2024-02-27 10:56

Viking Therapeutics jumps on weight-loss drug trial success UnitedHealth falls on report of DOJ investigation U.S. durable goods orders, consumer confidence drops Indexes: Dow off 0.25%, S&P 500 up 0.17%, Nasdaq up 0.37% NEW YORK, Feb 27 (Reuters) - U.S. stocks closed near flat on Tuesday ahead of inflation and other economic data that could shed light on the possible timing of a Federal Reserve interest rate cut. As corporate earnings season winds down, investors refocused on economic data and the likely path of U.S. rates. Equities have been on a furious rally for weeks, fueled largely by enthusiasm about artificial intelligence-related stocks that lifted the S&P 500 and Dow Jones industrials to record levels while leaving the Nasdaq just short of a new high. With the latest employment report not due until next week, the spotlight is on Thursday's January personal consumption expenditures price index (PCE), the Fed's preferred inflation gauge. Should the PCE reading resemble recent inflation readings on consumer and producer prices, it could compel the Fed to hold rates at current levels longer than the market is anticipating. On Monday, Kansas City Federal Reserve Bank President Jeffrey Schmid used a debut speech on policy to signal that he remains focused on the threat of high inflation and is in no rush to cut rates. In addition, Fed Governor Michelle Bowman on Tuesday indicated she is in no hurry to cut rates, given upside risks to inflation that could stall progress or even cause price pressures to resurge. "It's been toppy, it feels like it is clearly a little bit stretched," said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida. "The market is getting at least attuned to the fact they are not going to get what they want and so it is backing up. ... You're going to see it fade in a hurry if the PCE number comes in as expected or hotter than expected." The Dow Jones Industrial Average (.DJI) , opens new tab fell 96.82 points, or 0.25%, to 38,972.41. The S&P 500 (.SPX) , opens new tab gained 8.65 points, or 0.17%, at 5,078.18 and the Nasdaq Composite (.IXIC) , opens new tab rose 59.05 points, or 0.37%, to 16,035.30. Expectations for a cut of at least 25 basis points (bps) by the Fed at its June meeting stand at 59.1%, down from the near certainty at the end of January, according to the CME Group's FedWatch tool , opens new tab. Other data due this week which could help shape expectations from the Fed include the second estimate of gross domestic product, jobless claims and manufacturing activity. U.S. consumer confidence retreated in February after a three-month gain, and orders for long-lasting U.S. manufactured goods fell more than expected in January, data on Tuesday showed. Stocks gained some late support from Apple (AAPL.O) , opens new tab, which erased earlier declines to close up 0.81% after Bloomberg News reported the iPhone maker canceled work on its electric car, shifting some employees to its artificial intelligence project. But UnitedHealth (UNH.N) , opens new tab dropped just before the closing bell to end down 2.27% as the biggest drag on the Dow after WSJ reported the U.S. Department of Justice has launched an antitrust investigation into the company. Viking Therapeutics (VKTX.O) , opens new tab surged 121.02% after its experimental drug to treat obesity helped patients achieve "significant" weight loss in a mid-stage study. In turn, Amgen (AMGN.O) , opens new tab, which is also developing a weight-loss drug, lost 2.75%. Advancing issues outnumbered decliners by a 1.45-to-1 ratio on the NYSE while on the Nasdaq, advancing issues outnumbered decliners by about 1.6-to-1. The S&P 500 posted 46 new 52-week highs and no new lows while the Nasdaq recorded 253 new highs and 66 new lows. Volume on U.S. exchanges was 11.21 billion shares, compared with the 11.71 billion average for the full session over the last 20 trading days. https://www.reuters.com/markets/us/us-stock-futures-edge-up-ahead-economic-data-2024-02-27/

