2024-07-08 16:54

CAIRO, July 8 (Reuters) - Inflation in Egypt is forecast to have extended a slowdown for a fourth month in June, maintaining a downward trajectory that most analysts expect to last for the rest of the year at least, a Reuters poll showed on Monday. The inflation reading will reflect the June 1 300% increase in the price of subsidised bread, upon which millions of Egyptians rely. However, most analysts think its impact will be modest given its relatively light weight in the consumer price index and a slowdown in inflation among other foods. Annual urban consumer inflation is forecast to have decelerated to a median of 27.5% in June from 28.1% in May, according to a forecast of 17 analysts. Inflation had been slowing from September's record high of 38.0%, but in February unexpectedly jumped again to 35.7%. Goldman Sachs saw favorable base effects combined with the disinflation in other food items keeping inflation at 2% month-over-month. While the majority of surveyed analysts expect inflation to cool further, others see it accelerating, including Barclays, which is forecasting headline inflation at 32.3%. "Increased prices of subsidised bread should bring inflation to a higher plateau for the remainder of the year," the bank said. Analysts expected inflation to slow further into next year, though some flagged upside risks linked to expected increases in administered prices, including those for fuel, medicine, fertilizers, and natural gas. "These adjustments could exert upward inflation pressure, potentially disrupting the anticipated downward trend," said Mona Bedeir of Al Baraka bank. A median of nine of the analysts predicted that core inflation, which strips out volatile items such as fuel and some types of food, would decline to 26.7% from 27.1% in May. Egypt in March imposed austerity measures linked to a $8 billion financial support package from the International Monetary Fund as it grapples to get its finances under control. These included a devaluation of the currency that followed more than two years of chronic foreign currency shortages. Officials say they have made cutting inflation a priority. State statistics agency CAPMAS is due to release May inflation data on Wednesday. (This story has been corrected to say June, not May, in paragraph 13) Sign up here. https://www.reuters.com/world/africa/egypts-inflation-seen-declining-fourth-month-june-2024-07-08/

2024-07-08 16:31

July 8 (Reuters) - Devon Energy (DVN.N) New Tab, opens new tab said on Monday it had entered into a deal to acquire certain assets of Bakken-focused energy producer Grayson Mill Energy, which is owned by private equity firm EnCap, in a cash-and-stock deal worth $5 billion. The deal value includes $3.25 billion in cash and $1.75 billion in stock, and will enhance Devon's "multi-basin business", the company's executives said on a conference call. Shares of the company were down 2.5% in a lower crude price environment. A consolidation in the U.S. energy sector that triggered $250 billion worth of deals in 2023 has bled into this year, with companies seeking opportunities to deploy their capital and expand reserves. This has created a favorable environment for firms like EnCap to cash out on assets. In June, the private equity firm sold some shale assets of XCL Resources for about $2 billion. Reuters reported in January that the firm planned to sell Grayson Mill, a major Bakken-focused energy producer in North Dakota, Montana, and the Powder River Basin in Wyoming. Monday's deal, expected to close by the end of the third quarter, will add up to 10 years of inventory life with 500 additional wells, primarily in the Bakken, contributing 307,000 net acres to Devon's Williston Basin position. Devon expects its output to grow to 765,000 barrels of oil equivalent per day (boepd) from 664,000 boepd. "A more conservative outlook on deals may have prevented Devon from coming out on top in the various scrambles for core Permian opportunities," said Andrew Dittmar, principal analyst at Enverus. "The Eagle Ford and MidContinent now stand out as some of the least consolidated plays with the most remaining private opportunities." Devon's board of directors also expects to expand its share repurchase by 67% to $5 billion through mid-year 2026, while the acquisition is expected to add to the company’s dividend payout starting 2025. Sign up here. https://www.reuters.com/markets/deals/devon-energy-buy-grayson-mills-williston-business-5-bln-2024-07-08/

