FILE PHOTO: Christian Sewing, CEO of Deutsche Bank AG, addresses the media during the bank’s annual news conference in Frankfurt, Germany, February 1, 2019. REUTERS/Kai Pfaffenbach/File Photo
May 20, 2019
FRANKFURT (Reuters) – Shares in Deutsche Bank set a new low on Monday, just days before investors gather for their annual general meeting.
The price dipped to 6.673 euros ($7.45) midday in Frankfurt, down 2.4% from Friday. The previous low of 6.678 was set on Dec. 27.
Shares are down 36% since investors met for last year’s annual general meeting.
(Reporting by Tom Sims, editing by Riham Alkousaa)
FILE PHOTO: The Deutsche Bank headquarters are pictured in Frankfurt, Germany, April 25, 2019. REUTERS/Ralph Orlowski
May 20, 2019
FRANKFURT (Reuters) – Deutsche Bank denied a report that said some of its executives rejected the advice of the bank’s own anti-money laundering specialists and prevented some transactions involving entities controlled by President Donald Trump and his son-in-law, Jared Kushner, being filed with the government.
“At no time was an investigator prevented from escalating activity identified as potentially suspicious. Furthermore, suggestion that anyone was reassigned or fired in an effort to quash concerns relating to any client is categorically false,” Deutsche Bank said in a statement on Monday.
Citing five current and former Deutsche Bank employees, the New York Times reported on Sunday that the transactions, some of which involved Trump’s now-defunct foundation, set off alerts in a computer system designed to detect illicit activity.
Compliance staff members who then reviewed the transactions prepared so-called suspicious activity reports that they believed should be sent to a unit of the Treasury Department that polices financial crimes, according to the newspaper.
Deutsche Bank were down 1.5% in pre-market trading in Frankfurt.
(Reporting by Arno Schuetze and Tom Sims, editing by Riham Alkousaa)
FILE PHOTO: Investors look at screens showing stock information at a brokerage house in Shanghai, China May 6, 2019. REUTERS/Aly Song
May 20, 2019
By Luoyan Liu and John Ruwitch
SHANGHAI (Reuters) – The fresh escalation in the long-running Sino-U.S. trade dispute prompted a sharp selloff in Chinese markets last week with the yuan and banking and tech stocks hit particularly hard though some sectors, like farming, managed to outperform.
The market rout came after U.S. President Donald Trump raised tariffs on Chinese imports and Beijing retaliated with tariffs of its own. As result, the yuan is now off 2.5% so far this month.
(GRAPHIC: China’s yuan, stocks fall amid trade tensions – https://tmsnrt.rs/2WNlItd)
A weaker currency and trade uncertainties have intensified outflows of foreign funds from the A-share market since April.
Foreign investors are a key part of the country’s equities market, holding a total of 1.68 trillion yuan ($244.41 billion) worth of A-shares as of end-March, up from 1.15 trillion yuan at end-2018, according to latest PBOC data.
As of May 17, foreign investors via the Stock Connect had sold about 36 billion yuan worth of mainland shares in May, snapping a five-month buying streak.
(GRAPHIC: Foreign outflows via the Stock Connect intensified in May – https://tmsnrt.rs/2WU9WNE)
Shares in the four biggest lenders have taken a beating on concerns they will be asked to lend more to prop up the growth.
“If there is no resolution to the trade dispute, the banks may need to increase lending while trying to maintain asset quality especially after the weak April data,” strategists at Jefferies said in a note.
Chinese banks cut back new lending in April after a record first quarter that sparked fears of more bad loans, but analysts say the central bank will have to sustain policy support through the year.
(GRAPHIC: Shares in China’s big 4 banks skid in past weeks amid trade dispute – https://tmsnrt.rs/2WLisPc)
China’s information technology and telecommunications firms, which are heavily reliant on the global supply chain and hence seen as vulnerable to trade tensions, have seen a major correction since April.
As of Friday, the CSI IT index slumped 21.3% from an more than one-year high hit on April 2, while an index tracking China’s major telecoms firms declined 22.6% from a 16-month high hit on April 22.
Shares of Huawei suppliers slumped after the Trump administration hit Chinese telecoms giant Huawei with severe sanctions.
