2023-12-22 11:07
Dec 22 (Reuters) - South Africa's state-owned logistics firm Transnet on Friday reported a 1.6 billion rand ($87 million) loss in the six months to Sept. 30 on the back of declining rail, port and pipeline volumes amid higher costs. Transnet made a 159 million rand profit during the same period last year. Although its revenue rose 8.6% to 39.2 billion rand in the six months thanks to tariff increases for its services, costs rose 9.5% to 25.3 billion rand due to higher payroll, electricity and security expenses. Transnet has struggled to provide adequate freight rail and port services in South Africa due to equipment shortages and maintenance backlogs after years of under-investment. On Dec.1 the South African government, Transnet's sole shareholder, said it would inject 47 billion rand to help the firm meet its immediate debt obligations. Transnet has debts of 130 billion rand and has seen freight volumes decline to 150 million metric tons in financial year 2022/23 from 226 million tons in 2017/18, while reporting port backlogs of as much as three months. ($1 = 18.4244 rand) https://www.reuters.com/world/africa/south-africas-transnet-reports-87-mln-half-year-loss-2023-12-22/
2023-12-22 11:07
NEW YORK, Dec 22 (Reuters) - The U.S. offshore wind industry is eying a brighter 2024, with work expected to start on several projects following a year marked by stalled developments and billions of dollars in write-offs. The offshore wind industry is expected to play a major role in helping several states and U.S. President Joe Biden meet goals to decarbonize the power grid and combat climate change. But progress slowed in 2023 after offshore developers canceled contracts to sell power in Massachusetts, Connecticut and New Jersey, and threatened to cancel agreements in other states, as soaring inflation, interest rate hikes and supply chain problems increased project costs. European energy companies Orsted (ORSTED.CO), Equinor (EQNR.OL) and BP (BP.L) took about a combined $5 billion in writedowns on U.S. offshore wind projects that were in development because existing power sales contracts would not cover the cost of building and financing the projects. Next year, developers hope to revive projects with canceled or threatened power sales contracts by bidding their facilities in upcoming solicitations in several states, including New York, New Jersey, Massachusetts and Connecticut. "While auction clearing prices may increase, states appear to remain committed to clean energy goals," said Eli Rubin, senior energy analyst at energy consulting firm EBW Analytics Group. There were only two small offshore wind projects operating in the U.S. at the start of 2023, one in Rhode Island and another in Virginia, with total capacity of just 41 megawatts (MW). Capacity is set to jump to almost 1,000 MW in 2024 as commercial-scale projects off New York and Massachusetts enter service. One thousand megawatts of offshore wind can provide power to around 500,000 U.S. homes. "State procurements and policies will continue to drive demand for offshore wind energy and federal support will enable more job creation, supply chain investment and domestic energy production," said Ryan Ferguson, spokesman at Danish energy company Orsted. STATE SUPPORT New York last month launched a solicitation that allowed companies to exit old contracts and re-offer projects at higher prices. It will announce winners of an expedited solicitation for offshore wind in February. The state accelerated the solicitation in October after several developers, including Orsted, BP and Equinor, threatened to cancel contracts to sell power that were awarded in 2019 and 2021 before the Federal Reserve started hiking interest rates in March 2022 to fight soaring inflation. New York's first offshore wind farm, Orsted's 132-MW South Fork provided first power in December. In New Jersey, Governor Phil Murphy directed state utility regulators in November to launch an accelerated offshore wind solicitation in early 2024 after Orsted, the world's biggest offshore wind company, canceled its two Ocean Wind projects. Elsewhere in New Jersey, Shell (SHEL.L) and France's EDF continue to develop the 1,510-MW Atlantic Shores wind farm, which should produce power by 2027-2028, according to the project's website. In Virginia, U.S. energy company Dominion Energy (D.N) said its roughly $10 billion, 2,587-MW Coastal Virginia Offshore Wind project remained on budget and on track to start offshore construction in May 2024. First power is expected in the second half of 2025 and completion is set for late 2026. In Massachusetts, Avangrid (AGR.N) and Copenhagen Infrastructure Partners' 806-MW Vineyard Wind 1 project is on track to produce first power in the near future. Avangrid, which canceled contracts to sell power from projects off Massachusetts and Connecticut in 2023, said it plans to re-bid its 1,232-MW Commonwealth Wind off Massachusetts and 804-MW Park City off Connecticut in future solicitations. "What you're going to see in 2024 is a lot of competitive bids that will lead to contracts that will enable projects to go forward," said Ken Kimmell, chief development officer for offshore wind at Avangrid. Avangrid is majority owned by Spanish energy company Iberdrola (IBE.MC). Orsted, meanwhile, said it plans to start offshore construction in the spring of 2024 on its roughly $4 billion Revolution Wind project, which will supply 704 MW to consumers in Rhode Island and Connecticut. https://www.reuters.com/sustainability/climate-energy/us-offshore-wind-poised-success-next-year-after-turbulent-2023-2023-12-22/