2024-02-27 10:28

LONDON, Feb 27 (Reuters) - Microsoft's (MSFT.O) , opens new tab deal with French tech startup Mistral AI is facing scrutiny in the European Union. On Monday, Microsoft announced it would soon make Mistral's AI models available through its Azure cloud computing platform. The company said it had also invested in Mistral, but held no equity. "We've made a 15 million euro investment in Mistral AI which would convert into equity in the company's next funding round," a Microsoft spokesperson told Reuters. The deal has raised eyebrows in Brussels. Throughout negotiations over the EU's wide-ranging AI Act, Mistral lobbied for looser rules for some models, with advocates warning that strict rules risked undermining European companies' ability to compete with big tech. The European Commission told Reuters on Tuesday that it would analyse the Microsoft-Mistral deal, as part of its ongoing scrutiny of big tech's AI partnerships. The EU's executive arm previously warned that Microsoft's backing of U.S.-based OpenAI may be subject to EU merger rules. "What is emerging shows even more that it was good not to water down our ambition on the safety of GPAI (general purpose AI) models with systemic risks, following legitimate but strong lobbying from companies like Mistral," said Brando Benefei, a member of the European Parliament who oversaw the drafting of the bloc's landmark AI Act. "This story that is emerging will need to be further investigated." Microsoft and Mistral AI declined to comment. https://www.reuters.com/technology/microsofts-deal-with-mistral-ai-faces-eu-scrutiny-2024-02-27/

2024-02-27 10:20

BAMBOLIM, India, Feb 27 (Reuters) - India's thermal coal imports are expected to fall for the first time this year since the COVID-19 pandemic due to increasing domestic output and record high inventories, industry officials said on Tuesday. Out of eleven coal traders Reuters spoke with at the Coaltrans India conference in the western state of Goa, eight expected shipments of the fuel to decrease this year, while the others foresaw flat imports or marginal growth. Surging production and supplies by world's largest miner Coal India (COAL.NS) , opens new tab have pushed stockpiles at power plants to record highs of over 43 million metric tons, prompting it to sell more to non-power sector users such as sponge iron and aluminium smelters, which have traditionally imported the fuel. Pawan Kumar, head of coal sourcing at power producer SEIL Energy India (SEBM.NS) , opens new tab, said he expects thermal coal imports to fall over 3% to 170 million tons, while Rodrigo Echeverri, head of research at Noble Resources, forecast a near-6% decline. India imported 176 million tons of thermal coal in 2023, driven mainly by power plants. "Domestic production has gone up and coal is easily available at floor prices," Rajat Handa, vice president of international trade at Agarwal Coal told Reuters. "This year, imports are not going to be higher than 160 million tons," he said, adding that many users who previously imported the fuel are switching to domestically mined coal. The projected decline in coal imports could squeeze key exporters Indonesia, South Africa and Australia, which account for about 90% of coal shipments to India, the world's second biggest-coal importer behind China. The lower outlook also comes as the global coal market appears headed towards oversupply for the first time since 2020, according to Noble Resources. Echeverri estimated that the coal markets would be oversupplied by 32 million tons in 2024 due to a warmer-than-usual winter, global economic slowdown, and tepid buying by Europe due to high gas inventories. Lower Indian appetite for imports could further pressure prices , even as miners grapple with a 70% plunge from record highs that followed Russia's invasion of Ukraine in 2022. "The market will need to be saved by China in 2024 (again)," Echeverri said in a presentation. A surprise uptick in Indian shipments and record imports by China had helped balance the coal markets last year. The countries, which account for nearly half of global seaborne coal imports, had boosted buying despite record domestic output due to surging electricity use. Apart from utilities, cement plants - which seek better quality coal - along with steel and sponge iron plants, drove Indian coal imports in 2023, according to data from Indian trading and analytics firm I-Energy Natural Resources. While imports by Indian utilities could fall, growing cement and steel industries remain bright spots, traders and industry officials said. However, higher freight rates will also keep a lid on Indian imports, said K.C. Gandhi, joint president, materials management at Shree Cement, adding he expected prices to fall further this year. "Red Sea disruptions and challenges at the Panama Canal, which are contributing to high freight rates, will offset the benefits of ample availability," Gandhi said. He said he expects cement sector imports to grow in line with the industry's expected growth of over 7%. https://www.reuters.com/world/india/indias-thermal-coal-imports-seen-falling-first-time-since-pandemic-2024-02-27/

