2024-07-17 14:27

July 17 (Reuters) - Netflix (NFLX.O) , opens new tab likely added the fewest number of subscribers in five quarters during April-June as sharp gains following a crackdown on password sharing ebbed and viewer attention moved to summer sporting events including the Euro soccer tournament. The company added an estimated 4.82 million subscribers in the second quarter, according to LSEG data. That would be the lowest additions since the first quarter of 2023 and about half the 9.3 million it added in the previous three months. Still, the streaming giant's efforts to sell a lower-priced ad-supported tier have yielded strong ad revenue growth. The company's ad revenue is expected to have more than doubled in the June quarter. Overall revenue likely rose 16.4% to $9.53 billion, marking the fastest growth since the second quarter of 2021. Netflix's original shows such as the historical romance "Bridgerton" and the limited series "Baby Reindeer" - based on comedian Richard Gadd's experience with a stalker - topped most-watched charts in the second quarter, according to Nielsen data. When it reports second-quarter results on Thursday, investors will scrutinize the streaming giant's efforts to expand its lower-priced plan with advertising and look for updates on new growth drivers. In May, the company said its ad-supported tier reached 40 million monthly active users across the globe and accounted for 40% of all sign-ups in the countries it was available, up from 23 million in January. The ad push has resonated with investors. For the year, Netflix's stock is up nearly 35%, compared with a return of about 19% on the S&P 500 index (.SPX) , opens new tab. Seasonally, viewership during summer months for Netflix and its rivals such as Disney+ also takes a hit as people travel. This year, the Olympic Games that begin on July 26 are also expected to draw some viewers away from Netflix, according to analysts. AD FOCUS After investing heavily in originals, brokerage MoffettNathanson noted Netflix is also able to drive viewership with its competitors' content. Eighteen of the top 20 streamed titles were acquired shows, such as "NCIS" or "Grey's Anatomy," it noted. Netflix has also announced bundling partnerships. Comcast (CMCSA.O) , opens new tab is offering Netflix with its Peacock streaming service and Apple TV+ for its Xfinity internet and TV customers. Netflix is also hosting more live content, including its deal to stream two National Football League games on Christmas Day, to create advertiser-friendly events. "More live-event announcements will ensue as the company looks to improve its ad-supported time spent, amid an industry-wide reduction in scripted content production," Ross Benes, senior analyst at Emarketer, said. To drive the next phase of growth, Netflix announced plans in May to build an in-house ad technology platform that will offer marketers more ways to buy commercials and measure their performance. It initially leaned on Microsoft (MSFT.O) , opens new tab to build the backbone of the ad tier. "Despite this progress, we continue to view advertising as a longer term story and do not expect a material revenue contribution until 2025," BofA Global Research analyst Jessica Reif Ehrlich said in a note on Monday. Sign up here. https://www.reuters.com/business/media-telecom/netflixs-efforts-grow-ad-tier-focus-subscriber-growth-slows-2024-07-17/

2024-07-17 12:11

BERLIN, July 17 (Reuters) - German Chancellor Olaf Scholz will travel to Serbia and hold talks with President Aleksandar Vucic on Friday, a German government spokesperson said, naming critical raw materials as a key theme of the trip. Scholz is set to attend a critical raw materials summit together with European Commission Vice President Maros Sefcovic, during which Serbia will sign a memorandum of understanding with the European Union on a strategic partnership over sustainable raw materials, battery supply chains and electric cars. "The background to this is a project for sustainable lithium mining in Serbia. Overall, it is about the further development of a European raw materials agenda and the derisking of raw material sources," the spokesperson said at a regular government news conference in Berlin on Wednesday. The visit comes after the Serbian government reinstated a licence for Rio Tinto (RIO.L) , opens new tab, (RIO.AX) , opens new tab to develop Europe's biggest lithium mine in a potential boost to the continent's electric vehicle industry. If developed, the $2.4 billion Jadar lithium project in western Serbia could cover 90% of Europe's current lithium needs and help make the company a leading lithium producer. However, there has been strong opposition to the project from environmental activists and opposition parties in Serbia. Sign up here. https://www.reuters.com/world/europe/germanys-scholz-visit-serbia-eu-raw-materials-agreement-2024-07-17/