2024-07-08 16:02

HOUSTON, July 8 (Reuters) - Exxon Mobil Corp (XOM.N) New Tab, opens new tab on Monday signaled that lower refining margins across the industry and lower natural gas prices will reduce profits in the second quarter. A snapshot of operating factors affecting the quarter suggests earnings per share between $1.50 and $2.40, or about $8.3 billion, which is 17% below market consensus. The preview excludes additional oil and gas production from its $60 billion acquisition of Pioneer Natural Resources, concluded on May 3. But Exxon has provided some indication on how the Pioneer deal will affect results, which includes capital spending running at about $4.8 billion on an annualized basis. The oil major anticipated that Pioneer would add between 500,000 and 550,000 barrels of oil equivalent per day to its second quarter production, compared with the first three months of the year. Full financial results, which includes other factors other than operational resuts, are due on Aug. 2. The largest U.S. oil producer indicated operational results from oil and gas - its main business - will increase due to higher oil prices and despite of lower natural gas prices to about $6.2 billion from $4.6 billion in the second quarter last year, according to a securities filing. Exxon also said lower refining margins would have a negative impact on second-quarter profit of between $1.1 billion and $1.5 billion compared with the prior quarter. PIONEER Exxon has more than doubled its production to 1.3 million barrels of oil equivalent per day (boepd) since concluding the acquisition of Pioneer, up from 620,000 boepd in 2023. The full effects of the merger will be felt in the third quarter. The company has said it plans to triple Permian production to 2 million boepd by 2027 by drilling horizontal wells that are closer to each other than the industry average, in a cube format, in order to extract more oil and gas from the rocks. Results also reflect record oil production in Guyana, where Exxon pumped 632,000 boepd with partners in May, reaching a daily record of 663,000 boepd. This is about 100,000 boepd above the initial planned capacity. Exxon shares were down less than 1%. Its shares have risen more than 13% this year, below the S&P 500's 16% increase, but ahead of other major Western oil rivals. The company has announced it will increase share buybacks to a $20 billion run rate following the closure of the acquisition. It had projected a 40,000 boepd negative production impact in the quarter due to scheduled maintenance and $3 billion in seasonal cash tax payments. Sign up here. https://www.reuters.com/business/energy/exxon-signals-q2-below-market-consensus-excluding-pioneer-buy-2024-07-08/

2024-07-08 14:59

July 8 (Reuters) - Corning (GLW.N) New Tab, opens new tab raised its second-quarter core sales forecast on Monday, as demand for its fiber optic products surges with the rising adoption of generative AI technology, sending the specialty glass maker's shares up more than 9%. Corning's fiber optic solutions help companies transmit massive amounts of data needed for training AI systems. Hyperscale data centers require high-capacity optic cables to interconnect the facilities that may house storage devices and other infrastructure for their operations. New York-based Corning now expects core sales New Tab, opens new tab to be about $3.6 billion for the second quarter, compared with its previous forecast of about $3.4 billion. Analysts expect core sales of $3.41 billion, according to LSEG data. The company, which makes Gorilla Glass used in smartphones by companies such as Samsung Electronics (005930.KS) New Tab, opens new tab and Apple (AAPL.O) New Tab, opens new tab, will report its second-quarter results on July 30. Corning had delivered durable glass with infused color for the back of Apple's iPhone 15 and iPhone 15 Plus devices. Sign up here. https://www.reuters.com/technology/corning-raises-second-quarter-core-sales-forecast-driven-by-ai-boom-2024-07-08/

2024-07-08 14:50

July 8 (Reuters) - Lucid Group (LCID.O) New Tab, opens new tab reported second-quarter deliveries above market expectations on Monday, as price cuts helped boost demand for its luxury electric sedans. Demand for electric vehicles has grown at a slower-than-expected pace in the past year, pressured by high borrowing costs, economic uncertainties and consumer preference for hybrid alternatives. EV market leader Tesla (TSLA.O) New Tab, opens new tab and others, including Lucid, have responded by slashing prices and offering incentives such as cheaper financing options to lure consumers. Lucid, shares of which rose about 4% on Monday, had cut prices of its flagship Air sedans by as much as 10% in February. The EV firm produced 3,838 vehicles in the first half of 2024 and needs to make more than 5,162 cars by the year-end to meet its annual output forecast of 9,000 units. It had made 8,428 vehicles in 2023. "I think at this point, everything is shaping for them to achieve that guidance," Andres Sheppard, senior equity analyst at Cantor Fitzgerald, said. Lucid will produce and deliver more cars in the second half of the year, consistent with the automotive industry due to seasonal effects, he added. The company delivered 2,394 vehicles in the quarter ended June 30, above estimates of 1,940 units, according to eight analysts polled by Visible Alpha. Rivian Automotive (RIVN.O) New Tab, opens new tab reported upbeat second-quarter deliveries last week, while Tesla posted a smaller-than-expected decline. Lucid, in which Saudi Arabia's Public Investment Fund holds a 60% stake, had said in May it expects capital expenditure of $1.5 billion in 2024, up from $910.6 million last year, as it prepares to start manufacturing its Gravity SUV. The Gravity SUV, priced at around $80,000, is set to go into production later this year and will take on Tesla's Model X. Lucid's Air sedan competes against the Elon Musk-led EV maker's popular Model S. Lucid is set to report its quarterly results on Aug. 5. Sign up here. https://www.reuters.com/business/autos-transportation/ev-maker-lucid-beats-quarterly-deliveries-estimates-helped-by-price-cuts-2024-07-08/