2024-02-27 09:43

FRANKFURT, Feb 27 (Reuters) - Bank lending to companies and households in the euro zone stagnated last month, indicating the bloc's long-awaited economic recovery has yet to gain traction, European Central Bank data showed on Tuesday. On a quest to stem inflation, the ECB has jacked up interest rates to record highs, bringing bank lending to a standstill in a region that depends on it as its lifeblood. Banks increased their stock of loans to firms by just 0.2% in January after a revised 0.5% increase in the last month of 2023. Credit to households grew by 0.3% last month, the slowest pace since 2015, after rising by a revised 0.4% in December. Lending growth has been hovering around zero since the autumn but is expected to slowly recover in the coming months as the ECB likely begins cutting interest rates. Euro zone banks expect a small rebound in demand for mortgages and corporate loans for the first time in two years as a slump in lending shows early signs of moderating, an ECB survey showed last month. https://www.reuters.com/markets/europe/euro-zone-lending-stagnates-recovery-remains-elusive-ecb-2024-02-27/

2024-02-27 08:54

TOKYO, Feb 27 (Reuters) - As economic and geopolitical woes spur an exodus of investors from China, many have been redirecting money into Japan, giving the benchmark Nikkei (.N225) , opens new tab an extra boost as it rockets to all-time highs. While some investors just want to say goodbye to Japan's troubled neighbour in embracing the land of the rising sun, paradoxically, those seeking to harness the two countries' close economic ties at a cozy distance are winning handsomely. Nikkei heavyweights with a significant presence in China, such as chip giant Tokyo Electron (8035.T) , opens new tab and Uniqlo parent company Fast Retailing (9983.T) , opens new tab are soaring, having gained 126% and 63%, respectively, over the last 12 months. ASICS Corp (7936.T) , opens new tab, which has subsidiaries in countries including China, is up about 91%, while Japanese restaurant chain Saizeriya (7581.T) , opens new tab, a popular chain that has made a mark in China, has climbed 62%. Investors who have historically owned Chinese stocks but are now keeping a distance for fear of U.S. sanctions say owning a Japanese firm that either sells to China or is based there is becoming the more politically palatable option. Others are betting on China's eventual recovery, either driven by its quest for self-sufficiency or improved spending by its 1.4 billion consumers. Buying Japanese stocks is "less controversial in the U.S. political environment right now", said Liqian Ren, director of Modern Alpha at WisdomTree Asset Management in Philadelphia. "If a client owns Japan, even though the exposure is China's kind of proxy, your client is much less likely to ask you a political question if the portfolio didn't perform as well," she said. Japan's largest trade partner, China accounts for a fifth of trade and is also the third largest destination for Japanese investment, after the United States and Australia. While the countries may be intertwined economically, their financial markets could not present a greater contrast. China's blue-chip CSI300 index (.CSI300) , opens new tab hit five-year lows this month, and is down 18% in about a year, pummeled by property market troubles and a lack of large-scale stimulus. Japanese equities (.N225) , opens new tab, on the other hand, are at record highs, and seem set to rise on the back of a brighter outlook for its economy and corporate governance reforms. About $6.59 billion has flowed out of China offshore funds since April 2023, while Japanese offshore funds received $6.3 billion worth of inflows last month, adding to inflows of $7.84 billion last year, according to LSEG data. Jamie Halse, a portfolio manager at Platinum Asset Management in Sydney, owns baby products maker Pigeon Corp (7956.T) , opens new tab. The firm draws the majority of its operating profit from China, and Halse pointed to a rebound in the number of marriages on the mainland last year, which jumped 10%, following steady declines during the COVID-19 pandemic. "The other major area is most of the semiconductor supply chain, which is heavily exposed to Chinese demand," Halse added. "It has been very robust recently." Japan's chip-sector giants have helped to fuel the Nikkei's 17% gains this year, with Tokyo Electron and chip-testing equipment maker Advantest (6857.T) , opens new tab ranking among top performers. "We are seeing a lot of flows in our hedge fund book globally coming out of China, and ... a lot is coming into the Japanese market," said Bruce Kirk, chief Japan equity strategist at Goldman Sachs. Chinese ties can serve as a major buoy or bludgeon to Japanese companies. The earnings of Shiseido (4911.T) , opens new tab, a cosmetic firm banking on China's beauty market, were battered by the slowing economy and its shares have fallen 32% in a year. Whether investors come to Japan seeking China proxies or complete disconnection, the shadows cast over China have given the Nikkei an undeniable boost. Even companies with slim links to China, such as Recruit Holdings (6098.T) , opens new tab and Toyota Motor (7203.T) , opens new tab, are up sharply. But in the end, analysts see fundamentals such as corporate governance reforms and earnings at index heavyweights as key to future inflows. "The China replacement trade is like extra icing on the top," said WisdomTree's Ren. https://www.reuters.com/markets/asia/soaring-japanese-equities-offer-investors-cozy-distance-troubled-china-2024-02-27/