2024-07-17 12:09

WTO report addresses state aid to EV production China undergoes first WTO review since 2021 Countries set to react to WTO report this week GENEVA, July 17 (Reuters) - The World Trade Organization said on Wednesday that it was unable to get a clear picture of China's financial support for key industrial sectors, such as electric vehicles or aluminium and steel production due to an "overall lack of transparency". The WTO noted that the world's second-largest economy gave financial support and other incentives to industries over the 2021-2024 review period but said that Beijing did not provide enough information for the WTO to have a clear picture of the programmes. "The overall lack of transparency on China's government support may also contribute to debates on what is perceived by some as overcapacity in certain sectors," the WTO report said, naming a range of sectors from semiconductors to shipbuilding. The WTO noted in particular that it could not determine the size of Chinese government funds that it said were using public resources to make equity investments in key industries. "The incentives provided by these funds have generally not been notified to the WTO," it said. The WTO assessment was published as part of China's trade policy review - a process that all of the organisation's 166 members undergo every few years. China's last review was in 2021. Other countries are set to respond to the 173-page assessment which analyses China's trade policies in depth, noting that its importance in the global economy and in trade has been further accentuated over the review period. China says it operates according to market principles and Beijing has previously said it never makes use of prohibited subsidies for electric vehicles. In a document submitted to the WTO as part of the review process, Beijing said that it complied with both WTO rules and the commitments it agreed to when it joined the body in 2001. It added that it was open to talks on industrial subsidies and promoting development but that such talks "should be clearly defined to prevent generalised and macro discussions of state intervention or industrial policies". The United States and Australia have previously referred to China's "non-market" practices with Washington calling for progress at the WTO on addressing these issues. All WTO members must abide by the organisation's Anti-Subsidy and Countervailing Measures agreement, which prohibits government subsidies that can be shown to have harmed other members' trade or whose explicit purpose is to distort global trade. ($1 = 7.2652 Chinese yuan renminbi) Sign up here. https://www.reuters.com/markets/asia/chinas-industrial-support-programmes-lack-transparency-wto-says-2024-07-17/

2024-07-17 12:00

LAUNCESTON, Australia, July 17 (Reuters) - China's crude oil market is unambiguously weak. Not only has the world's biggest importer seen a fall in arrivals in the first half of the year, it has also been boosting the volumes being added to stockpiles. China added 1.48 million barrels per day (bpd) to either commercial or strategic oil stockpiles in June as lower refinery throughput outweighed soft crude imports. For the first half of 2024, China put about 900,000 bpd into storage tanks, and this amount has been accelerating in recent months. The tepid imports and the increasing volume of inventory builds undermine the still bullish demand 2024 forecasts from industry groups such as the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA). China doesn't disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of crude processed from the total of crude available from imports and domestic output. The total crude available to refiners in June was 15.67 million bpd, consisting of imports of 11.30 million bpd and domestic output of 4.37 million bpd. The volume of oil processed by refiners was 14.19 million bpd, down 3.7% from June 2023, according to official data released on Monday. For the first half of 2024, the total volume of crude available was 15.34 million bpd, while refinery throughput was 14.44 million bpd. This means that refiners processed 900,000 bpd less crude than what was available to them, which is up from the 790,000 bpd for the first five months of 2024. The overall picture that emerges from China oil sector is one of weakness, with no evidence of accelerating demand. Crude oil imports were 11.05 million bpd in the first half of the year, down 2.9% from the 11.38 million bpd recorded over the same period in 2023. Refinery processing was also down 0.4% for the first half, and the volume of crude flowing into stockpiles has been accelerating over the first six months of the year, with June's 1.48 million bpd being the highest since June 2023. If there is a sign of strength in China's oil sector, it's domestic production, which at 4.37 million bpd in June was highest daily output since June 2015. Domestic output was 4.39 million bpd in the first six months of the year, up 1.9% from the same period last year. But in some ways higher domestic output is a bearish factor, given that it lowers the need for imports, and it is import demand that largely factors into global crude prices. SECOND-HALF REBOUND? With China's first-half crude imports and refinery processing being weak, the question is where does that leave expectations that 2024 is going to see global oil demand being led by the world's second-biggest economy? Basically, it means that China is going to have to have an exceptionally strong second half, which in turn implies a robust recovery in economic growth, signs of which remain elusive so far. OPEC still expects China's oil demand growth to rise sharply over 2024 as a whole, with the producer group's July monthly report forecasting an increase of 760,000 bpd for the year as a whole, which was actually up from the June report estimate of 720,000 bpd. The IEA is more modest in its forecast for China, expecting an increase in demand of 500,000 bpd for 2024. But both of these forecasts appear highly optimistic in the light of the weak import and refinery performance in the first half. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/commodities/chinas-oil-sector-is-weak-with-rising-crude-inventories-russell-2024-07-17/