China’s No. 2 telecom equipment maker ZTE Corp had tumbled as much as 67.4% in 2018 on a U.S. export ban that threatened to put it out of business.
Firms heavily exposed to overseas markets also saw their share prices sinking, in particular electronics firms.
Chinese video surveillance products supplier Hangzhou Hikvision, which derived 30% of its 2018 revenue from overseas operations, tumbled about 25% from a 10-month high hit on April 2.
Apple Inc. supplier Luxshare Precision Industry also retreated 25% from a record high as trade tensions threatened to disrupt the U.S. firm’s mainland supply chains.
China’s leading LED products maker Sanan Optoelectronics dropped nearly 30% in May alone, extending an 11% loss in April.
(GRAPHIC: China’s stocks, sectors most hit by rising trade tensions – https://tmsnrt.rs/2Ed8A9w)
Bucking the trend, agriculture firms gained as investors expect them to benefit from Beijing’s retaliatory tariffs on U.S. agriculture products.
As of Friday, the CSI China mainland agriculture index slipped 1.2% in May, a much more modest decline than the benchmark Shanghai index’s 6.4% fall over the same period.
Leading the agricultural sector, Hefei Fengle Seed surged the maximum allowed 10% on Friday to a near four-year high, more than doubling so far in May.
(GRAPHIC: China’s agriculture stocks outperform – https://tmsnrt.rs/2EeFaaW)
(Editing by Vidya Ranganathan and Sam Holmes)
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 16, 2019. REUTERS/Brendan McDermid
May 20, 2019
By Sinéad Carew
NEW YORK (Reuters) – Shares of smaller publicly listed U.S. companies have fallen more on recent U.S.-China trade tensions than larger corporations and could face an even rougher road as the year wears on unless the prospects for economic growth improve.
Wall Street has been forecasting a return to growth for the S&P 600 index of small cap stocks in the second half of 2019, but an intensifying trade battle between the world’s two biggest economies puts these hopes into doubt.
Because they depend less on overseas sales than bigger companies, some investors say small caps may be less vulnerable in a trade war situation.
But if rising tariffs boost import prices to the extent that it slows U.S. economic growth, then smaller companies, which often have less financial cushion than big multinationals, could be badly hurt. And since many U.S. companies use overseas suppliers, tariff hikes could make imported goods too pricey.
“Because they have more domestic sales it doesn’t mean they’re totally insulated,” said Jill Carey Hall, U.S. strategist at Bank of America Merrill Lynch. “If we don’t get a resolution on trade, you don’t necessarily want to own small caps. They tend to fare more poorly in risk-off environments.”
Since U.S. President Donald Trump’s May 5 tweets about raising tariffs on $200 billion of Chinese goods to 25% from 10% the S&P 600 has fallen 5.4% and the Russell 2000 small cap index has declined 4.9% compared with the benchmark S&P 500’s 2.9% drop.
(GRAPHIC: Small caps vs S&P 500 – https://tmsnrt.rs/2LOW5Y3)
One problem is that companies depending on imports for inventory had no time to stock up in the days between Trump’s tweet and the actual tariff hike, started May 10.
And if the United States fulfills its threat to slap 25% tariffs on another $300 billion of goods that China sells here, that would add to the pressure.
Wall Street is already expecting a first-half earnings recession for the S&P 600 index of small cap stocks.
The average expectation is for a first-quarter earnings per share decline of 18% followed by a 9% second-quarter decline, according to I/B/E/S data collected by Refinitiv analyst David Aurelio.
“This will be the worst reporting season for small caps since 2009,” said Jefferies equity strategist Steven DeSanctis, referring to first-quarter results.
Looking forward, analysts expect third-quarter EPS growth of 6.9% for the S&P 600 and 23.3% growth for the fourth quarter, according to Refinitiv’s Aurelio.
But Wall Street may be too optimistic about the second half of the year, especially if the U.S.-China trade dispute is not resolved, according to DeSanctis, whose firm is predicting a prolonged trade battle.
“For small caps to pick up and resume their outperformance we need to see better trends in the economic data in the second half, which would lead to better earnings growth in the third and fourth quarter, which the Street is expecting,” he said.
In fact, traders in the bond market and fed funds futures are making bets that imply the exact opposite – that U.S. economic growth will weaken.
“There’s definitely a higher probability today that things aren’t going to get better in the second half,” said DeSanctis.
