2024-02-20 16:52

Feb 20 (Reuters) - A scorching rally in Nvidia's shares this year came to a halt on Tuesday as investors worried if the high-flying chip designer's quarterly results would justify its towering valuation. The stock fell 5.3% to $687.91. If losses hold, it could be the biggest percentage drop in more than eight months. Nvidia has been at the heart of the frenzy around artificial intelligence (AI). A more than 40% surge in its stock this year helped it replace Alphabet (GOOGL.O) , opens new tab as the third most valuable U.S. company, behind Microsoft (MSFT.O) , opens new tab and Apple (AAPL.O) , opens new tab. The market capitalization of Nvidia was $1.79 trillion on Friday. "The market is maybe a little bit hesitant whether they (Nvidia) can deliver a strong enough guidance to reinvigorate the market even higher," said Frank Lee, head of technology research at HSBC. The company will report quarterly results on Feb. 21. Analysts expect earnings of $4.56 a share and revenue to rise to $20.378 billion from $6.05 billion a year earlier, according to LSEG estimates. Still, Nvidia's eye-popping run this year that pushed it to new peaks and powered gains in U.S. stock markets could make the stock vulnerable if earnings are less than stunning. "You can't come out and simply meet or slightly beat for the stock to go higher, Nvidia's going to need to blow it away," said Dennis Dick, a trader at Triple D Trading. Nvidia options are pricing a swing of about 11% in either direction following results, according to data from options analytics service ORATS. Other AI-focused stocks such as Super Micro Computer (SMCI.O) , opens new tab fell 11.6% and Arm Holdings dropped 7.3%. Advanced Micro Devices (AMD.O) , opens new tab was down nearly 6%, having recorded double-digit gains on a year-to-date basis. Nvidia's shares are trading at 32 times its forward earnings estimates compared with the industry median of 25.4. https://www.reuters.com/technology/nvidias-stock-rally-sputters-ahead-quarterly-report-2024-02-20/

2024-02-20 14:14

LONDON, Feb 20 (Reuters) - The pound headed for its longest stretch of losses against the euro this year on Tuesday after the governor of the Bank of England said inflation did not need to return to target to justify cutting rates. Separately, European Central Bank data showed euro zone wage growth moderated in the fourth quarter from a record high in the third. Sterling was last up 0.13% at $1.2612 against the dollar, but down 0.23% against the euro at 85.705, around its lowest in a month. The pound was heading for a fifth consecutive daily loss against the euro, the longest such stretch since November. The ECB, much like the Bank of England, is fixated on wage growth and price pressures in the services sectors - two areas of the inflation picture that respond more slowly to changes in interest rates than other assets, such as housing or raw materials. BoE Governor Andrew Bailey told UK lawmakers on Tuesday that bets on interest rate cuts this year were not unreasonable, but he also pointed to clear signs of an upturn in Britain's economy which fell into recession at the end of last year. "There was a lot of emphasis again on this point about the recession, and not as much emphasis on ... the fact that there is a strong story, particularly on the labour market, actually also on household incomes," he said. Futures markets show traders expect around three rate cuts from the BoE this year, compared with at least four from the ECB. , But this is down from closer to five cuts priced in at the start of 2024, which Caxton strategist David Stritch said should have offered the pound some support. Given that expectations for rate cuts from most major central banks for 2024 are receding quickly, sterling isn't getting much edge from rate differentials, he said. "It suggests rates at 4.5% by year end, only 0.75% off where we are now, given the optimistic pricing of 1.5% of cuts at the start of the year," Stritch said. "It shows how quickly that well of happy pricings has dried up. Despite this, sterling has not enjoyed much success, although these climbing expectations of end of year rates are a global phenomenon and so GBP is being eaten up by the differential," he added. https://www.reuters.com/markets/currencies/pound-set-longest-string-losses-vs-euro-this-year-2024-02-20/

