2024-05-20 10:04

A look at the day ahead in U.S. and global markets from Mike Dolan World markets, heady on hopes for renewed U.S. disinflation and another attempt by China at shoring up its ailing housing sector, entered the new week on the front foot as attention switched back to the artificial intelligence boom. AI-bellwether Nvidia (NVDA.O) New Tab, opens new tab reports quarterly earnings on Wednesday with the bar to impress the investor gallery as high as ever - its stock has almost doubled again this year so far after tripling in 2023. And that's with good reason - the chipmaking giant's revenue is expected to have more than trebled to $24.8 billion from $7.2 billion a year earlier, with earnings per share soaring to $5.57 from $1.09, according to LSEG data. As a curious taster on Friday, Advanced Micro Devices (AMD.O) New Tab, opens new tab gained more than 1% as Microsoft (MSFT.O) New Tab, opens new tab said it plans to offer its cloud computing customers a platform of AMD AI chips that will compete with components made by Nvidia. Reddit (RDDT.N) New Tab, opens new tab, meantime, rose 10% following a partnership with OpenAI to bring its content to ChatGPT. But it's not been all about AI this year as still-buoyant U.S. growth and near double-digit aggregate annual earnings gains meet persistent optimism of lower interest rates later in the year. Treasury yields backed up a touch on Friday after the week's relief on April consumer inflation was dampened by irksome import prices and stubborn Federal Reserve soundings, not least from known-hawk Michelle Bowman. But there's still 40 basis points of easing priced into this year's Fed futures strip and an 80% chance of a move by September. And the main Wall St stock indexes (.SPX) New Tab, opens new tab, (.IXIC) New Tab, opens new tab clocked their fourth straight week of gains, with the blue-chip Dow Jones Industrial Average (.DJI) New Tab, opens new tab closing above 40,000 for the first time. On the rates front at least, the week's 20-year Treasury bond auction, release of the latest Fed minutes and Thursday's flash May business surveys from around the world stand out as weather vanes. With Fed Chair Jerome Powell isolated due to a COVID infection, Monday's appearance of Vice Chair Philip Jefferson and governor Chris Waller may set the tone. Otherwise, the week contains a smorgasbord of mostly second-tier economic data. Overseas, Chinese markets gave a tepid cheer to Friday's government measures to support the ailing property sector - with both mainland (.CSI300) New Tab, opens new tab and Hong Kong (.HSI) New Tab, opens new tab benchmarks up less than half a percent on Monday. And shares of Chinese developers wobbled a bit as investors fretted that what were billed as "historic" steps to stabilise the housing sector fell short. Hong Kong's Mainland Properties Index (.HSMPI) New Tab, opens new tab closed down 0.7% giving back a little of this month's 18% jump in advance of the inventory-clearing supports. What's more, last week's numbers on still-plummeting house prices were compounded on Monday by news of an extended 10% decline in government land sales revenue for the January-April period. In Japan, benchmark government bond yields inched to the highest in more than a decade on Monday, continuing a gradual grind higher amid expectations of tighter domestic monetary policy this year and Monday's stronger than expected auction of inflation-linked 10-year JGBs. The yen was steady, however, with the dollar little changed more broadly (.DXY) New Tab, opens new tab. Gold did head to new records, however, with markets monitoring Iran's political situation after its President Ebrahim Raisi - a hardliner seen as a potential successor to Supreme Leader Ayatollah Ali Khamenei - was killed in a helicopter crash. Oil prices , however, were little changed. Key diary items that may provide direction to U.S. markets later on Monday: * US corporate earnings: Palo Alto Networks, Nordson, Keysight Technologies * Federal Reserve Vice Chair Philip Jefferson, Fed Vice Chair for Supervision Michael Barr, Fed Board Governor Christopher Waller, Atlanta Fed President Raphael Bostic all speak * US Treasury auctions 3-, 6-month bills Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-05-20/