For growth to improve, U.S. consumer spending needs to stay strong, according to DeSanctis, who says the consumer would need to offset weakness in capital spending arising from corporate uncertainty over international trade.
To be sure, the labor market is still strong and wages are still growing. But that may not be enough.
“That’s important people do have money in their pocket to spend,” said DeSanctis, but he said small caps would struggle if tariffs inflate the price of consumer goods.
“If costs are really going to start to escalate, people are going to be far more concerned about their spending patterns,” he said.
(Reporting by Sinéad Carew, Chuck Mikolajczak and April Joyner; editing by Jonathan Oatis)
FILE PHOTO: The logo for Air New Zealand is displayed at their office located at Sydney International Airport, Australia, June 20, 2017. REUTERS/David Gray
May 20, 2019
PARIS (Reuters) – Boeing Co has won a hard-fought contest to sell wide-body aircraft to Air New Zealand Ltd, beating a challenge from Europe’s Airbus, industry sources said on Monday.
The carrier, which currently operates only Boeing wide-body jets on long-haul routes and Airbus single-aisle jets on shorter ones, has been weighing a purchase of new wide-body jets to replace eight Boeing 777-200ER aircraft.
Air New Zealand, Boeing and Airbus did not immediately respond to a request for comment.
The airline has said it is examining the Airbus A350 and the Boeing 777X or 787 models, with the aim of launching longer routes like Auckland-New York and Auckland-Brazil.
Air New Zealand Finance Director Jeff McDowall said in an analyst briefing in March that a decision on the aircraft purchase should be made in the next few months, but that the airline would need fewer replacement jets than originally anticipated in 2023 due to network changes.
The airline launched a two-year cost reduction program in March and deferred aircraft capital expenditures of about NZ$750 million ($490.1 million) as part of a business review.
In February, it slashed domestic fares by as much as 50 percent in a shake-up of its pricing structure in response to the slackening travel market.
(Reporting by Tim Hepher in PARIS; additional reporting by Praveen Menon in WELLINGTON; Editing by Stephen Coates)
U.S. President Donald Trump speaks at the National Association of Realtors’ Legislative Meetings & Trade Expo in Washington, U.S., May 17, 2019. REUTERS/Carlos Barria
May 20, 2019
WASHINGTON (Reuters) – U.S. President Donald Trump said his tariffs on Chinese goods are causing companies to move production out of China to Vietnam and other countries in Asia, and added that any agreement with China cannot be a “50-50” deal.
In an interview with Fox News Channel recorded last week and aired on Sunday night, Trump said that the United States and China “had a very strong deal, we had a good deal, and they changed it. And I said that’s OK, we’re going to tariff their products.”
(Reporting by David Lawder; Editing by Sandra Maler)
FILE PHOTO: A man looks at an electronic board showing the Nikkei stock index outside a brokerage in Tokyo, Japan, January 7, 2019. REUTERS/Kim Kyung-Hoon
May 20, 2019
By Andrew Galbraith
SHANGHAI (Reuters) – Share markets in Asia got off to a steady start on Monday as investors tried to catch their breath following another week of escalating trade tensions between the United States and China.
In early trade, MSCI’s broadest index of Asia-Pacific shares outside Japan tacked on 0.6% after a steep 3% loss the previous week. U.S. S&P 500 e-mini futures also turned higher, rising 0.5% following losses on Wall Street on Friday.
The Dow Jones Industrial Average fell 0.38%, the S&P 500 lost 0.58% and the Nasdaq Composite dropped 1.04%.
Australian shares jumped 1.4% after the center-right Liberal National Coalition pulled off a shock win in federal elections, beating the left-wing Labor Party.
Japan’s Nikkei stock index added 0.4%, after data showed growth in the world’s third-biggest economy unexpectedly accelerated in the first quarter.
The modest gains on Monday came even as financial markets remained on edge over the intensifying Sino-U.S. trade war, with the Trump administration last week adding Huawei Technologies Co Ltd to a trade blacklist.
The repercussions of that move were evident as Alphabet Inc’s Google suspended business with Huawei that requires the transfer of hardware, software and technical services except those publicly available via open source licensing.