2023-12-22 11:02
Dec 22 (Reuters) - A look at the day ahead in U.S. and global markets by Amanda Cooper. It's the last day in the final full week of trading for the year - not a bad point at which to take stock of what 2023 has brought to equity investors. A recession that never was, a consumer that has proven almost bulletproof in the face of high inflation and interest rates, an unexpected boom in AI-linked stocks and, supercharging the market in the final weeks of the year, the anticipation of a steep drop off in borrowing costs in 2024. Market watchers have been at pains to point out that much of the S&P 500's 24% gain this year has been due to the stellar performance of Big Tech - and the AI glitterati. But the equal-weighted S&P 500, which strips out the megacaps, is heading for a near 11% gain this year, most of which has come over November and December. The S&P is heading for a 0.5% gain this week. This might look a bit flimsy as "Santa rallies" go, but it will mark the eighth straight week of gains for the index - the longest such stretch since late 2017. And there has never been this kind of momentum in the run-up to Santa's stock market boost before. The longest string of weekly gains ahead of the Santa rally - gains in the week leading into Dec. 25 - was a five-week stretch in 2019. Greasing the wheels of this rally is the biggest two-month drop in 10-year U.S. Treasury yields since 2008, which has created a theoretical sweet spot for stocks. Inflation numbers later on Friday could give this year's Santa rally some extra sparkle, but they are unlikely to materially change the view that the Federal Reserve could cut interest rates down to 3.50-3.75% by the end of next year, from 5.25-5.50% right now. The core personal consumption expenditures index, the Fed's preferred measure of inflation, is expected to have risen at an annual rate of 3.3% in November and to have increased by just 0.2% on a month-on-month basis. If the index comes in at a yearly 3.3%, this will be the lowest reading since April 2021, but still more than double where it was back in February that year, before core PCE began to skyrocket and above the Fed's 2% target. The stock market appears content that inflation is under control. What is more in question is how much more can price pressures cool as a function of falling global energy costs, rather than as a function of burgeoning weakness in the economy. Even Santa can't hand out any crystal balls to answer that. Key developments that should provide more direction to U.S. markets later on Friday: * November personal consumption and expenditure index * November building permits * University of Michigan December final sentiment * November new home sales * November durable goods orders https://www.reuters.com/markets/us/global-markets-view-usa-2023-12-22/
2023-12-22 10:40
Dec 22 (Reuters) - Global equity funds saw significant withdrawals in the week up to Dec. 20 as investor enthusiasm over potential rate cuts waned and profit-taking set in ahead of the year-end holidays. The markets have experienced a sharp rally since late October. Investors reassessed positions during the week and sold $12.5 billion worth of equity funds, marking their largest weekly net selling since June 21. The MSCI All-World index (.MIWD00000PUS) dropped 0.9% on Wednesday, its steepest decline since Oct. 16, facing resistance near its March 2022 high of 724.49. Despite the recent pullback, the index has climbed nearly 15% since reaching a seven-month low on Oct. 27. Investors pulled a net $10.45 billion out of U.S. equity funds, the biggest amount since Sept. 27. European and Asian funds also saw withdrawals worth $1.24 billion and $279 million, respectively. The tech sector had $1.16 billion of outflows compared to net purchases of about $1.94 billion in the prior week. Financials and healthcare also recorded $838 million and $618 million worth of outflows, respectively. Global bond funds lost $5.37 billion in outflows as net selling extended into a second successive week. Global corporate bond funds broke an eight-week buying streak, with investors offloading funds worth a net $4.03 billion during the week. However, government and high-yield funds received $1.67 billion and $882 million, respectively, in inflows. Meanwhile, global money market funds experienced $35.61 billion worth of net selling, a second straight week of outflow. Among the commodities segment, energy funds witnessed $99 million worth of net selling, the first weekly outflow in four weeks. Precious metal funds attracted $22 million in net purchases, its lowest inflow in three weeks. Data covering 29,155 emerging markets funds showed investors sold $5.66 billion worth of equity funds, the largest weekly net selling since March 2020. EM bond funds also witnessed outflows, amounting to $721 million on a net basis. https://www.reuters.com/markets/global-markets-flows-graphic-2023-12-22/