2024-05-20 07:39

LONDON, May 20 (Reuters) - North Sea oil and gas producers are merging and shifting overseas as Britain's windfall tax slashes profits and as the opposition Labour Party threatens more tax if it wins the next general election. The change of strategy could accelerate the decline of domestic production, risking increased dependency on imports, greater vulnerability to higher consumer prices and more job losses. Oil majors such as Shell (SHEL.L) New Tab, opens new tab, Chevron (CVX.N) New Tab, opens new tab and Exxon Mobil (XOM.N) New Tab, opens new tab have long since pulled back from the ageing basin in pursuit of more profitable oilfields, divesting assets to smaller producers such as Harbour Energy (HBR.L) New Tab, opens new tab, Ithaca Energy (ITH.L) New Tab, opens new tab and Serica Energy (SQZ.L) New Tab, opens new tab. These independent oil and gas producers are now looking further afield and merging to cut costs and boost revenue. "Unfortunately, the UK government has turned the UK North Sea into a very harsh business environment," Gilad Myerson, executive chairman of Ithaca Energy, one of the largest North Sea producers, told Reuters last month. In 2022, the UK imposed a 25% Energy Profit Levy on the sector after a jump in energy prices resulting from Russia's invasion of Ukraine swelled profits as consumers faced higher prices, following similar measures in other European countries. Finance minister Jeremy Hunt subsequently extended the levy until 2029 and raised it to 35%, bringing the total tax burden to 75%, among the highest in the world. The levy, however, exempts most profits that are re-invested in oil and gas production, in what is known as the investment allowance. "The temporary windfall tax on oil and gas firms actively encourages investment to create jobs and grow the economy – the more investment they make the less tax they will pay," a spokesperson for the UK Treasury said. The tax wiped out most profits for producers last year and many, including Harbour Energy, the largest North Sea producer pared back investments and cut hundreds of jobs. Serica acquired smaller rival Tailwind Energy and is eyeing neighbouring North Sea countries. "We're more interested in doing something that diversifies us outside of the UK right now, because that's probably our biggest risk," said David Latin, Chairman of Serica Energy, highlighting opportunities in Norway. Ithaca, which has stakes in two of the largest remaining undeveloped oilfields in the North Sea, has agreed to combine its operations with the UK assets of Italy's Eni (ENI.MI) New Tab, opens new tab. "When you have a fiscal challenge, the bigger you are, the stronger you are," Ithaca's Myerson said, adding the company was looking to expand overseas to Norway, Denmark and elsewhere. Harbour Energy, meanwhile, agreed in December to acquire oil and gas assets from Wintershall Dea in an $11.2 billion deal which will drastically cut its dependence on the UK. And last week, Chevron said it plans to sell its remaining assets after more than 55 years in the basin, although the decision was unrelated to the windfall tax, it said. PRICES AND PROFITS RETREAT Prices of oil and gas, and in turn, profits of energy firms have retreated from the very high levels seen in 2022. The North Sea oil industry has complained it needs government support to maximize production from depleted reserves, rather than policies it says deter investment. "Any 'windfall' due to high commodity prices has long gone and the high tax situation is ill-suited to a mature oil and gas basin such as the UK North Sea," Serica's Latin said. Climate activists have called on Britain to stop all investments in new oil and gas production in order to meet its target to reduce greenhouse gas emissions to net zero by 2050. And as Britain heads into elections this year, the opposition Labour Party which commands a strong lead in polls, has vowed to increase the windfall tax by 3% to help finance its energy transition strategy. Labour also seeks to remove "loopholes", which refer to the investment allowance, according to consultancy Wood Mackenzie. "We will deliver the most significant investment in the North Sea in a generation, as we pursue our mission for energy independence and lower bills," Ed Miliband, Labour's Shadow Energy Secretary, said in a statement. RAPID DECLINE Production in the North Sea has declined to around 1.2 million barrels of oil equivalent per day (boed) in recent years from a peak of over 4.5 million boed in 1999. Analysts at brokerage Stifel estimate that over the remaining lifespan of the North Sea basin, a higher tax rate and removal of the investment allowance would lower investment by 30 billion pounds ($38 billion) more than its current estimates, leading to a faster decline in output. Under that scenario, Stifel projects that by 2030, the UK's oil and gas output would halve, and it could be paying around 2.5 billion pounds ($3.2 billion) a year to import 80% of its gas. Serica's finance chief Martin Copeland said the recent consolidation in the North Sea has been significantly driven by tax optimization, calling it "a sign of huddling together for warmth against a very, very chill backdrop." ($1 = 0.7873 pounds) Sign up here. https://www.reuters.com/business/energy/north-sea-energy-firms-look-beyond-uk-after-tax-squeeze-2024-05-20/

