2024-07-24 16:03

BoC cuts key interest rate by 25 basis points to 4.5% Trims 2024 GDP forecast to 1.2% from 1.5% Central bank says future rate cuts to be data-dependent OTTAWA, July 24 (Reuters) - The Bank of Canada on Wednesday trimmed its key interest rate by 25 basis points for the second month in a row, bringing it to 4.5%, and said more reductions in borrowing costs were likely if inflation continued to cool in line with forecasts. The central bank had kept its policy rate at a two-decade high of 5% for almost a year in a bid to combat high inflation. In contrast, the European Central Bank kept rates unchanged last week after it cut them in June. "We are increasingly confident that the ingredients to bring inflation back to target are in place," Bank of Canada Governor Tiff Macklem told reporters. The BoC reiterated that inflation should return sustainably to its 2% target in the second half of 2025. The central bank trimmed its 2024 economic growth forecast to a lackluster 1.2% from the 1.5% it predicted in April, in part because households are setting aside more money to pay debts and have less to spend on discretionary items. "The dovish language in the releases paints a picture of officials who are growing more worried about the likelihood of recession," Royce Mendes, head of macro strategy at Desjardins Group, wrote in a report. The Canadian dollar weakened further after the rate cut announcement, with the loonie trading down 0.06% to 1.3794 against the U.S. dollar, or 72.5 U.S. cents. Money markets see a 53% chance that the BoC will cut rates again in its next monetary policy decision on Sept. 4, and are factoring in just one more 25-basis-point cut this year, which would bring the policy rate down to 4.25% by the end of the year. Macklem said the expected direction of the policy rate was lower, but the bank did not have a pre-determined path. "It is reasonable to expect further cuts, but the timing is going to depend on incoming data. And importantly, what that data tells us about where inflation is heading," he said. GROWTH CONCERNS Downside risks to inflation are taking on increased weight in monetary policy deliberations, Macklem told reporters. Inflation is facing two opposing forces - a weak economy pulling it down and persistently high prices of shelter and services keeping it up. "The risk that inflation comes in higher than expected has to be increasingly balanced against the risk that the economy and inflation could be weaker than expected," Macklem said. The rise in consumer prices slackened to an annual 2.7% in June, with the central bank's closely tracked core measures of inflation also easing marginally. Economists expressed concerns about the prospect of weaker economic growth in the coming months, reiterating that a slowdown could trigger more rate cuts. "The Bank of Canada does seem to move into some of the weaker facets of the economy," said Andrew Kelvin, head of Canadian and global rates strategy at TD Securities. Kelvin expects another 50 basis points of rate cuts this year. In its quarterly Monetary Policy Report (MPR) released on Wednesday, the central bank projected overall inflation would be 2.6% this year and 2.4% in 2025. Annualized growth was just 1.7% in the first quarter, well below the central bank's forecast of 2.8% in April. The BoC said growth would increase in the second half of 2024, led by stronger exports and a recovery in household spending as borrowing costs ease. "With the economy strengthening, excess supply will be absorbed next year and into 2026," Macklem said. The BoC said it expected growth to be 2.1% in 2025, down from its forecast of 2.2% in April. It expects growth of 2.6% in 2026. Asked whether the central bank should have started cutting rates sooner, Macklem said he was comfortable with where rates are. Sign up here. https://www.reuters.com/markets/rates-bonds/bank-canada-cuts-rates-again-frets-about-low-growth-2024-07-24/