2024-07-17 11:43

World Bank in talks with more countries to issue cat bonds Modelling for drought, floods, wildfires is challenging So far, 7 countries signed up for Climate Resilient Debt Clauses No decision if clause should be triggered after hurricane Beryl LONDON, July 17 (Reuters) - The World Bank is looking to issue its first drought bond in the next 12-18-months and broaden its offering of catastrophe bonds supporting countries suffering devastation from storms and earthquakes, a senior executive at the lender said. The drought bond would be a new instrument in the multilateral lender's suite of so-called cat bonds - fixed income instruments that pay out to countries in the event of a natural disaster. "We would love to do something in the drought space, that is something we are working on," said George Richardson, director of the capital markets and investment department at the World Bank Treasury told Reuters, adding this would be most likely focussed on Africa. The World Bank has arranged and issued cat bonds though its lending arm, the International Bank for Reconstruction and Development (IBRD), to help emerging economies mitigate the fallout from storms and earthquakes for well over a decade. It has made $568 million of insurance payouts on these instruments. The vast majority of the World Bank's existing cat bonds cover countries in the Pacific and Caribbean regions, with Mexico dominating issuance. The lender was now in talks with more countries to broaden the geographic scope, Richardson said. Southern Africa is reeling from its worst drought in years, owing to a combination of naturally occurring El Nino - a warming of waters in the eastern Pacific leading to hotter weather across the world - and higher average temperatures produced by greenhouse gas emissions. This led to a number of record-breaking weather extremes last year. Richardson said modelling droughts, wildfires and floods was a little more difficult than earthquakes or storms for a parametric cat bond, an instrument where triggers depend on physical parametres of an event. "The fundamental challenge is that you need data, and you need to have some history of that so that it can be modelled by various agencies," Richardson said. The World Bank has also recently offered vulnerable, low income countries the option of introducing clauses into their borrowing from the Washington-based lender that would allow governments to defer repayments for up to two years if they were hit by a severe natural disaster. So far, seven countries have signed up to the so-called Climate Resilient Debt Clauses (CRDC) - Bahamas, Barbados, Belize, Grenada, St. Lucia, St. Vincent and the Grenadines and Montenegro. "Some of these are evaluating whether they should activate this clause after hurricane Beryl but so far, no decision has been made from what we know," said Richardson. Beryl left a trail of devastation across several Caribbean islands earlier this month, destroying as many as 90% of homes in parts of Grenada and St. Vincent and the Grenadines. Sign up here. https://www.reuters.com/sustainability/sustainable-finance-reporting/world-bank-eyes-first-drought-bond-next-12-18-months-2024-07-17/