2024-02-20 13:00

LAUNCESTON, Australia, Feb 20 (Reuters) - The changing nature of China's commodity demand is neatly encapsulated by the latest results of BHP Group, the world's biggest mining company and a major supplier to the top global buyer of iron ore, coal and copper. BHP (BHP.AX) , opens new tab reported a steady first-half result on Tuesday, recording $6.6 billion in underlying profits, the same as the year-earlier period and beating an LSEG estimate of $6.42 billion. The profit outcome was achieved despite a slower global economy, with both weakness in developed nations and in China, which struggled to boost its economy after ending its strict zero-COVID policy. If there was a cloud to BHP's earnings, it was the $5.7 billion in impairments and charges it booked, relating to writing down the value of nickel business in Western Australia state and charges against the Samarco iron ore operations in Brazil to cover for the dam collapse in 2015. But the main theme of the BHP results is that China is transitioning from being the main driver of growth in demand for commodities, to being a steady source of demand, albeit a very significant one. China had record iron ore consumption in 2023 and steel output was above 1 billion metric tons for a fifth straight year, numbers that allowed BHP to record a 6% rise in revenue growth. Iron ore is BHP's biggest product, accounting for 68% of the group's underlying profits. But the China growth story is likely easing, with BHP saying in its results statement that it expects only "modest growth in steel production in line with our long-held view that China's steel production would sit at a plateau in the 1.0 to 1.1 billion tons per annum range in the first half of the 2020s." The good news for iron ore miners is that India and Southeast Asia are also expected to increase steel output in coming years, which may offset any decline in China. With supply growth also modest, BHP expects a largely balanced iron ore market, which in turn should lead to relatively stable prices over the year ahead. Iron ore futures in Singapore ended at $128.51 a ton on Monday, roughly in the midpoint of the broad $100-$144 range that has prevailed since December 2022. COPPER, COAL It's much the same story for copper, with BHP expecting a recovery in demand as China's economy improves and inflation worries ease in the developed world, leading to a balanced market. "In the near term, we expect broad-based end-user demand growth in China to continue, albeit at a somewhat slower pace than the 6% year-on-year rate seen in calendar year 2023," BHP said. In addition to being the world's third-biggest miner of iron ore and copper, BHP ranks first in metallurgical coal, the key energy source for turning iron ore into steel. This type of coal is less dependent on Chinese demand given that much of the country's requirements are sourced from domestic mines and from neighbouring Mongolia. Nonetheless, BHP said the operation of domestic mines and overland imports from Mongolia are key uncertainties for the market in the coming year. However, India is expected to maintain its momentum and should provide solid demand growth for seaborne metallurgical coal given the South Asian nation's paucity of domestic supplies. BHP is bullish on the long-term outlook for metallurgical coal, believing it will be needed to make steel for decades, but supply is likely to be constrained by a lack of investment in new production. Overall, BHP's outlook for its major commodities remains tied to the fortunes of China, with a side-helping of India. But with China's economy maturing, the question for miners like BHP is whether there will be enough growth outside of China to allow for sustained increases in commodity demand. Disclosure: At the time of publication Clyde Russell owned shares in BHP as an investor in a fund. The opinions expressed here are those of the author, a columnist for Reuters. https://www.reuters.com/markets/commodities/chinas-shift-steady-commodity-demand-echoes-bhp-results-russell-2024-02-20/