2023-12-22 10:22
MUMBAI, Dec 22 (Reuters) - The Indian rupee posted its biggest weekly loss in over two months, even as it closed stronger on Friday tracking a rise in its Asian peers and aided by dollar sales from large foreign banks. The rupee ended at 83.14 against the U.S. dollar, compared to its previous close at 83.2775. The rupee's gains on Friday were aided by dollar sales from two large foreign banks, likely on behalf of custodian clients, a foreign exchange at a private bank said. For the week, however, the currency declined 0.16%, its worst week since Oct. 6, despite the dollar index appearing to be on course for a weekly loss, pressured by rising expectations of interest rate cuts in the United States. Investors are currently pricing in a slightly above 80% chance that the Federal Reserve will cut rates in March, according to the CME FedWatch tool. Weaker-than-expected U.S. third-quarter GDP data and a rebound in risk appetite also weighed on the greenback. The world's largest economy grew by 4.9% in the quarter, against expectations of 5.2%, according to economists polled by Reuters. The dollar index fell to its lowest level in over 4 months in Asia and last quoted little changed at 101.75. Asian currencies were mostly stronger, with the Malaysian ringgit leading gains, up by 0.5%. The rupee is unlikely to see sharp moves and should remain range-bound between 83.05 and 83.35 in the near-term, said Gaurang Somaiya, an FX and rates analyst at Motilal Oswal Financial Services. Investors now await U.S. personal consumption expenditure (PCE) inflation data, the Fed's preferred inflation gauge, due later in the day. The data is expected to show that month-on-month core PCE inflation remained flat at 0.2% in November, according to a Reuters poll. https://www.reuters.com/markets/currencies/rupee-ends-higher-posts-worst-week-over-2-months-2023-12-22/
2023-12-22 09:58
Nike's grim FY outlook drags shares of footwear retailers Foot Locker down ~5%, Dick's Sporting slips 3% Analysts note rising competition from Hoka, On brands At least six brokerages slash PT after results Dec 22 (Reuters) - Nike (NKE.N) is starting to lose share to upstart sneaker brands such as On (ONON.N) and Hoka and will need to invest in fresher styles, analysts said on Friday, after the sportswear giant trimmed its annual sales forecast and sent shares tumbling 11%. The Air Jordan 1 shoe maker mainly blamed cautious consumer spending for the downbeat forecast on Thursday and laid out a $2 billion cost-saving program, signaling a shift in strategy to focus on profitability over sales growth. European rivals Adidas (ADSGn.DE) and Puma (PUMG.DE) closed 5% and 7% lower, respectively, while shares of Lululemon (LULU.O) and Under Armour (UAA.N) fell about 1% and 4%. "Nike needs increased and improved marketing investments while HOKA, On and Lululemon are scaling further with increased customer acquisition and retention," TD Cowen analysts said after downgrading the stock to "market perform" from "outperform". Nike also said it would incur about $400 million to $450 million in employee severance costs in the current quarter, but did not specify the number of jobs it would cut. The company, which had 83,700 employees at the end of May this year, did not immediately respond to a request for comment about the job cuts. In 2022, Nike had 79,100 employees. The company unveiled plans to simplify its product assortment, increase automation, and scale product innovation in the women's and Jordan categories, as well as on products priced below $100, particularly in the running category. "I think it makes sense for them to focus on fewer number of products that can resonate stronger with consumers. And doing so will help them not only manage their inventory, but also their profitability," Raymond James analyst Rick Patel said. At least six brokerage cut their price target on Nike and two downgraded the stock. "While we think this (cost-saving plan) is a positive shift, it will take time to scale newness and innovation, and a soft macro will further pressure results in the meantime," Piper Sandler's Abbie Zvejnieks said. The brokerage cut its price target to $107 from $112. Nike shares, which have risen about 5% this year, were trading at $109.35. Its forward price-to-earnings ratio for the next 12 months, a common benchmark for valuing stocks, was 30.01, compared with Adidas' 44.48. (This story has been refiled to correct a typographical error in the headline) https://www.reuters.com/business/retail-consumer/nike-shares-falter-weak-consumer-spending-prompts-forecast-cut-2023-12-22/