2024-05-20 07:34

FTSE 100 up 0.2%, FTSE 250 adds 0.3% May 20 (Reuters) - London equities kicked off the week on a positive note, lifted by a rally among metal miners, while investors await comments from the Bank of England for hints on the central bank's interest rate trajectory. The blue-chip FTSE 100 (.FTSE) New Tab, opens new tab was up 0.2%, as of 0711 GMT on Monday, while the mid-cap FTSE 250 (.FTMC) New Tab, opens new tab climbed 0.3%. Precious metal miners (.FTNMX551030) New Tab, opens new tab and industrial metal miners (.FTNMX551020) New Tab, opens new tab led sectoral gains, as bullion prices surged and copper hit an all-time peak after top consumer China rolled out property stimulus measures and upbeat industrial output data. MET/ Traders are looking forward to the Bank of England's Deputy Governor Ben Broadbent's speech later in the day for clues that could signal the timing of the first rate cut. In corporate news, shares of AstraZeneca (AZN.L) New Tab, opens new tab lost 0.2% as the pharma giant announced plans to build a $1.5 billion manufacturing facility in Singapore. Keywords Studios (KWS.L) New Tab, opens new tab jumped 63.3% as European private equity group EQT (EQTAB.ST) New Tab, opens new tab was in advanced talks to buy the Dublin-based video game services company for $2.79 billion. Sign up here. https://www.reuters.com/world/uk/uk-stocks-start-week-positive-mood-metal-miners-shine-2024-05-20/

2024-05-20 07:32

LATEST DEVELOPMENTS U.S. says has no part to play in helicopter crash State Department says it reaffirms support for Iranian people in struggle for freedoms, as it sends condolences DUBAI, May 20 (Reuters) - Iranian President Ebrahim Raisi, a hardliner seen as a potential successor to Supreme Leader Ayatollah Ali Khamenei, was killed when his helicopter crashed in poor weather in mountains near the Azerbaijan border, officials and state media said on Monday. The charred wreckage of the helicopter which crashed on Sunday carrying Raisi, Foreign Minister Hossein Amirabdollahian and six other passengers and crew was found early on Monday after an overnight search in blizzard conditions. Supreme Leader Khamenei, who holds ultimate power with a final say on foreign policy and Iran's nuclear programme, said First Vice President Mohammad Mokhber, would take over as interim president, the official IRNA news agency reported. "I announce five days of public mourning and offer my condolences to the dear people of Iran," Khamenei said in a statement. Mokhber, like Raisi, is seen as close to Khamenei. The crash comes at a time of growing dissent within Iran over an array of political, social and economic crises. Iran's clerical rulers face international pressure over Tehran's disputed nuclear programme and its deepening military ties with Russia during the war in Ukraine. Since Iran's ally Hamas attacked Israel on Oct. 7, provoking Israel's assault on Gaza, conflagrations involving Iran-aligned groups have erupted throughout the Middle East. A long "shadow war" between Iran and Israel broke into the open last month with tit-for-tat exchanges of drone and missile fire. An Israeli official, who requested anonymity, told Reuters it was not involved in the crash. U.S. Defense Secretary Lloyd Austin said he had no insight into the cause of the crash, adding the United States had no part to play in it. Under the Islamic Republic's constitution, a new presidential election must be held within 50 days. Any candidate must first be vetted by the Guardian Council, a hardline watchdog that has often disqualified even prominent conservative and moderate officials, meaning the overall thrust of Iranian policy would be unlikely to change. "As Iran selects a new president, we reaffirm our support for the Iranian people and their struggle for human rights and fundamental freedoms," State Department spokesperson Matthew Miller said as the U.S. expressed its "official condolences". 'ONE HARDLINER DIES, ANOTHER TAKES OVER' Government loyalists packed into mosques and squares to pray for Raisi, but most shops remained open and the authorities made little effort to interrupt ordinary life. "He was a hard working president. His legacy will endure as long as we are alive," said Mohammad Hossein Zarrabi, 28, a member of the volunteer Basij religious militia in the holy Shi'ite city of Qom. But other Iranians showed little sorrow. "Who cares. One hardliner dies, another takes over and our misery continues," said Reza, 47, a shopkeeper in the central desert city of Yazd who did not give his full name, fearing reprisals. "We're too busy with economic and social issues to worry about such news." State media reported that images from the site showed the U.S.-made Bell 212 helicopter slammed into a mountain peak, although there was no official word on the cause of the crash. The dead also included the governor of East Azerbaijan Province and a senior imam from Tabriz city. Iran was a major buyer of Bell helicopters under the U.S.-backed Shah before the 1979 Islamic revolution, though the exact origin of the aircraft that crashed was not clear. Decades of sanctions have made it hard for Iran to obtain parts or upgrade its aircraft. The helicopter went down in Varzeqan region north of Tabriz, as Raisi returned from an official visit to the border with Azerbaijan, in Iran's northwest, to inaugurate the Qiz-Qalasi Dam, a joint project. BLOODY CRACKDOWN Since taking office, Raisi, 63, had ordered a tightening of morality laws, oversaw a bloody crackdown on anti-government protests and pushed hard in nuclear talks with world powers. In Iran's dual political system, split between the clerical establishment and the government, it is Raisi's 85-year-old mentor Khamenei, supreme leader since 1989, who holds decision-making power on all major policies. Raisi's victory in a closely managed election in 2021 brought all branches of power under the control of hardliners, after eight years when the presidency had been held by pragmatist Hassan Rouhani and a nuclear deal negotiated with powers including Washington. However, Raisi's standing may have been dented by the widespread protests against clerical rule following the death of 22-year-old Kurdish woman Mahsa Amini in morality police custody, and a failure to turn around Iran's economy, hamstrung by Western sanctions. Though far from being a foregone conclusion in Iran's opaque politics, Raisi, a middle-ranking Shi'ite cleric, had been widely seen as a leading candidate to succeed Khamenei. "There's no other candidate right now (with) that kind of a platform and that's why the presidential elections in Iran, however they unfold, will be the first decider about what comes next," said Vali Nasr, professor of Middle East Studies and International Affairs at John Hopkins School of Advanced International Studies. Deputy Foreign Minister Ali Bagheri Kani was appointed as acting foreign minister, IRNA said. Saudi Arabia's foreign minister called Kani to express condolences and reiterated Saudi's support for Iran. Funeral ceremonies for Raisi will be held from Tuesday to Thursday in the cities of Tabriz, Qom, Tehran and Birjand until his final burial at the Imam Reza Shrine in Masshad, according to Iranian media. Messages of condolences flooded in from Iran's other regional neighbours and allies, including the leaders of Syria, Egypt, the United Arab Emirates, Qatar, Jordan, Iraq and Pakistan. Russian President Vladimir Putin called Raisi "a true friend of Russia". The Kremlin said he had spoken to Mokhber by phone and both stressed "mutual intention to further strengthen Russian-Iranian interaction". Iran-backed militant group Hamas, fighting Israeli forces in Gaza with Tehran's support, issued a statement expressing sympathy to the Iranian people for "this immense loss". Sign up here. https://www.reuters.com/world/middle-east/hopes-fade-wreckage-found-helicopter-carrying-iranian-president-raisi-2024-05-20/