2024-02-20 13:00

LONDON, Feb 20 (Reuters) - Britain's new climate action plan is unlawful because ministers were given misleading information about the prospects of meeting legally-binding emissions targets, three environmental campaign groups told London's High Court on Tuesday. Friends of the Earth, ClientEarth and the Good Law Project are taking legal action over carbon budgets set by the government to meet Britain's target of net zero by 2050. The case comes amid concerns Britain has lost its position as a global leader on climate action and as environmental groups around the world step up legal challenges to press governments and corporations to do more to tackle climate change. A similar case brought by the three groups in 2022, after which the High Court ruled Britain had breached legislation designed to help reach the 2015 Paris Agreement goal of containing temperatures within 1.5 degrees Celsius of pre-industrial levels. The British government had to revise its plans, which were signed off last year. But the groups say the new plan is also unlawful because then energy minister Grant Shapps was not told of the risk that policies to reduce emissions could not be delivered. Friends of the Earth's lawyer David Wolfe said Britain's Climate Change Committee warned last year there were credible policies in place for less than 20% of the reductions required to meet the carbon budget for the period 2033-2037. He added in court filings that Shapps "proceeded on the assumption that the reductions in emissions of greenhouse gases from all of the proposals and policies ... would all be delivered in full when there was no evidential basis". Lawyers representing the Department for Energy Security and Net Zero, however, said Shapps did not assume emission reductions would be delivered in full. Jonathan Moffett also said in court filings that Shapps' decision required "an evaluative, predictive judgement as to what may transpire up to 14 years into the future", which was a matter for elected politicians rather the courts. https://www.reuters.com/business/environment/uks-climate-action-plan-inadequate-unlawful-campaign-groups-tell-court-2024-02-20/

2024-02-20 12:37

BIRMINGHAM, England, Feb 20 (Reuters) - British Prime Minister Rishi Sunak promised a new focus on food security on Tuesday, responding to criticism from farmers that agriculture is being not given the same strategic importance as energy and the environment. "Food security is a vital part of our national security and recent years have brought home the truth of that," Sunak told the National Farmers' Union (NFU) conference, noting Russia's invasion of Ukraine two years ago prompted a surge in food and energy prices. Sunak announced a series of measures including increased funding for some farming schemes and the annual publication of a food security index. Britain, which left the European Union in 2020, now has its own agricultural policy after many years coming under the EU Common Agricultural Policy (CAP). "I know the transition from CAP has been frustrating, taken time and I appreciate the perception that we didn't always get the balance exactly right," Sunak, the first prime minister to address the NFU conference since 2008, said. NFU President Minette Batters, in the run-up to an expected general election later this year, called on all political parties to commit to giving food security the same strategic priority as the environment and energy. "There is currently an imbalance between environment and food production in government policy. We must see changes this year to redress this before many more farms just simply disappear," she said. There have been widespread farmer protests across Europe in recent weeks, including France, Belgium, the Netherlands, Poland, Italy and Greece, over a range of issues including rising energy costs and competition from cheap imports. "Here in the UK, we share European farmers’ concerns and frustration," Batters said. "Years of unsustainably high production costs and crop losses because of extreme weather are putting farming families under mounting pressure." https://www.reuters.com/world/uk/britains-sunak-vows-focus-food-security-speech-farmers-2024-02-20/

2024-02-20 12:35

NEW YORK, Feb 20 (Reuters) - Investment firm Buxton Helmsley Group said it nominated four candidates to the board of directors of Fossil Group (FOSL.O) , opens new tab, after the fashion design company's stock lost three-quarters of its value over the last year. Buxton Helmsley, which has a roughly 1.4% interest in Fossil, said the company, known for its fashionable watches, needs fresh blood to help rebuild trust with investors. "Given the board's abysmal judgment and failure to oversee management for years, the need for immediate change at Fossil is abundantly clear," Alexander Parker, Buxton Helmsley's senior managing director, told Reuters. Parker said management and the board, which currently has eight members, made strategic mistakes that have hurt all shareholders. A representative for Fossil was not immediately available for comment. Fossil's stock price has dropped 29% so far this year. Over the last 52 weeks, the Richardson, Texas-based company's stock tumbled 76% as revenue and net income fell. Fossil shares closed at $1.04 on Friday, valuing the company at $55 million. Buxton Helmsley said its nominees to the board are: lawyer Pamela Corrie, who was general counsel at GE Capital; Charles Garcia, who worked in the financial services industry at firms including BlackRock; former Justice Department official Deirdre O'Connor, who worked with companies entering bankruptcy; and accountant Rumbi Bwerinofa-Petrozzello, who has expertise in audit and financial forensics. https://www.reuters.com/business/investor-names-director-candidates-fossil-group-after-stock-price-drop-2024-02-20/