Google’s suspension of business with Huawei “signals that even though the trade talks are being characterized as being stalled, when we factor in China saying there is no point (in) U.S. negotiators coming to Beijing in current circumstances as they did Friday, then the chance of a G20 deal seem more remote,” Greg McKenna, strategist at McKenna Macro said in a note to clients.
Noting the festering trade war, continued uncertainty over Brexit and rising tensions between the United States and Iran, McKenna said investors are currently “headline trading.”
“(It’s) too soon to see the economic consequences of the battle escalating. And so belief can be suspended until that time,” he said.
Oil markets, however, saw some active trade early on after Saudi Arabia’s energy minister said on Sunday that there was consensus among the members of the Organization of the Petroleum Exporting Countries to maintain production cuts to “gently” reduce inventories.
Both U.S. crude and Brent crude jumped more than 1% following the minister’s comments, with West Texas Intermediate fetching $63.51 a barrel and Brent crude at $73.05 per barrel.
In currency markets, China’s offshore yuan rebounded after touching its weakest level against the dollar since November on Friday. It was last trading at 6.9280 per dollar.
In onshore trading on Friday, the yuan weakened past the psychologically important 6.9 per dollar level to end at its softest level in 19 weeks. However, sources say the country’s central bank is expected to use foreign exchange intervention and monetary policy tools to stop it weakening past the 7-per-dollar level in the near term.
On Monday, the dollar added 0.2% against the yen to 110.30, and the euro was up 0.1% at $1.1165.
The dollar index, which tracks the greenback against a basket of six major rivals, was down a touch at 97.980.
The yield on benchmark 10-year Treasury notes rose to 2.4068% compared with a U.S. close of 2.393% on Friday, while the two-year yield touched 2.2187%, up from Friday’s U.S. close of 2.202%.
Spot gold was 0.1% higher at $1,278.42 per ounce. [GOL/]
(Reporting by Andrew Galbraith; Editing by Shri Navaratnam)
FILE PHOTO: Visitors walk past Huawei’s booth during Mobile World Congress in Barcelona, Spain, February 27, 2017. REUTERS/Eric Gaillard/File Photo
May 19, 2019
By Angela Moon
NEW YORK (Reuters) – Alphabet Inc’s Google has suspended business with Huawei that requires the transfer of hardware and software products except those covered by open source licenses, a source close to the matter told Reuters on Sunday, in a blow to the Chinese technology company that the U.S. government has sought to blacklist around the world.
Huawei Technologies Co Ltd will immediately lose access to updates to the Android operating system, and the next version of its smartphones outside of China will also lose access to popular applications and services including the Google Play Store and Gmail app.
Details of the specific services were still being discussed internally at Google, according to the source. Huawei attorneys are also studying the impact of the U.S. Commerce Department’s actions, a Huawei spokesman said on Friday. Huawei was not immediately reachable for further comment.
Representatives of the u.s. Commerce Department did not immediately have comment.
Huawei will continue to have access to the version of the Android operating system available through the open source license that is freely open to anyone who wishes to use it.
But Google will stop providing any technical support and collaboration for Android and Google services to Huawei going forward, the source said.
On Thursday the Trump administration officially added Huawei to a trade blacklist, immediately enacting restrictions that will make it extremely difficult for the technology giant to do business with U.S. companies.
(Reporting by Angela Moon; Additional reporting by Georgina Prodhan in London, and David Shepardson and Karen Freifeld in Washington; Editing by Kenneth Li and Daniel Wallis)
Saudi Arabian Energy Minister Khalid al-Falih speaks to the media before the OPEC 14th Meeting of the Joint Ministerial Monitoring Committee in Jeddah, Saudi Arabia, May 19, 2019. REUTERS/Waleed Ali
May 19, 2019
By Rania El Gamal and Vladimir Soldatkin
JEDDAH, Saudi Arabia (Reuters) – Saudi Arabia’s energy minister said on Sunday he recommended driving oil inventories down and that global oil supplies were plentiful.
“Overall, the market is in a delicate situation,” Khalid al-Falih told reporters ahead of a ministerial panel meeting of top OPEC and non-OPEC oil producers, including Saudi Arabia and Russia.
He said the Organization of the Petroleum Exporting Countries, of which Saudi Arabia is de facto leader, would have more data at its next meeting in late June to help it reach the best decision on output.