2024-07-24 16:01

July 24 (Reuters) - AT&T (T.N) , opens new tab exceeded market expectations for wireless subscriber additions in the second quarter as the telecom operator's higher-tier unlimited plans attracted customers, sending its shares up 4.8% on Wednesday. The company added 419,000 monthly bill-paying wireless phone subscribers, compared with expectations of 284,800 additions, according to five analysts polled by FactSet. "Our significant investment in 5G and fiber and consistent execution is driving durable growth across the large majority of our business," CEO John Stankey said in a post-earnings call. AT&T's unlimited plans that are usually priced lower than those of rivals have helped the company add budget-conscious customers amid tough competition from T-Mobile (TMUS.O) , opens new tab and Verizon (VZ.N) , opens new tab. That has also helped AT&T retain customers better than rivals, with its postpaid phone churn - the number of people disconnecting from a company's service - coming at 0.70%, the second lowest reported for a second quarter. AT&T's initiative which offers new and existing customers with the same deals on all smartphones has also helped to keep churn levels in check. Free cash flow, a metric that helps determine dividend payouts, rose more than 9% to $4.6 billion, beating LSEG estimates of $4.22 billion. However, slower phone upgrades in the U.S. weighed on AT&T's revenue, mirroring comments from Verizon (VZ.N) , opens new tab. Mobility equipment revenue was down 8% in April-June period. Total revenue of $29.8 billion missed estimates of $29.92 billion, according to LSEG data. The U.S. Federal Communications Commission said in a report on Monday the nationwide outage in February that lasted over 12 hours blocked more than 92 million voice calls and prevented more than 25,000 attempts to reach 911. "Following data breaches and a network outage, AT&T entered this round of earnings needing a win," said Jamie Lumley, analyst at Third Bridge. "The company has a number of positive takeaways, notably stable wireless customer growth, fiber business expansion and ongoing momentum in converged service adoption." Sign up here. https://www.reuters.com/business/media-telecom/att-beats-estimates-subscriber-additions-demand-higher-priced-plans-2024-07-24/

2024-07-24 16:01

WASHINGTON, July 24 (Reuters) - General Dynamics (GD.N) , opens new tab reported second-quarter revenue above Wall street estimates on Wednesday, but profit slightly missed and fewer high end jets were delivered than expected, and its shares fell 5%. Despite a 50% increase in business jet deliveries in the quarter, the Gulfstream parent only handed over 11 of its top-of-the-line, most expensive G700 business jets, below the company target of 15. The U.S. Federal Aviation Administration certified the G700 business jet just days before the quarter began, however persisting supply chain issues caused delivery delays. "Q2's EPS miss reflected a large shortfall at Gulfstream, which outweighed robust defense results," TD Cowen analysts said in a note, adding that they expected investors to be disappointed. The defense contractor reported an 18% rise in second-quarter revenue on Wednesday, helped by higher demand for its ammunition and nuclear-powered submarines. "In the Aerospace segment, we are continuing to ramp up the pace of our G700 deliveries and our defense businesses continued to grow, reflecting increased demand in response to the threat environment," CEO Phebe Novakovic said in a statement. Despite cost pressures due to constraints on the U.S. defense budget, defense firms continue to see strong demand for military equipment amid ongoing geopolitical conflicts. Profits at General Dynamics' combat systems unit, which makes vehicles and tanks, were $313 million in the quarter, up 25% from a year ago. The company now sees combat systems' annual revenue at $8.7 billion, a $200 million hike from its prior forecast. It also lifted the full-year revenue forecast for its marine systems segment, which builds nuclear-powered submarines and ships, by $1 billion and now expects $13.4 billion to $13.8 billion. General Dynamics reported quarterly earnings of $3.26 per share, missing analysts' estimates by one cent. Revenue of $11.98 billion was well above analyst estimates of $11.44 billion, according to LSEG data. The Reston, Virginia-based company now sees total revenue for the year coming in at $47.8 billion to $48.2 billion, up from its previous forecast of $46.6 billion to $46.7 billion. General Dynamic shares were off 4.6% at $280.80 in midday trading. The $95 billion in Ukraine and Israel aid bills passed by Congress earlier this year were expected to boost the order backlog for General Dynamics, which makes some of the artillery in heavy use in Ukraine. Other major companies that receive government contracts, such as Lockheed Martin (LMT.N) , opens new tab, RTX Corp (RTX.N) , opens new tab and Northrop Grumman (NOC.N) , opens new tab should also eventually expect a lift from the funds. Sign up here. https://www.reuters.com/business/aerospace-defense/general-dynamics-quartely-revenue-rises-higher-defense-demand-2024-07-24/