2024-02-27 08:12

KOKKINOTRIMITHIA, Cyprus, Feb 27 (Reuters) - On a cold winter evening in a car park in the Cypriot capital Nicosia, queues are already forming before former airline pilot Pantelis Panteli arrives in a small van to sell his produce. After being made redundant following the closure of Cyprus Airways in 2013, Panteli decided to try his hand at cheese-making. He hasn’t looked back. Now the newcomer has become an unlikely bastion of an old tradition amid a bitter legal battle about the ingredients of Cyprus's prized Halloumi. Should it be made from cow's milk - which now forms the bulk of exports and has a mellower taste - or from tarter goat and ewe milk, which some purists swear by? Panteli makes Halloumi exclusively from ewe's milk - even though some dairy farmers on the Mediterranean island say that method is not viable. "Nobody is making the real thing anymore, and that is our aim," he told Reuters, standing in a pen with about 300 noisy sheep at his farm in Kokkinotrimithia, west of Nicosia. Panteli started making Halloumi with guidance from his mother-in-law. Now he has his own 'Kouella' brand, Cypriot for ewe. "It was all trial and error with a small pot, then a bigger pot - and just like Steve Jobs - in our garage," he said. Panteli only has a permit to sell direct to consumers, and is restricted to producing 150 litres of milk per day at a new purpose-built dairy in the farm compound. But he is proving popular. He alerts customers to his whereabouts on social media, and makes videos on Tiktok and the social media platform X. Within two hours, he is normally sold-out. HEATED DEBATE Soft, rubbery Halloumi can be eaten raw, grilled, boiled or fried without losing its shape. It is the island's largest export after pharmaceuticals. Panteli cooks the milk in rennet which allows curdles to form. After resting, the curdles are cut and reheated. He hoists up layered grills from the whey, containing steaming hot slabs of Halloumi, and flips them onto a counter where he salts and folds them. He puts them in brine for a few hours, then packages them for sale. It has been three years since Cyprus won its status as the only country able to produce and market the prized cheese. In gaining a protected designation of origin (PDO) from the European Union, Cyprus committed to increase the quantity of ewe or goat milk to just over 50% by July 2024. But the dispute about ingredients has triggered farmers demonstrations. Industry stakeholders say ewe and goat's milk is highly seasonal, and could therefore have an impact on production capacity. Cheese makers had threatened to shut their dairies because there wasn't enough milk, while cattle-breeders are angry at the threat to the market for cows' milk. Authorities now plan to push back full compliance with the specifications to 2029. Nicos Papakyriakou, director-general of the cattlebreeders association, said that based on an older 1985 trade standard, accepted ingredients for Halloumi were not only goat and ewes' milk, but cows' milk as well. He says it is the mellower cows' milk that has allowed Halloumi to capture overseas markets. "The PDO says it should smell like a farm," he said, referring to official product specifications that Halloumi should have a 'barnyard' smell. "It would smell like goats! What consumer abroad would buy that?" he said. https://www.reuters.com/world/middle-east/cyprus-halloumi-war-an-ex-pilot-champions-old-ways-2024-02-27/