fueled demand for loans.

Net income rose to $4.49 billion in the second quarter ended June 30, from $3.87 billion a year earlier, driven by a 14 percent jump in net income for its global consumer banking.

Pretax profit from continuing operations increased 5 percent.

Earnings per share rose to $1.63 from $1.28 and topped analysts' average estimate of $1.56, according to Thomson Reuters I/B/E/S.

The bank's provision for income tax fell by $351 million, following President Donald Trump's corporate tax rate cuts.

Buybacks reduced shares outstanding by 8 percent from a year earlier, further boosting earnings per share.

Revenue rose about 2 percent to $18.47 billion but came in slightly below the average expectation of $18.51 billion as revenue from its investment banking business fell 7 percent.

The bank's fixed income trading revenue fell 6 percent, while equity trading revenue rose 19 percent. Total markets and securities services revenue fell 1 percent.

Last month, Chief Financial Officer John Gerspach said he expected trading revenue to be "flattish" compared with a year earlier.

Through Thursday, Citigroup shares are down 7.9 percent for the year, compared with the 1 percent drop in the broader KBW Bank Index (BKX).

JPMorgan Chase & Co's (N:JPM) quarterly profit topped Wall Street's expectations on Friday, as trading revenue came in much higher than expected and demand for loans increased on the back of a strengthening U.S. economy.

Asian shares extend recovery on Wall Street gains

Asian shares extend recovery on Wall Street gains
People walk past an electronic board showing Japan's Nikkei average outside a brokerage in Tokyo

By Andrew Galbraith

SHANGHAI (Reuters) - Asian shares were higher on Friday following gains on Wall Street overnight, as concerns over an escalating U.S. trade war with China took a breather.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) was up 0.2 percent, building on a 0.6 percent rise on Thursday, after U.S. stocks ended the day higher.

Australian shares (AXJO) also gained 0.2 percent, while Japan's Nikkei stock index (N225) was 1.2 percent higher.

Shares in Asia had recovered on Thursday after dropping on an announcement from Washington that the U.S. planned to institute 10 percent tariffs on an additional $200 billion in Chinese imports.

The U.S. slapped import tariffs of 25 percent on $34 billion worth of Chinese goods on July 6, prompting a matching response from China.

But while China has vowed to retaliate to the new tariffs, the lack of a specific response to date has sparked a global relief rally.

On Thursday, the Dow Jones Industrial Average (DJI) rose 0.91 percent to 24,924.89, the S&P 500 (SPX) gained 0.87 percent to 2,798.29 and the Nasdaq Composite (IXIC) added 1.39 percent to 7,823.92.

On Friday, S&P500 e-mini futures (ESc1) rose to a five-month high on expectations of solid earnings growth among U.S. firms despite the trade war threat.

"Some have suggested that Chinese officials are easing back their rhetoric with the intention of going back to the negotiation table, perhaps in light of increased concerns about economic impacts," ANZ analysts wrote in a note on Friday. "But it is not clear whether it is truly a change in tone or if the U.S. news was a surprise to China's economic team and a reaction is being prepared."

On Thursday, U.S. Treasury Secretary Steven Mnuchin said that the U.S. and China could reopen trade talks, but only if Beijing was willing "to make serious efforts to make structural changes."

The dollar, which has been a safe haven amid global uncertainty over trade, touched 112.70 against the yen , its highest level since Jan. 10. At 0003 GMT, it was changing hands at 112.67, up 0.1 percent.

The dollar index (DXY), which tracks the greenback against a basket of six major rivals, was up 0.1 percent at 94.868. The euro (EUR=) was down less than 0.1 percent at $1.1665. In commodities, U.S. crude (CLc1) was flat at $70.32 a barrel. Brent crude (LCOc1) gave up some ground, falling 0.2 percent to $74.34 per barrel. Brent prices had risen on Thursday after a warning from the International Energy Agency about the world's stretched oil supply cushion drove concerns about spare capacity.

The warning came after supply disruptions in recent weeks from countries including Venezuela, Norway, Canada and Libya.

Spot gold was flat, trading at $1246.58 per ounce. [GOL/]

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