2024-05-20 07:32

May 20 (Reuters) - European shares inched up early on Monday but remained rangebound as gains in commodity-linked stocks were offset by uncertainty around the outlook for interest rates. The pan-European STOXX 600 index (.STOXX) New Tab, opens new tab rose 0.1% by 0716 GMT, hovering below record highs hit last week. Miners (.SXPP) New Tab, opens new tab and oil & gas (.SXEP) New Tab, opens new tab climbed 0.8% and 0.7%, respectively, leading gains among European sectors as copper prices surged to record highs helped by China's property support measures and better-than-expected industrial data. Gold prices also hit fresh peaks, while crude prices edged higher amid political uncertainty in majot oil producing countries including Iran and Saudi Arabia. Countering the positive impact from rising commodity prices on equities, euro zone sovereign bond yields rose after officials from the European Central Bank and the Federal Reserve warned that the monetary easing path remained uncertain. Sign up here. https://www.reuters.com/markets/europe/surging-commodity-stocks-prop-up-european-shares-2024-05-20/

2024-05-20 07:10

SINGAPORE/HONG KONG, May 20 (Reuters) - Asia-Pacific investment firm PAG said on Monday it had raised $550 million for its first renewable energy fund, which focuses on investments in physical assets in Asia and includes solar power in Japan as its primary target. PAG, which manages more than $55 billion of capital ranging from private equity to credit, said in a statement that investors in the PAG REN I fund include pensions, sovereign wealth funds and fund-of-funds investors in North America, Europe and the Middle East. In a separate statement on Monday, Abu Dhabi sovereign investor Mubadala Investment Company said it had made a cornerstone investment in PAG REN I, marking its first investment in Japan's clean energy sector. Mubadala did not provide details on the size of its investment. "The strong response to this fund demonstrates investor confidence in the need and opportunity to enable the transition from fossil fuels to clean, domestically produced sources of energy generation in Asia," PAG Renewables President and CEO James Buford said in a statement. PAG's first renewable fund adds to fundraising activities in the energy market in the Asia-Pacific region. PAG said it is the largest and fastest-growing region globally and requires more than $2 trillion of investment in renewable power generation and energy storage over the next decade. Japan is the second-largest energy market in Asia and needs annual renewables investment to grow more than five-fold between 2023 and 2030 to hit its targets of doubling renewable generation between 2020 and 2030 and achieving net zero emissions in 2050, PAG added. Mubadala's investment added to a recent partnership where it was part of a group of investors led by PAG that in March acquired a 60% stake in Chinese property giant Dalian Wanda's mall unit for $8.3 billion. Sign up here. https://www.reuters.com/business/pag-raises-550-mln-asia-renewable-energy-fund-investors-include-mubadala-2024-05-20/