2024-07-17 11:39

A look at the day ahead in U.S. and global markets from Mike Dolan The dramatic switch to U.S. small cap stocks over the past week went into overdrive on Tuesday as interest rate cut and election fever combine, but world markets more broadly are getting nervy of the prospect of Donald Trump's return to the White House. In a series of interviews around this week's Republican convention, Trump set out several of his policy priorities around tax cuts, tariff rises and foreign policy. The most jarring comment overnight was his assertion that Taiwan should pay for its own defence - which knocked Taipei's benchmark index (.TWII) , opens new tab down about 1% - but it's just one of series of policy directions that's starting to feed market pricing. Taiwan's chipmaking giant TSMC (2330.TW) , opens new tab plunged 3%, the wider Taipei benchmark was down about 1% and chip stocks elsewhere were knocked back. Gold prices rose. Caught in the slipstream of this chipmaker hit and the week's Wall St rotation, global megacaps such as Nvidia (NVDA.O) , opens new tab are set to fall for the third day. It's a different picture for small caps however. The Russell 2000 (.RUT) , opens new tab of soared 3.5% on Tuesday - its fifth straight day of gains greater than 1%, its longest winning streak since April 2000 and highest level since January 2022. Jumping more than 10% over the past week, the index of mostly domestic-facing smaller business is now up almost 12% for the year to date - narrowing the gap with the S&P500's 19% for 2024 so far (.SPX) , opens new tab and the 21% rise in the Nasdaq 100 (.NDX) , opens new tab. Adjusting for the outsized weightings of the megacaps, the equal-weighted S&P500 (.EWGSPC) , opens new tab is now up almost 9% for the year. And futures suggest the Russell will hold those gains later. The gist of the argument behind the shift to better valued small caps from the pricy tech bellwethers is both stepped up interest rate cut speculation but also the tax, tariff and reshoring lean of a possible Trump return - now that his lead in betting markets for a November win has surged to more than 70%. That home bias has been absorbed pretty well across the board by the big stock indexes so far, with the S&P500 also up marginally to new highs on Tuesday. VOLATILITY CREEPING BACK But there are growing signs of volatility and disruption creeping back in - with S&P500 futures down almost 1% ahead of the Wednesday's bell and Nasdaq futures off 1.3% . The VIX volatility gauge (.VIX) , opens new tab was at its highest in more than a month. The economic backdrop to the stock market churn seems less worrying. Resuming U.S. disinflation still has futures fully pricing a first Fed rate cut in September and 65 basis points of rate cuts by year-end. Canada's surprisingly soft June inflation update reinforced that view. The June U.S. retail sales readout was better than expected and the Atlanta Fed's 'GDPNow' real time growth monitor nudged up to 2.5% this week from 2% last week. U.S. industrial production numbers and housing starts top the diary later and the earnings season starts to broaden out beyond the big banks. Overseas, UK headline inflation came in on target at 2% - though that was slightly above the 1.9% forecast and services inflation also picked up steam. Sterling rose as money markets dialed back the chances of a Bank of England rate cut next month to as little as a one-in-four chance. Britain's new Prime Minister Keir Starmer will set out his first package of proposed laws on Wednesday, fleshing out how he will honour his election-winning pledge to rebuild the country after years of weak economic growth and political turmoil. Key developments that should provide more direction to U.S. markets later on Wednesday: * U.S. June industrial production, June housing starts * US corporate earnings: Johnson & Johnson, Northern Trust, US Bancorp, Citizens Financial, Discover Financial, Synchrony Financial, United Airlines, Steel Dynamics, Prologis, Kinder Morgan, Crown Castle, Equifax, Elevance Health * Federal Reserve releases Beige Book of economic conditions; Fed Board Governor Christopher Waller, Richmond Fed President Thomas Barkin and Kansas City Fed chief Jeffrey Schmid all speak * New UK government sets out its legislative plans for the coming parliament in so-called King's Speech * German Finance Minister Christian Lindner holds news conference on 2025 draft budget * US Treasury auctions $13 billion of 20-year bonds Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-07-17/