2024-07-08 14:43

Left-led hung parliament vs far-right one seen making little difference French budget deficit unlikely to fall, investors say Focus turns to formation of government July 8 (Reuters) - A shock election win for France's leftist alliance has reinforced wariness among investors who had already braced for the risk of political deadlock and a policy paralysis that's unlikely to improve the country's creaking public finances. The left-wing New Popular Front (NFP) alliance won the most seats in Sunday's election, but fell far short of an absolute majority, a big surprise after Marine Le Pen's far-right National Rally (RN) led opinion polls. France, at the centre of the euro project and the bloc's second biggest economy, still faces a hung parliament and taxing negotiations to form a government as markets had already anticipated - just with the left in pole position, rather than the far-right. The risk premium, or spread, for holding France's debt over Germany's was at 65 basis points on Monday, a touch lower from Friday. It remains below the 12-year high hit in June at 85 bps. Still, that gap is not expected to tighten again rapidly with concern fixed on what France's new political climate means for its stretched public finances that have left it facing European Union disciplinary measures. Debt stood at 110.6% of output in 2023. "For any budget to be passed in the new assembly, probably at the margin some fiscal loosening is required to get a compromise," said Kevin Zhao, head of global sovereign and currency at UBS Asset Management, which manages $1.7 trillion in assets. Market relief proved tentative on Monday. France's main CAC 40 (.FCHI) New Tab, opens new tab stocks index, down 3.7% since Macron called the election, rose as much as 0.8% on Monday then gave up all its gain. Shares in France's three biggest lenders - BNP Paribas (BNPP.PA) New Tab, opens new tab, Societe Generale (SOGN.PA) New Tab, opens new tab and Credit Agricole (CAGR.PA) New Tab, opens new tab - which have dropped as much as 9.8% since June 9, also reversed earlier gains and were down 0.4%-1.2% at 1418 GMT. Banks had been hard hit in the run-up to the vote on concerns that higher political uncertainty would translate into increased economic risks and fears of possible windfall taxes. With the left more than 100 seats short of an absolute majority and President Emmanuel Macron's centrist grouping in second place, a hung parliament was still seen as the best outcome for investors in French assets, with it expected to limit the left's spending plans and avert a potential budget-driven market crisis. The NFP's plans include scrapping Macron's pension reform raising the minimum wage and capping the prices of key goods. It says the costs of its program would be offset by measures including tax increases. But some investors had deemed an NFP absolute majority a bigger threat to markets than the RN, as the left alliance has said it doesn't plan to reduce France's high budget deficit. "When you look at the composition of the parliament, the bar for the far-left to start doing anything market unfriendly is very, very high," said Gabriele Foa, portfolio manager at Algebris Investments, noting that the more moderate Socialists won a sizable share of the NFP seats. Possibilities for a new government include the NFP forming a minority government, Macron peeling off Socialists and Greens from the NFP to isolate Jean-Luc Melenchon's far-left France Unbowed for a coalition with his own bloc, or a technocratic government. NO RESPITE Still, a hung parliament was not seen by investors as good news for France's public finances and investors expected the country's budget deficit -- at 5.5% of output last year -- to stay elevated. Melenchon said the NFP would execute its programme, while Socialist leader Olivier Faure said Macron's pension reform must be cancelled. S&P Global Ratings warned on Monday that France's credit rating, which it recently downgraded, would come under pressure if economic growth falls short of projections or the budget deficit cannot be reduced. Analysts do not expect the French/German bond spread to return to the roughly 50 bps level seen before Macron called the election. "To be able to step (back into) French debt, will mean that we have guarantees from the government that they are taking good decisions to restore the fiscal and budgetary balances," said Matthieu de Clermont, head of insurance and regulatory strategies at Allianz Global Investors. "I'm not sure we'll get that any time soon." Some investors said the French-German spread could widen again if uncertainty drags on, raising the cost for France to borrow on international bond markets relative to its neighbours, potentially increasing pressure on the budget. "The biggest risk other than near-term headlines is what happens with the EDP and negotiations with the European Commission," said Schroders fund manager James Ringer, referring to the EU's budgetary discipline measures. Investors remained cautious on French assets as they said it was too early to gauge what a new government would look like. The risk of another election in a year's time is not ruled out. "It is probably going to take weeks, if not months, before Macron and others sort out their alliances." said Anders Persson, chief investment officer, head of global fixed income at Nuveen, which manages $1.2 trillion in assets. He remains underweight French government bonds. Sign up here. https://www.reuters.com/markets/europe/shock-french-left-election-win-is-little-solace-nervous-investors-2024-07-08/