OPEC, Russia and other non-OPEC producers, an alliance known as OPEC+, agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for six months, a deal designed to stop inventories building up and weakening prices.
Russian Energy Minister Alexander Novak told reporters that different options were available for the output deal, including a rise in production in the second half of the year.
The energy minister of the United Arab Emirates, Suhail al-Mazrouei, said oil producers were capable of filling any gap in the oil market and that relaxing supply cuts was not “the right decision”.
Mazrouei said the UAE did not want to see an increase in inventories that could lead to a price collapse.
Saudi Arabia sees no need to boost production quickly now, with oil at around $70 a barrel, as it fears a crash in prices and a build-up in inventories, OPEC sources said, adding that Russia wants to increase supply after June.
The United States, which is not a member of OPEC+ but is a close ally of Saudi Arabia, wants the group to boost output to bring oil prices down.
Falih has to find a delicate balance between keeping the oil market well supplied and prices high enough for Riyadh’s budget needs, while pleasing Moscow to ensure Russia remains in the OPEC+ pact, and being responsive to the concerns of the United States and the rest of OPEC+, the sources said earlier.
Sunday’s meeting of the ministerial panel, known as the JMMC, comes amid concerns of a tight market. Iran’s oil exports are likely to drop further in May and shipments from Venezuela could fall again in coming weeks due to U.S. sanctions.
Oil contamination also forced Russia to halt flows along the Druzhba pipeline – a key conduit for crude into Eastern Europe and Germany – in April. The suspension, as yet of unclear duration, left refiners scrambling to find supplies.
Novak told reporters that oil supplies to Poland via the pipeline would start on Monday.
(Additional reporting by Dahlia Nehme and Stephen Kalin; Editing by Dale Hudson)
FILE PHOTO: Canada’s Foreign Minister Chrystia Freeland takes part in a bilateral meeting with U.S. Secretary of State Mike Pompeo at the Lappi Areena in Rovaniemi, Finland May 7, 2019. Mandel Ngan/POOL via REUTERS/File Photo
May 18, 2019
By Steve Scherer
OTTAWA (Reuters) – Canada will move quickly to ratify the new North American trade pact, Foreign Minister Chrystia Freeland said on Saturday, a day after the United States agreed to lift tariffs on Canadian steel and aluminum.
U.S. President Donald Trump had imposed the global “Section 232” tariffs of 25% on steel and 10% on aluminum in March 2018 on both Canada and Mexico on national security grounds, invoking a 1962 Cold War-era trade law.
The metals tariffs were a major irritant for Canada and Mexico and had caused them to halt progress toward ratification of the new U.S.-Mexico-Canada Agreement (USMCA), the trilateral trade deal signed last year which will replace the 25-year-old North American Free Trade Agreement (NAFTA).
“We were very clear that as long as the 232 tariffs were there it would be very, very hard for us to ratify the new NAFTA, and that is why we did not table the legislation,” Freeland said in an interview broadcast by CBC radio.
“Now that that big obstacle is lifted, full steam ahead,” she said, without saying when the agreement would be presented to parliament, which closes down in June ahead of an October national election.
“I hope all members of the house will support this agreement,” she added.
U.S. Vice President Mike Pence said on Friday he would meet with Canada’s Prime Minister Justin Trudeau in Ottawa on May 30 to discuss “advancing” ratification.
While several U.S. Democrats applauded removal of the tariffs, some on Friday said USMCA was not yet ready for their support.
“When it comes to the new agreement, House Democrats continue to have a number of substantial concerns related to labor, environment, enforcement, and access to affordable medicines provisions. Those issues still need to be remedied,” said U.S. House Ways and Means Committee Chairman Richard Neal on Friday.
Freeland said Canada was in the process of reaching out to American Democrats to allay their concerns.
“We have been meeting with many leading Democrats to talk to them about the new NAFTA,” Freeland said. “We have a good, strong conversation happening.”
Despite the breakthrough on tariffs and the USMCA agreement last year, Freeland said Canada was still worried about U.S. protectionism.
“I am still concerned about U.S. protectionism and I think it would be naive for anyone to think that there is any kind of permanent safety or security. The reality is that this U.S. administration is openly, explicitly, and proudly protectionist,” Freeland said.
(Reporting by Steve Scherer; Editing by James Dalgleish)