2024-07-24 15:51

July 24 (Reuters) - Lyft (LYFT.O) , opens new tab will implement several safety and governance reforms to settle a shareholder lawsuit accusing the ride-sharing company's officers and directors of not doing enough to stop drivers from sexually and physically assaulting passengers. A preliminary settlement was filed on Tuesday night in the Oakland, California, federal court, and requires a judge's approval. Lyft agreed to boost passenger awareness of the "Alert 911 Silently" feature on its app for reporting misconduct, and make it easier to report problems 24/7 to a live human. It also said it has also improved training and its code of business conduct and ethics. The changes would last at least three years. Officers and directors would pay no money to the company, and their insurers would pay $700,000 to cover the plaintiffs' legal fees. Shareholders claimed that Lyft's reputation suffered from the company's inadequate training and background checks for drivers, including those with histories of sexual misconduct. They also said Lyft concealed the shortfalls before its March 2019 initial public offering, and also concealed defects in its electronic bikes that led to numerous injuries. Lyft officials denied wrongdoing in agreeing to settle. In a statement, the San Francisco-based company said it settled "solely to avoid the disruption and cost of litigation." Lyft has said the lawsuit was the last shareholder case arising from the IPO. Through Tuesday, Lyft's share price had fallen 83% since the offering. Many ride-share passengers have also accused Uber (UBER.N) , opens new tab drivers of sexual assault. More than 300 lawsuits against Uber alleging such conduct have been combined into a federal class action pending in San Francisco. The number of plaintiffs could reach the thousands. The case is In re Lyft Inc Derivative Litigation, U.S. District Court, Northern District of California No. 20-09257. Sign up here. https://www.reuters.com/legal/lyft-officials-settle-lawsuit-over-sexual-assaults-by-drivers-2024-07-24/

2024-07-24 15:05

July 24 (Reuters) - Online security and compliance management platform Vanta said on Wednesday it had raised $150 million in a fresh funding round led by venture capital firm Sequoia Capital, giving it a valuation of $2.45 billion. Companies pursuing artificial intelligence (AI) adoption are attracting the attention of U.S. venture capital firms after a near two-year lull driven by high interest rates and a sluggish exit market for startup investors. Vanta said it wants to double down on its AI innovation, eliminate legacy tools in compliance and deepen its global presence by venturing into the UK and Australia. The venture capital businesses of banking giants Goldman Sachs (GS.N) , opens new tab and JPMorgan Chase (JPM.N) , opens new tab also participated in the round that saw all previous investors returning, bringing the lifetime raise of the company to $353 million since 2021. San Francisco-based Vanta had raised $50 million in 2021 in a round led by Sequoia Capital, which also participated in its fundraise the year after. "Having Sequoia triple down on Vanta, including leading both our Series A and Series C rounds is tremendous validation," CEO Christina Cacioppo said, adding that such a sustained and long-term partnership is "rare". The company achieved a valuation of $1.6 billion when it raised $110 million in 2022. It has more than 8,000 customers, including hiring platform SmartRecruiters and database company ZoomInfo (ZI.O) , opens new tab. Vanta, founded in 2018 by Cacioppo, helps its clients with security monitoring and achieving compliance certifications at a faster pace through process automation. "We're investing in Vanta because of their demonstrated platform approach, starting with automated compliance and rapidly adding new modules," said Goldman Sachs growth equity investor Mike Reilly. Atlassian Ventures, Craft Ventures, CrowdStrike Ventures, HubSpot Ventures, Workday Ventures and Y Combinator were the other investors in the funding round. Sign up here. https://www.reuters.com/technology/sequoia-capital-backed-vanta-raises-funding-245-bln-valuation-2024-07-24/

2024-07-24 14:16

July 24 (Reuters) - CME Group (CME.O) , opens new tab on Wednesday beat analyst estimates for its second-quarter profit, as the exchange operator notched record trading volumes, with investors rushing to manage risks in the wake of ongoing geopolitical and economic uncertainties. Latest economic data showing signs of easing inflation has fueled hopes of a possible rate cut in the current half of the year that has helped markets reach new highs. "Looking at the uncertainty around the U.S. political landscape, with the disparity of opinions and policies, the need to mitigate and manage risk has never been more paramount," Chairman and Chief Executive Officer Terry Duffy said in an analyst call. "On top of that, the ongoing uncertainty in the Middle East coupled with the unrest between Russia and Ukraine are continuing issues with no end in sight that market's definitely need to manage. These are just a few of the geopolitical events that highlight the need for our risk management products." Market volatility helped increase CME's average daily volume (ADV) in the quarter as customers used its offerings to manage risks. The exchange had its best-ever second-quarter ADV. ADV grew 13.5% year over year to 25.9 million contracts per day. Clearing and transaction fees, from which CME makes the most of its revenue, was up nearly 12% at $1.25 billion. Its total revenue rose nearly 13% to $1.53 billion. On an adjusted basis, the exchange operator recorded a profit of $2.56 per share for the quarter. Analysts on average had expected a profit of $2.53 per share, according to LSEG data. Shares of the company rose 1% in early hours of trading. Sign up here. https://www.reuters.com/business/finance/exchange-operator-cmes-profit-beats-estimates-record-trading-volumes-2024-07-24/